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Commons Chamber

Volume 130: debated on Tuesday 29 March 1988

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House Of Commons

Tuesday 29 March 1988

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Private Business

British Railways Order Confirmation Bill

Considered; to be read the Third time.

Oral Answers To Questions


Schools-Employers (Compacts)


To ask the Secretary of State for Employment what representations he has had from groups of local employers and schools who wish to develop compacts; and if he will make a statement.

The Government are making available £3 million a year for each of the next four years to encourage the development of 12 employer-school compacts within inner city areas in England. It is also proposed to support a further two compacts in Scotland and one in Wales. The Manpower Services Commission has received a number of inquiries from interested employers and schools.

Does my right hon. Friend agree that even more progress could be made on reducing unemployment on the one hand, and skill shortages on the other, if we were to develop compacts in my area? We are constantly faced with the conflicting problems of skill shortages and unemployment. Does my right hon. Friend agree that developing compacts as they are now envisaged would foster in our young people, before they leave school, a greater awareness, understanding and direct experience of industry, thereby, we hope, increasing the number of pupils who might consider taking up employment in industry after leaving school?

I agree with what my hon. Friend has said. The whole concept of compacts is that employers should guarantee a job with training to young people, particularly those from inner city schools, who meet agreed standards of achievement and motivation. Obviously, we should like to develop the idea in the west midlands, among other areas. I know, of course, of my hon. Friend's interest in Wolverhampton.

The Secretary of State will know that the Opposition are very much in favour of the compact idea. Indeed, ILEA pioneered the idea in central London with great success, and many people — including the Government — are now modelling their plans on that success.

There are dangers, however. Targeting is very important. Does the right hon. Gentleman realise that targeting the youngsters who need the help provided by the compact—those less likely to obtain qualifications—is what the game is all about? Is he confident that employers will deliver on the compact, when they have signally failed to deliver on the general contribution to training over the past 10 years? The right hon. Gentleman knows —because he is carrying out a full investigation into training —that the voluntary principle has not worked.

The hon. Gentleman must be fair about, for example, the London compact. It is certainly true that ILEA has been very much involved with that, but so has the London enterprise agency, which involves companies in the private sector.

That, I think, is the reply to the hon. Gentleman's question : companies have become involved with the London compact. The aim — I agree with the hon. Gentleman — is to give a good education and an opportunity in employment, particularly in difficult areas such as the inner cities. We have 12 pilot schemes, and I hope that we shall learn from them.

There can be little doubt of the benefit of industrial and commercial links with education, but does my right hon. Friend agree with our right hon. Friend the Secretary of State for Education and Science that the presence of city technology colleges in some of our cities will act as a stimulus and a catalyst for even more compact schemes throughout the country?

I agree with my hon. Friend, and I believe that the closer together that we bring industry and schools, the better it will be for both sides.

Labour Statistics


To ask the Secretary of State for Employment what is the most recent percentage unemployment figure in the EEC.


To ask the Secretary of State for Employment what is the current net rate of unemployment in the United Kingdom and the EEC, respectively : and if he will make a statement.

According to estimates compiled by the statistical office of the European Communities on a harmonised basis, the unemployment rate in the United Kingdom in January was 9·4 per cent. compared with 10·4 per cent. in the European Community as a whole. Over the past year our unemployment rate has fallen faster than in any other industrial country and is now lower than many of our European competitors, including France. Italy, Belgium and the Netherlands.

Is not the optimism of the Secretary of State and his colleagues short-term? Has he had an opportunity to study the report published last week by the United Nations Economic Commission for Europe, which looks specifically at the longer-term position and warns against the decline in the British economy and other European economies —[Interruption.] Conservative Members may not like long-term analysis, but they have to face it. The report warns of the importance of pursuing expansionary fiscal policies to prevent European stagnation in the longer term.

I do not think that any economic analyst would agree with the hon. Gentleman that there is the slightest sign of decline in the British economy. Also, the Budget will considerably help employment. On the matter of trends, I have to point out that what has taken place in this country has not occurred over only two or three months. Unemployment has come down for 19 months in a row. One of the parts of the United Kingdom in which unemployment has come down most is Wales.

Does my right hon. Friend agree that apart from Britain's splendid example, where we are pursuing excellent Thatcherite policies, there is a serious problem in the continent of Europe and the rest of the Common Market, particularly by comparison with EFTA? Does that not suggest that we should be reviewing the excessive expenditure, high protectionism and excessive bureaucracy of the European Economic Community compared with EFTA and other parts of the world?

The latest EFTA figures show that unemployment has gone up slightly over the past month. I do not want to make too much of that. —[Interruption.] As my hon. Friend the Member for Southend, East (Mr. Taylor) rightly says, it is below the Common Market average. What pleases me is that unemployment is going down in this country at a faster rate than in any other industrialised country. We should take all the opportunities offered by 1992 and the open market, which I think fits in with at least part of what my hon. Friend is urging.

Do not the Europeans, to some extent, show us the way? Does the Secretary of State know that four firms have nearly disappeared in my constituency over the past two months and have been saved only by the good work of Enterprise West Cumbria? In part, the reason has been the failure of the British clearing bank system. Why can we not have the same level of support from our banks in the regions as is available in other parts of the European Community?

Unemployment is coming down in all regions of the country. Some of the biggest falls have been in regions such as the west midlands, the north and the north-west where the problem has been greatest. If the hon. Gentleman is considering disincentives to employment, I hope that he will point out to his Front Bench the disincentive of what happened at Dundee and how that has destroyed jobs for literally hundreds of people there.

Is my right hon. Friend aware that unemployment in the United States is now about 5 per cent.? Does he draw any conclusions from that fact—such as that the European Community is overregulated and suffers from excessive bureaucracy and hardening of the economic arteries? Will my right hon. Friend persuade his colleagues in Europe to draw the obvious lessons from the United States?

That figure shows some of the things that my hon. Friend has mentioned. Certainly we need to knock down the remaining barriers to trade. In addition, it shows how much further there is still to go and the opportunity that we have. There is no doubt that over the past two years our record inside the Common Market has been the best of all member countries.

Does my right hon. Friend agree that this country has one of the highest percentages of the population in work at 66 per cent.? Does he also agree that a far higher percentage of people are in work in this country than in the European Economic Community, which has an average of 57 per cent.? Does he also agree that the record fall in unemployment rates in the past two years is due to the Government's economic policies and initiatives by the Department of Employment?

All those facts are correct. I would only add that I do not believe that we should be remotely complacent about our position. We want unemployment to fall even further. I believe that unemployment will continue to fall under the Government's economic policies.

While I welcome the fact that there has been a fall in the unemployment rate, has the Secretary of State consulted his right hon. Friend the Secretary of State for Northern Ireland, and perhaps even the Irish Government, about the possibility of introducing the fair employment legislation for Northern Ireland into Great Britain especially in view of the statements from the Commission for Racial Equality, which has said that there has been no appreciable improvement in the past 20 years in the prospects of the black community?

I would not accept that analysis of the position. I believe that there has been a substantial improvement. Of course, I am continually in contact with my right hon. Friend the Secretary of State for Northern Ireland.

Before the Secretary of State is dazed by his own complacency on this matter, will he acknowledge that on the counting basis used by all previous Governments, including Tory Governments, the number of unemployed today is still 3,329,000, nearly three times the level that the Government inherited? Is he aware that more than half the alleged cut in the past 18 months is due to the increased numbers of people on Government schemes plus the tighter availability-for-work rules? Is he also aware that the Government's recently published labour force survey shows that for every seven persons knocked off the unemployment registers, only one new job was created? Is it not clear that the Government's unemployment figures are scarcely worth the paper that they are written on?

No, I do not accept a word of what the hon. Gentleman has said. Certainly the Government are not complacent. On the common basis of the European Community's statistical office, the figures show clearly that the unemployment rate in this country is below the European Common Market average. There is no question about that. [HON. MEMBERS: "The right hon. Gentleman's figures."] No, that is according to the EC's figures.

I am bound to say to the hon. Member for Oldham, West (Mr. Meacher) that, after Dundee, we will not take lectures from the Opposition on reducing unemployment. The unions which the hon. Member for Oldham, West so discreditably supported at the weekend have destroyed jobs, not created them. That is the responsibility of the hon. Member and his friends.


To ask the Secretary of State for Employment how many people were out of work in the Staffordshire, Moorlands parliamentary constituency at the most recent count; and what the figure was two years ago.

On 11 February 1988 the number of unemployed claimants in the Staffordshire, Moorlands parliamentary constituency was 2,700. The corresponding figure for February 1986 was 3,700.

Obviously there has been a significant reduction in unemployment in my constituency over the past two years. Does my hon. Friend agree that the unemployment rate in my constituency is still too high? When does he expect that the figure will be down to the 1973 level?

Of course I agree with my hon. Friend that the figures are too high. As he knows, we are not in the business of making specific forecasts, but we are slowly and steadily winning the unemployment battle. I place on record the contribution made by tourism to employment in my hon. Friend's constituency. Alton Towers will employ 1,400 people this year.

Training Schemes


To ask the Secretary of State for Employment how many young people in the London borough of Southwark are on Government training schemes; and if he will make a statement.

Some 530 young people are currently taking part in YTS schemes based in Southwark. They are benefiting from a structured training programme which will enhance their future job prospects.

Does the Minister realise that there is still a great skills mismatch between the training offered and the jobs available? Is he aware that in the docklands, where there is a great boom, most of the jobs—studies show that the figure is three quarters—go to labour recruited from outside the area rather than to people trained and recruited inside the area? Are he and his colleagues making progress, perhaps in the European Community where we were told discussions were taking place, to ensure that local youngsters can be trained locally and then employed locally, particularly in boom areas in Britain?

My answer referred to schemes based in Southwark, for which we have the figures. Obviously, some young people living in Southwark take part in schemes based elsewhere or in national schemes which have places in Southwark, and, for that matter, some young people in Southwark-based schemes no doubt come from outside the borough. The London labour market is not in sealed parcels, but we are doing our best to ensure that local people get local jobs.



To ask the Secretary of State for Employment how many working days were lost through strikes in November 1987; and what was the comparable figure for November 1978.

In November 1978 almost 2 million working days were lost through strikes. In November 1987 the figure was 103,000—the lowest November figure for 29 years.

Is not the fact that the November 1987 figure was one of the lowest for many years a tribute to the wisdom of the Government's industrial relations policies, which are recognised by some unions, though not by the Transport and General Workers Union, whose job-destroying attitudes apparently continue unabated?

There is certainly no question but that the TGWU has found a new way of destroying jobs, which will be widely condemned throughout the country. I have no doubt that the Government's reform of industrial relations law has led to some of the improvements that we have seen in those figures.

