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Commons Chamber

Volume 181: debated on Monday 26 November 1990

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House Of Commons

Monday 26 November 1990

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Oral Answers To Questions


Trust Ports


To ask the Secretary of State for Transport what progress he has made in respect of his plans to allow trust ports to move into the private sector.


To ask the Secretary of State for Transport what progress he has made in respect of his plans to enable trust ports to be privatised.

I believe that we should now build on the resounding success of the abolition of the dock labour scheme. To open up the ports industry further to market forces I want to see the main trust ports transfer into private ownership. I therefore intend to introduce a Bill in the current Session to allow trust ports to move into the private sector without the need to promote private legislation.

Will my right hon. Friend accept a strong welcome from Conservative Members for the enabling legislation that he is proposing? Will he join me in congratulating Tees and Hartlepool port authority on having been one of the first to put a Bill before the House, paving the way for others? Does he agree that the extension of private ownership to the trust ports represents a tremendous expansion of the business opportunities available to them?

Yes, I do. The present constitution of the trusts ports inhibits their development. The sooner they have a proper structure and are in the private sector, the better they will be able to develop, expand, create jobs and aid industry.

May I urge upon my right hon. Friend the importance of ensuring that when trust ports are privatised provision is made to allow dock workers and other port employees to obtain shares on favourable terms? That would do a great deal to make privatisation of the trust ports popular with those who work in them.

The Bill will encourage trust ports to come forward with their own schemes for privatisation. We shall have to approve those schemes; an important part of any scheme will be giving dock workers an opportunity to own shares in the ports in which they work. That has been a tremendous success in the case of Associated British Ports and it will be in others.

What will happen to the disgusting Tees and Hartlepool Port Authority Bill, which has created a lot of trouble in the House and led to the introduction of this measure? The interesting question is: how far can we trust trusts if measures such as this are to be introduced? And what implications are there for the national health service?

The only disgusting feature of that Bill was the mindless opposition to it by Opposition Members, including the hon. Gentleman. Even the hon. Gentleman's stretched imagination is roaming a bit far if it brings the health service into this question.

My right hon. Friend will be aware that the port of Poole is a trust port in an area of great environmental beauty and sensitivity. Will he assure me that he will consult local authorities and other bodies before bringing in any element of compulsion in connection with privatisation that might put the environment at risk?

There will be no change in the environmental regulations governing ports and there will be no relaxation of standards. An important part of any proposals will have to be the protection of those environmental concerns—but I shall take my hon. Friend's point into account.

Why did not the Secretary of State tell us anything about the Treasury? Are not the proposals really all about asset-stripping the land and taking the money into the Treasury? How much money does he intend to raise from that? How can he reconcile the proposal with the special responsibility that trust ports have towards the local community and, more importantly, to the local economy, with an integrated transport system?

I welcome the hon. Lady to the Opposition Front Bench and congratulate her on already setting a standard that her colleagues have never managed to attain. The measure is being promoted so that trust ports, which have very ancient constitutions and whose development is presently hampered, can get on with the business of being the modern ports that they are capable of being, now that we have got rid of the dock labour scheme. The Treasury share is incidental.

Rail Electrification


To ask the Secretary of State for Transport if he will make a statement on the current rail electrification programme.

British Rail is making good progress with its electrification programme. The electrification of the east coast main line will be completed in late spring next year, and other projects such as Tonbridge-Redhill and Birmingham cross-city are being implemented.

Does my hon. Friend think that British Rail is responding with the necessary courage and imagination to the challenge and opportunities of the channel tunnel and 1992? In particular, is it considering the ultimate necessity for an electrified link all the way via north Wales to Ireland?

I shall take the latter point first. It is for British Rail to come forward with investment propositions. We shall certainly look at InterCity propositions that are presented as being financially viable. The French Minister responsible for transport, to whom I recently spoke, said that when French railways appraises inter-city trains, it uses exactly the same basis as we use—the 8 per cent. financial rate of return. British Rail will invest some £1·4 billion to prepare this country for the opening of the channel tunnel. When it brings forward proposals for a high-speed rail link, the Government will look at them favourably, constructively and urgently.

Is the Minister seriously saying that, for example, on the Paris to Strasbourg TGV route, French railways is employing the same restrictive criteria as British Rail? Surely it is the Government who are responsible for regional policy and who should therefore look at ways in which regional rail investment can be fitted into overall regional policy. Will the Minister look as positively as French railways at areas such as the south Wales route for electrification, to ensure that Britain can benefit from the channel tunnel?

I confirm what I said earlier about the attitude and approach of French railways and the French Ministry of Transport to the provision of rail services between capitals. In terms of the basis of proposals for provincial services, the hon. Gentleman may know that only 50 per cent. of total rail investment over the next three years has had to meet the 8 per cent. real rate of return test. The other 50 per cent. has been justified for largely non-financial reasons. That is to say, it takes into account the benefits to non-users and, certainly, the economic and social benefits to the cities, regions and towns that such rail projects serve.

In thanking my hon. Friend for his answer, may I tell him that there will be despair not just among my constituents but among those throughout the Bradford metropolitan area and all hon. Members involved if electrification stops at Leeds? If one city has benefited under the Government it is Bradford, and we need electrification to encourage the further development of a thriving economy.

I am happy to confirm to my hon. Friend that the Government will reserve the appropriate resources to permit the electrification of the railway line between Leeds and Bradford and between Skipton and Likely. I am happy to confirm the electrification to my hon. Friend and to others who have pressed me on it—my hon. Friends the Members for Pudsey (Sir G. Shaw), for Keighley (Mr. Waller) and for Batley and Spen (Mrs. Peacock), and the hon. Member for Bradford, South (Mr. Cryer), who is not in his place.

Will the Minister please get his facts right? The east coast main line electrification will not be completed at the time that he states, because it goes only as far as Edinburgh. There can be no confidence either in British Rail or in the Government if they persist with such misinformation, especially when British Rail is cutting services and seems to be about to cut freight services to Aberdeen.

I am grateful to the hon. Gentleman for his welcome for the advent of the electrification of the east coast main line to Edinburgh. That will cut substantially the journey time between London and Edinburgh. As I have told the hon. Gentleman before, it is for British Rail to present a case on the extension of the electrification of the line to Aberdeen. We shall look carefully at any case that it presents, but InterCity services must meet the test that I outlined of an 8 per cent. real rate of return. We shall look at other factors, including regional and social benefits and alleviation of congestion for services other than those that we call the commercial railway, and take them into account.

Regional Airports


To ask the Secretary of State for Transport what measures are being taken to open up more transatlantic services from United Kingdom regional airports.

The Government recognise the importance of regional airports. An agreement was reached in June, which provided new opportunities for transatlantic services from regional airports. Official talks are to start tomorrow in Washington on the prospects for further liberalising the United Kingdom—United States aviation relationship on transatlantic services. That could open the way for any suitable United Kingdom airport to be used.

Does my hon. Friend agree that good transatlantic links can be of considerable importance in opening up regional centres such as Manchester and Birmingham for commercial and industrial development? My hon. Friend has been most successful in that so far. Will he continue with it? Will he confirm that that is not a substitute for further airport capacity in the south-east of England?

I agree with my hon. Friend about the importance for the regions of transatlantic services. It is thanks to my right hon. Friend the Secretary of State that in June we managed to get the agreement that made a significant advance. We intend to build on that in the talks that start tomorrow. I understand what my hon. Friend said about additional capacity in the south-east. A report on that was published last year, which we are studying and working on.

Does the Minister agree that much of the increased congestion at Heathrow is caused by people from other parts of the United Kingdom being brought in on shuttle flights so that they can then fly on to the United States? Would not it be better and quicker if the flights went direct from places such as Manchester to the United States? Would not that avoid some of the congestion in the south-east and bring the necessary investment to the Greater Manchester area that we all want?

I agree with the hon. Gentleman, and I should go further and say that it is important that we concentrate on developing regional airports. Much of what can be done by regional airports, such as attracting the airlines and showing that the business is there, is in their own hands. Regional airports such as Manchester have done that and I congratulate it.

Does my hon. Friend understand that regional airports will not benefit from the opening up of transatlantic or any other services unless and until they are properly privatised? Will my hon. Friend give an undertaking that the local authorities will be made to divest themselves of ownership of those regional airports, so that the airports can expand and take advantage of the opening up of air travel in the 1990s?

My hon. Friend makes a forceful point, which found sympathy with a number of my colleagues. Some regional airports have gone into private ownership. Perhaps it will surprise most hon. Members to know that one of the first was Liverpool. We welcome that and hope that others will follow that example.

What encouragement are the Government giving regional airports to develop transatlantic services? Is not it strange that British Airways, although not wanting to operate such services, invariably objects to foreign airlines doing so? Will the Minister comment on the fact that British Airways in the private sector rarely welcomes the competition that it regularly and publicly espouses? Is there any evidence that ownership of the airports has been anything other than beneficial to local authorities and poll tax payers, who have contributed to the airports?

Regional airports have grown because of the economic benefits offered by the Government. Ten years ago, regional airports were not making any money and were not providing services for their localities. The liberalisation of air services, to which the Government are committed, has led to the expansion of regional airports and we are proud of that.

Does my hon. Friend appreciate that, with regard to the Washington talks, the Government's ability to resist pressures from the United States to get something for nothing will result in our airlines being able to compete fairly across the north Atlantic? Will my hon. Friend guarantee that there will be no concessions on our fifth freedom or cabotage rights this side of the Atlantic without the Americans playing the game and giving us similar rights in America? Would not the current GATT round of talks be a good forum in which the lowering of that protectionist barrier might be achieved?

My hon. Friend makes a good point. I assure him that the talks that start tomorrow are designed to bring liberalisation, which will give opportunities for United Kingdom and other airlines. We are determined to give those equal opportunities and to make sure that United Kingdom airlines do not suffer or lose out in the negotiations.

British Rail Staff


To ask the Secretary of State for Transport when he next expects to meet the chairman of British Rail to discuss wages and conditions of British Rail staff; and if he will make a statement.

I discuss a variety of railway matters at my regular meetings with the chairman of British Rail. Wages and conditions of BR staff are primarily matters for British Rail management.

Is the right hon. Gentleman aware that it is nothing short of a scandal for Sir Bob Reid to receive £200,000 a year—an increase of £88,000 on the salary of the previous chair—when the basic rate for railway workers is £115·10 a week? Why did the management last year receive a 15 per cent. increase across the board, yet the railway workers got a miserly 8 per cent? Why will not the right hon. Gentleman give a guarantee now—some of his colleagues are throwing around promises—that railway workers will be treated in the same way as the management? Let us have no more of these double standards.

The new chairman of British Rail is one of the outstanding managers in Britain. To accept the job, he took a substantial reduction in salary compared with the salaries offered to him in other jobs. As the hon. Gentleman knows, those 15 per cent. increases were all individually negotiated contracts and were based on performance-related pay. Will the hon. Gentleman use his trade union connections to encourage the unions to start thinking in a modern way and to adopt shorter, more flexible hours and co-operate with the management, so that they can be better paid and work fewer hours?

