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Commons Chamber

Volume 180: debated on Tuesday 13 November 1990

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House Of Commons

Tuesday 13 November 1990

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Oral Answers To Questions


Training Programmes


To ask the Secretary of State for Employment whether he has any plans to review the budget available for training programmes.

The results of a review of the whole of my Department's spending plans were published in the Chancellor's autumn statement. The public expenditure settlement provides both the resources needed for training programmes and the flexibility to deploy those resources to best effect.

Will the Secretary of State confirm that unemployment is rising and set to rise further, that there are skill shortages throughout Britain and that Britain is massively less skilled than our European competitors? Given that situation, how can he possibly defend the £300 million cut in real terms in his Department's budget set out in the autumn statement? Is not that a disaster for our future competitiveness in Europe?

The hon. Lady has misunderstood the position. We are increasing planned spending on youth training, increasing spending on TVEI—the technical and vocational education initiative—and we have been reviewing the way in which we can most effectively help the long-term unemployed. We are making available up to 100,000 places in job clubs and on job interview guarantee schemes as well as introducing other ways in which to help the long-term unemployed more effectively. We shall still be spending some £750 million next year on employment training.

Does my right hon. and learned Friend agree that, throughout his welcome experiment on training and enterprise councils, one of the principal difficulties that the chairmen have brought to his attention has been the lack of flexibility in the way in which they can apply their funds? I hope that he will accept from me a warm welcome to his recent proposals to free up the use of funds to give the chairmen much greater responsibility.

I am grateful to my hon. Friend. He is absolutely right about the importance of the flexibility for which the TECs have been asking. His warm welcome for that flexibility has been echoed by the chairmen of the TECs. The TECs are now well beyond the experimental stage. There are 82 in place across the country, forming a complete network, and no fewer than half of them—41—are now fully operational.

With the worst balance of payments deficit in this country's history, with skill shortages in every tradeable sector of industry and with the single European market nearly upon us, which of our main competitors would even contemplate cutting £500 million from their training budgets in the next two years? If that is not for them, why is it for us in the Secretary of State's plans?

The hon. Gentleman should look more carefully at the statement that has been made and devote his attention to the increased resources that have been made available for training our young people and giving them the necessary skills. He should also reflect on the fact that he has totally failed to persuade the shadow Chief Secretary that training should be one of the two priority areas to which the Labour party is prepared to commit extra spending. The hon. Gentleman ought to put up or shut up.

Defend Heseltine against that ruthless attack by the Secretary of State—a Thatcher sycophant.

It is not just the money that the Government spend which matters, because, lamentably, the trade unions and industry do not spend enough money on training their own seed-corn labour for the future. Government money should be spent on encouraging industry and the unions to back labour training schemes because they are the people who will produce for tomorrow.

My hon. Friend is absolutely right to identify the importance of investment in training by employers. That investment has been steadily increasing, but I agree that it needs to increase even further. The TECs, as employer-led bodies in local areas, are in an unrivalled position to persuade fellow employers to do what needs to be done to increase their investment in training and to ensure that that investment is deployed even more effectively than it has been up to now.

Small Businesses


To ask the Secretary of State for Employment what policies the Government intend to introduce to help small businesses expand to create more local employment prospects.

The Government will continue to give priority to maintaining the best possible business environment and, in particular, the control of inflation and the reduction of unnecessary controls and red tape. This will benefit all small businesses, whether they are established or just starting up. At local level, training and enterprise councils are taking over responsibility for the delivery of many enterprise support schemes and are ideally placed to ensure that such support is geared to the needs of local businesses.

None of that will give any comfort to those who currently run small businesses, especially in the textile and footwear sector. Is the Minister aware that one job is lost every 30 minutes in each of those industries? Is he further aware that if that trend continues, there will not be a British textile and footwear industry left by the turn of the century? When shall we have reasonable, decent proposals from the Minister rather than the nonsense that he has talked today?

The hon. Gentleman must get tired of peddling stories of doom and gloom. It is regrettable that he is unable to say something positive even about the industries for which he alleges great support. It is encouraging to note that, even in the present difficult economic climate, there is a remarkable resurgence of new industry, with new people coming forward and new businesses being set up. That is what we are encouraging and shall continue to encourage and one of these days it will receive acknowledgement from the Opposition.

It is not so much expansion but survival that is important for village shops. In my constituency, 12 village shops have closed since the introduction of the uniform business rate. Will my right hon. Friend comment on the maintenance of existing shops and small firms rather than the expansion of those that have not yet come into being?

My hon. Friend raises the important issue of the need to make a distinction, of which I am aware, between encouraging new small businesses—we are remarkably successful at doing that—and the position of existing businesses, in the retail sector and elsewhere. The uniform business rate has had varying effects in different parts of the country, as was the intention from the start. My colleagues at the Department of the Environment have taken great care to try to ensure that the burden of the uniform business rate is limited to the extent that it affects businesses adversely. I hope that the businesses in my hon. Friend's constituency will come to my Department for advice and help, which is available in many different ways, so that they have the best possible chance not just of surviving but of prospering.

Does the Minister accept that the loss of transitional relief under the uniform business rate when businesses move premises can not only restrict expansion but make it difficult for businesses in difficulties to scale down? What assessment has his Department made of that and has the hon. Gentleman made any representations on the subject to the Secretary of State for the Environment?

The hon. Gentleman is tempting me on to territory on to which I dare not stray—[HON. MEMBERS: "Why not?"]—because another Government Department is responsible for that, as Opposition Members well know. [Interruption.] I am in touch with my colleagues at the Department of the Environment constantly to monitor the varying effects of the uniform business rate on small businesses. If hon. Members contact me with details of specific cases, I undertake to raise them with my colleagues in that Department to see what can best be done. [Interruption.]

Order. I urge hon. Members not to barrack in such an unseemly way. It is very disruptive.

At this time of undoubted recession, when small businesses are being hit particularly hard, it is important for them to be able to retain the greatest proportion possible of their hard-earned profits. Will my hon. Friend discuss with the Chancellor of the Exchequer the possibility in the next Budget of introducing relief against corporation tax on the first £500,000 of the profits of small businesses?

The one thing that I cannot undertake to discuss with my right hon. Friend the Chancellor is the word used by my hon. Friend, which I certainly would not dream of discussing with the Chancellor. My hon. Friend raised an important point and I hope that he will agree that we have gone a long way to ensuring that small businesses have one of the lowest rates of both personal and corporate taxation in the developed world, with the favourable rate for small businesses. Our remarkable success in setting up small businesses has reflected that in full. I am making representations on behalf of the small business community to our friends in the Treasury. I shall think carefully about my hon. Friend's helpful suggestion.

Wages Inspectors


To ask the Secretary of State for Employment how many wages inspectors are now in post; and how many were in post in 1979.

In 1979 there were 158 wages inspectors. The greatly simplified wages orders resulting from the Wages Act 1986 allowed the then complement of 120 inspectors to be adjusted to the present total of 71. There are currently 70 inspectors in post.

May I say how much I agree with your strictures about barracking, Mr. Speaker? It is disgraceful, just like the figures given by the Minister. It is no surprise that so many employers break the law in view of the small number of inspectors. Why are the Government so soft and selective on law breaking? Apparently it is okay for Rupert Murdoch to break the law, seemingly with the connivance of the Prime Minister, and it was all right in 1989 for 5,528 employers to underpay workers in wages council sectors. Why are the Government soft on those law breakers? Is it because robbing the workers is no crime in the Tory book?

The hon. Gentleman, perhaps uncharacteristically, displays an appalling lack of knowledge as to how the system works. The truth is that 96 to 97 per cent. of workers are paid the statutory minimum or above, so the non-compliance rate is low. The crucial factor is that not only do inspectors target employers and premises to ensure that they home in on those that they suspect may be in breach of the regulations, but when they find them, they use methods of persuasion and information—[HON. MEMBERS: "Ah!"]. The hon. Gentleman may have a blood lust for prosecutions——

We are much more concerned with the employees' interests and to try to ensure that the employer will continue in business and pay the wages required by the regulations. That is a far more fruitful way of approaching the issue than that which the hon. Gentleman seems to favour.

As 57 wages inspectors to inspect the wages of more than 20 million people must be but a drop in the bucket, would not it be a good idea to clear away the whole system and save the taxpayer some money?

I know that my hon. Friend is trying to be helpful, but I will quote from my right hon. and learned Friend the then Secretary of State for Employment, who said earlier this year:

"I have decided not to proceed with the abolition of the councils for the present."
he went on to say, and this may be of some consolation to my hon. Friend——
"I therefore intend to keep its operation under close review."—[Official Report, 6 March 1990; Vol. 168, c. 541.]
That is as far as I can go at present to satisfy my hon. Friend.

Has not the Minister just let the cat out of the bag? Is not the reason why we do not have a prosecution policy for underpayment and why there are so few inspections of premises and wages inspectors the fact that the Government intend to let the wages council system wither on the vine? The Minister accuses my hon. Friend the Member for Newham, North-West (Mr. Banks) of being wrong, but the Minister is being outright misleading, because the reality is that 30 per cent. of firms visited were found to be underpaying their employees in one form or another. Is it not about time that the party of law and order made the law work in everyone's interests? When low pay in this country is a growing problem, as it is, Ministers have a responsibility to do something practical, get the inspectors in and get the prosecutions coming.

The hon. Gentleman obviously formulated his supplementary question before I gave my earlier answer, as he is apparently unaware of what I said to his hon. Friend the Member for Newham, North-West (Mr. Banks). I shall therefore repeat it. The inspectors target their visits on those whom they suspect may not be paying the minima, which is why the non-compliance rate among those targeted is the higher figure that he mentioned, but the overall rate is as I stated earlier. The total non-compliance rate among employers is small. We and the inspectors believe that using persuasion and information is a much better way of dealing with the problem than blundering in with fines and penalties on small businesses which could be put out of business. There is no point in putting people out of business and destroying jobs in an effort to apply minimum wage levels.

Does my hon. Friend agree that minimum wage legislation can only create unemployment among those receiving low wages, who are among the most vulnerable in our society? Is he therefore surprised by the Opposition's enthusiasm to introduce such legislation?

Indeed, it is worse than my hon. Friend suggests. The truth is that if there were a statutory minimum wage of 50 per cent. of average pay, which I understand may be the policy of the Labour party, my Department estimates that 750,000 jobs could disappear as a result. If the Opposition want to be responsible for the destruction of 750,000 jobs that must be on their heads —it certainly will not be on ours.

Employment Rehabilitation Centres


To ask the Secretary of State for Employment if he will make a statement on the closure of employment rehabilitation centres.

I know that the lion. Lady has important and valuable experience in this area. In the consultative document, "Employment and Training for People with Disabilities", we announced plans for an improved employment rehabilitation service involving local assessment teams and rehabilitation agents supported by a reduced, but substantial, network of centres. No decisions on closure of particular centres will be taken until comments have been received on how best the plans might be implemented.

I recognise the establishment of the mobile assessment teams, which I see as complementary to the existing network of centres. The consultative document makes no reference to the importance of the three residential centres, Egham, Preston and Leicester. Does the Secretary of State regard those centres as essential to the convenience and well-being of disabled people, especially the more severely disabled, and to facilitating their entry into employment? After the next election the Minister and some of his colleagues may welcome the opportunity of assessment for alternative employment.

I do not know whether we shall have the opportunity to take advantage of the hon. Lady's kind offer, but there will continue to be a need for residential facilities, whether provided directly from the centre or by agents under contract, which is the general philosophy being applied in this area.

Irrespective of my hon. Friend's comments on the contribution of the hon. Member for Mid-Staffordshire (Mrs. Heal), will he confirm that the Minister for Social Security and Disabled People this morning reaffirmed the Government's commitment to the disabled with a substantial increase in grants and allowances and that the Government are looking after the disabled in the way that they would expect?

I am happy to agree with my hon. Friend. What has been done with and for people with disabilities by this Government has been one of the success stories of the 1980s.

It is important for the House to understand the background in relation to employment rehabilitation and ASSET centres. There are only about 30 of them, which means that about one third of the population have facilities beyond daily travelling distance. That is why we are planning to diversify and extend the network of provision to make facilities more widely available geographically.