How many days were lost in strike action in Dundee in the early part of this decade when, as a direct result of Government action, 3,000 Dundee jute workers were redundant—

I am asking the Secretary of State how many strikes took place in 1979 and 1980 when 3,000 jute workers in Dundee were made redundant as a direct result of Government action. Does the Secretary of State believe that there will be more strikes, or fewer strikes, if employers blackmail Britain into selecting particular unions and force employees to join those unions?

That is a particularly pathetic defence of the TGWU's position. The figure that I can give is that the TGWU has probably lost Dundee more than 1,000 jobs.

Does my right hon. Friend agree that the lesson of November is that the Government's legislation has worked and has shown clearly how effective it is? Surely another lesson that has come out of Dundee is that more legislation will probably be required to deal with such situations. Ford was prepared to come to Dundee, but required one-union agreement, and perhaps we should bring in legislation to make that possible in future.

I hope, first and foremost, that the unions concerned come to their senses and take the sensible action that is necessary before we need to consider further legislation.

If the Government are so concerned about the number of working days lost through strikes, why are they so indifferent to the far greater number of working days lost through industrial injury? Is the Minister not ashamed of the fact that the fatal and serious accident rate has increased since 1979 by 36 per cent. in manufacturing? Are not the Government directly responsible because they have cut the factory inspectorate by 20 per cent. and the annual number of prosecutions by 17 per cent.? —[Interruption.]

Order. Hon. Members should not point across the Chamber. I am listening to the hon. Member for Oldham, West (Mr. Meacher).

The hon. Gentleman's supplementary question has nothing whatever to do with the original question, but clearly we are concerned about industrial injuries and all our policies will be pursued to seek to reduce them. The hon. Gentleman should recognise that the number of working days lost in each of the past two years is the lowest for 10 years and the number of stoppages in each of the past three years is the lowest since 1940. That is the Government's achievement and it contrasts strongly with the industrial anarchy that the hon. Gentleman left behind him.

River Holidays


To ask the Secretary of State for Employment what is being done to promote river holidays in the United Kingdom.

Inland waterway holidays are marketed by the industry itself as well as the tourist boards and the British Tourist Authority overseas. I recently met the chairman of the British Waterways Board, and the chairman of the English tourist board and British Tourist Authority for a useful exchange of views on how the tourism potential of inland waterways could best be achieved.

That is welcome news indeed. Will my hon. Friend comment on what proportion of the British Waterways Board's income is derived from leisure? On the subject of water holidays, I commend to him that excellent book, "Three Men in a Boat" as an insight to the coming elections in the Labour party.

In regard to the latter part of my hon. Friend's question about "Three Men in a Boat", I am surprised that the hon. Member for Oldham, West (Mr. Meacher) has not put his oar into that particular boat. No doubt there is still time. In answer to the first part of my hon. Friend's question, the British Waterways Board receives about 43 per cent. of its earned income, excluding grant-aid, from leisure and tourism, amounting to about £2·75 million.

As inland waterways include canals, what help is available to promote canals in and around the city of Birmingham, given that it has more canals than Venice?

Section 4 grants are available for the development of tourism projects associated with canals. Indeed, a number of section 4 grants recently have been given to similar projects; for example, the National Waterways museum in Gloucester and the Waveney river centre on the Norfolk Broads. Grants are available.

Will my hon. Friend persuade the board to restore horse-drawn canal boats, which were very scenic in my constituency on the Grand Union canal in past years and are an excellent holiday for families and friends?

My hon. Friend never misses an opportunity to bring the horse, his favourite animal, into his questions. I am sure that the point that he made will be considered by the British Waterways Board.

Will the Minister advise the House what discussions took place about mooring fees during his meeting with the chairman of the British Waterways Board? Is he aware that the increase in mooring fees has been so great that many people who use the rivers and canals are having second thoughts because they cannot afford the increase? Will the Minister prevail upon the chairman of the British Waterways Board to look at the situation and ensure that increases are not above the level of inflation?

I shall certainly draw the attention of the chairman of the British Waterways Board to the hon. Gentleman's point about mooring fees. I understand that the level of charges essentially is for the commercial judgment and decision of the board.

"Training For Employment"


To ask the Secretary of State for Employment if he will make a statement on the implications for Derbyshire of the White Paper on "Training for Employment".

In Derbyshire, as elsewhere, the employment training programme will provide a wide range of high-quality training opportunities for unemployed people, to meet their individual needs and those of the local labour market.

Will the 3,132 people in Derbyshire currently involved in the community programme and their agents be involved in the new adult training scheme? What guarantee can my hon. Friend provide about the quality of those training programmes?

There will be a minimum of 170,000 community programme-type places in the new programme. My hon. Friend is entirely right to highlight the question of quality. The task of the Manpower Services Commission was to draw up a scheme which would provide quality training. It is satisfied that it has been able to do that and my right hon. Friend has accepted its recommendations in full.

Is the Minister aware that there is a lack of credibility in the White Paper's implications for South Yorkshire? There is a genuine fear among employers and trade unions that the programme cannot possibly provide the number of jobs and the required skills to assist an economy that badly needs revitalisation. The Minister will have to convince South Yorkshire that his claim—

In so far as Derbyshire and Amber Valley share similar problems, I am sure the hon. Gentleman will agree that there is a responsibility on all of us to try to allay genuine fears. If there are people in areas that are of concern to him who have these fears, I hope he will point out that the Manpower Services Commission's recommendations were unanimous and were accepted in full. I hope he will also point out that there are people on the Manpower Services Commission who represent not only local authority interests, but trade unions commissioners as well.

Regional Aid


To ask the Secretary of State for Employment if the advice of his Department is sought before a regional development grant is arranged for a company contemplating moving itself and its work force to another area.

The regional development grant scheme is essentially automatic. If a project meets the published criteria, the project will normally be approved and grant paid by the operating department without reference to the Department of Employment.

I thank my hon. Friend for his reply, but will he bear in mind that these very substantial grants can lead to a considerable distortion of trade? Will he make sure that in future his Department is kept aware when grants of considerable size—say, up to £1 million—are made available to firms to move to a neighbouring town, because they can completely distort the local employment picture?

I take my hon. Friend's point, but I think he is referring to the regional development grant, which has been automatic. Applications for this grant cannot be made after Thursday of this week, but regional selective assistance will continue.

The Minister has just said that the last date to apply for this grant is Thursday of this week. In the light of that will he, first, monitor the nature of automatic grants that are made available in Europe to ensure that firms coming here for the first time to extend their plants or to set up on the green field sites are not put at a disadvantage? Secondly, will he publish the criteria for regional selective assistance so that firms fully know what they are entitled to now that the regional development grant is to be phased out?

Both the hon. Gentleman's questions are matters for my ministerial colleagues in the Department of Trade and Industry, not for me.

My hon. Friend will recall that a couple of years ago the Government quite arbitrarily changed the rules that enabled grants to be paid to employees moving from one area to another. As the Ministry of Defence has 600 vacancies for administrative and clerical assistants and is having to engage large numbers of agency staff, what liaison is there between my hon. Friend's Department and the Ministry of Defence to try to alleviate that shortage by helping people to move from parts of the country where there is high unemployment to the London area?

We are in contact with other Government Departments about such matters, and our employment service and the MSC keep a very close eye on opportunities for jobs and job creation.



To ask the Secretary of State for Employment how many persons have benefited from the insolvency provisions of the Employment Protection Act in the midland region during the current financial year.

Can the Minister explain how the former employees of Midland Professional Cleaning Services could benefit from these provisions, bearing in mind that the company ceased trading, having been paid by the supermarket for which it was cleaning? It is not in liquidation and it has never filed returns to Companies House. Even though these two dozen people are still cleaning the same supermarket, they have lost about six weeks' wages—taken by the company—which they do not stand a chance of getting back simply because the company is not in liquidation. How can they be covered and seek the protection and the benefit of these insolvency provisions?

I thank the hon. Gentleman for his courtesy in giving me notice that he was going to ask that supplementary question. I know that he has been extremely active in contacting my Department to see whether anything can be done to help his constituents. The problem is that under this legislation, passed by the last Labour Government in 1976, my Department is in a position to help only where companies have become insolvent. I have made it my business to look at this question, and, as I understand it, the hon. Gentleman is entirely right.

This company is not insolvent, and therefore under the present state of the legislation nothing can be done. All I would say to the hon. Gentleman is that, apart from the legal remedies which his constituents have, if, for some reason, the company ever were to go into a state of insolvency I hope that at that stage he will contact me again, because I have a great deal of sympathy with the plight of his constituents.

Rural Areas


To ask the Secretary of State for Employment if he will make a statement on his Department's plans to encourage growth in employment in rural areas.

Our Department is playing its part with other interested Departments to help rural economies expand and diversify. Our key aim is to encourage enterprise by providing the necessary advice and support.

I am sure the Minister will agree, and I am certain that the rest of the House will agree, that, to judge from the paucity of his reply, there is a distressing contrast between the Government's emphasis on urban deprivation and that relating to rural deprivation in areas such as my own. Nevertheless, given that the Minister has said that he is working with his colleagues, will he seek the extension of the assisted areas map, particularly to the United Downs area in Cornwall, given the job losses currently happening in the tin industry there?

I do not agree with the hon. Gentleman. The figures indicate that unemployment in rural development areas is below the national average. I will certainly look into his last point.

Will my hon. Friend look at the situation in the East Sussex and Kent rural development area, where unemployment is higher than the national average, and where there is a strong feeling that window dressing is more important than new projects? Will he liaise with other Government Departments on this subject, which is causing considerable concern to my constituents?

Yes, I will certainly look into it if my lion. Friend will send me particulars of the matter that concerns him.

Steel Industry


To ask the Secretary of State for Employment if he will make a statement about the trend in the numbers of employees in the steel industry.

According to the most recently published figures, the number of employees in employment in the iron and steel industries fell by an estimated 2,500 in the year to January 1988.

Does the Minister appreciate that, with privatisation on the agenda, there is now considerable concern among steel workers because they have noticed that with the phoenix companies already created there has been a tendency to downgrade conditions of employment? Will he recognise that there will be considerable concern among steel workers throughout the industry if there is any attempt to dilute the contributory pension scheme, which has been established over a number of years?

I can appreciate the concern which the hon. Gentleman's constituents will feel when privatisation comes along, because although there are great opportunities, it represents a new departure, and clearly his constituents will want to be assured that there will be no dilution in the way that he suggests.

Perhaps I could make the point to the hon. Gentleman that there has been a transformation in the United Kingdom steel industry in recent years, and that is something that must bode well for his constituents. It is also worth emphasising that BSC gave an assurance as long ago as last December that, subject to market conditions, there would continue to be a commercial requirement for steel making and continuous casting capacity at the five integrated BSC plants for at least the next seven years. While I do not in any sense underplay the feelings of the hon. Gentleman's constituents, I hope that when they look at the industry in total they will be substantially reassured.