Does my right hon. Friend agree that there is a pent-up feeling in the railway work force, particularly in great centres such as York, that the work force would like to share in any possible equity participation? The fruits of their endeavours would come through in share ownership. At the next meeting with the chairman of British Rail, will my right hon. Friend look actively at that possibility, which would reduce the demand on wages and hence the pressure on freight and commuter users?

As the House knows, we are determined to privatise British Rail. As part of that privatisation, we shall make sure that the employees have shareholdings. I am sure that the House is aware that in every privatisation, the trade union leaders opposed privatisation and then urged their members not to take shares. However, 95 per cent. of their members, on average, chose to ignore their advice. I am sure that it will be the same with British Rail.

In view of the connection made by the Hidden inquiry on the Clapham tragedy between the excessive working conditions of the workers and the cause of that tragedy, can the Secretary of State tell us whether he now accepts that the Government's financial policy contributed to that problem? Does he accept that his inspectors should be prosecuting not only British Rail but the Government?

I heard the hon. Gentleman's half-baked suggestion when the announcement of the prosecution was made. I am sure that he will remember, as he studies those matters carefully, that in their evidence to Hidden both the chairman and the finance director said that they had adequate finance available——

May I remind the hon. Gentleman that the accident arose from additional new investment in signalling that was badly carried out? The hon. Gentleman may not have noticed that British Rail recently came forward with a package offering shorter hours, higher pay and more flexibility. I hope that the hon. Gentleman will encourage the unions to accept that package—they are refusing to do so at the moment.

Roads Programme


To ask the Secretary of State for Transport whether there have been any changes since the last announcement on the roads programme intended either to reduce the expenditure or prolong the construction periods in that programme.

No, Sir. This year's public expenditure settlement provided additional resources sufficient to maintain the programme already announced.

Does my hon. Friend agree that that confirmation should be welcome news to the groups that have expressed concern, on environmental grounds, about the noise and vibration from heavy traffic in our towns and villages and to those who are concerned about the reduction in road safety standards? Does he further agree that the programme will provide the means to avoid congestion, which wastes fuel and negatives the use of catalytic converters?

I very much agree with my hon. Friend. Investment in new roads ensures that congestion is relieved in the areas where it is most environmentally unsuitable to have through traffic. That is why the Government are proud of their record of 100 new bypasses and a massive road-building programme. Alone of all the political parties, the Conservative party is committed to further investment in Britain's road network.

My hon. Friend will be aware of my concern about the prolongation of the agony of decision making. Is he also aware that my constituents have been waiting since 1971 for the decision to build a fast, safe, dual road from the motorway to the city of Nottingham? My hon. Friend has before him a viable, widely supported plan, which has been put to him by the local Member of Parliament. Will he make a decision and get on with it?

It will not be long before the decision is made. I am not sure whether my hon. Friend would have been too pleased if what he thought to be a wrong decision had been made.

British Rail


To ask the Secretary of State for Transport how many new trains British Rail has on order.

British Rail has on order, for delivery up to 1994, 787 coaches for electric trains, 630 coaches for diesel trains, 15 channel tunnel train sets and about 170 locomotives.

Is my right hon. Friend aware that my constituents are fed up with the cattle truck conditions that they suffer when commuting to London? Is he further aware that they are looking forward to the introduction of the Networker trains, which will do a great deal to help? When can my constituents expect that relief to be on track?

The north Kent line is undergoing a modernisation programme costing more than £467 million. Some 63 stations will be lengthened to take 12-coach trains and the most modern commuter trains running in Europe will be introduced on the line next September. There will be brand-new signalling along the whole of the line and a new maintenance depot to ensure that the new equipment is properly maintained. Huge investment is taking place, which is good news for my hon. Friend's constituents.

Will the Secretary of State ask his officials to give him a report on the quality of the stock available on the Edinburgh-Linlithgow-Dunblane line?

Yes, I shall do that for the hon. Gentleman. I spent the day with ScotRail a week last Friday and I was very impressed with the new service between Edinburgh and Glasgow, which has the new 158 trains that are air conditioned, fast, clean and reliable. I was also impressed with the service on the Bathgate line, which has been reopened. I shall give the hon. Gentleman the answer to his question.

Should not my right hon. Friend be congratulated on his success in obtaining money from the Treasury—not only last year, but in the autumn statement this year—hugely to increase investment in British Rail and elsewhere in the transport system? Will he ensure that publicity is given to the sort of information that he has just provided, not least that on the new terminuses in London that are being greatly improved, so that the travelling public will know that improvements are on the way?

I am pleased to confirm that there is more than £7,000 million in the programme for investment in public transport, both rail and underground, for the three years beginning next April. That is in addition to the record programmes now under way.

Is the Secretary of State aware of the statement made recently by the right hon. Member for Henley (Mr. Heseltine) that he intends to devote far greater resources to railway investment, even at the expansion of a reduction in tax? As that is clearly at odds with what the Secretary of State has told the House, is not it time that the right hon. Gentleman accepted my suggestion that he should resign, before he is sacked in three days' time?


To ask the Secretary of State for Transport if he will make a statement on investment in British Rail.

As my right hon. Friend the Secretary of State said, we have provided for up to £4 billion of investment by British Rail over the next three years —the highest level for 30 years in real terms. Of that, £1·4 billion is for channel tunnel services and £1·3 billion for Network SouthEast.

My hon. Friend deserves congratulations on his Department's provision of that huge amount of money. He recently saw for himself the enormous cost, in environmental and money terms, that is carried by Kent because of the colossal increase in the number of lorry movements in the country. When he examines British Rail's investment programme, will he take into the mathematics the cost savings in the road programme if he encouraged British Rail to make more sensible plans for carrying freight on the railways?

I agree with my hon. Friend's sentiments. We must encourage the transportation of as much freight as can sensibly be carried by rail. We expect to make an announcement after Christmas that will bring together the various strands of British Rail and Department policy on freight. Sir Fred Holliday, a member of the British Rail board, is conducting a study of the environmental impact of channel tunnel rail services and we expect him to report next spring. I am sure that my hon. Friend will be interested to learn that. W. S. Atkins, an independent consultancy, will review the processes by which British Rail will reach a conclusion next spring on the right route for the high-speed rail link into London.

The Minister said that he would welcome an application from British Rail for electrification of the Crewe to Holyhead line. However, he must realise that British Rail will not apply, because, although European money is available, the Secretary of State would deduct it from grant that British Rail might be given for investment elsewhere. Money is available, uniquely, for the Crewe to Holyhead line, which would serve a development area and offer a direct international connection between member states of the European Community. What encouragement can the Minister give British Rail to produce plans for the electrification of that line for the Department's consideration?

Of course, we welcome any grant from the European transport fund, which this year stands at approximately £50 million, and which is expected to rise to £100 million next year. However, those sums are modest if one remembers that they are available for all 12 countries in the Community. Any grant, however small, is helpful and appreciated., but the European fund is by no means a panacea and will certainly not assist the hon. Gentleman in his promotion of a high-speed rail link from London to Scotland. Sufficient funds are not available now from the European transport fund and they will not be available.

Further to the earlier answer of my right hon. Friend the Secretary of State, does my hon. Friend share the concern about the north Kent line felt by Members of Parliament representing Kent constituencies? Will he confirm that British Rail investment will not only cover the inner-city area but will extend all the way down to Thanet?

My right hon. Friend the Secretary of State and I are very mindful of the need to improve services on the north Kent line. I hope to visit my hon. Friend's constituency shortly, to explore with him and to understand better his constituents' concerns, which he has represented clearly and forcefully. British Rail plans to make improvements to the line, but that will be done as resources are available.

Channel Tunnel


To ask the Secretary of State for Transport if he will make a statement on prospects for the channel tunnel fast link to London.

British Rail is eager to proceed with the rail link to the channel tunnel as soon as it is a viable proposition. It is reviewing the options and expects to reach a conclusion on its preferred option next spring.

On behalf of myself and the London borough of Newham, may I thank the Minister for his visit to Stratford on Friday? What are his impressions following that visit? Will he give a clear public assurance that British Rail is seriously considering Stratford as the site for the international station for the channel tunnel? Will he also say that British Rail will publish the criteria that it has adopted for considering the options for the route linking Kent to London?

I am grateful to the hon. Gentleman. I enjoyed my visit to Newham and Stratford terminal very much. Clearly it is an important intersection of lines for British Rail. The director of Network SouthEast gave the hon. Gentleman British Rail's commitment at that meeting—which I reinforce—that he will consider the prospects for redevelopment of the station straight away to improve facilities, which clearly need improvement, for the lines that currently run through Stratford.

As for Stratford being the location for the international station, that is for British Rail to evaluate. It was interesting for me to see the space available, but we must also note that, whichever route is chosen for passengers to come into London, it is important for them to arrive at a terminus in central London. British Rail made that plain. The Government understand that. In so far as the second terminal is to be King's Cross, the Government support British Rail. That is not inconsistent with a station at Stratford, but is nevertheless an important consideration.

Is my hon. Friend aware that there is some misunderstanding about the timetable to be followed by the Department following the presentation to him of British Rail's proposals for the construction of a high-speed rail link through Kent? Can he place on record today the likely timetable to be followed, leading to the announcement of his Department's approval, or otherwise, for British Rail's proposals?

I am grateful to my hon. Friend. British Rail has said that by next spring it will conclude its study of the alternative routes into London. The chairman of British Rail and its management have made plain their view that one needs a second terminal in central London, and that it should be King's Cross—that is the subject of a Bill before Parliament. When British Rail has reached a conclusion—as I said earlier, independent consultants will review the process and I am sure that my hon. Friends will put questions about it at the appropriate time—it will place before my right hon. Friend the Secretary of State for Transport a proposal for the preferred route and the method of financing it. The Department will consider that as quickly as possible.

Pending the decision to make Stratford the international interchange for the channel tunnel link, which would be a sensible decision, does the Minister recall sending me a letter earlier this year, stating that there would be immediate improvements to Stratford station —for example, making the lavatories work and painting the waiting room? His letter said that that work would be done by the end of the summer. Has he noticed the cold weather outside and the fact that the English summer has now ended? Can he give me a date when those promised improvements will take place?

That is a matter for British Rail. I understand the hon. Gentleman's concern and that expressed by the hon. Member for Newham, North-West (Mr. Banks). Improvements are needed to the station. Quite honestly, services and facilities there are not up to those that a major interchange station such as Stratford deserves. It will receive my personal attention.

Will my hon. Friend reassure the House that the independent assessment of British Rail's and the private group's proposals for the channel tunnel rail link will be truly independent and objective? I am sure that he will be disturbed to learn that functionaries of British Rail are promoting the impression, in the Warwick gardens area of my constituency, that it is only a matter of time before British Rail's original proposals for Warwick gardens are carried out.

There is no reason why my hon. Friend's constituents should jump to that conclusion. Distinguished independent consultants will thoroughly review the process to ensure that the logic, reasoning and rationale are sound and that the decision made is not only defensible by British Rail, the operator, but will command the widespread support of hon. Members.