Does the Minister accept that the Government are spending less this year on training, including rehabilitation, than they did last year and that they will spend less next year than this year? When seeking to justify that, will he mention unemployment, which is rising and will rise further as a result of joining the exchange rate mechanism? Does he accept that the Government's protestations about training will have no credibility so long as the Department acquiesces in cutting the training budget? The job of the Department is to defend that budget against the Treasury, not to acquiesce in cutting it, as it has done for two years.

I cannot agree with the hon. Gentleman that joining the exchange rate mechanism will necessarily lead to increased unemployment. That will depend greatly on what happens in wage settlements and negotiations in the labour market, so there is a clear message for people there. Disabled people under training will continue to be part of the guarantee and aim groups in relation to employment training and we shall continue to fund the training of such groups.

Does my hon. Friend agree that, as usual, the Opposition parties have got it wrong? The purpose of training is not training per se but finding people jobs at the end of training. In that context, is my hon. Friend's Department considering new ways of determining which training schemes are most effective in terms of job finding afterwards? Does he agree that such schemes need not by any means be the most expensive, as budgets are no indication of employment at the end of the day?

My hon. Friend is quite right. That is one of the thoughts behind the flexibility that my right hon. and learned Friend the Secretary of State has negotiated for the training and enterprise councils. That flexibility will enable a much greater range of experimentation to take place at local level, which will be led by people who are in contact with local labour markets. To return to the question posed by the hon. Member for Mid-Staffordshire (Mrs. Heal), the basic purpose of our changes is not just to increase the geographical coverage of the facilities but to enable us to tap into the wide range of expertise that exists in voluntary bodies and we shall try to ensure that it is made more available to assist disabled people into better and more appropriate forms of employment.

Employment And Ownership


To ask the Secretary of State for Employment what fresh initiatives he plans to take to encourage the development of co-operative and mutual forms of employment and ownership.

I have announced today that, as part of my Department's general policy to promote small firms, funding has been made available to provide short-term pump-priming support for projects submitted by the co-operative sector. This will be available over the next two financial years specifically for good quality innovative projects to promote co-operatives or to develop business training, advice and other strategies to improve the business performance and competitiveness of co-operatives.

I welcome the coincidence of that announcement and my question. Is the Minister aware of the welcome that was given to two commitments by his predecessor, the first being money for the co-ordination of co-operative development work following the demise of the Co-operative Development Agency, and the second being the promotion of co-operative initiatives by the training and enterprise councils? Will he assure the House that he will pursue those two undertakings during his tenure of office?

I am grateful to the hon. Gentleman for his acknowledgement of the follow-up to the commitment given by one of my predecessors. I assure the hon. Gentleman that in the guidance to the training and enterprise councils there is explicit acknowledgment of their continuing responsibility to work in this area as part of the follow-up commitment that we gave earlier in the year. I am delighted to be able to give the hon. Gentleman that assurance.

Will my hon. Friend take some care in this area? I remind him of unfortunate precedents, particularly that of the Triumph motor cycle co-operative which, if anything, accelerated the departure of the motor cycle industry from Britain.

My hon. Friend makes an important point. I emphasise that there is no intention to encourage such overblown and grandiose schemes. As my hon. Friend probably heard, 1 deliberately used the words "good quality innovative projects" and went on to emphasise elements such as business training and advice. I think that I can give my hon. Friend the assurance that he seeks—there is no way in which we shall get involved in the kind of disasters that overtook the Labour party when in government.

Labour Statistics


To ask the Secretary of State for Employment how many people are in work in the United Kingdom (a) now and (b) in 1979.

The work force in employment in the United Kingdom stood at 27,346,000 in June 1990 and 25,365,000 in June 1979—an increase of just under 2 million over the period during which this Government have been in office.

Many people choose to take part-time jobs, but such jobs are now under threat because of European Community directives on part-time and temporary workers. Will my right hon. and learned Friend confirm that the European Commission is proposing that all part-time staff who work more than eight hours a week will have to pay national insurance? If that is true, does my right hon. and learned Friend agree that it is a tax on jobs which could devastate the rural economy and that all hon. Members should unite to oppose it?

My hon. Friend is right, but he has identified only part of the damage that the European Commission's proposals would inflict on prospects for employment. The costs on employers, in addition to the costs on employees to which my hon. Friend referred, would run into billions of pounds. That is why we are endeavouring to persuade the Commission and other member states of the damage that these proposals would do to employment throughout the Community.

Is the Secretary of State aware that the number of registered disabled people out of work has more than doubled since 1979 and that this is mainly his fault, because he failed to implement the 3 per cent. quota system and in some ways is condoning law breaking? As he is letting down disabled people, what does he propose to do about finding jobs for them?

The right hon. Gentleman will know that the difficulty with the quota system is that there are insufficient numbers of registered disabled people to allow employers to fill the quota. This is one matter on which we consulted in producing our recent consultation document, of which I know the right hon. Gentleman is aware. In direct answer to his question, I can say that, as I am sure he will be pleased to know, as part of the package announced last week, unemployed disabled people are to be included among the aim group for the purposes of eligibility for employment training. I am sure that many more of them will take advantage of those opportunities and will acquire jobs as a result.

Is my right hon. and learned Friend aware that one of the more heartening aspects of the situation is the number of people over the age of 50 who are in full-time employment? Is he aware that, at long last, British industry and commerce have recognised the value of older people and that, by and large, most are doing excellent jobs?

My hon. Friend is right. Employers are increasingly coming to recognise the value of workers aged over 50. They are getting jobs in increasing numbers and I expect that trend to continue.

What progress has been made to detect those who are claiming benefit while being employed and thereby distorting the true figures of unemployment?

The hon. Gentleman makes an important point. We have been concentrating our efforts in these matters on employers who are suspected of acting in collusion with workers and encouraging workers to break the law in this way. Our efforts are achieving considerable success and have resulted in many prosecutions.



To ask the Secretary of State for Employment what is the latest estimate he has as to the level of tourism-related employment in Britain; and what the figure was three years ago.

In June 1990 there were an estimated 1·43 million employees in employment in tourism-related industries in Great Britain compared with 1·28 million three years before.

Is not this excellent record entirely due to the efforts of my hon. Friend? Will he confirm that, just ahead of the Isle of Wight, Great Britain ranks fifth in the world for earnings from overseas tourism? Is not it a signpost to encourage the Government in their endeavours to introduce quality into the United Kingdom product that tonight the English tourist board will be presenting the "England for excellence" award?

Yes. Few in the House are more qualified to speak on the matter than my hon. Friend, whose constituency leads the way, in the rest of England and the United Kingdom, in our efforts to attract tourists, which are ever more successful. This pleases me, particularly with my responsibility for small businesses, and I pay tribute to our colleague, Viscount Ullswater, who is responsible for tourism in my Department. I am grateful for my hon. Friend's comments and let us hope that the efforts will continue, both in his constituency and throughout the realm.

Is not it true that there is a deficit in invisible earnings, which have become truly invisible under this Government? Jobs in tourism are no substitute for jobs with good training in manufacturing industry which, under the Government, have been reduced by over 2 million. That has helped us to a record balance of trade deficit not met by the increase in tourism. When will the Government improve and increase manufacturing industry and restore some of the 2 million jobs that they have thrown on the scrap heap?

I regret and deprecate what the hon. Gentleman has said, on two important grounds. One is that the hon. Gentleman has hidden in what he said the welcome fact that our people are sufficiently prosperous that they decide, in ever-greater numbers, to exercise their freedom to take holidays abroad. The hon. Gentleman's remarks are a disgraceful slander on all those who do such excellent work in tourism and I am surprised that he should bring himself to make them.

As my hon. Friend the Member for Isle of Wight (Mr. Field) said, an increasing number of people are undertaking quality jobs, providing a quality product and boosting overseas earnings. If the hon. Gentleman and the Opposition do not understand that, they are even less fit for government than I thought.

May I welcome my hon. Friend to the Government Front Bench wearing his current hat? Bradford?the hon. Member for Bradford, South (Mr. Cryer) did not even mention the city which he represents in part?has demonstrated that the market has changed in terms of jobs and opportunities and that people want to spend money and leisure time on tourist-related activities. Bradford constituents, and my constituents in Dorset, South have shown that many new and excellent jobs can be created, to the delight of the many people from overseas and from the United Kingdom who enjoy the facilities that they provide.

It is a sign of the times that my hon. Friend the Member for Dorset, South (Mr. Bruce) had to say what the hon. Member for Bradford, South (Mr. Cryer) should have said. That Conservative Members have to do the job of Labour Members is no more than a sign of the times.

Unemployment, Lambeth


To ask the Secretary of State for Employment what measures he is taking to reduce unemployment in Lambeth.

My Department's full range of employment, enterprise and training measures is available in Lambeth to help unemployed people and others to find new jobs, to retrain or to set up businesses of their own.

We also have our specialist inner city initiatives, which operate in the borough, including the inner London jobs team and an inner city officer based in Brixton. In addition, under the urban programme the borough has been allocated £9·28 million in 1990–91.

Is the Minister aware that Lambeth has the highest unemployment in London and a large black population and that racial discrimination is always injurious to employment opportunities? Is the hon. Gentleman further aware that some employment agencies connive at racial discrimination? Has the Minister's attention been drawn to a particular allegation that Eileen Dupont of Conservative party central office gave a requirement to employment agencies that she wanted only English-rose type secretaries and to the discrimination that is implicit in that requirement? Will the hon. Gentleman investigate the matter and ensure that both the Conservative party and the Government promote principle, not prejudice?

I am happy to pay tribute to the hon. Gentleman's expertise in these matters which goes back to the time when he was a Minister at the Department of Employment.

The hon. Gentleman will be the first to recognise the importance of the achievement of a 19·4 per cent. fall in long-term unemployment over the past 12 months in the Lambeth area. Racial discrimination in employment is serious and the hon. Gentleman has made some allegations. I invite him to provide me with more detail, perhaps in writing, after the end of questions.

Labour Statistics


To ask the Secretary of State for Employment what is his most recent estimate of the total of the work force who are employed in more than one job and are thus counted twice in the employment statistics.

Precise information on the number of people with more than one job included in the published work force in employment estimates is not available.

However, the labour force survey estimated that 708,000 people held a second job as an employee in the spring of 1989.

Do the Government agree that there is as much truth in their job statistics as there was in the claim, made in 1945 from a bunker by Josef Goebbels just before he took cyanide, that Germany was about to win the war? Before the Government exit in similar circumstances and in a similar fashion, will the right hon. and learned Gentleman confess that counting 750,000 double-jobbers twice, including 1 million non-existent self-employed in the totals and multiplying the value of part-time jobs twice corrupts the Government's job statistics into a meaningless, propagandist fantasy?

Before the hon. Gentleman engaged in such far-fetched fantasies, he would have done well to check the fact that there has been no change from the practice followed by previous Governments in these respects. However we calculate the figures, there are more people in work now than there have ever been. Opposition Members should be welcoming that fact instead of constantly trying to decry it.

When my right hon. and learned Friend is considering the employment statistics, will he bear in mind the case of Terry Deane of Ealing, who was refused employment by the then Labour Ealing council —which has since been found guilty by an industrial tribunal of the most blatant discrimination—in its housing department in 1987?

I am glad that the Leader of the Opposition arrived in time to hear my hon. Friend draw to the attention of the House yet another respect in which the previous Labour Ealing council behaved disgracefully. No doubt that council was elected by, among others, the right hon. Gentleman.


To ask the Secretary of State for Employment what are the latest unemployment figures for the north-west region; and if he will make a statement.

In September 1990 the level of unemployment, seasonally adjusted, in the north-west region was 232,300—[Interruption.] Labour Members must be celebrating the fact that there has been a fall of 40 per cent. in unemployment in the north-west region during the past three years.

Are not those figures unrealistic? Are not they made up of part-time workers and people who have been conscripted to phoney schemes in a deceitful way? What will be the effects of ERM entry on unemployment? Why are the Government closing job and retraining centres in Merseyside? What will be the effects of the disastrous poll tax figures on councils such as Liverpool city council, which is the largest employer in the area? What will it all mean for employment for the people of Liverpool?