Does my hon. Friend agree that many more jobs among steel-using industries stand to be lost by the operation of cartels among European steel producers and political interference than could possibly be saved in the steel industry by any such practices?

While that may not be directly a matter for me, I can understand the concern that my hon. Friend expresses in that question. Sometimes there is a feeling, certainly on this side of the House, that the high standards that we impose on ourselves are not always entirely matched by the performance of others.

Employment Trends


To ask the Secretary of State for Employment if he will make a statement on employment trends for the remainder of 1988.

Following the long-established practice of previous Governments, we do not make forecasts of future employment levels. However, there is every prospect of a continuing rise in employment during 1988.

With unemployment having fallen for 19 successive months, which now represents the greater threat to future job growth: the Neanderthal mentality of Dundee trade-union man, or the greedy mentality of Dagenham trade-union man?

It is difficult to place these factors in order of importance, but both are certainly important. The events in Dundee have without doubt damaged prospects. Wage increases are also well ahead of inflation, and this can damage competitiveness, and jobs and job creation as well. I hope that wage negotiators will have regard to that.

Looking back at the hundreds of thousands of manufacturing jobs that the Government have destroyed up and down the country, including in Dundee, it ill becomes them to criticise the trade union movement for refusing to accept the Government's suggestion that it should go on bended knee to the United States, like a Third world country, asking the Americans to come here to pay slave labour wages and destroy the trade union movement. If the Minister expects that from the British trade union movement, he has a fight on his hands.

There is no point in our approaching Ford until the unions concerned have made their position clear.

Has my hon. Friend considered that employment trends in 1988 and thereafter could improve considerably if great care were taken with future legislation to ensure that it does not inhibit manufacturing industry or the future of new manufacturing industries? What is done in the Department about representations to other Departments to see that their legislation does not inhibit industry?

The primary responsibility for this rests with the DTI and the deregulation unit, which examines all proposals. We do our bit, too, particularly for small businesses.

Does the Minister accept that, in spite of the recent fall in unemployment, the current number of unemployed claimants is between two and three times what it was when the Conservative party came to power? Does he recognise that, without a major Government initiative in this area, there is no hope of getting unemployment down by the next general election even to its level in 1979?

The hon. Gentleman should also recognise that employment has been up in every quarter for four and a half years.

Have not recent events shown that traditional trade unions are still interested in traditional working practices, rather than in creating the sort of climate that creates employment?

Manufacturing Industry


To ask the Secretary of State for Employment how many jobs have been lost in manufacturing industry since June 1979; and if he will list the sectors of manufacturing industry which have incurred the highest number of job losses.

Between June 1979 and January 1988 the number of employees in employment in manufacturing industry in Great Britain is estimated to have fallen by 2,077,000. Over this period, the largest falls occurred in the mechanical engineering, motor vehicle, metal manufacturing, electrical engineering and metal goods industries. However, recent figures suggest that the trend in manufacturing employment may now be levelling out.

Is the Minister aware that that list of more than 2 million casualties, of which Ron Todd has not been responsible for a single one—[HON. MEMBERS : "Oh!"]—shows the hypocrisy of the Government when they talk about the loss of jobs in the last eight years? The Prime Minister has caused more devastation in manufacturing industry than Adolf Hitler caused between 1939 and 1945. It is no wonder that West Germany and Japan are laughing at Britain where they have a $120 billion surplus on their trade and are walking away to the top of the industrial trade league, while we are losing jobs all around Great Britain.

The immoderate, ignorant and intemperate nature of that question shows that if we ever have a "wally of the week" award, the hon. Gentleman will be in a class of his own.

Is my hon. Friend aware that my constituents do not well receive criticisms from Opposition Members about job losses when they recall that the last Labour Government closed the steelworks in Corby? However, my constituents welcome the enormous assistance that the Government have given them, which has enabled Corby to make such a striking recovery from that disaster.

I am sure that my hon. Friend is right. He might want to compliment the hon. Member for Bolsover (Mr. Skinner) on having had the courage to address the issue of Dundee, even if he has not managed to reach the inevitable conclusions about it.



To ask the Secretary of State for Employment what proportion of YTS leavers become unemployed; and how many have become long-term unemployed.

The Manpower Services Commission carries out regular follow-up surveys of all YTS leavers. These surveys show that, of those who left YTS schemes between April 1986 and September 1987, 22 per cent. were unemployed when surveyed. These surveys do not provide data on the duration of unemployment.

Is the Minister aware that in the northern region 31 per cent. are destined for the dole and those who do get work get jobs without proper training? Does the Minister agree that every youngster needs proper, quality training so that he can get a proper, quality job?

Yes. That is why we have the drive for equality in YTS and why we insist, for example, on approved training organisation status for all providers as from this week.

Prime Minister



To ask the Prime Minister if she will list her official engagements for Tuesday 29 March.

This morning I had meetings with ministerial colleagues and others, including the Prime Minister of Fiji and the Mayor of Shanghai. In addition to my duties in the House, I shall be having further meetings later today.

In view of the widespread concern about the poll tax in the country, and indeed on her own Back Benches, will the Prime Minister give serious consideration to withdrawing this deeply offensive legislation?

No. The community charge is a much fairer way of local people paying towards local authority expenditure than the present rating system. The community charge in England will meet only one quarter of local authority expenditure. About half is met by the taxpayer and a quarter by industry. In Scotland the community charge meets only one seventh of local authority expenditure.

Does my right hon. Friend welcome the decision yesterday by the Royal College of Nurses to reaffirm its no-strike policy, on the basis that strikes damage patients? Does she agree that that contrasts starkly with the behaviour of some teachers in London. When they go on strike it damages only their own pupils.

Yes, It was a most encouraging result. Of course, that was the reason why the Royal College of Nurses was given a pay review body. The Royal College has never gone on strike, and I am glad that our faith in it was abundantly rewarded by the view that it took.

Will the Prime Minister make clear her personal opposition, and that of the Government, to British rugby players organising a visit to South Africa?

As the right hon. Gentleman is aware, we stand by the Gleneagles agreement, under which we attempt to discourage teams from going to South Africa. I understand that the English Rugby Union is trying to dissuade people from going to South Africa. I am not aware that either the Scots or the Welsh have declared their view.

Will my right hon. Friend make it completely clear, in order to scotch rumour and media hype, that there is absolutely no difference of policy between herself and the Chancellor of the Exchequer?

My hon. Friend is correct. Both the Chancellor and I put downward pressure on inflation as the topmost priority. Both the Chancellor and I think that exchange rate stability can be very useful for industry.


To ask the Prime Minister is she will list her official engagements for Tuesday 29 March.

I refer the hon. Gentleman to the reply that I gave some moments ago.

In her endeavour to re-establish the bonds of family life, has the Prime Minister ever given any consideration to the value of a wife? Is she aware that the Forestry Commission is trying to double the rent of the tied cottages of its New Forest keepers and is offering in compensation £2 per week for each keeper's wife? Given that the Forestry Commission pays the same keepers 45p a week for a ferret and £2·30 a week for a dog, should she not intervene?

I think the hon. Gentleman will be aware that the Budget set out considerably to help wives by the changes made by my right hon. Friend the Chancellor of the Exchequer about the taxation of wives. We on this side value them extremely highly.

Will my right hon. Friend find time in her busy day to read the scandalous letter sent by the Hammersmith branch of NALGO to Sinn Fein accusing the Government of state terrorism in Northern Ireland? Will she urge the national executive of NALGO to take disciplinary action against those members involved, and will she affirm—

Will my right hon. Friend join me in condemning the actions of that NALGO branch?

Is the Prime Minister aware that Citizens Advice Bureaux case studies on the effects of her social security cuts show that a single pensioner home owner will lose £2 a week, a pensioner couple claiming income support can lose up to £18 a week, a pensioner on dialysis will lose £17 a week, and a doubly incontinent person claiming attendance allowance will lose £14 a week? Is that the way to treat sick and elderly people in the Britain of 1988?

I am not aware of which press release by the Citizens Advice Bureaux the right hon. Gentleman is talking about. Is it one that has come out recently? There was a recent Citizens Advice Bureaux press release that was based on a belief that there was a difference between the time when supplementary benefit was changed to income support and the increase in pension benefit came into effect. In fact, that is not so.

Why will the Prime Minister not answer any specific question on the social security changes? Why is she dodging around talking about press releases when she knows very well that what I refer to are specific case studies of real people who, despite their huge needs, will lose £14, £17 and £18 a week as a consequence of next week's changes? Is she ashamed of those changes?

I assumed that the right hon. Gentleman was talking about a Citizens Advice Bureaux press release which came out yesterday and which was based on a misunderstanding. Among other things, may I tell the right hon. Gentleman that the overwhelming majority of people will benefit, gain, from the improved social security benefits that will come out on 11 April? Some people on housing benefit will not gain because of the different arrangements about capital. It is absolutely futile for him to suggest that the Conservative party and the Government do not look after the needs of people on social security. It is absolutely futile, because not only are we already spending £44 billion on social security, but there is to be an increase of £2 billion next year. His questions are utterly futile and he cannot refute the facts.

That is all very well, but many sick and elderly people still stand to lose £14, £17 and £18 a week. Let me ask the Prime Minister the question again. Does she think that that is the way to treat anyone in this country?

The overwhelming majority of people will gain—and were designed to gain—from the increases in pensions, in disablement benefit and in sickness benefit. A few people will not gain. Apart from those on housing benefit, those who do not gain will be protected during the transition, in that their cash values will be protected. The overwhelming majority of us on this side of the House think it right that people who have capital of £6,000 should not be eligible for housing benefit, particularly as it is often paid by those who have none.

The Prime Minister does not even understand her own policies. According to her Government's figures, 60 per cent. of claimants will lose because of the structural changes. There are no transitional arrangements for new payments. Will she now tell the people of Britain whether she thinks that people on dialysis, old-age pensioners and single home owners should be losing money at all? She can talk about gainers. Should anybody on those incomes be losing anything at all?

An extra £2 billion is to be spent on social security next year, giving a total of £46 billion. The right hon. Gentleman referred to dialysis. Far more people are now receiving dialysis than ever were in his time.

When the right hon. Gentleman said that 60 per cent. of people were losing, I think that he was referring to the Citizens Advice Bureaux press release this morning, which was seriously misleading, because it got the date of the benefits uprating wrong. Almost everyone in this country is doing far better than he or she was in 1979.