Will the Minister admit that the choice of Upper Halling in west Kent—[HON. MEMBERS: "Hawling."] However it is pronounced—[Interruption.]

With your permission, Mr. Speaker, I shall start again. Will the Minister admit that the choice of Upper Halling in west Kent on the safeguarded route prejudices the rest of the route? Will not the link pass through south-east London, unless he changes the criteria? Will he follow the advice of the European Commission and change the Treasury rules to allow for a mix of public and private money to finance the link in a way that will meet national, economic and environmental needs?

I understood perfectly what the hon. Lady meant. The line that is safeguarded between Folkestone and the North Downs does not prejudice any of the three routes. It is a safeguarding procedure to prevent developments or construction along the line of the route that would be inconsistent with perhaps one or two of the proposals. Whatever happens, it is certain that the route will pass through Ashford, and the Government have given a commitment to support Ashford station.

The Government have not ruled out public financing of a high-speed rail link—not a grant, but public financing —or a contribution from Network SouthEast to reflect improvements to commuter services in south-east Kent. A high-speed rail link that serves commuters will bring benefits to those who live in the south-east and therefore higher fares and revenue to British Rail.

The Arts

Enhancement Fund


To ask the Minister for the Arts what criteria he will employ when distributing his new enhancement fund.

The enhancement fund will help arts organisations to enhance the quality of their output and management. I have asked the Arts Council to propose criteria that will achieve those objectives.

The Minister will be aware of the concern that the fund will not be used to help smaller regional theatres. What reassurance can he give to theatres such as the New Victoria theatre in my constituency, which has operated for the past four years on a subsidy grant less than that agreed by the Arts Council?

The hon. Lady will understand that I mean no disrespect to that theatre when I say that I cannot comment specifically on it. The fund represents moneys that were made available to meet the needs of the hour. They are not confined to the great national companies but include the needs of local companies. I hope that the Arts Council will propose a range of uses of the enhancement fund that will meet local and national needs.

May I congratulate my right hon. and learned Friend and my right hon. Friend the Chief Secretary to the Treasury most warmly on their remarkable achievement in substantially increasing the overall amount of money for the arts which demonstrates the Government's continuing commitment to the arts? Will my right hon. and learned Friend clarify and make it quite plain that one objective of the imaginative enhancement fund is to make it easier for the Arts Council to channel more money to arts bodies that provide art of the highest quality?

My right hon. Friend is an extremely hard act to follow. This year's good settlement merely follows on from his tremendous efforts during his five years as Minister for the Arts, culminating in last year's settlement. The aim of the enhancement fund is to enhance the activities of excellent companies. It is not confined to companies that have run up deficits.

When the Minister first announced the enhancement fund he said that he would take a close look at the proposals. Does his close look constitute a different approach to the arm's length principle from that of previous Ministers for the Arts?

No, it certainly does not. In previous years my right hon. Friend the Member for Shoreham (Mr. Luce) very properly top-sliced certain sums of money for particular uses. For instance, there was an incentive fund of £5 million and my right hon. Friend made provision for an additional £3 million this year for different sorts of incentive schemes. Because of present needs, it is right that there should be an enhancement fund, but I do not propose to enter into the details of its distribution. If, however, I obtain money from the Treasury on the basis that there are needs to be met, I am entitled to examine whether those needs have been met.

I do not believe that the arm's-length principle means that Ministers should resemble the Frankenstein monster, although some may see a comparison, with life breathed into one in September to argue with the Treasury in October, to announce the provision of money in November and then to go back to sleep again in December for eight months. My duty is to ensure that the arts are safeguarded by the proper distribution of funds.

I, too, congratulate my right hon. and learned Friend on an excellent settlement. May I thank him for his approach to arts matters? Will he confirm that both the Royal Shakespeare Company and the Royal Opera house will be eligible for further assistance from the fund?

They will certainly be eligible, but we shall have to await the Arts Council's deliberations.



To ask the Minister for the Arts how many appointments he has personally approved since assuming his responsibilities as Minister for the Arts.

Twelve, Sir. Seven were for the British Film Institute, including the reappointment of Sir Richard Attenborough as chairman. Four were for the Crafts Council. The other was for the British museum.

I am certain that the Minister has backed the winner in the leadership contest for the Conservative party. When the goodies are handed out, will he impress upon the new Prime Minister the need to have the Minister for the Arts in the Cabinet? The right hon. and learned Gentleman would enjoy that, and the arts world would benefit from it. Now that the lady has almost gone and we can talk freely among ourselves again, will he drop the absurd Thatcherite obsession with attacking local authorities? Will he make it clear that when he makes appointments to the regional arts boards he will keep up the number of local authority nominees?

I had the winner yesterday afternoon. I hope that I have got the winner tomorrow as well. The status of the Minister for the Arts will be a matter for the new Prime Minister. As for appointments to the regional arts boards, I have had a number of constructive meetings with local authority representatives. Our wish is that there should be a strong local authority presence, nominated by local authorities, on the regional arts boards. The fact that one third of the places are reserved for local authorities is a sign of the importance that we attach to an arts funding partnership with the local authorities.

As those appointed to arts bodies can make good use of the excellent increase in the funding obtained by my right hon. and learned Friend, may I, too, congratulate not only him but the whole of the Government team at the Treasury, led by my right hon. Friend the Member for Huntingdon (Mr. Major), the Chancellor of the Exchequer, because it is due partly to his support and firm encouragement that the arts are able to benefit in this way?

On appointments, will the Minister confirm that every single regional arts association has written to him, protesting in the strongest possible terms against the proposal in his letter to the chairman of the Arts Council that he personally should appoint the chairs of the new regional arts boards? Does a single person or a single arts body support the Minister in this extraordinary centralist move? Will he withdraw it?

The jury before which the proposals have to be judged is not composed of the regional associations as they are now constituted. We have to try to ensure, in accordance with various reports—including those of Committees of this House—that there is proper accountability for moneys that are spent. The money spent by the regional arts boards is overwhelmingly Treasury-obtained finance, although we also maintain a sense of regional ownership and the partnership with local authorities. The hon. Gentleman should await the deliberations of Tim Mason's committee, as I shall.

What is absolutely clear is that I will not shrink from establishing a framework that is, to my mind, consistent with ensuring that the bodies to be transferred—if, indeed, they are to be transferred; most do not want to be under the existing arrangements—can be reassured that the new structures will be strong enough to bear the weight of the evaluations needed for them. That is the important point. It has nothing to do with amour-propre and who appoints whom; it has to do with how we can best enhance the quality of artistic life in this country.


To ask the Minister for the Arts if he will list all appointments made by him to arts bodies in the last year.

Yes, Sir. I have arranged for the list to be published in the Official Report.

Does the Minister accept that much of this country's activity is ridiculously overcentralised and that it is time that we brought some democracy into arts appointments? Should not there be guaranteed places for local authority members appointed by their local authorities, rather than by the Minister? Does he further accept that the minority ethnic communities and user groups of arts centres and theatres should be able to appoint and elect people to arts authorities, rather than the Minister's sitting in splendid isolation in London deciding who should be the members of every regional arts authority?

That prompts the large question, whether the quality of the people appointed in such a way would ultimately be any better. I am closer to the hon. Gentleman than he recognises. I have already proposed that one third of the membership of regional arts boards should be local authority representatives.

Hang on a minute. I am coming to that. I got the point the first time, although I do not always.

We are asking the local authority associations to find a way of proposing a mechanism so that they can determine



Name of Appointee


Advisory Committee on the Government Art CollectionMemberMr. R. Shone30 July 1990
Arts CouncilMembersMs. B. Anderson1 April 1990
Mr. E. Hall1 April 1990
Miss C. Mulholland1 April 1990
Professor Sir Alan T. Peacock1 April 1990
Sir Brian N. R. Rix1 April 1990
Mr. A. Smith1 April 1990
Professor C. St. John Wilson1 April 1990
British Film InstituteChairmanSir Richard S. Attenborough1 October 1990
GovernorsMrs. B. Anderson1 October 1990
Mr. T. Clarke1 October 1990
Ms. B. Ferris1 October 1990
Ms. P. Hoon1 October 1990
Mr. R. G. Hughes1 October 1990
Mr. A. Sapper1 October 1990
British Library BoardChairmanCommander L. M. Saunders-Watson19 March 1990
MembersThe Lord Adrian1 May 1990
Professor A. J. Forty1 April 1990
Mr. D. A. E. R. Peake1 July 1990
Mr. R. E. Utiger1 May 1990
British MuseumTrusteeProfessor C. Renfrew19 October 1990
Crafts CouncilMembersMr. A. H. Doggart11 October 1990
Mr. J. Jones11 October 1990
Mr. J. Newton11 October 1990
Professor D. Vaughan11 October 1990
Greater Manchester Museum of Science and IndustryChairmanMr. A. Goldstone27 January 1990
Library and Information Services CouncilMembersMr. S. A. Brewer1 January 1990
Sir Charles Chadwyck-Healey Bart1 January 1990
Councillor C. Heinitz1 January 1990
Mr. C. J. Koster1 January 1990
Mr. D. Leabeater1 January 1990
Mrs. S. I. Martin1 January 1990
National Museums and Galleries on MerseysideTrusteesProfessor G. J. Davies1 January 1990
Mr. J. Entwistle1 April 1990
Mr. A. Swerdlow1 April 1990
Lady Vaizey1 April 1990
Reviewing Committee on the Export of Works of ArtMembersMr. G. Jackson-Stops1 August 1990
Dr. J. I. R. Montagu1 August 1990
Mr. A. G. Reynolds1 January 1990
South Bank BoardChairman designateSir Brian Corby11 June 1990
Theatres TrustChairmanSir David L. Crouch6 April 1990
TrusteesMr. I. Albery6 April 1990
Baroness Birk6 April 1990
Mr. G. L. Harbottle6 April 1990
Mr. R. M. Marshall6 April 1990

Private Sponsorship


To ask the Minister for the Arts if he will make a statement about the growth in private sponsorship in the arts since 1983–84.

who goes on to boards. I am anxious that there should be a proper partnership with local authorities, with the minimum amount of trouble and fuss.

Following is the information:

Business sponsorship of the arts now stands at over £30 million a year, more than double the level in 1983–84. Much of this growth is due to the Government's highly successful business sponsorship incentive scheme.

Does my right hon. and learned Friend accept that that dramatic increase is welcomed by everyone connected with the arts? Does he further accept that many Conservative Members prefer privately funded to publicly funded generosity?

I hope that most of my hon. Friends— indeed, most Members of the House—believe that a balance must be struck. I appreciate that I will never convince at least one of my hon. Friends—I am more hopeful about others—that we want substantial private contributions, although I am firmly committed to a strong level of Government funding. I hope that that level will increase year on year, which is what we managed to achieve this year.

Civil Service

Conditions Of Service


To ask the Minister for the Civil Service when he last met civil service trade union leaders to discuss conditions of service.

I have not yet met the civil service trade union leaders; I shall of course do so as and when necessary.

