asked Her Majesty's Government:

My Lords, from the 10 cities put forward, the European Commission provisionally short listed four early last year. These were London, The Hague, Madrid and Munich. Since then it has not taken the matter further but its next step will be to make a proposal about location to the Council of Ministers, and it may do this in the near future. However, it will be for the Council to make the decision, and it is not bound to accept the Commission's proposal.

My Lords, what efforts are the Government making to ensure that our case is given every possible encouragement so that the advice given by the Commission is in our favour rather than in favour of the other three sites?

My Lords, my noble friend will be aware that the decision will take into account all factors. The Government recognise the benefits of having the EC Trade Marks Office in London and hence we are ready to support it with a financial package. He may have noticed the necessary enabling clause, which is Clause 273 of the Copyright, Designs and Patents Bill in your Lordships' House, a Bill with which he is somewhat familiar.

My Lords, the noble Lord draws attention to Clause 273 of the Copyright, Designs and Patents Bill before your Lordships' House. Is it a question of money? Is it a question of the Government designing the right financial package which will bring the EC Trade Marks Office to our shore, or are there other factors which will come into play?

My Lords, as I said, the decision will take all factors into account. It is not just a matter of money. I think that all in your Lordships' House will agree that such a decision should not become just an auction. I assure noble Lords that the Government will pursue with vigour the UK hid to house the EC Trade Marks Office in London.

My Lords, I recognise that much lobbying can be counterproductive and an auction is highly undesirable, but will the Government make quite sure that the Community realises that we have for one reason or another not done very well in the siting of any Community institution of importance? Is it not time that that was remedied?

My Lords, I can assure my noble and learned friend that the Government will indeed make this omission very clear to the Commission in our continuing negotiations to try to have the office located in London.

asked Her Majesty's Government:

My Lords, in the first 10 months of 1987–88 there was a negative public sector borrowing requirement of £7 billion.

My Lords, does my noble friend think that that very satisfactory position will continue in the next 12 months or is the Budget too imminent for him to make a forecast?

My Lords, there will be a new forecast for this current year for which we still await the figures for two months. It will be made in the Budget next Tuesday so there is not much more that I can say at this point.

My Lords, is the noble Lord aware that the diminution in the public sector borrowing requirement has been compensated for many, many times over by an increase in private sector borrowing requirements? Is he further aware that that diminution has led to growing squalor in the public sector in terms of deficiencies in housing, the infrastructure, schools and so on, and that the increase in the latter has resulted in very considerable pressure on our balance of payments and has contributed to keeping interest rates high, which is gravely disadvantaging British industry?

My Lords, I obviously do not accept what the noble Lord says. A low public sector borrowing requirement, even a negative public sector borrowing requirement is a sign that the economy is healthy and growing and that public finances are firmly under control. This year's public sector borrowing requirement is likely to be the lowest since the early 1950s, with the exception of one year 1969–70.

My Lords, is my noble friend aware that the sour grapes reaction of noble Lords opposite will not be shared by most people? They find this particular grape very sweet.

My Lords, I can only agree with my noble friend.

My Lords, would the noble Lord not agree with my noble friend that high interest rates are disadvantageous to British industry?

My Lords, it would appear from all the figures that have become available recently that British industry is doing rather well in the world at the moment.

My Lords, that does not answer my question. Would the noble Lord be good enough to say whether he agrees that the high interest rate is not advantageous to British industry?

My Lords, as I said, British industry appears to be doing very well at the moment. It might well do better with lower interest rates, but on the other hand we have to keep control of inflation, which is just as important to industry as interest rates.

My Lords, is the noble Lord aware that in the city of Newcastle-upon-Tyne the local authority is currently sacking 150 teachers, and a negative borrowing requirement has been achieved by a multiplicity of economies of that kind throughout the country?

My Lords, it is important that public sector expenditure should be firmly under control if we are to have a healthy and growing economy. If the local authority cannot find better ways of saving money than sacking teachers, it is unfortunate.

My Lords, in view of the somersault in the Government's economic policy, how much importance do they place on M3 as an indicator of money supply?

My Lords, we are tending to stray rather far from the Question on the Order Paper. I have no doubt that if the noble Lord will be patient until next Tuesday my right honourable friend the Chancellor of the Exchequer in his Budget speech will no doubt answer many of the questions which have been posed.

My Lords, is it not the case that it is not my noble friend who has strayed but it is the Prime Minister who has strayed from her Chancellor of the Exchequer?

My Lords, I would not accept that. But I must say that that question also strays somewhat from the Question on the Order Paper, which concerns the size of the public sector borrowing requirement for this year.