I hope that the hon. Gentleman welcomes the fact that overall employment in the north-west was risen by 347,000 since March 1983, an increase of 14 per cent. There have been many significant developments. I visited the north-west only last week to open the new Stockport and High Peak training and enterprise council. I encourage the hon. Gentleman to get in touch with his local TEC and give it his full support.

Is my hon. Friend aware that my constituency has the second-highest level of manufacturing employment in Britain, at more than 55 per cent? Will he encourage my right hon. and learned Friend the Secretary of State to visit Pendle early in the new year—perhaps they could come together—to see some examples of its manufacturing base?

I should be happy to make that suggestion to my right hon. and learned Friend, who has, in fact, heard it. If he cannot visit Pendle, I shall do so.

Why were the unemployed ritually sacrificed in last week's autumn statement, despite the fact that it is estimated that unemployment will rise to 2 million next year? Is the Minister aware that in regional blackspots such as Liverpool, Riverside the male unemployment level is 31·7 per cent?

Can the Minister explain the extraordinary decision to cut £1 billion from the Department's budget in real terms for the period 1988 to 1994? Will he confirm that the Government are opting out of the slick sloganising of the skills revolution, or is it simply a question of the unemployed being asked to eat cake?

The hon. Gentleman is rehearsing his speech for today's debate. Employment training remains an important programme and we shall continue to fulfil our guarantee of training for all 18 to 24-year-olds. We shall continue to provide training for the aim group, who are older than that. Our evaluation of employment training—we are about to place a summary in the Library—suggests that training may not always, in all circumstances, be the answer to help the long-term unemployed. That is why my right hon. and learned Friend recently made his announcement about jobs clubs and the job interview guarantee scheme. The hon. Gentleman should set that in the context of what he described.

Overseas Visitors


To ask the Secretary of State for Employment what is his revised estimate for the numbers and value of overseas visitors to the United Kingdom for 1990; and if he will make a statement.

During the first eight months of 1990, the latest period for which figures are available, overseas residents made an estimated 12·3 million visits to the United Kingdom, 4 per cent. more than in the same period of 1989. For the same period it is provisionally estimated that overseas residents spent £4,920 million in the United Kingdom, 10 per cent. higher than for the same period in 1989.

Does my hon. Friend agree that overseas visitors contribute substantially to employment opportunities, particularly in centres such as York, and will he hold urgent discussions with my right hon. and learned Friend the Secretary of State for Education and Science so that more courses in hotel and catering management may be made available and so that youngsters entering that great industry are not put off by the Opposition's antics in referring to jobs for ice-cream salesmen?

My hon. Friend makes an important point and I pay tribute to the leading way in which his constituency is a tourist attraction, providing many more jobs in tourism than it has done in the past. I urge my hon. Friend to approach his local training and enterprise council and work with it to respond to local training needs, helping to boost yet further his already successful tourism industry.

Prime Minister



To ask the Prime Minister if she will list her official engagements for Tuesday 13 November.

Order. I ask the House to behave reasonably at this time. The Prime Minister.

This morning I had meetings with ministerial colleagues and others, including one with Professor Landsbergis of Lithuania. In addition to my duties in the House, I shall be having further meetings later today.

Is the Prime Minister proud of the fact that her attempts to privatise the national health service have resulted in the loss of nearly 5,000 hospital beds so far this year, including 100 in the Wakefield area? Has she any idea of the pain and discomfort facing vast numbers of patients on waiting lists as a direct result of her policies?Have not we reached the stage when she should be spending more time at home with Denis, making way for a Labour Prime Minister who believes in the NHS?

Our policies have resulted in 1 million more patients a year being treated. In the past four years expenditure on the health service has risen from £24 billion in 1988 to £26 billion, to £29 billion and to £32 billion—an increase of nearly 50 per cent. in real terms since we took over. That is a very good record which would never have been surpassed, let alone equalled, by the Labour party.

What advice did my right hon. Friend give to President Landsbergis of Lithuania in support of his demand for his country's independence?

The same advice as I have given him before—that we have never recognised that Lithuania was legally annexed and, therefore, have never allowed ambassadors or consuls in that country. We recognise the difficulties that Lithuania is in now. We believe that they can be resolved by negotiations. We recognise, too, that those have run into unexpected difficulties recently and we shall do our level best to take them up so that negotiations resume.

Will the Prime Minister join me in agreeing with her new Secretary of State for Education and Science in his very firm opposition to the daft idea of education vouchers?

My right hon. and learned Friend the new Secretary of State for Education and Science said almost precisely the same as I did in the House. If the right hon. Gentleman had done his homework before he came in, he would know that.

That gives a new meaning to the word "almost". Why is the Prime Minister being so evasive about the question of education vouchers? After all, all that I asked her was whether she agreed with a Minister in her Cabinet. Why cannot she simply say that she backs the Secretary of State for Education and Science on this important question?

In fact, the Secretary of State for Education and Science backed me. [Interruption.] We said—[Interruption.]

May I now read to the right hon. Gentleman what he should have read before he came into the Chamber? He will find that my right hon. and learned Friend the Secretary of State for Education and Science said precisely the same as I did, and that I said precisely the same as he did. He will find it—[Interruption]. They never like the facts, Mr. Speaker, but perhaps I can get them out. On 18 October in oral answers to questions, I said in reply to the right hon. Gentleman:

"In education we are attempting to increase choice—in city technology colleges, in grant-maintained schools and with open rolls."
The right hon. Gentleman then asked me about vouchers, and I pointed out that vouchers
"are one, and only one, method of what we are already operating; the money follows the pupil."
—[HON. MEMBERS: "Reading."] Of course, I am reading. Had the right hon. Gentleman read the remarks before he came into the Chamber, he could have saved himself a question.

May I read the sentence again:
"They are one, and only one, method of what we are already operating; the money follows the pupil. That is a form of giving extra choice and of giving the voucher to the parent for the pupil."—[Official Report, 18 October 1990; Vol. 177, c. 1374.]

I thought that the Prime Minister had formally declared herself against stonewalling, but it appears that that does not extend to Prime Minister's Question Time.

Let me put it very simply to the Prime Minister. The Secretary of State for Education and Science said that education vouchers were "not on the agenda". He said:
"I have never been in favour of vouchers. I don't think they play any part in the Government's plans … I don't think you need vouchers."
Does the Prime Minister agree with him?

I refer the right hon. Gentleman to the complete answer that I gave at column 1374 of Hansard, when I pointed out that we are already introducing a pilot scheme for vouchers in training. That is Cabinet policy and in education we are increasing choice. I know that the right hon. Gentleman is against increasing choice, but I repeat that, if he had read my reply, he would not have needed to ask the question. Perhaps he had better go back to bowling from the nursery end.

I do not know whether my right hon. Friend has had a chance to watch Sky Television—[Laughter.]

Last night there was an absolutely devastating exposure of conditions in Romanian orphanages. The conditions are absolutely disgusting. Will my right hon. Friend review the programme and see whether any initiative can be taken by the United Kingdom Government?

I did not see that particular television programme, but I have seen other programmes showing those conditions. Obviously it is something that we would wish to help with. When we received a request from Romania for disposable syringes, for example, we met it immediately. I am very well aware of the problem and we will look at it again.

Did the Prime Minister see today's disgraceful attack in The Sun today made by the supporters of her cause on three of her colleagues? As, in her position, she should set the standards of public life in Britain, will she take this opportunity unequivocally to condemn that attempt to smear her colleagues, undermine democracy in her party and cheapen public life?

I share the right hon. Gentleman's concern. Politics is about policy; it should never be about personal attacks on people's way of living. I totally condemn any such personal attacks.

Is my right hon. Friend aware that deep concern is felt in our armed forces about the continual suggestions that there should be cuts in our Army manpower at a time when both the Gulf and Northern Ireland place great calls on our strength? Will my right hon. Friend take this opportunity to say categorically that our armed forces will be kept at the level that is necessary for the task facing them?

That is an undertaking that I can give. The tasks which face us are changing, as my right hon. Friend the Secretary of State for Defence told the House. We are therefore looking at "Options for Change" and my right hon. Friend is coming across with policies to meet those "Options for Change" which are intended always to ensure that our defence is sure enough to meet whatever attack may come, from whatever quarter it may come.

Gulf Crisis


To ask the Prime Minister if she will make a statement on the discussions in Geneva with King Hussein of Jordan in relation to the ecological consequences of war in the middle east.

My bilateral discussions with King Hussein did not cover this subject, as I made clear to the hon. Gentleman on 7 November. However, if a tyrant is never to be fought in order that freedom and justice may be restored, tyranny will triumph with all its brutality and the environment of human rights, which we seek to extend, will have received a fatal blow.

If King Hussein is right and 50,000 million barrels of oil equivalent go up in flames, what will be the result in terms of carbon monoxide, carbon dioxide and sulphur dioxide, and what would that do to people and the planet?

If the hon. Gentleman wishes to avert such a tragedy, there is one method which would do it easily—that is for Saddam Hussein to withdraw totally from Kuwait and for a legitimate Government to be restored. I do not necessarily accept King Hussein's figures —mine are a little different—but that is not the main point. Saddam Hussein's withdrawal would not put right a wrong, because of the brutality that has been perpetrated in his name, but that is the answer to the hon. Gentleman's question.

Was there on the occasion referred to any discussion of the human consequences of Saddam Hussein's actions so far, such as the killing of tens of thousands of his own people in Iraqi Kurdistan by the use of poison gas and, for example, the killing and torturing of Kuwaiti citizens that is taking place even today in the territory that his armies have occupied? If we are to have such statements, let a proper balance be struck.

I am grateful to my right hon. Friend. As he knows, Saddam Hussein has used chemical weapons both in war and on his own people, the Kurds. We were one of the foremost countries to condemn him. We believe that he also has biological weapons at his disposal. It is contrary to the law to make them, let alone to use them. We also believe that he is not far from having nuclear weapons. However, the strongest point is that the terrible brutalities and barbarities that he has perpetrated cannot just be left. Kuwait must be restored. If Saddam Hussein will not withdraw, we must do it by the military option.



To ask the Prime Minister if she will list her official engagements for Tuesday 13 November.

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

May I wish the Prime Minister well in her current difficulty? Although I cannot speak for Conservative Members, many Opposition Members are rooting for her. Is the Prime Minister aware that an auction is taking place today in Sunderland of the assets of the last remaining shipyard, despite the fact that bids were received from companies that were willing, without subsidy, to build and repair ships in that yard? Is the Prime Minister aware that if she had resisted the EC veto with a fraction of the resistance that she has offered in her other European adventures, she would have enjoyed wider support? Will she take this opportunity to apologise to the people of Sunderland?

As the hon. Gentleman is aware, the closure of that shipyard was announced in 1988 after negotiations with the Commission in Europe. In return for the closure we had a new enterprise zone in Sunderland and a £45 million package to assist the people of Sunderland to come into new industries, the industries of tomorrow, because, as the hon. Gentleman will know, we had too much shipbuilding capacity in this country. It was a reasonable deal for Sunderland and a better one than if we had put subsidies into an old industry. We could not put in extra subsidies because of our agreement with the Commission and, indeed, it would not have been the right thing to do.


To ask the Prime Minister if she will list her official engagements for Tuesday 13 November.

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

As the autumn statement has been received by the financial markets and our constituents with great satisfaction, does my right hon. Friend feel that the decision to spend an extra £3,000 million on health will finally give the lie to any suggestion that the Government are not firmly committed to an excellent NHS?

Yes. My hon. Friend is absolutely right. It was a settlement which kept firm control of public spending, which is necessary for financial prudence. Nevertheless, it found sufficient resources to meet our commitments to the social services, pensioners and health and extra for the disabled, while at the same time redeeming some past debt, much of which was built up by the Opposition. That is an account of very good stewardship on the part of my right hon. Friends the Chief Secretary to the Treasury and the Chancellor of the Exchequer and I congratulate them both.


3.31 pm

The Secretary of State for Trade and Industry and President of the Board of Trade
(Mr. Peter Lilley)

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

I shall make proposals aimed at increasing competition, stimulating innovation and widening customer choice in all areas of the market. In November 1983 the Government gave a commitment that—(Interruption.]