If and when the Minister's friend, the Chancellor of the Exchequer, becomes Prime Minister and introduces his classless society, will he ensure that civil servants get an extra bonus for introducing Bills to carry through that classless society—Bills to abolish the honours list, the public schools, the House of Lords and the royal family, and retrospective legislation to get rid of all those knighthoods of the Tory Members who voted for the right hon. Member for Henley (Mr. Heseltine)?

I shall ask my right hon. Friend to give that most careful consideration.

I hope that my right hon. and learned Friend will find time to introduce a Bill to preserve the hon. Member for Bolsover (Mr. Skinner).

When my right hon. and learned Friend talks to the civil service will he make a point of discussing the opening hours of museums and galleries, especially at weekends, on bank holidays and in the evenings when families, particularly children, could visit them if they were open?

That is a good point. Like my hon. Friend, I represent an inner London constituency where many people like to go to museums and galleries. Family times do not necessarily fit in with opening times. There is a difficult balance to be struck. Perhaps my hon. Friend would write to me in more detail about his opinions. I shall meet the directors of museums and galleries before Christmas and I should be interested in discussing his proposals with them.

I am not as optimistic as my hon. Friend the Member for Bolsover (Mr. Skinner) that if the Minister's favoured candidate becomes Prime Minister he will produce a classless society. Is there any opportunity of the people at GCHQ once again having the right to belong to a trade union if the Chancellor of the Exchequer becomes Prime Minister, or are we going to continue with the autocratic rule of the Thatcher years?

We are going to continue with the common sense settlement that was reached a few years ago. There is absolutely no reason to reopen the matter.



To ask the Minister for the Civil Service what further progress has been made towards the creation of agencies.

Since I last reported to the House, the Government have published the first annual review of "next steps" agencies and the Government's response to the Treasury and Civil Service Select Committee's third and very helpful report on "next steps".

Will my right hon. and learned Friend confirm that he will continue the sensible policy of his predecessor in making a top priority in the creation of any new agencies improved services to the general public, particularly as it is the general public who fund them?

Just because it is not well known, people should not overlook the significance of the "next steps" development, which I have reason to hope is a bipartisan policy and not a matter of political controversy. It affects organisational changes, not as ends in themselves, but towards better services to the public and better working conditions for people within the service, for whom the agency framework offers a much better quality of working life. We shall certainly proceed with that. We are determined to achieve our ambition of half the civil service being in "next steps" agencies by the end of 1991.

Whether the establishment of these agencies is a bipartisan policy depends on what the Government do. The Minister is certainly right that many things are not well known. It is important that standards of quality and service to the public are part of any agency programme. They must not fall below levels determined by the Minister. Can the Minister be helpful and make these things better known? Can he put them together and make all these standards of service available to the public in an effort to achieve greater awareness?

That is a most helpful and constructive point. As the hon. Gentleman knows, the key basis for the agency relationship is that accountability to Ministers and Parliament is not lost. There is firm agreement between Ministers and the agencies about what should be achieved and about setting standards. The payment of performance-related pay to the heads of the agencies depends on their ability to deliver on those. That is of the essence and creates an incentive towards good and effective service, which may have been absent previously. I should be only too happy to consider the hon. Gentleman's remarks sympathetically. I am grateful to him for making it clear that this positive framework for change in the civil service is something in which he and his hon. Friends are happy to be involved.

Can my right hon. and learned Friend go one step further and say what financial and manpower savings, if any, are achieved by the agencification process rather than the current system?

The principal aim is efficiency in the service to the public. In some circumstances that may yield savings; in others, it would not. I shall be only too happy to let my hon. Friend know, from the records that we have, what the effect has been so far.

Natural History Museum


To ask the Minister for the Civil Service if he will make a statement on the latest representations he has received from the Institution of Professionals, Managers and Specialists about the staffing situation at the natural history museum.

I have received a number of representations from the IPMS.

I understand that negotiations have continued between the natural history museum management and IPMS representatives, and I am glad to note that, on 20 November, an agreement was reached between them.

Should not the Minister transfer his affections from Chelsea football club and spend his Saturday afternoons up the road at the natural history museum? Will the IPMS be consulted about the disastrous proposal to reduce spending on library services at the museum by £80,000 to £100,000 in the coming year, given the loss that that will entail in terms of the serious scholarship that is so important to British science?

When I watch a game I occasionally have the feeling that there are some stuffed animals on the pitch, although that was not the case yesterday.

I take seriously the hon. Gentleman's question about the natural history museum because I know that he is very interested in the matter. I have taken quite a lot of trouble to have meetings to discuss it. There will always be controversy about the balance to be struck between the resources applied to making the museum more accessible to the general public and those applied to keeping the collection accessible to scholars. I understand that. I can only say that, having had meetings with Sir Walter Bodmer, the director and others, I believe that the museum has genuinely and sincerely attempted to achieve that balance. Now that agreement has been reached, the right thing to do is to await the outcome.

I hope that the hon. Gentleman will be reassured to hear that the museum's bids for running costs next year have been met in the settlement that I have been able to make available. I hope that that will help to maintain the balance and to ensure that the museum can continue to do its important work. I appreciate that, exceptionally, that also amounts to a great deal of commitment to research.

Action On Race


To ask the Minister for the Civil Service if he will make a statement on the programme for "Action on Race".

Departments and agencies are making good progress in drawing up and implementing their individual action plans under the programme for action on race which my predecessor introduced in May this year.

Does my right hon. and learned Friend agree that it is possible for selection and recruitment procedures to be based on what is suitable for white Anglo-Saxon Protestants but that, given our multicultural population, we must adapt the way in which we recruit and select people to ensure genuine fairness as between people of different races?

There is no doubt that we can and should do a great deal more to recruit more representatives of ethnic minorities to the public service and, in particular, to ensure that members of those minorities can occupy the higher offices in that service. The typically well-considered and far-sighted plan announced by my predecessor is designed to achieve that, and I look forward to receiving my hon. Friend's detailed comments on it.

Kuwait (Iraqi Withdrawal)

3.31 pm

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"The imminent vote in the Security Council on the limit of time on Iraqi withdrawal from Kuwait."
The matter is specific because the issue is no longer the "invasion of Kuwait" but whether outsiders have the right to intervene, even if such intervention involves misery on a scale that is out of all proportion to the initial outrage.

I have to persuade you, Mr. Speaker, that the matter is urgent. The crucial discussion in the UN is to take place on Thursday, and the hostages to whom my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) and others have referred, may prefer detention in Baghdad to the death from the sky which would be their certain fate if war broke out.

The matter is important, and important to the House, because we here must not indulge in courage by proxy. It costs those sitting on these green Benches little to make declarations to the effect that we must resist or that we must do this, that or the other in terms of a military option.

The high price of war will be paid by the country's youth, who were often reared in urban wastelands because there was "no money" to give them anything better. We have obligations to our service men. As national service tank crew and as one who for 21 months wore the emblem of the Desert Rats, I think that it is extremely important that the House shows those in service positions that we discuss what we propose to do.

This question has been repeatedly put and has equally repeatedly been unanswered: what on earth happens if more than one oilfield catches fire? There is only one Red Adair team. At least those questions should be answered before people start firing bullets and setting fire to oilfields.

There is also a matter which is personal to yourself, Mr. Speaker, as Speaker of the House. There are occasions when the two Front Benches are basically agreed on a course of action, rightly or wrongly. I believe that some of us, perhaps many of us on the Opposition Benches, do not share that consensus. Therefore, we rely on your judgment to form a view on whether there should be a debate on a matter of this kind. The Gulf is a matter of overwhelming importance and urgency. If it is not discussed on Tuesday, or, at the latest, Wednesday, it will be too late and decisions will then be made in the United Nations.

The hon. Member for Linlithgow (Mr. Dalyell) asks leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,

"the imminent vote in the Security Council on the limit of time on Iraqi withdrawal from Kuwait."
I in no way underestimate what the hon. Gentleman has said. However, as he knows, under Standing Order No. 20, I must announce my decisions without giving reasons to the House. I have listened with concern and care to the hon. Gentleman, but he knows that I must decide whether his application comes within the Standing Order and whether it should take precedence over the business set down for today or for tomorrow. I regret that, in this case, the matter does not meet the requirements of the Standing Order, and I cannot therefore today submit his application to the House.

On a point of order, Mr. Speaker. Will you give guidance to the House? As it is clear that action is likely to be taken on the diplomatic front, would it not be appropriate, as my hon. Friend the Member for Linlithgow (Mr. Dalyell) suggested, for the House to debate the issue as quickly as possible? Obviously there are many different and varied views in the House about the situation in the Gulf, and my view differs from that of my hon. Friend the Member for Linlithgow. However, I believe that he has a valid point, although there are those of us who believe that it may be necessary for military action to be taken while others like my hon. Friend the Member for Linlithgow take the opposite point of view.

In the face of the possibility of military conflict, it would be appropriate that there should be a debate on the matter in the House. Can you give the House any advice about such a debate? If you cannot grant one using your powers under Standing Order No. 20, can the Government be persuaded to have a debate in the near future?

That is a very different matter. The hon. Gentleman is aware that I have difficult decisions to take in these matters. I weighed what the hon. Member for Linlithgow (Mr. Dalyell) had to say with great care, because I received his request to make the application before 12 o'clock today. I have not turned down his application lightly, and in no way do I underestimate the importance of the matter.

Fishing Vessel (Sinking)

3.39 pm

On a point of order, Mr. Speaker. You will recall that the Minister of State for the Armed Forces made a statement on Friday about the tragic sinking of the fishing vessel Antares. Since then it has emerged that a trainee commander was in charge of the submarine that brought down the fishing vessel and that there was a very long delay in alerting the rescue services. As the Clyde fishermen are now threatening to blockade the Clyde unless action is taken to stop underwater submarine activities forthwith, have you had a request for a further statement from the Minister to correct the errors and omissions that were made on Friday and in view of the increased urgency of this particular matter?

I have not had any such requests. As the hon. Gentleman knows, I granted a private notice question about this important matter on Friday. It may be true that certain further information has come to public notice since then, but an inquiry is to be held, and no doubt that will be taken into account at the time.

European Community Documents

3.40 pm

On a point of order, Mr. Speaker. I wonder whether it is in order for the House to consider the motion being proposed by the Leader of the House that we should make a decision pursuant to Standing Order 102(2) in respect of a European Community document. I have just obtained a copy of Standing Orders from the Vote Office, and Standing Order 102(2) does not appear to cover this matter.

I then consulted your excellent Clerks, Mr. Speaker, who told me that there was a new Standing Order 102(2) somewhere which had been agreed at the end of the Session—indeed, I remember the debate on it. Unfortunately, however, the Clerks did not have a copy and sent me to the Vote Office, where, sad to say, I was told that there was no copy of the new Standing Order, because it was being printed.

This is not a jocular issue—not a matter of trying to pick an argument. I hope that you, Mr. Speaker, will consider three aspects. First, the only reason why the motion has been tabled is that the Council of Ministers is meeting next week—that is why the document has been switched from a Committee to the Floor of the House.

Secondly, the meat of the motion is huge. It proposes to put an end to the control on the possession of weapons at internal borders—a vital issue.