Is my right hon. Friend aware that in north-west Hertfordshire district health authority there have been two health cuts: a cut of 47 per cent. in the waiting lists under this Government, and a cut of £100,000 available for patient care as a result of a 17 per cent. rate increase applied by the Socialist-controlled Hertfordshire county council?

Yes, the overwhelming majority of people who are treated under the National Health Service have very good cause to be grateful, and are very grateful. Cuts in the Health Service came under the Labour party when it was in power.


To ask the Prime Minister if she will list her official engagements for Tuesday 29 March.

I refer the right hon. and learned Gentleman to the reply that I gave some moments ago.

When the right hon. Lady finds time to read the report by the National Association of Citizens Advice Bureaux, will she also read the report by the Policy Studies Institute, and by Oxford university, showing the impact of the Government's social security cuts on the sick, the disabled, the elderly and the unemployed? How will she then deal with the situation? Will she ask her right hon. Friend the Chancellor of the Exchequer to provide funding for the sick, the disabled, the elderly and the unemployed, or will she instruct the appropriate Parliamentary Under-Secretary of State for Health and Social Security to arrange for them to take out second mortgages, or will she withdraw funding from the Citizens Advice Bureaux, the Policy Studies Institute and Oxford university?

Or will, perhaps, the right hon. and learned Gentleman and his party move a motion to cancel all the increases, or do they in their heart of hearts believe that they are far better with the overwhelming majority? The right hon. and learned Gentleman knows that they are far better. Otherwise, I challenge him to move a motion to cancel the increases.


To ask the Prime Minister if she will list her official engagements for Tuesday 29 March.

Does my right hon. Friend agree that the Monopolies and Mergers Commission investigation into trade union restrictive practices is most welcome? Furthermore, does she agree that those practices, whether at Dundee or elsewhere, disadvantage British industry, increase costs, damage the interests of the British consumer and are damaging to the country's interests overall?

My hon. Friend is absolutely right. All restrictive practices stifle competition and put up costs. We should do everything that we can to rid ourselves of them. That is why this matter has been referred to the Monopolies and Mergers Commission.

To ask the Prime Minister if she will list her official engagements for Tuesday 29 March.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Does the Prime Minister recall her carefully considered reply on 18 July 1985 to her hon. Friend the Member for Mid-Worcestershire (Mr. Forth), when she justified the 30 per cent. plus increase in top people's salaries by the need to provide rewards regarded by the public as fair but not generous in relation to the responsibilities carried? Bearing in mind last week's statement by the hon. Member for Kingston upon Thames (Mr. Lamont) that the reduction in the standard rate of tax is irreversible, will the right hon. Lady tell the House whether she intends to bear such adjustments in mind when she next reviews top salaries?

The report from the Top Salaries Review Body will come in with those of other review bodies, and we shall make our decisions on them, as we have done previously. I have not noticed that hon. Members have been anxious to take lower salaries.

Rover Group (Privatisation)

3.31 pm

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry
(Mr. Kenneth Clarke)

With permission, Mr. Speaker, I should like to make a statement.

I informed the House on 1 March that British Aerospace had declared a serious interest in acquiring the Government shareholding in Rover Group and that negotiations were being put in hand. British Aerospace asked that the negotiations should be on an exclusive basis. We agreed to this, provided that the further studies that it wished to carry out on Rover Group, and the negotiations between British Aerospace and the Government, were concluded by the end of April.

I promised to return and report the outcome of these discussions to the House at the earliest opportunity. I can do this today because British Aerospace has completed its investigations satisfactorily and earlier than anticipated. The negotiations have therefore been concluded and agreement reached. The rules of the stock exchange require in these circumstances that an announcement is made without delay. Today we have entered into a conditional contract with British Aerospace for the sale of the Government's shareholding in Rover Group.

Before entering into the contract with British Aerospace, we considered a number of confidential expressions of interest, but none amounted to a specific offer.

The board of Rover Group believes that this is the best possible outcome for the group. British Aerospace is strongly committed to the further development and growth of Rover Group, working with the existing Rover Group management who have made so much progress in improving the performance of the businesses. Honda told us that it welcomed the continuity of Rover Group's management team which would be assured by British Aerospace's ownership of the company. I therefore hope that the important operational partnership between Rover Group and Honda can continue to develop satisfactorily.

Without constraining British Aerospace's day-to-day management of the business, we have agreed important conditions on the agreement. British Aerospace has undertaken not to relinquish control of Austin Rover and Land Rover within five years. This undertaking is supported by legal arrangements designed to ensure that it is not to its financial advantage to do so.

I shall now turn to the main financial terms of the agreement. During negotiations it has been impressed on us by the board of British Aerospace that Rover Group operates in a highly competitive industry and that, notwithstanding the recovery in 1987, its current and prospective levels of profitability are insufficient to meet the interest burden on debt built up through many years of accumulated losses. The Government have been equally concerned that the merger of these two major British manufacturing groups should move forward only on a firm financial footing.

Since 1975, when the Government became the majority owner of British Leyland, the banks have been content to advance large sums on the strength of the Government's involvement. In order that the company is in a fit state to return to the private sector it is appropriate that we should deal with this accumulated indebtedness, which no company without similar backing could be expected to maintain. Of course, we would have had to undertake this exercise whatever route had been adopted for Rover Group's privatisation. The Government have therefore agreed that the Government will make a cash injection of £800 million into Rover Group for this purpose.

Following agreement on these steps to strengthen the Rover Group balance sheet, we have been able to conclude an agreement to sell the Government shareholding in Rover Group for £150 million.

We have also agreed with British Aerospace and Rover Group arrangements whereby £1·1 billion of Rover Group's trading tax losses will effectively be eliminated, leaving only £500 — [interruption.] — £500 million of these losses will remain to be claimed against Rover Group profits in the future. British Aerospace has also agreed that other currently available tax reliefs within Rover Group will be applicable only within that group.

I turn now to the elimination of the Varley-Marshall-Joseph parliamentary assurances relating to Rover Group's bank debts, trade creditors and other obligations. These currently total approximately £1·6 billion. While Rover Group has been in public ownership, the Government have given assurances that the obligations of the group will be met. No new obligations incurred by the Rover Group after the date of completion will benefit from the assurances. Obligations incurred between now and the completion date will cease to benefit from the assurances on completion.

The negotiations with British Aerospace have concerned only the Government's shareholding in Rover Group. British Aerospace has said that, following completion of its acquisition of the Government's shares, it will make separate proposals to Rover Group's minority shareholders in due course to acquire their shares. British Aerospace has made it clear that these proposals will be fair and reasonable and will be made after consultation with the Rover Group board and its advisers.

The agreement is, of course, subject to the approval of the British Aerospace shareholders and the completion of the normal European Community procedures. We also expect to receive the advice of the Director General of Fair Trading.

I should like to explain what progress there has been on the European Community implications of these plans. On 14 March we notified the European Commission that we proposed to deal with the necessary restructuring of Rover Group's finances. My right hon. and noble Friend the Secretary of State met Commissioner Sutherland on 23 March to explain the Government's objectives and proposals. He had a further meeting with Commissioner Sutherland yesterday. The Commission met this morning and decided to open the formal state aid procedure. I am confident that the Commission will expedite its investigation.

The agreement brings to a successful conclusion the privatisation initiative that began in earnest with the flotation of Jaguar in 1984. Since he took office in May 1986, Mr. Graham Day has presided over a remarkable period of change. The House should pay tribute to his achievements. He returned the group to an operating profit last year. He has already returned 18 Rover Group businesses to private ownership. These include the trucks and bus activities, Unipart, Istel, and Jaguar Rover Australia, which are all trading profitably under their new owners. The final step that I have announced today will fulfil our commitment to privatise Rover Group within the life of this Parliament.

In the hands of British Aerospace, Rover Group would have the best available chance of developing its independent role in the vehicle industry. We cannot afford to underestimate the contribution to the economy of the largest United Kingdom passenger vehicle producer with a turnover of £3 billion, exports of £1 billion, direct employment of 43,000, and indirect employment of two or three times that number in the component supply sector, as well as over 50,000 jobs in Rover Group's distribution networks. This will strengthen Rover Group's ability to compete at home and abroad and thus benefit all those who work with and for it, as well as the economy as a whole. I commend the agreement to the House.

Has not the Chancellor of the Duchy of Lancaster got his seasons confused? Is not Christmas, rather than Easter, normally the season for giving? Is not this astonishing statement another sad instalment in the sorry saga of the Government's long attempts to write off Britain's largest indigenous car manufacturer at any price? Is it not an act of political irresponsibility and industrial sabotage, totally lacking in industrial logic or commercial sense?

Will the right hon. and learned Gentleman confirm that he is paying British Aerospace £650 million—enough to raise child benefit by £1 per week—to persuade it to walk away with net assets worth £770 million? How can that crazy logic be justified, even in terms of this Government's ridiculous economic calculations?

Will the right hon. and learned Gentleman also confirm that, with his characteristic lack of regard for the taxpayer's interests, he is writing off £1·1 billion of debt that is owed to the taxpayer, allowing Rover and its future owners to retain enough tax losses to ensure that they pay no tax whatsoever on any profits that they may make in the next few years?

Will the right hon. and learned Gentleman comment on reports that tomorrow British Aerospace will reveal that it is short of cash itself? Is it not clear that BAe views Rover as a sort of cash cow to help it over a liquidity problem, and that instead of putting money into volume car manufacture it intends to take it out—hardly the right basis for an industry that desperately needs a long-term commitment to investment if it is to survive? What assurances can he offer the House that the investment that is desperately needed will be made by a cash-starved BAe?

Does the right hon. and learned Gentleman recognise that Rover's collaboration with Honda is crucial to its future? Does not the cancellation of the Legend project make it clear that Honda is already disenchanted, and will it not become even more disenchanted as the greedy logic and confetti money basis of the deal becomes increasingly clear?

What assurances does the right hon. and learned Gentleman have that the EEC will complete its investigations in time or in favour of this ridiculous deal?

Finally, what assurances can the right hon. and learned Gentleman give the House about the future of this vital British industry? Is not his statement a further sign that all that the Government wish to do is to wash their hands of this important industry as quickly as possible, with no regard whatsoever for the future of the work force or for Britain's industrial future in this vital area?

I did not follow all the hon. Gentleman's financial logic—if that is a fair description of the way in which he put his questions. If he is acquiring a somewhat belated concern for the interests of the taxpayer, he might reflect on the experience of the taxpayer since 1976, when the company was taken into public ownership, because during that time the taxpayer has had to pay £2·9 billion to cover the losses that have been made by the company. If the hon. Gentleman tries to convert that into other things that might have been bought by the taxpayer with that money, he will find that he reaches some spectacular conclusions.