Order. Will hon. Members who are leaving the Chamber do so quietly, please?

—for a period of seven years, they did not intend to license operators other than British Telecom and Mercury to provide basic telecommunications services over fixed links. We said that this commitment, which became known as the duopoly policy, would be reviewed at the end of that period.

I am today publishing a wide-ranging consultative document entitled "Competition and Choice: Telecommunications Policy for the 1990s". Copies are available in the Vote Office and will be placed in the Libraries of both Houses. The document invites comments by 14 January 1991. I will announce the conclusions as soon as possible thereafter.

This country enjoys one of the most open and dynamic telecommunications markets in the world. In the past 10 years, the Government have introduced competition into all sectors of the market, including the supply of equipment, the running of networks and the provision of services. We have also privatised our main operating company, British Telecom.

The benefits of those decisions are now clear. Customers have a real choice in the equipment that they buy; they no longer have to wait for months to have a telephone line installed; BT investment has doubled to around £3 billion a year; Mercury is established as a serious competitor and has installed a national digital network that far exceeds in coverage its licence obligations; prices have fallen by over 20 per cent. in real terms since BT's privatisation and by a third in areas where competition is strongest, for example trunk calls; we have the two largest mobile phone networks in the world; and companies are now committed to major investments in cable television and personal communications networks.

Those benefits have been greatest where the market is most open and competition is strongest. It is time to build on these achievements by further opening up our telecommunications market to increased choice and competition.

My main proposal is that we should end the present duopoly policy. There would in future be a presumption that applications for licences to run telecommunications systems should be granted unless there were specific reasons to the contrary. The proposals in the document are aimed at strengthening competition and increasing customer choice in all three tiers of the telecommunications system: the local network, the trunk network and international services.

In the local network there is little competition as yet, but nearly 70 per cent. of the homes in the country fall within franchises awarded to cable television companies. The Government and the Director General of Telecommunications wish to encourage these companies to provide telecommunications as well as entertainment services. The director general proposes several measures, in particular to reconsider the restriction on cable companies providing voice telephony except in conjunction with BT or Mercury.

I have considered whether BT and other national public telecommunications operators should be allowed to provide entertainment services over their main networks. Consumers might theoretically benefit from that through lower prices. However, the prospect of BT entering the market might deter cable companies from investing, even if BT did not enter the market itself. The consumer would then lose out, both on the provision of cable entertainment and on the benefits of competition in local telephone services.

I am therefore proposing that BT should not be allowed to provide entertainment services until 10 years after the completion of the duopoly review. If, however, seven years after the completion of the review the director general advises that an earlier date would be likely to promote more effective competition, we would consider bringing forward the 10-year limit.

In the trunk area of the market, I would be inclined to consider favourably applications for new licences to run networks. The director general favours the progressive introduction of equal access to give customers greater choice over who should carry their calls. I also propose that utilities should be able to develop their assets for telecommunications purposes, provided that the resulting competition is fair and firmly in the private sector.

In the area of international telecommunications, the director general has already made it clear that he intends to seek a price cap on BT's international services. The director general has also considered the remaining restrictions on the ability of companies to compete with BT and Mercury by leasing circuits from them and reselling capacity to third parties. He has advised me that those restrictions should be lifted in relation to countries which allow an equivalent resale of international capacity. I welcome that advice and invite comments on the director general's conclusions and on the timing of their implementation.

I propose that the duopoly policy should be ended for international telecommunications as elsewhere. I propose also a major liberalisation of two-way satellite services.

BT's prices are subject to regulatory control. It argues that its call charges are too high relative to cost, while its charges for exchange line rental and connection are too low. It therefore seeks to be allowed to restructure its prices, so as to recover more revenue from rentals and connection charges and correspondingly less from calls.

BT is already allowed to restructure its prices to a certain extent as part of the existing price controls that it agreed as recently as 1988. In the light of that and other considerations, the director general has concluded that a case has not yet been made for any greater restructuring than is currently allowed. He therefore proposes that the present price constraints should remain in place until they are reviewed in 1993.

This country has already benefited from our policies of privatisation and competition. Other countries are now following our example. Privatisation has recently taken place in New Zealand and is being actively considered in countries as diverse as Malaysia, Poland and Mexico. Competition is being introduced not just in places such as Japan and Australia, but even in the tightly regulated markets elsewhere in Europe. Moreover, because of the United Kingdom's lead, this country is becoming a telecommunications "hub" for western Europe.

The Government are committed to reinforce that lead and to ensure that consumers have the widest possible choice of high quality services at the most competitive price.

Does the Minister agree that the real test of his duopoly review will not be theoretical but practical—that of a genuine improvement in standards and of a reduction in cost for the 19 million households currently each paying a £78 standing charge, a 15 per cent. increase in cheap rate local calls, and an average 9 per cent. rise in bills? All that is on top of a £148 connection charge, for a service that generates half a million complaints every year.

Why do the Minister's proposals do nothing to set targets for the quality of service, set no objectives for long-term research and investment, offer no promise of lower prices and do nothing for more than 3 million households that cannot afford a phone? While we welcome competition in the area of mobile communications and personal communication networks, and believe that, if there is to be genuine competition, British Telecom should not be excluded from competing in those areas—as the Minister has proposed today—or from distributing television pictures, and although we will endorse further competition where it is in the public interest, we hold the view that competition is not itself a substitute for regulation in the interests of the consumer. No telephone company in Europe or the world successfully meets the needs of ordinary consumers without active public regulation.

Will the Minister explain why, according to his statement, Britain is to be the only country in Europe that intends to reduce consumer regulation over the coming years? Will he repudiate the Minister of State's statement that regulation should be reduced and instead state clearly that competition in new areas will not provide the excuse for the Government's complete abdication of their responsibilities?

Will the Minister now face up to his regulatory responsibilities in the public interest? Will he impose on all companies clear quality of service targets encompassing speed of repairs, accuracy of bills and automatic refunds where service is poor? Will he set the objective for all companies of reducing installation and standing charges? Given that British Telecom is enjoying record profits, will he act to prevent charges to ordinary consumers for directory inquiry services? Will he lay down guidelines for improved investment in new high technology, to make Britain genuinely a world leader and put an end to the situation in which British Telecom spends only 2 per cent. of its income on research—and Cable and Wireless substantially less—compared with 4 per cent. in Japan, France and other competitor countries?

Given that 90 per cent. of homes in Germany, 93 per cent. in America and 98 per cent. in France have telephones, but that only 86 per cent. of British households have a phone, will the Minister set targets for increasing connections, so that phone ownership will reach the level enjoyed by our major competitors by the year 2000? Will the Minister insist on the provision of a proper service for low-income users of the telephone—one that does not offer most benefits to rich people having high incomes and second homes, when those in real difficulty are people on low incomes living in their first and only homes—

Will the Minister expand Oftel's role to that of a genuine consumer protection commission whose activities will include public hearings, so that telephone executives will not be able to hide from public criticisms, which should be answered, concerning British Telecom's pricing policy, quality of service, profits, and future plans—

Six years after privatisation, Britain's call costs are the highest in Europe. Its connection and standing charges are also among the highest and now there are plans for new charges. However, the Minister spoke today only of "the theoretical" benefit of his proposals to the ordinary consumer. When will he realise that 19 million households want not a charter primarily to allow foreign cable companies to make money, but one that serves British consumers—and a Government who are prepared to act in the public interest in ensuring improved standards, lower prices, and a telecommunications service that is run for the many and not simply to make huge profits for the few?

The hon. Member for Dunfermline, East (Mr. Brown) wants to go back to a nationalised system, fully regulated, with no choice, no competition, poor standards and the difficulties we once had to get lines installed. He pays lip service to competition, but all his emphasis is on regulation. That is an extraordinary paradox, because under Labour there was no regulator for the telecommunications industry. The Fabian Society document, which I note the hon. Gentleman has read, recorded that the Post Office was left to regulate itself. We introduced a regulator independent of the Government and of the telecommunications suppliers, which is by far the best system and much superior to the one that preceded it.

The hon. Gentleman has claimed that we are the only country to be reducing regulations, but that is nonsense. Throughout the world, countries are learning from our example and are seeking to reduce unnecessary regulation and introduce more competition. Competition is beneficial, but it cannot be relied on exclusively in an industry where there is a single, dominant supplier. That is why we continue with an effective regulator.

The hon. Gentleman wants us to lay down quality standards, but he ignores the fact that, for the first time, we have introduced penalties for delays in repairs or the installation of a new line. We are the only country to have such penalties and they are much more effective than the mere indicative standards that the hon. Gentleman has sought.

The hon. Gentleman wants to increase the mismatch between prices and costs. That is an extraordinarily bad policy to adopt towards prices; I believe that it is more sensible that they should reflect underlying costs. The hon. Gentleman wants to go back to a system whereby £250 million is paid by ordinary households for directory inquiries, when the bulk of them are undertaken by commercial organisations. Now that BT is introducing a charge for directory inquiries, the costs will be transferred to the people who seek those inquiries and, as a result, a quarter of a billion pounds will be taken off the charges that households face. In March next year, charges will be reduced by 4·5 per cent. on local calls and 7 per cent. on trunk calls. Those reductions will be introduced at the same time as the charges for directory inquiries.

The hon. Gentleman claims that British Telecom only spends 1·9 per cent. on R and D. That is correct, and it is exactly the same as was spent under the previous Labour Government. The big difference is that BT's turnover has increased enormously, so the extent of R and D has increased. The international comparisons in which the hon.Gentleman indulged are a dangerous game, because in different countries research and development might be carried out by the telecom operators or by the equipment suppliers. In this country, our equipment suppliers invest a higher proportion of turnover in R and D than do our continental competitors.

The hon. Gentleman has claimed that our charges are higher than those on the continent, but the director general carried out an independent survey of a basket of charges and deduced that our charges are broadly the same. The hon. Gentleman has argued that the benefits will go primarily to foreign cable operators, but I believe that the harm that the Labour party would cause would be felt by the millions of shareholders in BT and Cable and Wireless who directly participate in the industry. We should support them and pay no attention to the criticisms of the Labour party.

Order. I remind the House that we have an important debate ahead of us today, when a large number of right hon. and hon. Members want to participate. I shall allow questions on this statement to continue until 4·15. We will then have the introduction of Members, followed by that important debate.

Will my right hon. Friend confirm that, in the course of the consultations, the office of the regulator and the efficiency with which that office carries out its task will be taken into account and be open to discussion? May I also be assured that the regulatory system that is introduced after the consultations will in no way debilitate the ability of Mercury and British Telecom, because of increased competition available thereafter to foreigners in this country, in the world markets in which they seek to operate?

My hon. Friend makes two good points. First, I assure him that the director general will be consulted at all stages of the consultation, that he has participated fully in drawing up the document and that he supports all the recommendations in it. Secondly, I agree that it is important that British companies should be enabled and encouraged to participate on the world stage. Indeed, they are well placed to do so, because they are privately owned and are the favoured operators in many countries. That is why British Telecom, for example, has won a contract for 3 million telephones to be installed in Thailand, Cable and Wireless is a participant in Japan and so on. We shall do nothing to undermine that and everything to support it.

Why are there no proposals in the document about the particular problems and needs of disabled people?

That matter is discussed in the document. I appreciate that the right hon. Gentleman will not have had time to read it in full. The director general has consulted British Telecom and is seeking to encourage BT to spend yet more. Last year it spent £3 million on the disabled. I believe that it is committed to spending £4 million on a special unit for the deaf and, naturally, we support BT undertaking such social obligations.

It is odd to hear the hon. Member for Dunfermline, East (Mr. Brown) running down BT, when his party's Fabian Society said recently that it was hard not to be impressed with the pace of change in the last few years. Is it not a fact that the Government's telecommunications policy has been one of our great success stories? Following liberalisation and privatisation, we now have two international companies of great esteem, BT and Mercury and, even more important, thousands of small companies that could never have entered the market without that liberalisation. May we have an assurance that, under his proposals, there will not be any unfair advantage to nationalised companies compared with private sector companies, which want competition to be increased? In other words, may we be assured that he will not lean in favour of public sector companies?