Thirdly, in an explanatory note, the Minister responsible has said that this is an abuse of article 100A on majority voting—

Order. The hon. Gentleman must not debate the matter. He must now allow me to give the reasons for this.

The Standing Order was agreed to on 24 October—

The hon. Gentleman says that he was here, so he knows that it was agreed to by the House. I shall look into why the Standing Orders have not yet been printed—they were sent to the printers immediately after the debate. A similar motion was passed last week and is part of our Standing Orders. I have to put the Question—

Mr. Speaker, I am not a troublemaker, but a specific period of time has elapsed. I cannot recall the wording of the Standing Order; I cannot obtain it from the Vote Office; and under the Standing Orders of the House, we need to have the papers necessary to take a decision. It is possible to regard the whole matter as a joke and to claim that it does not matter what papers we have because the Government will get their business through anyway, but that is not what I came here for 25 years ago. We are entitled to the necessary papers for decisions to be made.

The Chief Whip will recall the Single Act being put through late on a Thursday. Now we are to put through a vital issue again late on a Thursday or early on a Friday. Surely we should go through the proper procedures. How can we do that?

Order. We are going through the right procedures. The matter has been passed by the House and it is part of our Standing Orders. I have no authority to do anything other than put the Question. The hon. Gentleman was here, and if he does not like the motion, he can vote against it now.

There is a way around this. Notwithstanding the vote taken in a general form last week—

Last month. I want to ask you to tell the Leader of the House that this procedure has been found wanting because the relevant information cannot be obtained from the Vote Office. This matter can be taken off the agenda and brought back when the information is available. All the Leader of the House has to do is to stop this nonsense continuing.

Order! It is not a question of not being fair. It is a question of the House having passed the Standing Order. I have no authority to go against a decision of the House. The hon. Gentleman knows that—

Order. I will read out the motion passed by the House on 24 October. It states:

"If a Motion that specified European Community documents as aforesaid shall not stand referred to a European Standing Committee is made by a Minister of the Crown at the commencement of public business, the Question thereon shall be put forthwith."
The hon. Gentleman can vote against that if he does not like it, but I have no authority other than to put that motion.

I apologise for rising again, Mr. Speaker; this is my last intervention. There is no point in voting for or against. Our choice on the motion is either to discuss the directive in the early hours of Friday morning when no one will hear about it, or to put it to a Committee that is stuffed with people appointed by the Government. The issue here is that, under Standing Orders, the papers required for a debate must be in the hands of the House.

You, Mr. Speaker, are the only person who can protect us here. Why are those papers not available in the Vote Office? There is no point in voting on the motion because, either way, it will slip through and nobody will know about it, even though it is a vital issue. I simply say that papers should be available and that it is your duty to ensure that.

Is the hon. Gentleman saying that European Document No. 8836/90 is not available?

Well, I have explained to the hon. Gentleman that the Standing Order was passed by the House. The Speaker's hands are tied in matters of this kind. When the House passes a change in Standing Orders, I am obliged to accept it. I must now put the Question.

Order. I do not need the hon. Gentleman's help, helpful though he always is.

Motion made, and Question put forthwith, pursuant to Standing Order No. 102(2) (Standing Committees on European Community Documents).


That European Community Document No. 8836/90 relating to acquisition and possession of weapons shall not stand referred to European Standing Committee C.

The House divided: Ayes 164, Noes 19.

Division No. 10]

[3.46 pm


Alexander, RichardGlyn, Dr Sir Alan
Amos, AlanGoodlad, Alastair
Arbuthnot, JamesGorst, John
Arnold, Jacques (Gravesham)Grant, Sir Anthony (CambsSW)
Ashby, DavidGreenway, Harry (Ealing N)
Atkins, RobertGrylls, Michael
Atkinson, DavidGummer, Rt Hon John Selwyn
Baker, Nicholas (Dorset N)Hamilton, Neil (Tatton)
Beaumont-Dark, AnthonyHampson, Dr Keith
Bendall, VivianHarris, David
Bennett, Nicholas (Pembroke)Haselhurst, Alan
Blackburn, Dr John G.Hayward, Robert
Boscawen, Hon RobertHiggins, Rt Hon Terence L.
Bottomley, PeterHind, Kenneth
Bowden, A (Brighton K'pto'n)Hordern, Sir Peter
Bowden, Gerald (Dulwich)Howard, Rt Hon Michael
Bowis, JohnHowarth, G. (Cannock & B'wd)
Brandon-Bravo, MartinHowe, Rt Hon Sir Geoffrey
Bright, GrahamHowell, Ralph (North Norfolk)
Brown, Michael (Brigg & Cl't's)Hughes, Robert G. (Harrow W)
Buck, Sir AntonyHunt, Sir John (Ravensbourne)
Burns, SimonHurd, Rt Hon Douglas
Burt, AlistairIrvine, Michael
Butterfill, JohnJanman, Tim
Carlisle, John, (Luton N)Jones, Robert B (Herts W)
Chapman, SydneyKellett-Bowman, Dame Elaine
Chope, ChristopherKing, Roger (B'ham N'thfield)
Clark, Hon Alan (Plym'th S'n)Kirkhope, Timothy
Clark, Sir W. (Croydon S)Knapman, Roger
Conway, DerekKnight, Greg (Derby North)
Coombs, Anthony (Wyre F'rest)Knight, Dame Jill (Edgbaston)
Coombs, Simon (Swindon)Knox, David
Cormack, PatrickLamont, Rt Hon Norman
Cran, JamesLang, Ian
Davies, Q. (Stamf'd & Spald'g)Latham, Michael
Davis, David (Boothferry)Lawrence, Ivan
Devlin, TimLester, Jim (Broxtowe)
Dicks, TerryLightbown, David
Douglas-Hamilton, Lord JamesLilley, Peter
Dover, DenMacfarlane, Sir Neil
Dunn, BobMacGregor, Rt Hon John
Durant, TonyMacKay, Andrew (E Berkshire)
Dykes, HughMaclean, David
Eggar, TimMaclennan, Robert
Finsberg, Sir GeoffreyMcLoughlin, Patrick
Fishburn, John DudleyMajor, Rt Hon John
Forsyth, Michael (Stirling)Malins, Humfrey
Fowler, Rt Hon Sir NormanMans, Keith
Fox, Sir MarcusMarshall, John (Hendon S)
Franks, CecilMartin, David (Portsmouth S)
Gale, RogerMeyer, Sir Anthony
Gardiner, GeorgeMiller, Sir Hal
Garel-Jones, TristanMorrison, Sir Charles
Gilmour, Rt Hon Sir IanMorrison, Rt Hon P (Chester)

Moss, MalcolmSquire, Robin
Mudd, DavidStern, Michael
Neale, GerrardSumberg, David
Nelson, AnthonySummerson, Hugo
Neubert, MichaelTaylor, Ian (Esher)
Newton, Rt Hon TonyTaylor, John M (Solihull)
Nicholls, PatrickTaylor, Matthew (Truro)
Nicholson, Emma (Devon West)Tebbit, Rt Hon Norman
Onslow, Rt Hon CranleyThompson, D. (Calder Valley)
Oppenheim, PhillipThompson, Patrick (Norwich N)
Paice, JamesThornton, Malcolm
Patnick, IrvineTracey, Richard
Raison, Rt Hon TimothyTwinn, Dr Ian
Renton, Rt Hon TimViggers, Peter
Ridley, Rt Hon NicholasWalden, George
Rossi, Sir HughWallace, James
Rowe, AndrewWalters, Sir Dennis
Sackville, Hon TomWard, John
Sainsbury, Hon TimWardle, Charles (Bexhill)
Scott, Rt Hon NicholasWatts, John
Shaw, David (Dover)Wheeler, Sir John
Shaw, Sir Giles (Pudsey)Whitney, Ray
Shelton, Sir WilliamWiddecombe, Ann
Shephard, Mrs G. (Norfolk SW)Wilshire, David
Shepherd, Richard (Aldridge)Wood, Timothy
Shersby, MichaelYeo, Tim
Skeet, Sir Trevor
Smith, Tim (Beaconsfield)

Tellers for the Ayes:

Speed, Keith

Sir George Young and

Speller, Tony

Mr. Tim Boswell.


Abbott, Ms DianeMahon, Mrs Alice
Allen, GrahamMolyneaux, Rt Hon James
Barnes, Harry (Derbyshire NE)Pendry, Tom
Bidwell, SydneyRedmond, Martin
Dalyell, TamThompson, Jack (Wansbeck)
Flannery, MartinWinnick, David
Flynn, PaulWise, Mrs Audrey
Foot, Rt Hon Michael
Hoyle, Doug

Tellers for the Noes:

Lambie, David

Mr. Teddy Taylor and

Leighton, Ron

Mr. Dennis Skinner.

Livingstone, Ken

Question accordingly agreed to.

Orders Of The Day

Statutory Sick Pay Bill

Order for Second reading read.

3.59 pm

I beg to move, That the Bill be now read a Second time.

As right hon. and hon. Members will note, the Bill consists of only three clauses. The House may find that a welcome change from most of the social security and other Bills brought before it. In general, social security Bills cover a wide variety of different social security matters, and their lengths are commensurate with that. This Bill, however, is a one-subject Bill dealing solely with the arrangements under which employers can currently recover, from their remittances of national insurance contributions, the whole of the statutory sick pay that they pay out to their employees when they are sick.

As the House will recall—certainly the hon. Members for Oldham, West (Mr. Meacher) and for Birmingham, Ladywood (Ms Short) will—in my general uprating statement last month, I gave notice of our intention to adjust those arrangements as a continuation of, or a building upon, the restructuring of the SSP scheme that I undertook, to a modest extent, last year.

Before coming to the detailed provisions of the Bill, it might be helpful briefly to remind the House of the background to and the origin of the SSP scheme. Those hon. Members with lengthy memories—that will include the Opposition Front-Bench spokesmen—will recall that, when the Government came to office in 1979, occupational sick pay cover during the 1970s had taken off and begun substantially to expand. However, the state—I would call it the ordinary social security system—was continuing to process some 10 million sickness benefit claims a year, with the result that there was a significant overlap, and sometimes even over-provision, between the state and the employers. Because sickness benefit was not taxed, in effect many employees were better off when sick than when at work. It was against that background, and with a wide measure of consent from both employers and their organisations, that the SSP scheme was introduced.

I doubt whether the House will wish me to dwell too long on the history of the SSP scheme. Despite what I suspect one or two Opposition Members may say, it is fair to point out that the scheme has been a considerable success story. When it began, there was undoubtedly apprehension among employers and employees about its impact. In the event, those fears proved largely groundless, especially after the inevitable initial problems, which arise with any substantial changes, had been overcome. Employers quickly assimilated SSP into their usual payroll arrangements, and the vast majority of them now operate the scheme with very little difficulty. Perhaps a measure of its success could be gauged from the fact that even the trade union movement—if I may put it in those terms—commented favourably on the implementation of the scheme.

I acknowledge that smaller employers, who obviously have less scope for developing expertise in the SSP scheme, may sometimes find its operation more of a chore. That is one reason why I had their interests especially in mind when developing the package, on which I shall elaborate later.