When the hon. Gentleman comes to analyse the bargain that the Government have struck with British Aerospace, he should reflect, first, on the full terms, which I gave the House in some detail. At the moment the taxpayer is facing an obligation under the Varley-Marshall-Joseph assurances that amounts in total to £1·6 billion. On the basis that I have given, that prospective liability will be extinguished in the next few months and no now liabilities will accrue under that head.

When it comes to extinguishing the tax losses that have been accrued by Rover in the past, like several of his hon. Friends when I read it out, the hon. Gentleman totally misunderstood the implication of that. Extinguishing those tax losses means that they cannot be offset against future profits. It is to the benefit of the Exchequer to extinguish over £1 billion of accumulated tax losses, and it is worth about £400 million prospectively to the British economy. The remaining £500 million of tax losses available to British Aerospace is of use to it only against future Rover Group profits, and Rover Group has been earning those on its trading profit and loss account during the past 12 months.

The hon. Gentleman says that British Aerospace regards Rover as a "cash cow". I assume that that is his description of British Aerospace's commercial judgment that the company is a good long-term investment from which it expects to earn profits in the future. I trust that it will do so if its management is successful in developing the business.

The hon. Gentleman has no reason whatsoever for casting doubt on Honda's reaction to the deal. We have sounded out Honda, which is content that its important commitment to and involvement with the Rover Group should continue. The hon. Gentleman is irresponsible in casting doubt on that.

I advise the hon. Gentleman to go away and study the deal. It is an extremely good day for the taxpayer that we can see the end of the Varley-Marshall-Joseph assurances and extinguish all those tax losses. It is a very good day for the Rover Group and all who work in it that a company such as British Aerospace has judged that it wishes to bid for that company and that it sees a long-term future for the business.

When the hon. Gentleman talks about sabotage, he has a brass neck. During the past fortnight the activities of the trade union and labour movement have sabotaged 1,000 new vehicle jobs in Dundee. When he is faced with a deal such as this, a little modesty on his part would be rather suitable.

I congratulate my right hon. and learned Friend on the deal. Is he not doing what BAe and Rover should do? Should they not get together in the same way as General Motors, Ford and Boeing in the United States, to strengthen the production and manufacturing technology available to a combined group to compete in the world today?

I am delighted that BAe is acquiring the management talents of Graham Day, but may I have an assurance that no pay-off is involved relating to BAe's problems in financing the Airbus?

The judgment made by the management of BAe is in line with that made by other successful companies in other parts of the world. There is nothing unique about an arrangement between an aerospace company and a vehicle manufacturer.

I can assure my hon. Friend that there is no hidden deal behind the full details that I have given the House today. In particular, our arrangements with BAe on its aerospace business remain as they have been: a close pattern of partnership.

Is it not unfortunate that the Secretary of State for Trade and Industry is not a Member of the House of Commons, which has pre-eminently the right to discuss economic and financial matters, and to which the Secretary of State might then be personally accountable?

Is the right hon. and learned Gentleman aware that the Public Accounts Committee may well wish to examine the justification for the sale, and will certainly want to distinguish between the Government's right to produce policy objectives and the right of the taxpayer to be sure that his money is protected?

This is a collective decision by the Cabinet and the Government. The Government are, of course, answerable to the House for their decisions, and are certainly accountable to the House for the way in which they look after public money and the taxpayer's interests. They have absolutely nothing to fear from an examination of the arrangements by the Public Accounts Committee. If the Committee wishes to take evidence, we shall welcome the opportunity to explain further.

May I turn from the politics of the Opposition to the jobs of my constituents, and the constituents of many other west midlands Members?

I welcome the early timing of the announcement to relieve uncertainty. May I ask, however, whether out of the "dowry", if I may describe it thus—in view of the expression
"committed to the further development of Rover Group"—
any commitment was sought for the replacement of the Metro car, which accounts for two fifths of the Rover Group's sales and is the only Rover car in the country that is in the top-selling bracket?

I can assure my hon. Friend that BAe has told us that it looks on its acquisition of the Rover Group as a long-term investment and is committed to the maintenance and development in the longer term of the group's present business. It would clearly be wrong for the Government to impose constraints and commitments on the management of the group when it must make its own decisions on capital investment and on its future.

I am in no doubt that BAe has acquired the business to develop and maintain it. Obviously, it will address itself —together with the Rover Group management which is joining it—to the future well-being of the business and the shape of the product range.

Does the Minister agree with his noble Friend Lord Bruce-Gardyne, who has described these as "golden giveaway terms"? Does he agree that the Government are paying BAe to take the Rover Group off their hands just as it is becoming profitable, and will he at least guarantee that the Government's golden share of 15 per cent. in BAe will be maintained?

It is now clear to the electorate that, whatever else may be the case, investments in the economy are not safe in the Government's hands.

If those comments by Lord Bruce-Gardyne are accurately quoted, I flatly disagree with them. I advise the hon. Member for Truro (Mr. Taylor) and my noble Friend to study the terms more closely and to consider the full extent of the contingency liabilities and obligations that the taxpayer now faces in owning the Rover Group. As a consequence of the deal, we will extinguish all those assurances and all the excessive tax losses, and will return the company—on a sound basis—to the private sector, where it has a better prospect of thriving in the future. The arrangements for the golden share in British Aerospace remain unaffected and stay as they have always been announced.

I thank Leslie Crowther for that statement, which is the industrial equivalent of the 5p cemetery. What will the Minister say to give any confidence to the workers of Rover, given that BAe has just announced its intention to reduce its costs by one fifth in the next two years and by a further one third in the following two years? Since Rover and BAe are both heavily dependent on export markets, and are therefore vulnerable to the falling dollar, what guarantees is the Minister giving today for the jobs of Rover workers against the background of that economic cutback? With an increased tendency towards sweating in Ford, Jaguar and Land Rover, is it not a fact that car workers' trade unions will have to strenghthen their organisations to fight the battles ahead?

British Aerospace is in a highly competitive market in both its civil aviation and military business. Therefore, I have no doubt that all those with the interests of BAe at heart will welcome the commitment of the management to bring down, and keep down, its costs and remain competitive, which I am sure it will endeavour to do. The guarantee of jobs that the hon. Gentleman seeks cannot be given, except in the context of looking for jobs to be assured by continued success in the market place. It does not matter who owns the company, whether it is a public sector or private sector owner, of whatever sort. The well-being of the company and those who work for it depends on its continued success in the market place and the continued improvement in performance that we have seen under Graham Day's leadership in the past 12 months.

The idea that the organisations representing car workers need to be strengthened does not instantly come to my mind. What is needed is for the organisations representing those workers to come up to date with the 1980s and realise that the attitudes that they have displayed recently in the face of an attractive Ford investment proposal in Scotland will set the car industry in this country moving backwards, rather than forwards.

Will my right hon. and learned Friend accept that this is a welcome end to a disastrous story that was started by the right hon. Member for Chesterfield (Mr. Benn) when he put together two companies that should never have been together? Is it not a vindication of the Government's policy of a step-by-step privatisation of the original British Leyland group, culminating in this arrangement with BAe? In fact, the paying of £800 million is a good deal when it gets the taxpayer off the hook for a £1·6 billion guarantee. The taxpayer should be rejoicing, and we should be wishing the firm every success in the future.

I am grateful to my hon. Friend for his comments. It is a remarkably successful outcome to the Government's attempts to prepare the Rover Group as a whole for a return to the private sector. I agree that we should look back with relief to the ending of a period during which almost £3 billion has been expended by the taxpayer on covering losses in that group, when we all know how £3 billion of taxpayers' money could have been put to other purposes had the group not been performing as it was.

On the matter of the £800 million, the fact is that the bank indebtedness of the company was allowed to accrue only because the Government were standing behind it. No other company trading in the same way as the Rover Group could have built up that bank indebtedness. It is simply not reasonable to expect it to be taken on by any new purchaser. That would have applied however we had eventually moved to privatisation of the group. Therefore, we have extinguished that bank indebtedness but, at the same time, as my hon. Friend the Member for Surrey, North-West (Mr. Grylls) points out, we are getting rid of all sorts of other liabilities for the taxpayer which cannot be brought to an end except by successful privatisation of the sort that I have announced.

Will my right hon. and learned Friend recognise that BAe buying Rover is a remarkable achievement for a privatised company —British Aerospace—encouraging first Royal Ordnance plc and now Rover into the private sector? Will he recognise that in writing out a contingent liability we are saving potential damage to the taxpayer? In recognising that the fortunes of the company are bound to be significantly improved in the private sector, we are now certain that the company can continue to expand as it has done so dramatically since it was first privatised.

I agree with my right hon. Friend. As a result of the changed industrial climate and the Government's economic policies, we have seen a powerful manufacturing group emerge composed of what were fairly unsuccessful nationalised industries only a few years ago. Every responsible hon. Member must wish that this great group will go on to be a very powerful manufacturing force in the British economy.

As BAe needed Government help to fund its contribution to Airbus development a year ago, how will BAe find the money to finance new model development at Rover Group in future? What assurances, estimates or forecasts has BAe given the Government about jobs at Rover Group in view of the tremendous job losses that have taken place at BAe since it was privatised?

I do not know whether the hon. Gentleman is, by implication, criticising the provision of launch aid for the Airbus project. Launch aid is in no way a subsidy. It is aid to develop a product which has a particularly long lead time before it can produce any returns. It also enables BAe to engage in the Airbus project, which is still at a fairly early stage of development in the civil aviation market. However, launch aid is not a subsidy, because there are agreements attached to launch aid whereby it will be repaid on terms that will show a return agreed in advance with the Government. There is no way in which a comparison can be drawn between that aspect of financing civil aviation and the capital needs of a vehicle business. Of course, the company will have to look to its resources and ability to raise money on the assets to finance its future model development. That is inevitable in that business as in any other.

The loss of jobs in BAe is the inevitable result of the competitive pressures on the company. However, the security of jobs in any business depends in the end on the ability of the business to remain competitive and its ability to produce products that it can sell successfully in the market place. No nationalisation process can get round that.

Within the agreement between BAe and the Rover Group, has there been an agreement on management contracts for the most able members of the Rover board? Was any other organisation prepared to put up more money than BAe for the Rover Group?

I cannot, of course, give details of the contracts of individual managers with the new company, any more than I could give details off the cuff of existing management contracts. I know that BAe regarded the existing management of Rover Group as one of its assets, and it intends to continue to work with the existing management. This will cause the minimum of disruption to those engaged in the company. We did not receive any offers from anyone else. We received some expressions of interest, but they have proceeded no further. We have reached a satisfactory conclusion to our negotiations with BAe.