My hon. Friend is right to draw attention to the excellent Fabian Society document, with which I found much to agree, and to emphasise the importance of jobs in the industry, in the many subsidiary companies engaged in activities related to telecommunications, in the importance for industry as a whole of having an efficient and dynamic telecommunications sector and in the importance of winning markets abroad. As for the position of foreign state-owned companies that wish to participate in this country, I shall, of course, pay close attention to the degree of state ownership when considering granting a licence. Privatisation has been successful, and we do not wish to encourage nationalisation by the back door.

Does the right hon. Gentleman agree that, while all the smart waffle from the Labour Front Bench fails to disguise the freephone line to renationalisation, the Minister's commitment to privatisation appears to be somewhat limited? Is it not a fact that the apparent decision not to liberalise the price regime until 1993 is likely to keep British Telecom profits up artificially? How far is that related to the Government's wish to maintain a high value of their own shareholding of BT? Will the right hon. Gentleman assure the House that, whatever happens in the necessary freeing of the telecommunications industry to market forces, a fair deal is ensured for rural subscribers?

I am not sure that I understood the point that the hon. and learned Gentleman was trying to make. The regulatory system puts a limit on the amount by which prices can rise. It does not boost prices. We have in the review increased the scope and extent of competition, which may keep prices below their limit in some areas of the market, and increasingly so as competition spreads. The agreement with the director general runs to 1993 and can subsequently be extended with another agreement.

We have made it absolutely clear, as has the director general, that we wish to see continuing adequate provision for rural users. There must be grave doubts about whether it is more expensive to supply them, as some people suggest, or much the same, as others allege.

Is my right hon. Friend aware that British Telecom has dramatically, in one step, raised the cost of a wake-up call to £2·49 per call—£17·46 a week? Therefore, is he surprised that the greater part of the nation can no longer afford to be woken up?

I am sure that my right hon. Friend has never had that problem or needed that service. He will be pleased to know that, now that there is competition on so-called value added services over the line, he will be able to seek a more cost-effective competitor, and I suggest he does so.

May I declare my interest, which is the same as that of my hon. Friend the Member for Wigan (Mr. Stott)? I am sponsored by the engineering section of the National Communications Union. Does not the Minister accept that his proposals for the local loop will produce no competition in reality, particularly in rural districts? Does he also accept that the development of a national broad band network, which industry and commerce need going into the next century, will not happen under his proposals? Finally, does he accept that the proposals to allow foreign cable competitors into our market, while we do not have equal access into theirs, could be widely seen by many of us as little short of economic treason?

First, I pay tribute to the members of the hon. Member's union and employees of British Telecom and other companies generally. They have demonstrated that, once freed from the shackles of nationalisation, they are well able to compete internationally, and produce excellent and improving services and that there is nothing wrong with them.

I do not agree with the hon. Gentleman's points. His suggestion that there has been no additional competition in rural districts is not necessarily the case. We are looking for competition to come into local networks in three ways—first, the cable operation, which might not extend into some regional districts; secondly, the expansion of the mobile networks, possibly allowing them to introduce relationships with fixed links that might be of value in those districts—radio communication is already being used by BT in rural districts, which is one reason, as I have said, that it is not necessarily more expensive; and thirdly, equal access will be made available to people progressively across the country, if that is the eventual conclusion of the consultation. That will ultimately be just as available to those in rural districts as to those in urban ones.

As for international companies, we are seeking to enable BT and other companies to participate in other markets, just as we allow other companies to participate in ours.

In welcoming my right hon. Friend's statement, may I ask him whether it is possible to hope now, as a result of what he is implementing, a reduction in the cost of calls from car telephones and other forms of mobile telephones? Can we now look forward to an acceleration in the use of mobile telephones in Europe?

As my hon. Friend knows, we recently licensed three new PCN operators, in addition to the two mobile operators and the four telepoint operators. Competition between them should extend the coverage of mobile networks and ultimately reduce charges, which I am sure my hon. Friend will welcome.

Does the right hon. Gentleman realise that there is no competition over telephones in my community and there is no likelihood of delivering the number of television services unless cable television is introduced? The Minister has shut the door on the possibility of British Telecom delivering cable television. Surely that option should remain open if the Minister is to force other cable television companies to come into communities such as mine.

The danger is that, if we gave British Telecom the right to pass entertainment services over its network, the cable operators would never invest in the necessary network because they would fear the eventual entry of BT. So we might end up with the worst of all possible worlds: neither BT nor the cable operators. That is why we believe that there is a need for a degree of regulation in this area to allow alternative competitors to build up over a period of up to 10 years. I am not sure that the hon. Gentleman will find that those on the Opposition Front Bench agree with him on this.

Will my right hon. Friend increase the powers of Oftel? Is he aware that the Director General of Oftel wrote to me a short while ago agreeing with me that the restrictive practices that British Telecom operates by not allowing the addresses which are freely available in telephone directories to be revealed to those who inquire of telephone directory inquiries are indeed restrictive practices and should be abolished? Why should a service that is so widely in demand by people who merely want to write a letter to someone who happens to live in another part of the country be refused by British Telecom and not be allowed to be provided to any other agencies that might like to provide it?

My hon. Friend makes a good point. I shall discuss it with the Director General and see whether there is a case for taking it forward.

Does the right hon. Gentleman accept that he is dealing with a complicated and important issue in the context of areas such as Scotland? Not only do the proposals deal with communications by telephone; they have an important impact on information technology, too.

Why does the infant industry argument apply to protecting areas in which 70 per cent. of people have cable television but not to rural areas? Why is there no positive discrimination to ensure that rural areas and other parts of Scotland get the services they require if industry and commerce are to be sited there after 1992?

I am surprised that the hon. Gentleman is not aware that the Highlands and Islands area made a principal sales pitch out of the fact that it is in the forefront of introducing digital technology, which is a great attraction to new service industries and companies coming to the area. That has been achieved by this Government.

May I congratulate my right hon. Friend on his excellent statement? Will he disagree with the opinion that BT is a natural and necessary monopoly, the phrase used by the right hon. and learned Member for Monklands, East (Mr. Smith)?

It is clearly the dominant supplier at the moment. Through these proposals and this review we are seeking to determine whether we can extend competition into areas that it has not reached and deepen it where it exists already. There is nothing natural and inevitable about a monopoly in this area, especially as new technologies open up new opportunities for introducing competition. Happily, we are at the forefront of exploiting these new technologies world wide.

With the introduction of new players to the field, will the Secretary of State consider statutory supervision of the entertainment services?

I appreciate the hon. Gentleman's point and the campaign that he has waged on this, with which I have some sympathy. He will know that people already can be prosecuted for obscene communications over the telecommunications network, either by individuals or by the police; and that there is a voluntary code of practice with a number of safeguards to prevent the abuse of these services.

Like the hon. Member for Blaydon (Mr. McWilliam), I declare a financial interest in this matter: it is the subject of public record. Will my right hon. Friend give serious attention not only to state-owned companies but to privately owned monopolies in other countries that might make bids for trunk operations? What time scale does he have in mind for implementing this document?

It is not our practice to exclude foreign private investment in this country. As one of the largest investors overseas, we would be the last to try to introduce barriers to the flow of investment in either direction. We shall try to ensure that companies that inhibit BT, Cable and Wireless or other companies from operating in their countries remove those restrictions. We shall argue that within the context of the GATT round.

Is the Secretary of State aware that, when considering in his statement the various organisations that are competing in the telecommunications market, he made a serious omission? He left out Kingston Telecommunications a company which provides cheaper telephone services and a far better quality service than BT and which is developing value-added networks. Will he confirm that the review will in no way impair the excellent work over recent years to develop this high-technology company, which is much loved by the people of Humberside?

I can confirm that to the hon. Gentleman. That company has been a little beacon of competition in the former state sector and it has pioneered a form of equal access which will undoubtedly have lessons for the rest of the country. We welcome that.

Bearing in mind the fact that, since 1979, the Opposition have opposed every attempt by the Government to introduce more competition to the telecommunications system, does my right hon. Friend agree that they have a cheek to sneer at his statement? Do they think that people easily forget that if they had had their way over the past 11 years we would still have a telecommunications system that was a cosy state-run monopoly, run for the benefit of the unions and not the consumers, and probably still supplying dial telephones after a six-month wait?

My hon. Friend is absolutely right. If one wants a case study, one has only to look at the introduction of mobile telephones in Britain and Germany. Here we introduced two competitors, but in Germany there is a state-run monopoly. Now Britain has a market that is five times the size of the market in Germany.

Does the Secretary of State appreciate that at least part of the increased profits shown by British Telecommunications arises from its disgraceful decision to take a contributions holiday from the workers' pension fund because it decided that there was a surplus in that fund? When the Secretary of State pays tribute to those workers, will he condemn the action of BT in robbing the pension fund in order to inflate its profits? When he was asked about provision for disabled people, he said that it was mentioned in the document. What are the specific proposals?

I mentioned some of the specific proposals in answer to an earlier question. Already BT spends about £3 million on the disabled. There is special provision in the charge for directory inquiries to exempt blind people, and they will have the benefit of lower call charges and so on.

Does my right hon. Friend agree that the cable television industry is poised to make an investment of some £4 billion in the infrastructure of this country and that that will have considerable benefits for both domestic and business consumers? I think that my right hon. Friend may know about my interest in this case. Does he agree that that investment would be prejudiced unless it is made on fair terms and that therefore the bar on BT carrying entertainment is critical? will he explain how the 10-year bar on BT carrying entertainment might be reduced to seven years and how that would operate?

My hon. Friend makes a very good point. In our judgment, a guarantee period is necessary. Initially, we propose 10 years, but it is suggested in the document that if, after seven years, the director general believes that the industry is sufficiently well established and profitable and that competition can be further enhanced by shortening that time scale, he will do that. However, he will not make that decision until seven years have passed and then only if he judges that things have gone very well until then. The hon. Member for Falkirk, East (Mr. Ewing) asked about pension funds. I never question points made by actuaries. I can only assume that the actuary was well satisfied with the success of British Telecom's pension fund in investing in other healthy British companies.

The Secretary of State will be aware of the great strides made by British Telecom in the fibre-optic broad band networks. Before that network can be introduced to the local loop, it will be necessary for British Telecom to provide finance for the loop. Is the Secretary of State aware that that can only be done if the asymmetry rule is withdrawn'? Why is he forbidding competition by not allowing British Telecom to carry entertainment on its lines? That would provide finance for fibre optics in the local loop. Why is he against such competition?

The hon. Member is right. There have been considerable advances in the use of fibre optics. Before privatisation, BT had 13,000 km of fibre optics entrenched. It now has 1·1 million km of fibre optics installed. The question is whether we should compel or artificially encourage the further extension of this. The Labour party is committed to making BT cover the country with fibre optics. I agree with the Fabian Society that that is a silly policy and that it is not for the Government to choose between alternative technologies. As to whether this could be facilitated by removing the asymmetrical policy, I believe that my other arguments are compelling. It is open to BT to introduce fibre optics and other devices to bring telephony to the household before the 10 years are up, if it so wishes.

My right hon. Friend will be aware of the view, promoted by Mercury among others, that ending the duopoly at this point will reinforce BT in its predominant market share, while myriad smaller suppliers compete for 15 per cent. or whatever of the market, in turn making it difficult for any competitor of comparable size to BT to emerge. I do not necessarily subscribe to that view, which could be dismissed in the case of Mercury by saying, "It would say that anyway," but I invite my right hon. Friend to give us his views on that issue.

Yes, that is an important question, to which one needs to respond. Mercury is well established and a viable and strong company. It will potentially benefit from a number of proposals in this document. For example, the extension of competition to local networks will, even if not carried by Mercury itself, feed more calls into the Mercury network as, very often, those new competitors will wish to channel calls through the competitive Mercury system. The introduction of equal access, if we go ahead with it, will also probably help Mercury, and it has advocated it. A number of the measures that we have proposed will strengthen rather than undermine Mercury.

I warmly welcome the statement, because competition and choice will benefit customers. As we have two of the largest mobile telephone networks in the world, has the Minister any plans to recommend to the manufacturers of mobile telephones that they should carry a security warning?