Has my right hon. Friend had an opportunity to hold full consultations with all the small and medium-sized organisations? At a time when the Government are telling businesses generally that they must keep down their costs, for obvious reasons, and at a time of high interest rates, many of the small and medium-sized firms are in some difficulty. Has my right hon. Friend received any advice from the deregulation unit and from our hon. Friend the Minister with responsibility for small firms about their reaction to the Bill? I have heard a great deal of concern expressed because it is perceived that the Bill will add to costs at a difficult time. Will my right hon. Friend bear that in mind and tell the House what consultations he has had?

I will certainly bear in mind my hon. Friend's remarks, and I acknowledge the considerable part that he has played over many years—of which I have had personal experience in various ministerial positions and in other ways—in ensuring that the interests of small businesses in particular are taken fully into account. I hope that my hon. Friend will bear with me, because later in my speech I shall refer to parallel reductions in national insurance contributions, which are geared to take special account of the needs of smaller businesses. They may mean that some smaller employers—although not all, because it will depend to some extent on factors particular to certain businesses—whose employees are not highly paid, as is the case in many service industries, will find that reductions in national insurance contributions will leave them rather better off, taking the package as a whole, than at present.

I am sure that the Secretary of State would not want to mislead the House. He must be aware that the National Federation of Self Employed and Small Businesses is passionately angry about his proposals, feels that promises made in the past have been breached, and believes that the new measures will prove very destructive both to sick people and their businesses. That view is on the record. The right hon. Gentleman should not pretend that businesses welcome the legislation, because they certainly do not.

I did not make any such pretence. I sought to make a sensible and balanced response to my hon. Friend's intervention. Later in my speech, I shall give examples of the possible effect of the new system on a representative sample of small employers with a typical incidence of sickness, showing how they might gain from the reduction in national insurance contributions for employers, which are specially focused on lower earnings bands below £175 or £185 per week.

Will my right hon. Friend confirm that some representations were made before his uprating statement, in which he announced significant improvements in social security benefits that might put a different complexion on the representations made to him?

The representations to which the hon. Member for Ladywood referred were submitted before the federation had details of the reductions that were to take place in employers' national insurance contributions.

The hon. Lady must be referring to later representations. Those I have seen were dated 6 November, and it was not until 8 November, at the time of the autumn statement, that I gave details of the national insurance contributions re-rating proposals. The reduction for employers is rather larger in both percentage and absolute money terms than I indicated at the time of my original uprating statement. Once I had refined the detail, the final proposals were more generous than those signalled at the time that I announced the SSP proposals.

It may be that certain interests have not yet been able to take into account, to the extent that I would obviously want them to do, the advantages to employers of the reductions that are to be made in national insurance contributions, which will total about £250 million—quite a significant sum, taken over all.

There is no doubt that the interests of small employers in particular should be taken into account, and I have sought to do so. Considerable strides have been made in recent years in improving the presentation of guidance on statutory sick pay, which has done a great deal to increase understanding of the scheme among small employers in particular. Moreover, the development of software packages for those employers with computer payrolls—I accept that this is not true of all employers, but it is true of a growing number—has further eased any operational difficulties which may originally have been experienced.

Earlier in my remarks, I referred to the growth of occupational sick pay coverage which had occurred during the 1970s. Since statutory sick pay was introduced in 1983, and occupational sick pay coverage has continued to grow. At first, coverage was more selective—that may emerge later in the debate—and tended to apply to white collar rather than to manual workers. Gradually, as the expansion of occupational sick pay schemes continues, they have become more comprehensive.

When the former Secretary of State, the right hon. Member for Sutton Coldfield (Sir N. Fowler) introduced the Social Security and Housing Benefits Bill on 23 November 1981, he said that the latest available estimate was that 90 per cent. of full-time employees were in some sort of occupational sick pay scheme. I think that the latest estimate that the Minister has given was 91 per cent.—after a survey done for his Department in 1988. From 90 per cent. to 91 per cent. does not seem to be a great increase in coverage.

Certainly the coverage of occupational sick pay schemes is substantial. For example there has been a tendency to bring more part-time workers into such schemes and for schemes to provide more comprehensive coverage. As a result, many of those groups who are sometimes adverted to as people who have missed out in these developments, have been increasingly included.

As I was about to say—this is the point that the hon. Member for Orkney and Shetland (Mr. Wallace) was referring to—research carried out for the Department by an independent organisation, IFF research, in 1988 showed that about 20 million of the work force, or 91 per cent., as the hon. Gentleman said, work for employers with occupational sick pay schemes. As I have said on a number of occasions, for example during the uprating—

May I finish the sentence before the hon. Lady intervenes again?

That figure reflects the fact that there is a growing acceptance by employers of their greater responsibility for covering short-term sickness among employees, which in my view is right and proper.

We know that the Secretary of State chose the words in the uprating statement carefully—91 per cent. of the work force work for employers who provide some occupational cover. That does not mean that 90 per cent. of the work force are covered, as the hon. Member for Orkney and Shetland should know. Most low-paid, part-time, short-term workers are not covered. Nearly half the workers in the private sector are not covered. To talk as though 90 per cent. are covered is misleading. At best, probably only half the population are covered.

I think that the hon. Lady will find that the figures are higher than that. I hope that I always choose my words carefully. I have no desire to mislead anyone. It is certainly the case that 91 per cent. of employees work for employers with occupational sick pay schemes. As I was seeking to tell the hon. Member for Orkney and Shetland, in practice the schemes have become more comprehensive over the years, and fewer people are now excluded from them. That is the best assessment that we can make.

I shall gladly give way to the hon. Gentleman, but first, it may be helpful if I complete the next part of my speech.

A particularly striking feature of the report—commissioned in 1988—is the growth in coverage in manual occupations. That has grown from 62 per cent. of employees in 1974 to 88 per cent. in 1988—only 5 per cent. behind coverage in non-manual grades, at 93 per cent. The report also indicates that the majority of schemes—83 percent. in the private sector—top up SSP to full basic pay, and that, overall, nearly three quarters of all employees receive their full salary when sick. That is a very encouraging development, and it clearly demonstrates the extent to which employers have increasingly accepted responsibilities in the field of short-term sickness.

The Bill is premised on the view that occupational sick pay is wide and is increasing. Will the right hon. Gentleman face up to the point made by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short)—that 44 per cent. of private-sector schemes do not offer occupational sick pay and that 55 per cent. of private employers who employ fewer than 10 employees do not have an occupational sick pay scheme? The 90 per cent. figure that he keeps quoting is totally irrelevant and grossly misleading. Does he accept that there can be no justification for the Bill when that premise simply does not exist?

I do not accept that for a moment. The figure of 91 per cent. of employees working for employers who offer occupational sick pay schemes could not be said to be less than striking for almost any other sector. In some of the electoral matters with which the hon. Gentleman and I are concerned, 90 per cent. would be regarded as extremely high. Employers who do not offer what could be described as an occupational sick pay scheme may continue to pay employees for a significant time when they are sick.

Nothing that I have said could be described as misleading. If anything, the way in which the hon. Gentleman is trying to minimise employers' improved acceptance of their responsibilities on short-term sickness among their employees is far more misleading than anything that I have said.

I am grateful to the Secretary of State for giving way, because this point is crucial. If the Government are saying that they will change the basis of national insurance because 91 per cent. of people have cover, we must be clear about that figure, because we profoundly disagree with it. The only person covered by a workplace occupational sick pay scheme may be the managing director, and none of his workers may receive any benefit. A workplace may be covered, but not as many people as the Secretary of State is suggesting, on whom he is basing his argument.

I draw some encouragement from such a line of argument. If the hon. Gentleman can produce a significant number of examples—I am tempted to say, if he can produce one—of occupational sick pay schemes that are confined to the managing director, I might give some credence to his argument, but I doubt that he could find a single such scheme, let alone a significant number.

Is my right hon. Friend aware that, in agriculture for example, a sick pay scheme cannot be confined to one member but must be given to all members of staff?

I note what my hon. Friend says, and I am grateful to her. The trend has undoubtedly been towards wider coverage of groups who previously might not have been part of an occupational sick pay scheme, and we have borne that point in mind.

This problem is of deep concern to me, as I represent a constituency which, because of the changes to industry, is now a small-firm economy. Has not the Secretary of State missed a golden opportunity to consider employers who employ fewer than 10 people and to give some real statistics? Let us have the truth. Like Labour Members, the right hon. Gentleman knows that many employees are not paid SSP when they should be. Has any research been conducted into how many employers do not pay SSP? The right hon. Gentleman's case is flawed, and there is little statistical evidence to back up this nasty little Bill.

Occasionally, as in every part of the social security system, the rules do not work perfectly. A great deal of effort was put into improving the guidance and assistance to employers to help them to operate the system. One aspect of the reimbursement arrangements does not work well. In some circumstances, employers fail to claim what theoretically they are able to claim. People have the right to go to the Department of Social Security if they feel that they are not receiving their full entitlement. In certain circumstances, the DSS will take steps to make sure that they do.

I do not pretend that the system works perfectly in all cases. I do not pretend, either, that the administration of the social security system, through the DSS, works perfectly in all cases. It is incontrovertible, however, that the statutory sick pay scheme is working a great deal better than most Opposition Members forecast at the time that it was introduced. Moreover, it is working a great deal better than it did in the early days. It has settled down and, by and large, is working very well.

This report, which was debated at some length during the proceedings on this year's Social Security Bill, has been thorougly discredited by the Government. It does not reach the conclusion that the Minister reaches. It states that the majority of occupational pension schemes are very poor compared with the statutory sick pay scheme. Only 19 per cent. of private sector schemes provide cover for the full six months. Many of the other private sector schemes exclude trainee workers. In such dangerous industries as mining and construction, where a statutory sick pay scheme is needed, fewer than 50 per cent. of firms offer any sick pay scheme whatsoever.

I have already said that occupational sick pay schemes are widespread, that their breadth and coverage has improved in recent years and that the statutory sick pay scheme as a whole has worked well. It seems to me to be right that employers should accept greater responsibility for short-term sickness among those whom they employ. The Minister for Social Security and Disabled People is sitting beside me. I ought therefore to point out that, when demands on Social Security Ministers are high, we ought to do more for the long-term sick and disabled, for the less well-off pensioners on income support and for those who need help with residential and nursing care. It is right, when we consider how to use social security money, to consider our priorities. That is at the core of my argument.

If I may refer to occupational sick pay schemes in the public sector, in particular to civil service and local government schemes, there have recently been a number of horrendous reports of people regarding days off for sickness as though they were extra holidays. Can the Minister say whether the Bill will help to combat that abuse?

I had not intended to refer to that issue; I feared that it might inflame the hon. Member for Oldham, West, who is fairly easily inflamed. My hon. Friend may have in mind something to which I had decided not to refer—a recent Audit Commission report suggesting extraordinary levels of above-average absence through sickness in a number of London boroughs. I do not wish either to add or to detract from what the Audit Commission says, or to speculate about the reasons for it, or to suggest what the effect upon the Bill might be. However, my hon. Friend may seek to intervene in order to comment further on the matter.