This appears to be a very generous settlement for BAe. It is getting Rover Group on the cheap. In return for this generosity, what specific assurances has the right hon. and learned Gentleman secured for the future investment in model development and the continuity of Rover's presence in the volume market? What form will the legal agreement over relinquishment take? What has happened to the £80 million from the pension fund which the workers contributed to the Rover Group balance sheet? In view of the importance of this matter for jobs and industrial success in my constituency and elsewhere, should we not have a full debate on this issue as soon as possible?

I have not the first idea what price the Opposition think they would have negotiated in such a deal had they embarked upon one. I suspect from some questions from other Opposition Members that they have not yet fully absorbed the details of the very successful bargain that has been struck between BAe and the Government in reaching this arrangement.

We have not imposed requirements on the purchasers of the company about model development or the volume that it should seek in the market, because we believe that it is contrary to the interests of the company and everyone working in it to attempt to put those political constraints on the management's ability to manage the business in the best interests of the company and those who depend on it.

The pension fund in the Rover Group accumulated a surplus. Together with a large number of other companies, the group is taking a tax holiday on contributions with regard to the company and increasing the benefits to the members. The employers and the employees have both contributed to the pension fund. I understand that both are now benefiting from the fund's good performance and there have been improvements to the benefits, for which credit should be given.

As I told the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) a moment ago, the Government would welcome the opportunity to explain the position to the Public Accounts Committee, if the Committee regarded the matter as important enough to look at, and we would certainly welcome a debate on the Floor of the House. I am sure that my right hon. Friend the Leader of the House is ready to arrange a day for such a debate, through the usual channels.

I welcome the conclusion of the negotiations. My right hon. and learned Friend will be aware that Austin Rover is the tip of a manufacturing iceberg, because thousands of component suppliers throughout the midlands, and indeed the country, feed into the two main assembly plants. They have geared production for an output of 500,000 cars per year. Is my right hon. and learned Friend satisfied that the new management of BAe has the financial backing and commitment to ensure that such volume manufacturing will continue and, with it, the prosperity of large chunks of our manufacturing businesses?

Throughout the negotiations, we have been conscious of the interests, to which my hon. Friend rightly draws attention, of the component suppliers and the distributors, and the tens of thousands of jobs that are indirectly dependent upon the Rover Group's business. I think that they will welcome the outcome of these negotiations because we have achieved the conclusion of the privatisation process without disrupting business or creating any excessive uncertainties. My hon. Friend will remember that when various other bidders were rumoured to be in the field two years ago and there was uncertainty, the company lost £250 million-worth of sales, 2 per cent. of its market share, which it has never recovered, and there was considerable alarm among dealers and component manufacturers. This has been a smooth process which has had their interests very much in mind.

The continued volume of production and success of the business depends entirely on the success of the management and work force in maintaining and improving their position in the market place. We believe that the privatised company will be much better placed to compete in that market place than it would be if it continued in public sector ownership.

Will the right hon. and learned Gentleman kindly answer the question asked by my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) about whether he or the Government have received any estimates or forecasts of the effect of this deal on the employees of the Rover Group, and perhaps its suppliers? Does he agree that, just as BAe must put the matter to ballot of its shareholders, it is only fair that the Government should put it to a ballot of their shareholders—the electorate?

I made it clear a moment ago that we have not entered into detailed commitments about the future shape of the business, except that BAe has made it clear that it has bought the company as a long-term investment and is committed to its continued development. The total number of employees engaged in any particular occupation will depend, as I keep saying, upon its success in the market place. I am in no position to make forecasts about that for anything more than the immediate future. The acquisition in itself has no effect upon employment prospects in the group, except to give a little added security to those who work there because of the potential benefit of the company being free to trade as a private sector company.

I have no intention of embarking on a referendum on this subject. The judgment of the people might be a little more reliable than that of the Labour party, but I fear that the period of uncertainty during the referendum would do a huge amount of damage to the business and all those dependent on it.

Will my right hon. and learned Friend accept my congratulations on the speed as well as the success of the negotiations that he has led? Perhaps those congratulations should also go to that hard-working team of officials who serve him so well. Will he lift his uncharacteristic shyness on two aspects? Will he comment further on, first, the Honda association and the joint projects undergone by Honda — not just the management commitment, but the project list — and, secondly, on the competitive business within the European Community? My right hon. and learned Friend referred to the opening of the European processes. Does he have some confidence that they will be closed favourably at the appropriate time?

I am grateful to my hon. Friend, who had responsibility for this business at more difficult times. As he was so successful in assisting the company through those difficult times, I am sure that he is as delighted as I am to see the project come to such a successful conclusion with this privatisation

We have ascertained that Honda is perfectly content for the acquisition to go ahead. Indeed, it appears to welcome it. It would have been somewhat worried if a car manufacturer had shown an interest in the group, but we have had no offer from any car manufacturer. Honda has shown its willingness to continue to collaborate model by model with the Rover Group, which has been important to the group in the past.

Processes within the EC will inevitably take a little time. All the other member states have to be given the opportunity to comment on the state aid element of what we propose. We have the Commission's agreement to expedite that process as quickly as possible, and I hope that it will be concluded within the next few months.

Is it not true that, while BAe is paying £150 million, the tax loss concession is worth £175 million to it, so it ends up with £25 million in hand? Has not the right hon. and learned Gentleman handed an inquiry to the Public Accounts Committee on a plate? Is it not true that the only people who who have benefited from this matter in the past few days, and indeed, today, are those who are speculating in BAe's shares who have pre-empted this decision and who will inevitably make a substantial gain?

The hon. Gentleman is a member of the Public Accounts Committee and no doubt he will have an opportunity to put forward those arguments again. I remind him that the taxpayer is guaranteeing £1·6 billion-worth of bank and trade creditors who have been dealing with the company on that basis until now. Those liabilities will be extinguished over the next few months. For the moment, because of its losses, the group has accumulated £1·6 billion-worth of tax losses, which could be offset against any future profitability of the group, at great expense to the Exchequer. We have extinguished over £1 billion-worth of those tax losses, and that in itself saves the Exchequer a contingent liability of about £400 million. When the hon. Gentleman looks at the deal more closely he will see that it is a bargain for the taxpayer, that proper accountability can be mantained for the public interest and that it is good news for BAe and those involved in the Rover Group.

Will my right hon. and learned Friend give a clear assurance to the House that any future application for launch aid by BAe will in no way be affected by its link with the Rover Group, whether or not the Rover Group is running at a profit at the time and whatever means of financing the Rover Group is being conducted by BAe?

I am not anticipating any early application for more launch aid from BAe, because we have only recently concluded the launch aid arrangement for the A330 and A340. If any future launch aid applications are made, we shall look at them on exactly the same basis as we have looked upon past applications in the light of our statutory obligations and our judgment whether they are justified in order to get a project under way in the interests of the national economy. I can assure my hon. Friend that the agreement that I have announced today in no way affects our dealings with BAe on the other parts of its business.

Will the Minister explain the logic of the sequence that when private companies go bust they are taken into public ownership to protect jobs, with taxpayers' money they are turned into profit, and then, when they are in profit, they are handed back to private enterprise? All the industries that have been nationalised in the past 20 years have been badly run in the private sector. What guarantees has the Minister that this enterprise will be better run in the private sector than it presently is in the public sector?

I do not want to give too long an answer to explain the sequence of events. I am sure that hon. Members will recall the background. The economic and industrial climate in the country was quite disastrous to the success of any major manufacturing industry. There was raging inflation, large public sector deficits and a steady loss of competition in international markets. Car companies were overmanned and inefficient, with over-powerful and out-of-control local trade union leadership encouraged by the Government of the day to continue to obstruct any moves towards real competitiveness and higher efficiency. The Government then nationalised the company to protect it against reality and to subsidise continued over-manning and inefficiency. Nearly £3 billion-worth of taxpayers' money was lost in covet-mg the losses.

Then a Government came in who were determined to improve the climate of British industry, to back up the management that wished to turn the company around, and to support Graham Day and his team in their efforts to produce the first trading profits. We are now putting the company back where it belongs, in the private sector, in an economic environment that is very attractive to the whole of British manufacturing industry.

Does my right hon. and learned Friend agree that two fundamental points are being missed? First, the Rover Group has been purchased by a British company, which is important. Secondly, looking at the balance sheet of the Rover Group, and bearing in mind that my right hon. and learned Friend certainly is not in a seller's market, he and his Department have achieved a very good deal indeed for the taxpayer. Will he confirm that when he approaches the Commission, he will argue that Renault recently had 1·2 billion-worth of debt written off by the French Government, with the approval of the Commission? When he argues under articles 92 and 93 of the treaty of Rome, will he use the same arguments to gain approval for the deal as the French Government used?

I share my hon. Friend's pleasure at the fact that the company that made an offer to the Government for the Rover Group is a British company and one of our major manufacturing companies. That is welcome indeed. I agree that the deal that we have struck in selling the Government's shareholding is reasonable and fair and perfectly advantageous to the taxpayer and to the companies involved.

When we go to the European Commission we shall point out that the state aid that we shall be providing will be part of the process to return the company to the private sector, where we expect it to thrive in a competitive environment. Therefore, I trust that the Commission will look favourably upon the suggestion as a logical step in getting rid of a history of subsidy and loss and enabling the company to enter a privatised setting, which ought to be consistent with the whole policy of the Community towards the European market.

What is so special about British Aerospace, which is declaring redundancies in my constituency, that it has managed to get the Government to suspend their normal policy of allowing free play of the market in competition and getting a splendid bargain because it happens to be the first in the queue to ask for it? Bearing in mind that it took a long time for the Government to decide to give launch aid, even as a loan, it is surprising that the decision was reached so quickly. May we look forward to the day, as the owners of Rover, that the company will ask for launch aid for new models? Will the taxpayers have such a bargain when that is taken into consideration?

British Aerospace has reached this successful conclusion because it was the first company since the election to put the proposition to us that it wished to acquire a company which everyone knew we proposed to privatise. We gave it exclusive negotiating rights for a period because we feared the disruptive effects on the business if everyone began making bids for it and created a great air of uncertainty for the company, its component suppliers and distributors. I am sorry if the hon. Gentleman finds the speed of the negotiations disconcerting. It is true that for a change this piece of business has been conducted with reasonable secrecy, expedition and good sense on all sides. That is the way in which good government should be conducted.

I thank my right hon. and learned Friend for the excellence of the arrangements, and particularly for the fact that a formula has been found to keep the company British. I would have thought that that would find complete accord with my colleagues across the Floor. Will the understanding and the obligation given that the company will remain in the present hands for the next five years also apply to all subsidiary parts of the company, including Land Rover? This would allow for the further protection of the employment of my constituents.