The hon. Gentleman may be pleased to know that the introduction of the new digital technology next year will make interception far more difficult. I shall make sure that a certain Minister in the Northern Ireland Office is one of the first to receive the new technology.

My right hon. Friend referred to the importance of fibre optics. Will he undertake to allow British Rail to use its fibre optic network? Does he think that the decision to offer more licences will have any impact on BT's proposals to charge for directory inquiries?

I propose in the document that utilities such as British Rail should be able to compete and receive licences so long as they do so fairly and firmly in the private sector. That means that they must not give exclusive wayleaves over their land to one private company, and if they participate in a private company, it should be majority private owned. I hope that that will meet my hon. Friend's concerns.

Did the Secretary of State use the clout that goes with retaining 49 per cent. of the shares in BT to argue against the introduction of charges for directory inquiries? Does he intend to sell that stake before May 1992?

The hon. Member is quite unaware that the quarter of a billion pounds spent on directory inquiries will be paid by those making the inquiries and that every penny of it will come off the charges paid by ordinary users. Charges will be reduced by 4·5 per cent. for local calls and 7·3 per cent. on trunk calls, at the same time as charges are introduced. Many of these inquiries are carried out by commercial organisations such as marketing firms. I see no reason why households should subsidise marketing organisations.

My right hon. Friend has referred to the fact that the Government remain a 49 per cent. shareholder in BT, and he alluded to the fact that, although some things may be legal, they are highly undesirable, such as nasty phone lines. We know that BT responded to widespread anger at the way in which they were being used. May I refer my right hon. Friend to the BT advertisement that appears on page 19 of The Sun and to that on page 10, which draws attention to the privatisation of electricity supply, and say to him, as the thought of the day, that we should judge people by their supporters and that Government advertising should no longer support The Sun if is behaves as it did on the front page of today's edition, which is how the Russians behaved during the mid-1960s to Commander Courtney?

I entirely endorse my hon. Friend's remarks. I thought that the front page of The Sun was disgusting and I did not get to page 19. I hope that it will not be repeated. However, I do not want to see Government advertising used in a discriminatory way according to the contents of newspapers.

New Members

The following Members took and subscribed the oath:

Terence Henry Rooney Esq., for Bradford, North.

Joseph Edward Benton Esq., for Bootle.

Personal Statement

I remind the House that a resignation statement is heard in silence and without interruption.

4.19 pm

I find to my astonishment that a quarter of a century has passed since I last spoke from one of the Back Benches. Fortunately, however, it has been my privilege to serve for the past 12 months of that time as Leader of the House of Commons, so I have been reminded quite recently of the traditional generosity and tolerance of this place. I hope that I may count on that today as I offer to the House a statement about my resignation from the Government.

It has been suggested—even, indeed, by some of my right hon. and hon. Friends—that I decided to resign solely because of questions of style and not on matters of substance at all. Indeed, if some of my former colleagues are to be believed, I must be the first Minister in history who has resigned because he was in full agreement with Government policy. The truth is that, in many aspects of politics, style and substance complement each other. Very often, they are two sides of the same coin.

The Prime Minister and I have shared something like 700 meetings of Cabinet or shadow Cabinet during the past 18 years, and some 400 hours alongside each other, at more than 30 international summit meetings. For both of us, I suspect, it is a pretty daunting record. The House might well feel that something more than simple matters of style would be necessary to rupture such a well-tried relationship.

It was a privilege to serve as my right hon. Friend's first Chancellor of the Exchequer; to share in the transformation of our industrial relations scene; to help launch our free market programme, commencing with the abolition of exchange control; and, above all, to achieve such substantial success against inflation, getting it down within four years from 22 per cent. to 4 per cent. upon the basis of the strict monetary discipline involved in the medium-term financial strategy. Not one of our economic achievements would have been possible without the courage and leadership of my right hon. Friend—and, if I may say so, they possibly derived some little benefit from the presence of a Chancellor who was not exactly a wet himself.

It was a great honour to serve for six years as Foreign and Commonwealth Secretary and to share with my right hon. Friend in some notable achievements in the European Community—from Fontainebleau to the Single European Act. But it was as we moved on to consider the crucial monetary issues in the European context that I came to feel increasing concern. Some of the reasons for that anxiety were made very clear by my right hon. Friend the Member for Blaby (Mr. Lawson) in his resignation speech just over 12 months ago. Like him, I concluded at least five years ago that the conduct of our policy against inflation could no longer rest solely on attempts to measure and control the domestic money supply. We had no doubt that we should be helped in that battle, and, indeed, in other respects, by joining the exchange rate mechanism of the European monetary system.

There was, or should have been, nothing novel about joining the ERM; it has been a long-standing commitment. For a quarter of a century after the second world war, we found that the very similar Bretton Woods regime did serve as a useful discipline. Now, as my right hon. Friend the Prime Minister acknowledged two weeks ago, our entry into the ERM can be seen as an
"extra discipline for keeping down inflation."—[Official Report, 30 October 1990; Vol. 178, c. 888.]
However, it must be said that that practical conclusion has been achieved only at the cost of substantial damage to her Administration and, more serious still, to its inflation achievements.

As my right hon. Friend the Member for Blaby explained:
"The real tragedy is that we did not join the exchange rate mechanism … at least five years ago."
As he also made clear,
"That was not for want of trying."—[Official Report, 23 October 1990; Vol. 178, c. 216.]
Indeed, the so-called Madrid conditions came into existence only after the then Chancellor and I, as Foreign Secretary, made it clear that we could not continue in office unless a specific commitment to join the ERM was made.

As the House will no doubt have observed, neither member of that particular partnership now remains in office. Our successor as Chancellor of the Exchequer has, during the past year, had to devote a great deal of his considerable talents to demonstrating exactly how those Madrid conditions have been attained, so as to make it possible to fulfil a commitment whose achievement has long been in the national interest.

It is now, alas, impossible to resist the conclusion that today's higher rates of inflation could well have been avoided had the question of ERM membership been properly considered and resolved at a much earlier stage. There are, I fear, developing grounds for similar anxiety over the handling—not just at and after the Rome summit—of the wider, much more open question of economic and monetary union.

Let me first make clear certain important points on which I have no disagreement with my right hon. Friend, the Prime Minister. I do not regard the Delors report as some kind of sacred text that has to be accepted, or even rejected, on the nod. But it is an important working document. As I have often made plain, it is seriously deficient in significant respects.

I do not regard the Italian presidency's management of the Rome summit as a model of its kind—far from it. It was much the same, as my right hon. Friend the Prime Minister will recall, in Milan some five years ago.

I do not regard it as in any sense wrong for Britain to make criticisms of that kind plainly and courteously, nor in any sense wrong for us to do so, if necessary, alone. As I have already made clear, I have, like the Prime Minister and other right hon. Friends, fought too many European battles in a minority of one to have any illusions on that score.

But it is crucially important that we should conduct those arguments upon the basis of a clear understanding of the true relationship between this country, the Community and our Community partners. And it is here, I fear, that my right hon. Friend the Prime Minister increasingly risks leading herself and others astray in matters of substance as well as of style.

It was the late Lord Stockton, formerly Harold Macmillan, who first put the central point clearly. As long ago as 1962, he argued that we had to place and keep ourselves within the EC. He saw it as essential then, as it is today, not to cut ourselves off from the realities of power; not to retreat into a ghetto of sentimentality about our past and so diminish our own control over our own destiny in the future.

The pity is that the Macmillan view had not been perceived more clearly a decade before in the 1950s. It would have spared us so many of the struggles of the last 20 years had we been in the Community from the outset; had we been ready, in the much too simple phrase, to "surrender some sovereignty" at a much earlier stage.

If we had been in from the start, as almost everybody now acknowledges, we should have had more, not less, influence over the Europe in which we live today. We should never forget the lesson of that isolation, of being on the outside looking in, for the conduct of today's affairs.

We have done best when we have seen the Community not as a static entity to be resisted and contained, but as an active process which we can shape, often decisively, provided that we allow ourselves to be fully engaged in it, with confidence, with enthusiasm and in good faith.

We must at all costs avoid presenting ourselves yet again with an over-simplified choice, a false antithesis, a bogus dilemma, between one alternative, starkly labelled "co-operation between independent sovereign states" and a second, equally crudely labelled alternative, "centralised, federal super-state", as if there were no middle way in between.

We commit a serious error if we think always in terms of "surrendering" sovereignty and seek to stand pat for all time on a given deal—by proclaiming, as my right hon. Friend the Prime Minister did two weeks ago, that we have "surrendered enough".

The European enterprise is not and should not be seen like that—as some kind of zero sum game. Sir Winston Churchill put it much more positively 40 years ago, when he said:
"It is also possible and not less agreeable to regard"
this sacrifice or merger of national sovereignty
"as the gradual assumption by all the nations concerned of that larger sovereignty which can alone protect their diverse and distinctive customs and characteristics and their national traditions."
I have to say that I find Winston Churchill's perception a good deal more convincing, and more encouraging for the interests of our nation, than the nightmare image sometimes conjured up by my right hon. Friend, who seems sometimes to look out upon a continent that is positively teeming with ill-intentioned people, scheming, in her words, to "extinguish democracy", to
"dissolve our national identities"
and to lead us
"through the back-door into a federal Europe".
What kind of vision is that for our business people, who trade there each day, for our financiers, who seek to make London the money capital of Europe or for all the young people of today?

These concerns are especially important as we approach the crucial topic of economic and monetary union. We must be positively and centrally involved in this debate and not fearfully and negatively detached. The costs of disengagement here could be very serious indeed.

There is talk, of course, of a single currency for Europe. I agree that there are many difficulties about the concept—both economic and political. Of course, as I said in my letter of resignation, none of us wants the imposition of a single currency. But that is not the real risk. The 11 others cannot impose their solution on the 12th country against its will, but they can go ahead without us. The risk is not imposition but isolation. The real threat is that of leaving ourselves with no say in the monetary arrangements that the rest of Europe chooses for itself, with Britain once again scrambling to join the club later, after the rules have been set and after the power has been distributed by others to our disadvantage. That would be the worst possible outcome.

It is to avoid just that outcome and to find a compromise both acceptable in the Government and sellable in Europe that my right hon. Friend the Chancellor has put forward his hard ecu proposal. This lays careful emphasis on the possibility that the hard ecu as a common currency could, given time, evolve into a single currency. I have of course supported the hard ecu plan. But after Rome, and after the comments of my right hon. Friend the Prime Minister two weeks ago, there is grave danger that the hard ecu proposal is becoming untenable, because two things have happened.

The first is that my right hon. Friend the Prime Minister has appeared to rule out from the start any compromise at any stage on any of the basic components that all the 11 other countries believe to be a part of EMU—a single currency or a permanently fixed exchange rate, a central bank or common monetary policy. Asked whether we would veto any arrangement that jeopardised the pound sterling, my right hon. Friend replied simply, "Yes." That statement means not that we can block EMU but that they can go ahead without us. Is that a position that is likely to ensure, as I put it in my resignation letter, that
"we hold, and retain, a position of influence in this vital debate"?
I fear not. Rather, to do so, we must, as I said, take care not to rule in or rule out any one solution absolutely. We must be seen to be part of the same negotiation.

The second thing that happened was, I fear, even more disturbing. Reporting to this House, my right hon. Friend almost casually remarked that she did not think that many people would want to use the hard ecu anyway—even as a common currency, let alone as a single one. It was remarkable—indeed, it was tragic—to hear my right hon. Friend dismissing, with such personalised incredulity, the very idea that the hard ecu proposal might find growing favour amoung the peoples of Europe, just as it was extraordinary to hear her assert that the whole idea of EMU might be open for consideration only by future generations. Those future generations are with us today.

How on earth are the Chancellor and the Governor of the Bank of England, commending the hard ecu as they strive to, to be taken as serious participants in the debate against that kind of background noise? I believe that both the Chancellor and the Governor are cricketing enthusiasts, so I hope that there is no monopoly of cricketing metaphors. It is rather like sending your opening batsmen to the crease only for them to find, the moment the first balls are bowled, that their bats have been broken before the game by the team captain.