I was seeking to say something about the pattern of occupational sick pay schemes. Obviously, I recognise that not everyone is covered; we have debated that point in the last few minutes. Under some schemes, some new employees may have to serve a qualification period before becoming eligible for occupational sick pay. A typical qualifying period for short-term sickness cover is three months. However, it is worth remembering that half of all private sector schemes—this follows on from some of the points made by Opposition Members—have no exclusion clauses at all. All employees in those schemes are covered from day one, regardless of length of service, job grade and so on.

As I have said, where there is a qualifying period, it would typically be about three months—perhaps, in some cases, six months—which is substantially less than the qualifying period for state sickness benefit. To receive state sickness benefit, in broad terms—I will not go into all the complications of the national insurance rules—it is necessary to pay contributions for two years, whereas large numbers of those in occupational sick pay schemes qualify for benefit from day one, and the great majority within three or six months.

Will the Secretary of State help all of us by giving his best estimate of the proportion of the working population who are covered? I do not want him to give the House these false figures relating to employers who cover some of their workers. What proportion of the British work force are covered by an occupational sickness scheme?

I have given the hon. Lady the best information that I can give, drawn from the survey that we conducted. If my right hon. Friend the Minister for Social Security and Disabled People can add to that, he will certainly seek to do so later in the debate. What is unarguable is that a substantial proportion of the British work force are covered by occupational sick pay schemes.

There is one other point that I should make. I am not quite sure whether the hon. Member for Ladywood is going to raise the question of those who are earning less than £46 a week, and are therefore below the lower earnings limit at present. If she is including those people in her reference to the proportion of the British work force, hers is a pretty poor point. Admittedly, they do not qualify for statutory sick pay, but in many cases they have deliberately chosen not to enter the national insurance system, and therefore would not qualify for state sickness benefit either. In effect, they have made a choice to stay out of the area of coverage for short-term sickness.

I would be interested to know whether the hon. Lady's implicit attempts to argue that point include those people who are in the work force, but have quite deliberately chosen to keep their earnings below £46 a week in order to stay clear of the national insurance system. We know that a lot of people do that, but that is a decision for them. I am not willing to accept that they should be included in the hon. Lady's statistics to somehow undermine the validity of what I am saying about the growth in coverage of occupational sick pay schemes.

I am happy to answer the Secretary of State. It is my view that we should extend the coverage for sickness and so on to part-time workers, as well as full-time workers. However, I think he knows that that is not the point that I am making. He keeps quoting the misleading statistic that 90 per cent. of the British work force work for employers who offer some occupational sickness scheme. That could include a tiny number in management positions in a very big work force: the right hon. Gentleman knows that. I am referring to the people within the national insurance scheme, which is being whittled away. I am not referring to those who work very short hours; that is a separate issue. Will he give the House his best estimate of the proportion of the work force who are covered? I doubt that it is half, and I do not want him to mislead the House and say that the figure is 90 per cent.

I do not think that I could be accused of having misled the House; I have no intention of doing that. It is clear that the proportion is very substantial. If my right hon. Friend the Minister for Social Security and Disabled People or I can give the hon. Lady any further help on that point later in the debate, we will.

It is a striking fact that so large a proportion of the work force—more than 90 per cent.—work for employers who have occupational sick pay schemes. It is incontrovertible that the spread of those schemes—which formerly excluded rather more people than they do now —has been substantial, and that a sizeable proportion of those in employment are either covered by occupational sick pay schemes or work for employers who, as a matter of practice, will go on paying them—often full pay—for some period when they are sick.

I repeat that this is the absolutely key, hinge point of the Bill. Does the right hon. Gentleman accept, and has his Department not briefed him—I am sure it has—that the IFF survey, to which he refers, involved a sample which was over-stratified in favour of large companies? Large companies are more likely to provide occupational sick pay, but there has been a reduction in their number and a huge increase in small companies with fewer than 20 or even 10 employees. It is precisely because they were under-represented in the survey and they do not offer occupational sick pay that the survey is so fallacious. Is the Secretary of State not therefore basing the whole Bill on a fallacy?

No, I am not. There are a number of interrelated points in the argument and we are arguing on one narrow front. The hon. Gentleman will remember from my uprating statement that we are undertaking a variety of steps here, all of which have some relationship to his point. Yes, there has been a large and welcome development of small firms. As I have often said, many of them will have employees who are paid less than £175 a week—or £185 a week, as it will be from next April—at which point they get into the full range of employers' contributions. Those firms are getting a proportionately larger reduction in their employers' contributions.

Equally, a significant number of employees of small firms will qualify not for the higher rate of statutory sick pay but for the lower rate. The lower rate was fully uprated in line with prices precisely because, as I said in my uprating statement, it was more likely to go to employees whose employers were not providing occupational cover.

The package as a whole includes the changes in the reimbursement arrangements, what has been done with the rates of SSP, including the full uprating of the lower rate, and the reduction in national insurance contributions, which is worth some £250 million to employers as a whole. While I am not in any way seeking to dismiss the hon. Gentleman's point about small employers, that very point has been carefully taken into account in the package of proposals with which this measure—the only one in the Bill which requires such legislation—is associated.

Employees who do not yet have any occupational sick pay cover tend to be people in low-paid or part-time employment. As I have said, it is precisely for that reason that the uprating proposals provided for a full uprating of the lower rate of SSP, which is what those groups are most likely to receive.

The summary to the sick pay report, which we have just been discussing—I stress that it was carried out by an independent research company—concludes:
"Looking to the future, the level of cover is likely to increase further, as employment continues to shift towards industries with more generous schemes (i.e. service and new manufacturing industries); traditional differentials between manual and non manual grades are further eroded; and as part of the continuing improvement in terms and conditions of employment".
It is on that record and prospect, derived in part from the report but by no means only from it, that we are seeking to build.

The proliferation of occupational sick pay schemes now means that, for the great majority of those in work, the rates of SSP bear little or no relation to the amount that they receive when sick. It is right that the Government should take account of that in the future development of the scheme and in considering the distribution of available resources within the social security budget as a whole.

Let me now outline the proposals for the restructuring of statutory sick pay which I announced to the House during my uprating statement on 24 October. As has become clear from our exchanges over the past few minutes, the proposals contain two elements. The first comprises the reimbursement arrangements for employers, which are the subject of the present Bill. The second relates to the changes in the rates and earnings thresholds for SSP.

I should make it clear that the latter will be covered in a separate SSP uprating order and will be debated in the House, with the main benefit uprating package, in due course. It would perhaps not be proper for me to anticipate that debate, although it is right—again, as our exchanges have clearly shown—to refer to those changes during this Second Reading debate, because they form part of the general restructuring of SSP.

As hon. Members know, there are two rates of statutory sick pay. At present, the lower rate goes to those employees whose average weekly earnings are between £46 and £125—£46 being the lower earnings level at which national insurance contributions become payable. As I explained to the hon. Member for Ladywood, I propose to increase that rate, in line with the full retail prices index amount of 10·9 per cent., from £39·25 to £43·50—an increase of £4·25 a week. That is in recognition of the fact that those in low-paid or part-time employment are less likely to have occupational sick pay cover when they fall sick.

At the same time, I propose that the dividing line between the two rates, which, as I have said, is set at £125, should be increased to cover the whole range of earnings bands within which employers pay the lower rate of contributions. At present, that covers employees earning less than £175 a week, with an increase to £185 from April 1991 under the proposals that I announced for the re-rating of national insurance contributions following the Chancellor's autumn statement on 8 November. I propose to leave the higher rate of SSP unchanged this year at £52·50. Subject to parliamentary approval, the changes will take effect from 6 April 1991 and I made it clear in my uprating statement that they will reduce public expenditure by about £100 million in 1991–92.

As I have said, this is not perhaps the proper parliamentary occasion on which to discuss those proposals in detail, but I must stress that the vast majority of employees will face no reduction in the total payment that they receive when sick. That is because of the way in which occupational sick pay under employers' schemes interacts with SSP.

It may help if I explain just how the reimbursement arrangements work. Each month, employers deduct from their regular remittances of national insurance contributions to the collector of taxes the gross amount of SSP that they have paid to their employees. If the total contributions clue amount to less than the SSP paid, the employer can similarly adjust his payment of PAYE tax. Should the total of both national insurance contributions and tax be insufficient to allow full recovery, the employer can either wait until the next month's payment to recover the balance or apply to the Inland Revenue for a direct refund.

In addition, since April 1985—some time after the scheme came into operation—an employer has also been able to recover, by deduction from his remittances of national insurance contributions, an amount by way of compensation for the cost of the national insurance contributions payable on SSP itself. That amount is fixed each year and, at present, is 7 per cent. of the total SSP paid.

Having explained the reimbursement arrangements—I hope with reasonable clarity—let me outline the provisions in the Bill. All the substantive provisions are in clause 1. Clause 1(1) reduces the amount of SSP that employers can recover in the way that I have described from 100 per cent. to 80 per cent. Clause 2(2) enables that percentage to be varied by order. Clause 1(3) brings to an end the additional 7 per cent. compensatioin rate. The first of the two remaining subsections enables regulations to be made to cater for rounding to the nearest penny, and the second makes the consequential amendment to the Social Security Act 1975 relating the transfer of funds between the Consolidated Fund and the national insurance fund. Clauses 2 and 3 deal with consequential and supplementary matters and are in the standard format that appears in most Social Security Bills. I do not propose to deal with those clauses in detail, but I want to make two points.

The first point relates to subsection 3 of clause 2, which contains a power to make transitional regulations. Hon. Members may like to know that the intention is for those to provide that all payments of SSP made before 6 April 1991 will continue to be subject to 100 per cent. reimbursement plus the 7 per cent. compensation, even if not recovered from remittances to the Inland Revenue until after that date. Payments of SSP made on or after 6 April will be recoverable at the new 80 per cent. rate, and no additional compensation will apply.

The second point relates to subsection 2 of clause 3, about commencement. As I have just made clear, it is intended that the provisions will come into effect from 6 April 1991. If there are other points about the fairly elaborate detail of those two clauses that hon. Members wish to raise, my right hon. Friend the Minister for Social Security and Disabled People will try to answer them when he replies.

As the explanatory and financial memorandum to the Bill explains, the change from 100 per cent. to 80 per cent. reimbursement will result in public expenditure savings of £181 million in 1991–92, rising to £190 million and £197 million in the following two years. In addition, the ending of the 7 per cent. compensation rate will increase income to the national insurance fund by £71 million in 1991–92, £75 million in 1992–93 and £78 million in 1993–94.

To what extent will that be offset by the reduction in national insurance contributions, or is that the net figure?

My hon. Friend has raised a good point. That is the total of expenditure saving plus additional income as it were or reduced outgoings to the national insurance fund, which, as my hon. Friend will see from the figures, amounts to about £250 million.