My hon. Friend represents Yardley in Birmingham and I am sure that his opinion coincides with that of the vast majority of the people who live in Birmingham whose well-being depends to a large extent upon the industry. We will have to wait to see, but my expectation is that this arrangement will be welcomed by the work force and by all those who work in the area and are dependent on the Rover Group for business. Most will share my hon. Friend's view of the purchaser and welcome the fact that British Aerospace has been the successful purchaser. We have entered into an agreement whereby British Aerospace will not be able to sell the whole business or any substantial part of it during the five-year term. I am certain that it will not be able to sell off Land Rover separately during the five-year agreement.

Will the Minister help us by clarifying paragraph 3 of his statement:

"Before entering into a contract with British Aerospace we considered a number of confidential expressions of interest, but none amounted to a specific offer"?
How could there be a specific offer from anyone if no one had the information on which to base the offer, which was exclusive to British Aerospace? Was there any interest from Ford, and did Ford express any annoyance at the way in which it was treated over Austin Rover?

I cannot disclose commercially confidential approaches to us. I certainly cannot start disclosing the nature of the representations made to us by different companies or identify the companies involved. As I have said, we had various expressions of interest, but none of those amounted to an offer. —[Interruption.] The hon. Gentleman has given an explanation of why, perhaps, there was no offer. I have explained to the House why we felt that it was right to agree to the request of British Aerospace and Rover Group that there should be a period of exclusive negotiation with British Aerospace. The alternative would have caused considerable uncertainty to all in, and possibly disruption to, the business. Therefore, we pursued exclusive negotiations, which have come to a successful conclusion. No one could complain about that.

I am not prepared to disclose the nature of our exchanges with individual companies or to identify those companies. Such approaches are commercially confidential.

Does my right hon. and learned Friend find as surprising as I do the degree of hypocrisy and synthetic attitude of many Opposition Members, including the hon. Member for Dagenham (Mr. Gould), in particular about foreign ownership? Will he confirm that this must be the best offer for the 45,000 people working at Austin Rover? Does he agree that the need for a secure future for the 51,000 people working in the distribution network, and the hundreds of thousands who work in the components industry, is often forgotten? Finally, does he remember the great opposition from Opposition Members to Land Rover going to General Motors and Austin Rover going to Ford, and does he agree that the solution for a good British company bringing in technical skills must be the best possible solution?

I agree with my hon. Friend. I am sure that had there been privatisation with another company there would have been wild indignation from the Opposition if another car manufacturer had expressed an interest, or an overseas company had expressed an interest. They are pressed to find objections to British Aerospace, which is a rather popular and successful company. As far as I can see, their main criticism has been about the terms that we struck. They are trying to convince the House and the public that the Labour party would have struck a more successful privatisation deal with some unknown purchaser—an unlikely concept.

With regard to my hon. Friend's last serious point, it is particularly good news for all those who work in the components industry. There will be more jobs in the industries that provide the components for the Rover Group, such as Unipart, than there are in the Rover Group itself. The smooth transition from one ownership to another, with no threat of disruption to the business, will be welcomed by all those interested in the components industry.

Order. I must have regard to the fact that there is to be another statement after this one and that there is a very heavy day in front of us. I shall allow questions to continue for another five minutes and then we must move on. I say now, rather than at the end of this statement, that I shall consider calling those hon. Members who are not called now when this matter is debated on another occasion. I ask for brief questions, please.

The Minister has told us that Rover's debts are £1·6 billion. What are the company's assets, and how do they compare?

In December, the net asset value was £334 million, but I must ask the hon. Gentleman to await the report and accounts of the company and the balance sheet that will eventually be put to British Aerospace shareholders for a further and an up-to-date figure.

When my right hon. and learned Friend considers the remarks of the Opposition, will he remember that they reached the zenith of their financial control with the operation of the National Enterprise Board? Is my right hon. and learned Friend aware that other large motor manufacturing companies have billions of pounds worth of invesment lined up to produce new models and new developments? Does he therefore accept that the terms that he has announced today are barely enough, if enough, to ensure that Rover escapes permanently from the public sector?

I entirely agree with my hon. Friend's comments about the Opposition's record when they were in government. It bears no comparison with our own. I agree also with his final judgment that their attacks upon us show complete schizophrenia. One moment they object to the fact that we are injecting cash to eliminate £800 million of bank debts that would never have been accumulated if the company had not been in the public sector, and the next moment they suggest that the new group will not be strong enough to raise the capital to invest in new models. Had we handed this company to anybody without doing something about the scandalous level of debt that it has been allowed to accumulate when it was under public sector control, it would have been in considerable difficulties. That is why it is a perfectly sensible bargain to get those debts out of the way before the company is returned to the private sector.

Will the Minister not be so dismissive about the interests of the workers in the company, particularly in relation to the pension fund? Is he aware that today car industry workers are far more alert and aware of the consequences of the pension fund? Recent industrial action in the car industry was not about wages and conditions; it was about pensions. The Minister has been far too dismissive this afternoon of the fact that it is his responsibility to ensure that the interests of the workers in the pension fund are fairly dealt with. There is evidence that the "increases" in no way reflect the amount of the increase in the pension funds.

I am extremely concerned —as concerned as the hon. Gentleman—about jobs in the car industry and about the well-being of the work force. My opinion is that the position of the work force in this company will be made better, not worse, by transferring the company to the private sector, where it will have a better chance of thriving in the market place. One reason why we are acting as we are is that we believe that privatisation is in the interests of commercial organisations and of all those whose livelihood depends upon them.

The last time that we had an exchange on the pension fund I made inquiries to find out what the dispute was about over the Rover Group's pension fund. It seems to arise from a misunderstanding of a perfectly ordinary process, whereby a pension fund has accumulated a surplus that has been earned on the investment of both employer and employees. The employer and the employees are benefiting from that surplus by way of a holiday on contributions for the employer and improved pension benefits for the members of the fund. That does not justify a strike in the car industry or in any other industry, and I trust that the hon. Gentleman will not lend his support to groundless strikes in this or in any other industry.

Is my right hon. and learned Friend aware that he has secured a very good deal for the British taxpayer, in the sense that he has found a willing buyer for the Rover Group? Does he recall the uncertainty that prevailed just two years ago and the damage that was done to the business of the company at that time? Will he contrast that with the excellent way in which he has concluded this deal, which guarantees British ownership?

I am grateful for my hon. Friend's judgment of the bargain that we have struck, and I have every regard for his opinion in these matters, which is more accurate than that of our critics on the Opposition Benches. I also agree with my hon. Friend that most people outside the House will welcome the fact that the successful purchaser is a great British company and that it is a major exporter of manufactured goods from this country. I am quite sure that the opposition from the other side of the House would have been very strong if anything else had occurred.

On the last occasion, when we did not proceed in a different way but when rumours emerged about the interest of other companies, the effect was devastating, and in a period of about two months the company lost 2 per cent. of its market share, which it has never recovered. This time, the comparable confidentiality, the expedition of the negotiations and the fact that we never declared open house to all the other bidders has been to the great advantage of the company and of all those who work for it.

What are the legal arrangements that are allegedly designed to make it not in the interests of British Aerospace to sell within rive years, and how enforceable are those arrangements? How can the Minister possibly say to the House and to the nation that he has obtained the best possible offer when he did not provide to any company other than British Aerospace the information that would have been needed in order to obtain appropriate offers from anyone else, including Ford?

We have attached terms to the injection of cash into the Rover Group so that, even if there were to be a sale within five years, the first £650 million of any profit would go the Government? It would not therefore be in the financial interests of British Aerospace to avoid that term. If it attempted to use the tax losses over and above the £500 million that remain, then, pound for pound, that benefit would be taken back by the Treasury, so again it would not benefit the company if it sought to do that.

The hon. Gentleman also asked why we gave no other company the opportunity to make an offer. If we had provided everybody else with such an opportunity, we should have run the risk of causing great uncertainty and disruption to the business.

Is my right hon. and learned Friend aware that in 1960 we produced 14 times the number of cars that were produced by the Japanese, but that by 1979 they were out-producing us by eight to one? Have not the British car industry, the British car worker and the British taxpayer paid a heavy enough price already for the years of union plutocracy and the emasculated management of the car industry? Is not this, under very difficult circumstances, an extremely good deal?

I agree with my hon. Friend. In 1988 the vehicle industry in this country is being completely transformed. That has to be compared with the position in the late 1970s, when the Government of the day intervened and poured taxpayers' money into the industry to enable it to remain uncompetitive, overmanned and inefficient, in the belief that somehow that would safeguard jobs in the industry. One sees that there are plenty of Opposition Members who fondly imagine that that is the right way for a Government to behave towards an important commercial undertaking.

Can the right hon. and learned Gentleman assure the House, preferably with the authority of his right hon. Friend the Leader of the House, who is sitting beside him, that there will be a full opportunity to debate this extraordinary statement during the week that we return from the Easter recess, particularly so that we can press him for the answers that he has notably failed to give us this afternoon on such issues as the prospective job losses, which the Rover Group must surely have discussed with him? Is he aware that, in the absence of any such assurance I shall ask you, Mr. Speaker, to consider an application this afternoon under Standing Order No. 20 for a debate forthwith?

The Lord President of the Council and Leader of the House is sitting beside me, and he has intimated that he will welcome an opportunity to discuss, through the usual channels, the possibility of a debate on this matter. I do not think that he would want me to bind him to exactly when that debate is to take place, but I am sure that he has taken on board the request for an early debate. I personally would welcome such a debate.

I realise that the details of this deal are complex but I attempted to be as explicit as possible in my statement. It is remotely possible that when people have studied the details they will not wish to press for such a debate, but if they do so we shall be happy to debate the matter once more. I look forward to taking the matter further. I hope that by the time we hold our debate I shall have more encouraging news about our progress towards making this conditional agreement a final agreement—as we make progress with the European Commission and as we move towards the general meeting of British Aerospace shareholders.

Urban Policy (Scotland)

4.29 pm

With permission, Mr. Speaker, I should like to make a statement about urban policy in Scotland. I am today publishing a document entitled "New Life for Urban Scotland" which explains our policies and sets out our plans for major new initiatives. Copies are available in the Vote Office and have been placed in the Library.

Since the 1970s much has been done to revive Scotland's urban areas and in particular to bring new life to inner-city areas, for example through Glasgow Eastern Area Renewal in Leith and in Dundee. It is generally agreed that Glasgow and other areas of Scotland are being transformed. But in the 1980s it is the people living in the large peripheral estates who are suffering most from choice in the type of housing they occupy, who have the least say in running their communities, and who are most dependent on state benefits and services.

In drawing up our proposals, we have carefully examined the lessons of recent experience. Future action will therefore be firmly based on the principles of helping residents take more responsibility in various ways for their communities, of full involvement of the private sector, and of partnership between different public bodies and the private sector.