The point was perhaps more sharply put by a British business man, trading in Brussels and elsewhere, who wrote to me last week, stating:
"People throughout Europe see our Prime Minister's finger-wagging and hear her passionate, 'No, No, No', much more clearly than the content of the carefully worded formal texts."
He went on:
"It is too easy for them to believe that we all share her attitudes; for why else has she been our Prime Minister for so long?"
My correspondent concluded:
"This is a desperately serious situation for our country."
And sadly, I have to agree. The tragedy is—and it is for me personally, for my party, for our whole people and for my right hon. Friend herself, a very real tragedy—that the Prime Minister's perceived attitude towards Europe is running increasingly serious risks for the future of our nation. It risks minimising our influence and maximising our chances of being once again shut out. We have paid heavily in the past for late starts and squandered opportunities in Europe. We dare not let that happen again. If we detach ourselves completely, as a party or a nation, from the middle ground of Europe, the effects will be incalculable and very hard ever to correct.

In my letter of resignation, which I tendered with the utmost sadness and dismay, I said:
"Cabinet Government is all about trying to persuade one another from within".
That was my commitment to Government by persuasion—persuading colleagues and the nation. I have tried to do that as Foreign Secretary and since, but I realise now that the task has become futile: trying to stretch the meaning of words beyond what was credible, and trying to pretend that there was a common policy when every step forward risked being subverted by some casual comment or impulsive answer.

The conflict of loyalty, of loyalty to my right hon. Friend the Prime Minister—and, after all, in two decades together that instinct of loyalty is still very real—and of loyalty to what I perceive to be the true interests of the nation, has become all too great. I no longer believe it possible to resolve that conflict from within this Government. That is why I have resigned. In doing so, I have done what I believe to be right for my party and my country. The time has come for others to consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long.

Orders Of The Day

Debate On The Address

Fifth Day

Order read for resuming adjourned debate on Question [7 November].

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.— [Mr. Younger.].

Question again proposed.

Education And Training

I must announce that I have selected the first amendment in the name of the Leader of the Opposition and that furthermore today, because of the large number of right hon. and hon. Members who wish to participate in the debate, I propose to put a 10-minute limit on speeches between 7 pm and 9 pm. I should have liked to put the limit on somewhat earlier, but we have two maiden speeches today and that would have been unnecessarily harsh and perhaps unfair to those hon. Members. Therefore, I ask hon. Members who are called before 7 pm to bear it in mind that I should be most grateful and the whole House would applaud them if they could keep their speeches to approximately 10 minutes in length.

4.38 pm

I beg to move, at the end of the Question, to add:

But humbly note the increasing anxiety of parents and employers that the education and training policies of Her Majesty's Government have seriously undermined choice and opportunity and placed standards at risk; express anxiety and concern that Britain's investment and achievement in education and training is leaving the country further behind its major European and other competitors; condemn Her Majesty's Government for its incompetence towards, and mismanagement of, the education service and its profound failure to fulfil its proper and necessary role in improving and upgrading the skills base of the nation; and believe that standards will only be raised and opportunities increased by a change of administration to a government committed to serious investment in the nation's future.
It is customary to congratulate a new Secretary of State on his appointment to office, and that I do. The presence of a new Secretary of State at the Dispatch Box results from the deep political crisis that faces this broken-backed Administration. It is not only a crisis about the future role of Britain in Europe but a crisis of confidence in the Government's ability—indeed, their inability—to provide the standards of education and training enjoyed by our major competitors in Europe and beyond. Never has public anxiety about the state of Britain's education system been greater. Never has public confidence in the Government's ability to deliver a decent standard of education been lower.

In last week's Gallup poll in The Daily Telegraph,82 per cent. of respondents said that Britain was not giving enough attention to education; 73 per cent. believed that the quality of education in Britain was declining. 'When asked who was to blame, just 10 per cent. blamed the Government's usual scapegoat, the local education authorities; 4 per cent. blamed the teachers' unions and 68 per cent. blamed the Government. So much for the Prime Minister's claim in February:
"The education service is in better shape than it has ever been."—[Official Report, 6 February 1990; Vol. 166, c. 757.]
If the Government had set out on a deliberate strategy to ensure that Britain fell further and further behind its major competitors in education and training, they could hardly have done better. In the early and mid-1980s, the Government undermined the foundations of the education service by deep cuts in spending and continuous abuse of the teaching profession. Then the right hon. Member for Mole Valley (Mr. Baker) put intolerable pressures on the system by imposing contentious and ill-conceived changes on all schools without consultation.

Then came the previous Secretary of State for Education and Science, who is now the Leader of the House. I believe that he recognised the damage and havoc caused by his predecessor, but he lacked the political clout to do much about it and was consistently and publicly undermined and humiliated by Downing street, the chairman of the Conservative party and central office. So now we have the right hon. and learned Member for Rushcliffe (Mr. Clarke). The man who, at the Department of Health, increased hospital waiting lists, closed wards and alienated health workers and patients alike is now to be responsible for the education of our children. How long will it be before the Secretary of State who derided professional ambulance personnel as mere drivers calls professional and highly trained teachers just minders?

The Secretary of State may be new to the Department of Education and Science, but he is not new to Conservative education policy. In his speech 17 months ago he proudly admitted part authorship of the education section of the Government's 1987 manifesto. In that speech he claimed that in education and health the Government were not
"opposed by left or right"
and that the only opposition to the Government's education policies were
"the forces of pure reaction and the resistance to change of the trades unions—the middle class and professional trade unions in particular—who represent the deliverers of the service … the teachers."
He concluded in a spectacular passage:
"The National Union of Teachers and the National Association of Schoolmasters Union of Women Teachers are now looking like powerless spectators as Kenneth Baker's reforms sweep on past them to mounting public approval."
Even as the Secretary of State spoke, what little public approval had existed for the promise of the Baker reforms evaporated as their desperate practice dawned. It even dawned on many Conservative associations. In a resolution the Conservative association of Doncaster, North complained of

"the manifest failure of the Baker education reforms to improve standards of learning."
The simple truth is that after 11 years the Government's education policies have collapsed.

The Government lack ambition for the nation's children and have failed to provide the leadership, funding and effective management which the education and training services so desperately need.

I must admit that I do not know what goes on in Doncaster. However, I have made a wide-ranging tour particularly of the primary schools in my constituency. The heads of those primary schools are almost unanimous in their approval of the recent changes to the system under which they have to operate.

I can only say to the hon. Gentleman that his experience is not that of almost any other head teacher in the country. Nor is it the experience of the chairman of the Kent education committee who recently wrote to parents condemning the Government's proposals for

The Government's lack of ambition is shown most emphatically by their failure during 11 years significantly to increase the proportion of young people aged between 16 and 19 in full-time education and high-quality training.

I shall give way in a moment.

Recent figures from the DES show that, at 35 per cent., the proportion of young people staying on at 17 in Britain is lower than in any of our major competitors—half the rate of most.
"What an incredible disregard of human potential to accept that 60 per cent. of our children leave school at 16 while in our competitor countries that number is 10 per cent. or less."
So said Peter Morgan, the director general of the Institute of Directors, earlier this year.

I shall give way in a moment.

There is no strategy to tackle that disregard of human potential, only ministerial confusion and contradiction. The former Secretary of State for Employment, the right hon. Member for Sutton Coldfield (Sir N. Fowler), said in his speech last December that on behalf of the Government he would set stretching targets under which by 1992—just two years away—the number of young people obtaining the equivalent of five 0-levels or GCSEs grades A to C would be doubled to more than two thirds, and that in three years 25 per cent. of our young people should reach the national vocational qualification level 3, equivalent to two A-levels or more.

I have told the hon. Lady that I shall give way in a moment.

That was the promise made by the Secretary of State on behalf of the Government. Within four weeks, he had left the Government, and every word that he said in that speech was repudiated by the Prime Minister and his successor.

If the hon. Lady does not sit down, I shall not give way to her. I have told her that I shall give way. She must simply wait her turn.

What the right hon. Gentleman said should be stretching targets were totally repudiated by the Prime Minister in a letter to my right hon. Friend the Leader of the Opposition. She said that those stretching targets could not be "specific Government targets." The whole policy was simply dumped within four weeks of being formulated. In contrast to the shambles of the Government, Labour will set targets and those targets will be achievable. They will have the support of both sides of industry.

The hon. Gentleman referred to opted-out schools. I have two of those in my constituency and they are doing exceedingly well. The first has already appointed four extra members of staff and is about to appoint two more. The schools have been given 25 per cent. more cash in every subject department for equipment. They are managing their affairs infinitely better than Lancashire county council did on their behalf. We now hope that others will follow their excellent example.

I shall deal with the detail of opting-out policy later, but the hon. Lady should know that opted-out schools have had more money because of the deliberate fiddling of the formulae. Opted-out schools are being bribed and given extra cash, for which the ratepayers and poll tax payers of Lancashire have to fork out.

The Government's lack of ambition is also shown in nursery education. Britain has the lowest pre-school and child care provision of any of our major competitors and the Government have no strategy whatever for tackling it. In many Conservative areas, there is no choice or opportunity for nursery education for thousands of children, because there are insufficient nursery schools or nursery classes. In contrast to the Government, Labour will ensure that the Prime Minister's pledge of 1972 of nursery education for all is turned into a reality.

Good leadership requires clarity, consistency and consent, but the education service has had none of them. Instead, it has been subjected to a lurch in one direction and a retreat in another. The right hon. Member for Mole Valley was told by everyone who knew anything about education that an inflexible, 10-subject national curriculum and associated testing would not work. Reality dawned on his successor. He set about a retreat, but it was never clear where that retreat would take him.

As a result we got decision-making on the hoof, with different Ministers saying different things. In a speech in July, the former Secretary of State announced one series of so-called solutions to the problems left by his predecessor. Then up popped the new Minister of State, anxious for a headline, with another prescription. On 30 October he told The Daily Telegraph that the Government were planning
"radical changes in secondary schools to allow less academic children to concentrate on vocational education from 14."
It is not remotely clear whether that is to be the start of a great new reform along West German lines, some variant of the French system or, as I suspect, the introduction by the back door of a grammar stream to an unreformed A-level, and a secondary modern stream for the rest.

The chaos in the curriculum before 16 is replicated post-16. The reform of education and training opportunities beyond 16 is of profound importance to the creation of real choice for young people and to secure the skills base of the economy. The present range of vocational qualifications and courses is, as the senior chief inspector of schools put it,
"a jungle in which talent and opportunity are lost",
while A-levels as an examination are outdated and outmoded.

The argument is, indeed, about standards. A-levels cause pointless over-specialisation which leads to the under-education of each generation, especially in science and technology. A-levels are even failing on their own terms. The number of entrants for A-levels in physics and mathematics, for example, has declined markedly. This country cannot possibly compete until the jungle at 16-plus is sorted out, as Labour has proposed. Everyone bar the Government knows that. There is no coherence from the Government, just confusion.

What the hon. Gentleman has said is extremely serious. The country will want to know now what alternatives he proposes to A-levels. He cannot undermine A-levels, which are valuable to a great many pupils, without proposing alternatives. That should be done in the same breath.

If the hon. Gentleman had waited, both would have been almost in the same breath. He knows as well as anybody that we have spoken a thousand times and published documents about our alternatives to A-levels and the reform of 16-plus education. Everyone bar the Government knows that there must be changes to 16-plus examinations.

In 1988 the Government established a committee, under the chairmanship of Professor Higginson, with the remit to reform A-levels. Two weeks before it published its report, the members of that committee were privately told that the Government would accept their recommendations for a sensible system of a five-subject, slimmer but no less rigorous A-level qualification. Two weeks later, the report was publicly rejected as a result of a prime ministerial veto of the wishes of the previous Secretary of State. It is not just on European policy that Downing street disrupts Cabinet government. It is on educational policy and in many other areas. Two years were then wasted as various groups tried to salvage something from the mess. A-levels, AS-levels and some core skills were to be combined.