My Lords, can the Minister indicate to us any connection between the decline in the public sector borrowing requirement and the rise in the deficit of the balance of payments?

My Lords, I do not think that there is a connection between the two. The important point is that, unlike certain major countries in the world which have not only a public sector deficit but also a large balance of payments crisis, we have only an unfavourable balance of payments at the moment.

My Lords, so that we can get a full picture of the situation, will the Minister tell us how many million people are now unemployed?

My Lords, that strays even further from the Question on the Order Paper than some of the previous questions.

asked Her Majesty's Government:

My Lords, it is less than a year since the Department of Trade and Industry completed a year's campaign to encourage UK manufacturers and commercial concerns to look more seriously at the Nordic market, including Finland. UK exports to Finland in 1987 were 20 per cent. higher than a year earlier. No further campaign is at present planned, but a full range of help is given by the government export services and Finland is one of only five West European countries that are eligible for financial support for group business visits under the department's outward mission scheme.

My Lords, I thank the Minister for that very informative reply. I declare a non-financial interest in that I am a long-standing member of the Anglo-Finnish Parliamentary Group and of the Finnish UK Trade Guild. I have paid three visits to Finland, two of which were in connection with Parliament and one a commercial visit. Is the Minister aware that in the Shotton paper mill in Clwyd there is a marvellous example of Anglo-Finnish co-operation both in employment and in capital? There is a further example in the Osake-Pankki Bank where 25 per cent. of the clients come from the UK. Despite his Answer, can he say when the last occasion was that a British Trade Minister visited Finland and whether he will encourage his right honourable friend to hold a trade fair there to increase exports even further?

My Lords, I am aware of my noble friend's keen interest in Anglo-Finnish trade. There are plans for Ministerial visits involving Finland. For example, the Finnish Minister for Foreign Trade will be visiting this country on 3rd to 4th May this year, and my right honourable friend the Secretary of State for Scotland will be visiting Finland on 28th May to 1st June. I cannot tell my noble friend when the most recent visit by a British Minister to Finland took place, but I would further point out to him the success of the Nordic campaign which was conducted in 1986–87.

My Lords, does the Minister agree with the noble Lord, Lord Auckland, that the Finnish banks have made a substantial contribution to the financial market here in London? Would he further give us some figures, if he has them in his brief, on the balance of manufacturing trade between Finland and the United Kingdom?

My Lords, I can tell your Lordships that in 1987 there was a balance favourable to Finland in trade between this country and Finland of £742 million. But I should say that approximately 40 per cent. of Finnish exports to this country consist of paper and pulp products. If one excludes paper and pulp products the trade between the two countries is almost even.

My Lords, does the Minister agree that our trade with Finland also favourably affects our trade with the Soviet Union?

My Lords, I am not sure that I would necessarily make that connection. In fact Finland's trade with the Soviet Union has fallen very considerably in the past few years, which of course has made it much more important for Finland to develop other markets.

My Lords, on the occasion of the proposed Ministerial visits, the Finnish visit to this country and that of the Secretary of State for Scotland to Finland, will Ministers take the opportunity to thank Finnish industry for its £250 million investment in urban new towns which is generating jobs and is providing an outlet for the timber industry, particularly in Scotland?

My Lords, I shall certainly pass on the noble Lord's comment to my right honourable friend the Secretary of State for Scotland. I should point out to your Lordships that the project that the noble Lord has in mind—the Caledonian paper mill—will indeed create 400 new jobs and another 480 indirect jobs in the construction and forestry industries.

asked Her Majesty's Government:

My Lords, in asking this Question, perhaps I may declare an interest, in that I am president of the North Yorkshire branch of the British Red Cross Society.

My Lords, the Geneva Conventions Act 1957 already makes it a criminal offence to use the emblem of the Red Cross without the authority of the Defence Council. The Act also makes it a criminal offence to use without the authority of the Secretary of State for Trade and Industry or the Board of Trade any design or wording so nearly resembling the Red Cross emblem that it could be mistaken for or understood as referring to it.

My Lords, I thank the Minister for that reply. Is he aware that the Red Cross emblem is used primarily in time of war for protecting the sick and wounded and those who look after them—doctors, Red Cross personnel and chaplains? Therefore, if unauthorised use is made of the emblem, that might confuse the issue and even result in deaths.

Yes, my Lords. The Red Cross emblem has a very important role to play in time of war. I am sure that your Lordships will all agree with me that we have a high regard for the work of the Red Cross and attach great importance to the protection provided for it by the Geneva Convention.

My Lords, can the noble Lord tell the House whether similar protection is afforded to analogous emblems such as the United Nations symbol and the red crescent which is also used in time of war for protection? What are the arrangements in those cases?