The hon. Lady is adding up the figures for the following years. I am happy if she does that, and if need be, we can set out the three-year figures. However, inevitably they will be subject to uncertainty, because many variables are involved. The figures given are the best efforts that could be made at the time. I believe that the easiest figure to concentrate on at the moment is the combined total of the saving in public expenditure, plus the increased revenue to the national insurance fund, which is of the order of £250 million. As has been noted, that takes no account of the reduction in national insurance contributions, which itself is about £250 million. I said in my uprating statement that it would be more than £200 million. When I gave the details on 8 November, the figure was larger than I had signalled in my uprating statement. In practice, the reduction announced on 8 November is about £250 million.

I do not mean to pretend that there is or can be a direct equivalence for every employer between their reduction in national insurance contributions and the additional amount that they might have to pay for statutory sick pay. However, it is clear from my figures that the offset is substantial when we consider employers as a whole in respect of the reimbursement side of the package.

The Secretary of State has presented a package to the House including the measures in the Bill, the reduction in employers' insurance contributions and the freezing of the higher rate of SSP and the change in the threshold. With regard to the last factor, is there a further £100 million saving to the Treasury? As a package, is there a reduction in public expenditure of £100 million? If that is the Treasury's gain, whose loss is it?

I hope that it was clear in my uprating statement and in everything else that I have said that the figures I have given in response to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) and to the hon. Member for Ladywood relate to the public expenditure saving in the Bill together with increased national insurance revenue, which is not a saving in public expenditure in the Bill as against the reduction in national insurance contributions. None of that embraces the £100 million to which I referred a few minutes ago, arising from the fact that the higher rate of SSP is not being uprated and from the change in the thresholds. That is absolutely clear and I would not wish to risk misleading anyone about it.

As to who has gained, my uprating statement included significant increases in benefit for those in residential care and nursing homes, an improvement in income support for less well-off pensioners, and last Wednesday the House debated a Bill which will steer significant additional money over the next two or three years to the long-term sick and disabled. I do not run away from the fact that Social Security Ministers must face priorities in the way in which they spend and use money. This Bill is part of an assessment of where the weight of state resources should be directed to achieve the best value for the taxpayers' money.

Taking the package as a whole, and in view of today's figures, the National Federation of Self Employed and Small Businesses believes that many firms will have to pay up to £11 a week more for up to 28 weeks. If that is the case, it is a matter of concern. Will the Secretary of State deal with that concern?

I will refer to examples later against the background of the fact that, while the maximum extension of SSP following changes made around 1985 is now 28 weeks, the average spell of sickness is probably about three weeks. We must take account of the likely expectation and experience and of the reduction in national insurance contributions. I will give some examples shortly which should ease my hon. Friend's anxieties and should also significantly ease the anxieties of the National Federation of Self Employed and Small Businesses, which has not perhaps yet had the fullest opportunity to digest the reduction in national insurance contributions that I announced on 8 November.

Many of the early comments on the proposals have, not unnaturally, centred on the effect on employers. Before I refer to that, I want to refer briefly to the implication for employees and to emphasise that the changes in the Bill —I am not here talking about the other £100 million, for which there could be slightly different arguments—have no direct effect on employees. Their entitlement to particular payments remains entirely unchanged by the change in reimbursement and compensation arrangements for employers.

I am aware that it has been suggested in some quarters that it will in some way disadvantage disabled people by making employers less willing to take them on. Exactly the same was said when SSP in its present form was first introduced, and on the occasion of earlier changes, such as extending the period for which SSP is payable. I believe that those fears proved groundless in the past, and I see no reason to suppose that they are any better founded now. Indeed, we do not expect any change in the pattern of employment of people with disabilities as a result of these changes.

In general, people with disabilities do not have bad attendance records. Their records are likely to be as good as, if not better than, average. The 1984 general household survey showed that half of all people with disabilities in work took fewer than five days a year off work for sickness or treatment, and that, over a five-year period, half of them had not had a spell of sickness or treatment lasting a month. Consequently, there is no reason to suppose that employers' SSP liability for them would be any greater than for the average employee.

My right hon. Friend the Minister for Social Security and Disabled People shares my view that there are many other factors of far greater importance in determining job opportunities for disabled people. Both the Department of Social Security, and perhaps even more importantly the Department of Employment, have developed numerous policies to seek to promote the employment of people with disabilities. Those opportunities advanced in this House only four days ago when we debated the disability working allowance proposals in the Bill that we discussed on Wednesday, which we are hoping to bring into effect in April 1992. That will certainly have more effect on the encouragement of disabled people to work and on the scope for them to work than will the proposals that we are discussing to day.

I come now to some of the points raised by my hon. Friends about the position of employers under the Bill. It is important to see its proposals in the context of the reductions in national insurance contributions, to which I shall shortly refer, and which go a long way towards offsetting any additional costs arising from the reduced recovery arrangements.

Hon. Members who were here when SSP was introduced in 1983—I confess that I was one of them; I think that I was the Under-Secretary serving on the Bill —will recall that employers' organisations argued strongly in favour of the sort of arrangements that we have now.: I would not want to disguise that fact. Their view was entirely reasonable at the time, especially as the scheme was new and an untried departure. After detailed discussions, the Government agreed to provide for the 100 per cent. recovery system.

It is equally and eminently reasonable for us to have taken a fresh look at the system, now that we have nearly a decade of successful practical experience of the scheme and in the light of other developments in and demands on the social security system—that is what we are doing in practice. In particular, we have examined the implications of full reimbursement for employers with occupational sick pay schemes.

Because SSP can be offset against occupational sick pay liability, and because employers can get back all the SSP they pay, in some cases that reduces the amount of sick pay that employers would othewise pay anyway under their own schemes. So in some cases—I do not say in all—the 100 per cent. recovery arrangements provide a positive financial advantage for employers. Now that SSP is well bedded in, it is reasonable that we should examine the extent of that and whether it is right to retain it in its present form.

I know that some employers have argued that it is not the employers' place to provide short-term sickness cover for their employees. As I said earlier, and in my uprating statement, I do not agree. That flies in the face of what has been happening: a growing number of employers accept that it is their responsibility to be concerned with short-term sickness among their employees.

I recognise that it is not always so easy for smaller employers to provide the sort of cover that employers in major companies provide, but many of them do so for short-term, if not for long-term, sickness. Provision of occupational sick pay is now the norm, not the exeception, and as I told the hon. Member for Ladywood, when smaller employers do not operate formal schemes, they often make discretionary payments or continue full pay for short periods of sickness. We cannot quantify that as well as the hon. Member for Ladywood or I would like, but it does show that the hon. Lady was overstating what we might call the occupational sick pay gap.

Will my right hon. Friend give particular consideration to the thousands of small firms that have been established under this Government's tenure of office? They will be especially affected by the legislation and they would like to think that the Minister will give them some consideration. They will be somewhat taken aback by these proposals.

I hope to do precisely that by giving some illustrative examples of what the position would be for a given number of employees earning the sort of sums that we might be discussing, taking account of the reduction in national insurance contributions that they would experience at the same time. I hope that that will be useful.

Somewhat different considerations apply in relation to the 7 per cent. additional compensation rate, which was introduced as part of the legislation which extended SSP from eight to 28 weeks. It was intended to compensate employers for the cost of the national insurance contributions that they pay on SSP. This part of the arrangements has been of only limited success. Despite wide publicity, as many as a quarter of employers do not claim it. Furthermore, in the interests of simplicity it is available on all SSP paid, even when the total SSP is below the lower earnings limit, and so will not have attracted national insurance liability in the first place. I hope that I carry the hon. Member for Ladywood with me.

Now, the lower rate of statutory sick pay is £39·25 a week. The lower earnings limit is £46 a week. No national insurance liability arises on £39·25 a week, therefore, yet the current compensation arrangements compensate employers for a payment that they are not making. So this part of the arrangement is not very satisfactory; it has not been working well; and the justification for at least part of it is far from clear.

My understanding is that part of the reason for the compensation was the administrative burden associated with reclaiming—especially for small firms. The Minister is talking as though he is recovering money, but are firms no longer to be compensated for the burden of administering statutory sick pay?

When the arrangements were first put in place and subsequently modified, a whole variety of arguments was advanced. Employers certainly mentioned the administrative problems that they might be caused, but most of them have discovered that the problem is much smaller than they had thought. Whatever the rationale behind the system at the time, this part of it has not worked very well and has no clear justification. It would certainly be difficult to see its justification in a case in which all the employees concerned were paid the lower rate of statutory sick pay, none of which attracted national insurance contributions. This is certainly not a tidy or defensible arrangement, and although I would not have tried to disturb it for its own sake, we thought it right to do so when drawing up the wider package of changes that I have just described.

I cannot answer that off the cuff, but I shall ask my right hon. Friend and provide what information we have at the end of the debate.

It is important to put the hundreds of millions of pounds that we have been discussing in perspective. The amount involved in the reduction to 80 per cent. reimbursement from what is in effect, if not in legal terms, 107 per cent. now, is about £250 million in the coming financial year. That must be compared with total labour costs in the British economy of about £300 billion. We are talking about little more than 0·05 per cent. of total labour costs in the economy as a whole. We cannot dismiss it on that ground, but it is important to recognise that we are talking about a small sum in relation to the total cost of which it forms a part.

The implications for employers generally will be fairly small. The precise effects will obviously depend on the level of sickness experienced in a work force, but as I said, it should be remembered that, although SSP is payable for 28 weeks, the average spell of sickness lasts for only three weeks, and 90 per cent. of sickness is over within eight weeks. Crucially, whatever the gross effect of the Bill's changes, the net effect will be significantly smaller, perhaps in some case completely eliminated by the significant reduction in employers' national insurance contributions which will come into effect at the same time and are an important part of the context in which the Bill must be seen.

As a result of my annual review of the level of the national insurance fund and the prospective demands upon it, I found it possible to reduce the standard rates of national insurance payable by employers. I propose reducing the standard rate payable by employers from 10·45 to 10·4 per cent. More importantly, I propose to reduce the lower rates, which are currently 5, 7 and 9 per cent. in respect of employees earning up to £175 a week, to 4·6, 6·6 and 8·6 per cent. respectively.

Those changes will reduce employers' costs by about £250 million and, as I said in response to interventions, they are likely to be especially helpful to employers, often smaller employers, whose employees are among the less highly paid. For example, for an employee earning £70 a week, the employer's national insurance contribution will reduce by 28p a week. For an employee earning £120, the reduction will be 48p, and for an employee on £170, it will be 68p.

Those sums may seem small, and it seems sensible to give one or two illustrations of how the SSP and contribution changes interact. Let us look at a small employer with five employees each earning £170 a week. If one of them receives three weeks SSP in the year, which equates to the present average duration of sickness, the extra cost to the employer in SSP would be £82·41, assuming that he makes good the difference between the higher and lower rates of SSP with occupational sick pay. The employer would be making an annual saving on his national insurance contribution liability of £176·80, making him £94·39 better off.

I have taken a case in which only one employee had three weeks off, and that could be said to be an unduly favourable example. If the same employer had two members of his work force of five on three weeks' sickness in a year, he would still make a saving on additional SSP against reduced national insurance contributions of £ 11·98 a week. If an employer with 20 employees all earning £170 a week had four of them off sick for three weeks each, his average saving would be nearly £400—or, to be precise, £377·56