In the summer, near-anarchy broke out on the ministerial corridor at the DES. The Secretary of State went on holiday, leaving the shop to the Parliamentary Under-Secretary of State, the hon. Member for Darlington (Mr. Fallon). On 17 August The Independent announced:
"Minister rules out A-level changes."
There were to be no changes to A-levels and no five-subject examination. Then the Under-Secretary went on holiday and the Secretary of State returned.
"MacGregor hints at big A-level changes",
he announced to The Independent on 11 September. He continued:
"Major changes might be needed to A-levels to increase the number of pupils staying on."
The Secretary of State was summoned to Downing street. The Under-Secretary of State returned from holiday, started up the war of words against his Secretary of State, attacked his advisory body and accused those who want reform of having been "hijacked" by progressive elements.

I am serious.

The Government's indecision, chaos and failure of leadership is beyond belief. The shambles is all too characteristic of a Government who treat the education service like a plaything and experiment with the education of other people's children as though they were animals in some laboratory. What kind of lead can be given when the service has had three Secretaries of State in 15 months and when not one of the present ministerial team has held his present job for longer than four months?

There is similar incoherence on the critical issue of vouchers—the scheme by which the Conservative party would end free state education. The Under-Secretary of State is a member of the No Turning Back group of right-wing Tory Members of Parliament. Eight weeks ago, the group published from Conservative central office a pamphlet calling for vouchers. As we well know, the Prime Minister said at the Conservative party conference that she hoped that the training voucher scheme
"would not be the last".
As my right hon. Friend the Leader of the Opposition mentioned just an hour and a half ago, the Secretary of State takes a different view. On television at the weekend he said emphatically of vouchers:
"I don't think they play any part in the Government's plans."
I do not know whether he was present for the exchange between my right hon. Friend and the Prime Minister, but when the Prime Minister was asked three times whether she endorsed those words, she three times denied her Secretary of State.

I offer him this chance to intervene in my speech. Will he tell us not what he thinks but what he knows about whether vouchers will play any part in the Government's plans? Will vouchers be in the next Conservative manifesto? Does he have the Prime Minister's approval of his answer?

Plainly they will not. As my right hon. Friend and I have explained frequently, we have set out to achieve choice and money following the pupil. We have done that by open enrolment, local management of schools and the formula allocation of funds to children who go to those schools. As a result, all the aims pursued by those who advocated vouchers are being achieved by our present reforms. The idea of vouchers for schools is not on the Government's agenda,. It need not be arid will not be on the agenda, because we have found a better way of pursuing those highly desirable objectives.

I am glad to have that categorical undertaking. It begs the questions why the Prime Minister did not say so and where it leaves the Under-Secretary of State, who does not remotely take that view. The No Turning Back group has written a pamphlet proposing the extension of the education voucher system to all parents.

The Government have shown a fundamental lack of ambition and a failure of leadership, alongside a failure to provide funding and management. When the Secretary of State comes to the Dispatch Box, he will probably tell us what a priority education spending has been for the Government. Since 1979, the Government have allowed the share of national income spent on education and science to fall by one eighth, from 5·5 per cent. in 1979 to 4·8 per cent. last year, which is equal to £3·5 billion at today's prices. The Secretary of State has been muttering that national income has increased. If so, why could not education have enjoyed an increased share of it, instead of its being flung away in tax cuts for the rich?

Under the Labour Government, when national income was not rising so quickly, the proportion of gross domestic product spent on education fell. The records of the two Governments show that we have given higher priority to education in our spending plans, and we continue to do so. The success of our economic policies has enabled us to increase spending in real terms per pupil by almost half as much again.

That is simply not correct. The Secretary of State knows that the proportion of spending under the Labour Government rose, and that under the Labour Government previous to that, for the first time education took a greater share of the budget than defence. If the Secretary of State is so proud of the Government's record, perhaps he could explain why teachers have had to suffer real cuts in pay for each of the past three years. Why, since 1979, has the central Government share of educational spending been cut by more than a quarter in real terms?

Why will the latest poll tax settlement mean enforced cuts in education budgets in areas such as Avon, where the local Conservatives are pushing for a £10 million cuts package for next year?

The figures in last week's autumn statement for current spending will not even make good the 10 per cent. inflation with which local authorities have had to cope. As to capital spending, there is a £4 billion backlog of repairs and renewals. The Government's latest allocation means that urgent schemes will be put off yet again, and that pupils must continue to receive their education in crumbling schools. Last week's allocation is less in real terms than that made by the Labour Government in 1979. As a result of that measly allocation, in the summer the former Secretary of State banned church schools even from applying for money to build nursery classes, and suddenly announced that school building regulations passed by the House in July 1981 and due to be enforced next year were to be deferred for another five years.

Those regulations are of great importance, as they lay down minimum standards for teaching areas for junior and middle schools and for sixth forms, and stipulate better changing accommodation for all schools, and separate recreation and play areas for nursery children. When those regulations were introduced, the then Under-Secretary of State for Education and Science, the right hon. Member for Brent, North (Sir R. Boyson), said:
"it is intended that in 10 years"—
that is, next year—
"all schools should be under the minimum regulations." —[Official Report, Fourth Standing Committee on Statutory Instruments, 28 July 1981; c. 21.]
They will not, because 10 years of accumulated neglect by the Government will mean, on the Government's own admission, that millions of children will continue to receive their education in substandard accommodation.

The Secretary of State referred to local management. It has become a terrible embarrassment for the Government, and in a characteristic effort to pass the buck, Ministers spent the summer claiming that wicked local education authorities have withheld thousands of pounds that should have been delegated to schools' budgets. Today's Daily Mail carries three pages of complaints about the red tape that is strangling our schools, the scandal of missing teachers, the growing army of bureaucrats who do not teach even one child, and the fact that the number of non-classroom teachers has doubled in eight years.

The Daily Mail quotes the Secretary of State as saying:
"The Daily Mail has done a service to education by exposing this burgeoning bureaucracy."
The right hon. and learned Gentleman would be well advised in future to look before he fires, for by making that comment, he has shot his foot off. The number of non-classroom teachers has increased, but does the Secretary of State understand why, and who is responsible? That increase is the direct result of Government policies. Through the education support grant and training grant schemes, the Government are paying local authorities for non-classroom teachers to provide training in the national curriculum and testing, and to support all the other Government programmes.

The hon. Gentleman knows perfectly well that his explanation does not excuse the disparity between the different local education authorities cited by the Daily Mail. Is he really leaping to the defence of bureaucracies such as that in Newcastle upon Tyne, where the proportion of non-teaching, non-classroom staff at 54 per cent. exceeds that of classroom teachers? If the hon. Gentleman will examine the league table in the Daily Mail, he will discover that Labour councils in particular spend more on bureaucracy than they do on their classrooms, which is the Labour party's consistent approach to public services.

The Secretary of State should also examine his Department. Bureaucracy has increased over the past three or four years because of the massive growth in the demands made on the education service by Government policies. The number of civil servants in the Secretary of State's Department has increased by 131 over the past three years, and the number of inspectors has risen by 22 per cent., to cope with the unrealistic demands on it.

Labour-controlled Lancashire county council says:
"We have checked the position in the summer term. We had 70 advisory teachers, 59 of whom are funded by programmes initiated and paid for by central Government, mainly the education support grant programme."
Where non-classroom teachers in the Daily Mail survey are not paid by central Government, many are supply teachers used to cover vacancies caused by teacher shortages which have in turn been created by Government policies.

I will explain to the Secretary of State why many Labour authorities have a higher proportion of non-teaching staff. It is because those authorities run nursery schools, which use a high proportion of such staff, including nursery nurses. Increasingly in Labour-controlled areas, nursery nurses are used in reception classes, to release primary school teachers to train in running the Government's national curriculum and assessment system. Labour areas also provide school meals services, which need people to run them.

The level of holdback has been endorsed by every Education Minister in respect of all education authorities. It was endorsed by the former Secretary of State and by the right hon. and learned Gentleman's new colleagues. The Government complain that one authority has a percentage holdback of X, and another of Y—but the Government approved that power being given to local authorities. Holdback is higher in some authorities than in others because they have done what the Government asked in respect of competitive tendering for cleaning and catering services, and the proportion of holdback greatly increases in those cases.

The hon. Gentleman dodged all my questions about comparisons. The city having the highest proportion of non-classroom staff is Newcastle upon Tyne, and the city having the lowest is Leeds. Both are Labour-controlled. The same variations occur in the percentage holdback for local management of schools. It betrays the hon. Gentleman's real instincts to leap to the defence of authorities that are employing most people away from the classroom, and who are holding back a bigger proportion of their budget. He defends bureaucracy rather than classroom spending.

I do not defend bureaucracy, and the Secretary of State has every reason to know that. We did not create the massive bureaucracy in town and country reorganisation: the Government did, by making repeated changes. Can the Secretary of State imagine the extent of the chaos created in an education dept by all the changes, made one after the other, to the national curriculum? Does he not appreciate that the reorganisation of local schools management—which may achieve in the long run a reduction in the number employed in the town halls and country halls—is bound to impose greater pressure initially? The Government circular acknowledges with one voice that it will mean an increase in the number of so-called bureaucrats about whom the Secretary of State complains.

As to the variations, I believe in local democracy and that different boroughs should have the right to determine how much is spent on their local education service, and to sort out that matter with their own electors. That is for local authorities, not central Government.

No. Many other hon. Members want to speak, and I have already given way several times.

Order. The hon. Member for Blackburn (Mr. Straw) has made it clear that he will not give way.

Not only is the whole education system short of money, but the Government have squandered money on irrelevant and doctrinaire projects that have mocked the needs of the 93 per cent. of children in the maintained sector. I refer to policies such as the assisted places scheme, opting out and city technology colleges. The worst favour that the right hon. Member for Mole Valley did for his party's supporters in Bradford was to site a city technology college in that city.

No. I have already given way six times, and many other hon. Members want to speak. The hon. Gentleman knows that I am usually generous in allowing interventions.

Order. The hon. Member for Dartford (Mr. Dunn) must not persist when the hon. Gentleman who has the Floor has made it clear that he does not want to give way.

Twelve days ago, the former Secretary of State said on television, that he could not understand why there is such opposition in Bradford to a city technology college. As I watched him on television, I was struck by the fact that he genuinely did not understand. Had he done so, he would never have agreed to the official opening of the CTC just a week before polling day in Bradford, North. The teachers and parents of Killingholme first school in Bradford understand why the children are housed in temporary buildings, and so do those not far away at St. Augustine's Church of England school—I visited it last week—where the ceiling has fallen down and the school has therefore closed. They understand that, had it not been for the £7 million squandered on the CTC, their schools would have been renewed. There would still be £4 million left to spend on other crumbling schools in Bradford.

Opting out has palpably failed as a policy. It is known that Ministers do not want it to succeed. On 13 October, the then Secretary of State was reported in the Financial Times as believing that
"if a majority of the nation's schools did opt out, the result could be an administrative nightmare for central government, which would have to supervise and fund thousands of schools."
The failure has been so complete that that Secretary of State abandoned categorical pledges that he and his predecessor had given to the effect that opt-out schools would be treated no better financially than were LEA schools. Instead, at the Conservative party conference, the right hon. Gentleman brazenly announced a series of bribes for schools that left a local education authority. How can that bribery possibly be squared with the repeated undertaking made by one Secretary of State after another that there would be no difference between the financial treatment of local education authority and of opt-out schools?

Although opting out has failed, it has paralysed the ability of LEAs to do what the Government say they want —to remove surplus places. The number of surplus places has shot up to more than 1,700,000, while the number of places removed by statutory closures in this Parliament is running at half the level achieved in the previous Parliament. The cost of that waste is at least £360 million. That money has been deliberately denied to our children while Ministers seek cynically to trap LEAs into naming schools for closure. The aim of the policy is not to improve the efficiency of the service, but to trigger opting out. Similar perverted priorities have been followed in higher education.

The hon. Gentleman referred to the importance of good education and said that that required clarity and consent. Does he agree that grant-maintained schools represent clarity and consent? It is necessary to have a ballot before opting out. What greater consent can one have than that? Will he give a commitment from the Dispatch Box that he will not abolish grant-maintained schools in the event of Labour coming into office?

I am delighted to tell the hon. Gentleman that, on taking office, one of the first steps of the Labour Government will be to take opt-out schools back into the local community and the LEAs. I am glad to say that that policy has the full support of the Conservative chairman of education on Kent county council.

Mr. Dunn