My Lords, I do not have details as to how other international emblems or symbols are protected. However, the existence of the laws which were adopted in this country under the regulations adopting the Geneva Conventions Act 1957 emphasises the importance which we all attach to the Red Cross itself.

My Lords, is my noble friend aware that a publication called Tribune appears with a red cross on the cover which is indistinguishable from that used by the organisation to which he has referred? Are the Government taking any action under the 1957 Act against that publication for a blatant violation of the law?

My Lords, I fear that there is a limit to the comment which I can make on that question. The matter is being considered by the Director of Public Prosecutions and until he has made up his mind, that is as far as I can go.

My Lords, is my noble friend aware that there was some surprise when the Labour Party hijacked the red rose of England after some centuries of use, as we were reminded by the England rugger XV at Twickenham recently? Is it not rather amazing that the Red Cross, which has been recognised under international law and the Geneva Convention since 1864, is suddenly seized upon by the Labour Party to lead its long-running campaign in support of the NHS? Surely an apology from the Opposition Benches would be appropriate, as well as a withdrawal of the use of that distinguished and internationally recognised emblem.

My Lords—

Order!

My Lords, perhaps the noble Lord is jumping the gun a bit! Naturally it is important that the emblem of the Red Cross should be protected. That is why the Geneva Convention is so precise on that subject. I am aware that the Labour Party has written to the Red Cross undertaking that in future it will not use any more material containing a symbol which is similar to the one which has been used in that particular campaign.

My Lords, will the noble Lord accept my apology for jumping up rather quickly? Is he aware that the Union Jack has been hijacked by the party opposite as its emblem? By what authority was that done? Given the reply by the noble Lord to the effect that the matter of the red cross is being studied by the Director of Public Prosecutions, will he agree that it is wrong for this House to turn itself into a sort of kangaroo court, even with as elegant a chief kangaroo as the noble Lord, Lord Orr-Ewing?

My Lords, I am not sure that we ought to hijack the national emblem of Australia either. As I said earlier, I can make no comment while the matter is being considered by the DPP.

My Lords, am I correct in recalling that there was a time when a medieval crusader carried a shield with a red cross on the front page of the Daily Express

My Lords, all I can say to that is that I run up the white flag!

My Lords, is my noble friend aware that the cross carried by the crusaders was the cross of St. George, whereas the red cross to which we are referring is the symbol used on the national flag of Switzerland or perhaps the Canton of Geneva? Is he also aware that a host of grateful wounded, including myself, would be deeply regretful if anything were allowed to be done that might impair in any way the integrity of that almost magical symbol, the red cross?

My Lords, as I have already said, I am sure that all your Lordships would concur with that.

My Lords, is the noble Lord aware that the party opposite has not only hijacked the Union Jack but has also hijacked the Royal crown? If he wishes, I can send him a copy of a local newspaper from the old constituency of the noble Viscount, Lord Whitelaw, in which the weekly advertisement of the local Conservative club is surmounted by the Royal crown.

My Lords, that may or may not be so. However, I assume that the Royal crown is not protected by the Geneva Convention. That is rather more central to the Question which I am answering today.

My Lords, perhaps I may ask the noble Lord if he is aware that the red crescent is protected under the Geneva Convention and also that it is the duty of all governments or states to protect those symbols?

My Lords, I am aware that they are protected. Perhaps I should also say to the noble Baroness that it is open to the Red Cross to take any civil proceedings which it may wish to take.

My Lords, I beg to move the Motion standing in my name on the Order Paper.

My Lords, I beg to move the Motion standing in my name on the Order Paper.

rose to call attention to the role of energy generation in sustaining the growth and expansion of the British economy; and to move for Papers.

My Lords, we are indeed grateful to the noble Lord, Lord Beloff, for this afternoon's debate which he has opened in an unusually thoughtful and wide-ranging way that allows all of us to take up our particular interests on the subject of energy. He has reminded us at an appropriate time that there is more to the discussion on energy than discussion about who owns it. I therefore do not propose to talk about privatisation this afternoon although obviously it exists as a factor in our discussions. I should like to say at this stage how much I, too, look forward to the maiden speech of the noble Viscount, Lord Weir. I do not know his expertise on this matter, and I look forward to hearing what he has to say.

I wish to concentrate on the arguments surrounding the need for a strategy for energy as a whole irrespective of who owns it. It seems to me that attempts to formalise energy policy within successive governments have not been particularly successful. One of the first post-war attempts in this country was the 1951 Ridley Committee which petered out after only a very few years. Then the Energy Advisory Council was set up in 1965. Despite a brave beginning and its influence on the production of one or two important White Papers, it, too, died quietly.