It is especially important that we renew the self-confidence and initiative of local people and help them to assume increased responsibility for their communities. The way is open through, for example, involvement in training opportunities, tenant co-operatives, housing associations, school boards, small businesses and self-employment. It is essential that residents are fully involved and committed to plans to regenerate their areas.

The private sector has already demonstrated the important part it can play in bringing back new life to deprived urban areas. The Government are committed to increasing further their involvement, both through our wider economic policies and through encouraging investment in deprived areas. It is part of the task of both central and local government to create a climate in which the private sector feels able to invest. We hope the private sector will examine with enthusiasm the scope for investment in areas currently neglected. We want to see it involved from the outset in new urban regeneration initiatives. There are opportunities for investment which would both be of benefit to the private sector and make a major contribution to the economic and social regeneration of these areas.

For the Government's part, there is in place in Scotland a strong array of instruments to pursue urban renewal. some £500 million will be spent on urban renewal in Scotland in 1988–89, over and above local authority spending. The Scottish Development Agency is using its comprehensive powers in many places. Last year it spent £62 million on urban renewal. Urban renewal is a major priority in its corporate plan over the next few years.

The urban programme will spend £44 million this year, an increase of £6·4 million. We are announcing today approval of 225 urban programme projects, worth £8·9 million. Scottish Homes is soon to be created as a new and important housing agency, which will work alongside the SDA in pursuing urban regeneration. It will build on the expertise of the Housing Corporation and the Scottish Special Housing Associaton, which between them spend over £125 million per year on urban renewal and which fully support the proposals that am announcing today.

In addition, we are announcing today that £25 million is being specifically earmarked next year for new housing-related urban regeneration initiatives by the Housing Corporation. This replaces the original figure of £12 million referred to in paragraph 45 of the document. As announced on Friday, we have also just issued extra housing capital allocations to district and islands councils totalling £77 million, as a result of the popularity of council house sales. Policies on health and social services, crime, education and training provide special support to areas of urban deprivation. Enterprise is to be encouraged through the wide network of enterprise trusts, the enterprise allowance scheme, training and the new range of regional assistance. The Manpower Services Commission will spend some £250 million in urban areas, which will contribute to urban renewal.

With so much already happening, the Government's first aim is to sustain the momentum. But this is not enough; over the next 10 years a new priority must be given to tackling the problems of the peripheral estates. The Government will therefore establish a number of initiatives which will simultaneously pursue economic, environmental, housing and social objectives in peripheral estates. Four major new initiatives will be located in Castlemilk in Glasgow, Ferguslie Park in Paisley, Wester Hailes in Edinburgh and Whitfield in Dundee, subject to consultation with the local authorities and other bodies concerned.

Partnership will be required for taking forward these initiatives, involving the local community, the Government, the SDA, Scottish Homes, the local authorities, the private sector, the health boards, the MSC and other public bodies. The Scottish Office will initiate the development of such partnerships over the next few months and will be responsible for steering their progress. Ministers will be directly involved. The Government will look to the SDA and, in due course, Scottish Homes, to play a leading role in implementing the initiatives, and the initiatives will need a local base in the communities themselves.

Moreover, the SDA, with local authorities, the Housing Corporation and the private sector, has plans well advanced for smaller-scale local initiatives in peripheral estates at Barlanark in Easterhouse, Glasgow, Forgewood in Motherwell and Tulloch in Perth. These pilot initiatives are aimed at revitalising these estates through action on housing, employment and the environment. The public and private sectors will contribute an estimated £45 million to these smaller new pilot initiatives. The SSHA, in consultation with the Housing Corporation, also has in hand an important housing initiative in Castlemilk, which will cost several million pounds.

We expect that these new initiatives will make a major contribution to tackling the characteristic problems of urban decay and will set a pattern for urban regeneration in Scotland into the 1990s. The work of urban renewal in Scotland, however, will extend more widely than these outlying estates, and the policies which we have set out are aimed at bringing new life to cities and towns throughout Scotland.

After all the advance publicity and public relations hype, this statement is a sad anticlimax. What can we say? It is a beautifully produced brochure; it is glossy; it is splendid in its layout; but, sadly, it contains nothing. There is little hope here for those struggling with the effects of urban deprivation. The statement that the Secretary of State has made takes us no further forward. It deals in banal generalities.

Is financial provision not the key? And what have we been given, apart from a gathering of bric-a-brac from the past ingeniously packaged to give the impression of generosity? What new money is included over and above what has already been announced, and what new money is coming directly from the Government? How can anyone be impressed by talk of an additional £77 million for housing authorities when this depends entirely upon receipts? Glasgow's nominal share is £11 million, but all of it is to be found by selling assets. There will not he a penny, as I understand it, from the Government.

Is it not a fact that capital spending on housing in the public sector was scheduled to fall between 1987–88 and 1988–89 from £556 million to £505 million? The one specific addition that I can detect in this document, which is an additional £13 million for urban regeneration, announced today, still leaves in effect a cut of some £38 million between this year and next year. This whole presentation has been a mirage and a confidence trick.

We are promised four new initiatives; it is stated as a bald fact. But where are the details on structure or on funding? We are told that it is too early to specify what these initiatives will cost, clearly because neither the right hon. and learned Gentleman nor his advisers have thought out what is to be done. The document discouragingly warns that the overall level of expenditure on urban regeneration will be determined annually through the public expenditure machinery. On top of that, we are promised that Ministers will be directly involved. There is certainly little to cheer about there.

The Secretary of State boasts about the role of the private sector, but there is not a name to be seen, no hard information, no figures. Unlike the Chancellor of the Duchy of Lancaster, he cannot even promise breakfast for the eager entrepreneurs.

Will the right hon. and learned Gentleman accept that we welcome any initiative that involves all the relevant agencies, including local government, is properly funded and does not represent a takeover bid againt the wishes of the local community? There is absolutely no guarantee in this document or in this apology for a statement that those criteria have been met.

Does the Secretary of State recall that he and his colleagues have recently been given to quoting the Grieve report? Has he read the committee's final statement, published yesterday? If so, did he notice its view, on the question whether finance could realistically be expected from the private sector to tackle the problems of urban deprivation, that
"the Scottish Office produced no evidence of a conclusive or even convincing character and obscurity remains"?
Is that not a fair and balanced judgment on today's shoddy exercise in window dressing?

I can now see what the Glasgow Herald meant this morning when it said:

"Labour's problem is that it opposes everything and appears to have nothing constructive to say."
That sums it up more eloquently than anything that I could possibly say.

I noticed that towards the end of his remarks, the hon. Member for Glasgow, Garscadden (Mr. Dewar) said that the Opposition would welcome any new initiatives that sought to work with the local community and to provide partnership between the public and private sectors, leading to proper provision for the problems. The hon. Gentleman should be aware that that is exactly what the statement does.

I would make the following points in answer to the hon. Gentleman's questions. First, the hon. Gentleman was right to say that, for the most part, we are not talking about new money — [HON. MEMBERS: "Ah!"] No, because resources have not been the problem in the past. Hundreds, if not thousands, of millions of pounds have been invested in Glasgow's housing and in the housing stock of local authorities throughout Scotland. If we are faced today with these appalling problems on peripheral housing estates, as Professor Grieve concluded, resources by themselves will not solve the problem unless we know how to use them adequately.

It so happens that the statement includes about £25 million of new resources to be used by the Housing Corporation. Much of it will be available in the four areas in which the initiatives are to take place. I take pride in the fact that those additional resources are available because of the popularity of the Government's policies of house sales. Tenants have responded to the Government's policy and as a result we can now reinvest the resources into the housing stock in a way that gives double chargrin to Opposition Members. They are upset and annoyed that tenants are buying their houses and that the money is going back into housing to improve the remaining housing stock. I can understand their disappointment, but they cannot expect anyone else to share it.

Secondly, the hon. Member for Garscadden said that he of course welcomed any new initiatives but believed that there was nothing in these initiatives to be welcomed. It will be interesting to see whether Glasgow district council shares his view and whether Edinburgh district council and other local authorities declined to co-operate on the grounds that there is nothing in the proposals to benefit the housing estates in their localities.

The hon. Gentleman is now trying to withdraw that insinuation, but he cannot have it both ways. If local authorities believe that the proposals do not represent any significant new initiative, they will doubtless show complete disinterest. But the hon. Gentleman knows as well as I do that if local authorities have the interests of their tenants at heart they will welcome these initiatives.

Finally, the hon. Gentleman asked about the Grieve report. He will appreciate that Professor Grieve identified what the Government have been saying for a long time — that single-tenure housing estates are one of the causes of the problem. Professor Grieve recommended that Glasgow district council should dispose of up to 25 per cent. of its total housing stock, and up to 50 per cent. in the peripheral areas, to have any prospect of resolving the social and economic problems in those localities. If the hon. Member for Garscadden quotes Professor Grieve, I hope that he supports the report's analysis.

Order. I remind hon. Members from Scotland that we have a day ahead of us in which they are heavily involved. It may just be possible—I cannot be certain—that some of their questions to the Minister could be raised in the debates to come. I ask them to ask brief, preferably single, questions, so that we do not delay too long.

Does my right hon. and learned Friend agree that the attitude of the Opposition to any new initiative, whether in housing or Ford at Dundee, is utterly depressing and negative? Will he accept my congratulations on his new policies and, realising that they are so popular, extend them to the rural areas of Scotland, which are anxious to have the opportunity of further urban development? Will he bring in the Scottish Sports Council to help improve the quality of life, either through private money or directly through Scottish Sports Council aid?

I thank my hon. Friend and acknowledge that many of the rural areas have difficulties which the Scottish Development Agency and other bodies must take into account.

As for my hon. Friend's general point, it is very sad that the Labour party, which claims so often to speak for Scotland, has produced over the years virtually no original thought on housing, education or urban regeneration; it appears merely to believe that resources, irrespective of how they are used, are the solution to all the social problems that we face. The party offers a depressing prospect.

The Secretary of State has mentioned four peripheral estates, but is he aware that they are all in areas that have suffered seriously over the past few years from cuts in housing grant and housing capital allocations? If that money had been available to local authorities, many of the problems in those estates would not exist.

It is pathetic that, even after announcing these initiatives, the right hon. and learned Gentleman cannot give a single penny of new money. He says it is "too early" to specify how much the initiatives will cost, and there is no commitment to extra money. If he wants to call GEAR in aid, he might at least acknowledge that it was launched by the Labour Government—by me, in fact. At the time of its launch we took on the financial commitment for the following five years—that is the difference between what we did and what he is doing.

If the right hon. Gentleman believes that the problems of Castlemilk or Whitfield, or the other areas, began in 1979—