In the 1970s we had the National Energy Conference and the Energy Commission. Both ran into short-term problems which needed quick solutions at a time when there seemed to be a general lack of interest in the need for a comprehensive approach.

Perhaps more useful contributions to the general energy debate have come, strangely enough, from the Royal Commission on Environment Pollution and from Select Committees. For example, our own Select Committee on the European Communities dealt in its 10th report with Community coal policy. And its 18th report is on nuclear power. Each of these excellent reports approached the subject with a general look at the energy scene which should be of great value in future decision making.

Important contributions are also made by public inquiries. Dare I mention Sizewell B? Despite the length and the difficulties of this inquiry, it produced a wealth of very useful information. Together with monopolies commission reports and various academic exercises there is no shortage of knowledge available to anyone who wishes to produce a strategy for energy.

Government policy has to take account of economic objectives, it is true, but also of social implications and environmental objectives. Environmental objectives are becoming imperative, as the noble Lord, Lord Beloff, rightly pointed out at some length. They are becoming increasingly important as scientific evidence accumulates and as public perceptions of environmental hazards are sharpened. I cannot comment on whether feelings about radiation are akin to those on witchcraft but they are very real. People are frightened, and if we are to overcome that it needs more than reassuring words based on nothing more, it seems, at the moment than rather limited research. A carefully planned policy objective can be badly displaced by events such as Chernobyl which has caused even greater distrust of nuclear power. We have new fears about the greenhouse effect which is causing revulsion against the so-called dirty power stations fired by coal. If we do not succeed in controlling the greenhouse effect, all other decisions may well become irrelevant.

I should like to be assured that the Government are taking this threat seriously. What research is being undertaken in the United Kingdom on the greenhouse effect? Was the report in the Daily Telegraph on 1st March correct? I shall quote from it. It related to a press conference given by the chairman of the Natural Environment Research Council. The report said:

"There is a shortfall for research into global warming—the 'greenhouse effect'—and into North Sea pollution, seismology affecting the stability of nuclear power stations and into deep geological surveying, which could find fuel resources worth billions".

We need to know whether it is true that the cuts for NERC are having a direct effect on those areas of research. If so, it is very serious indeed.

Thirty years ago, as the noble Lord, Lord Beloff, made clear, it was assumed that oil would replace coal as the main energy source and that eventually nuclear energy would replace oil. It seemed at the time a reasonable assumption. Then came the oil price shock of 1973–74 when still only a small percentage of our power was being provided by nuclear means. Coal, therefore, made a comeback because stocks were available locally and imported coal was cheap.

Nuclear planning was also stepped up in the general need to provide alternatives to oil. World inflation, it is true, subsequently secured a drop in oil prices in real terms but that was overcome by a doubling of prices again in 1980. There seem to be very few certainties in the energy business except the certainty of continuing need. Most informed opinion calls for a government strategy. It is therefore very disappointing to read the remarks of the noble Viscount, Lord Davidson, in a speech on 8th July last year during a debate in this House on the generation of energy for power and industry. The noble Viscount, in the Official Report, at col. 722, said:

"The Government's approach is one of sensible management, not of grandoise plans across all the industries carrying vast contingencies but carefully and painstakingly bringing major reorganisations such as privatisation to fruition".

Is this still the Government's policy? If it is, it seems to go against all informed opinion which calls, not for government interference in management planning of the industries, but for a government strategy for energy as a whole. Any energy policy must recognise that the prime needs are security of supply and reasonable costs—I think that everyone is agreed on that—and then energy conservation. Efficient energy use is absolutely vital. Fashions in fuel choice may come and go, but we know that the earth's resources of raw materials are not infinite and we know now that the earth's capacity to absorb waste products is also finite. No amount of juggling with the best economic arrangements for today will alter those two facts. So we must pursue the best possible use of resources with the least harmful effects on the health of the planet, as the noble Lord, Lord Beloff, said.

No doubt many alternative energy solutions, in addition to those of which we have already heard, will be offered today. I want to mention just one. Combined heat and power is an obvious candidate. We learn, for example, that in Vesterase in Sweden combined heat and power has increased the efficiency of their coal-fired power station to 90 per cent.; that is against 30 per cent. for most of our coal-fired stations, with greatly reduced SO₂ emissions. The entire city is heated by previously wasted heat from the power station and there are no individual domestic boilers. That must be a matter for congratulation all round unless one happens to own shares in Pottertons or one of the other boiler-producing companies when perhaps one would not be quite so happy about it. What research is in progress in the United Kingdom on combined heat and power?

Decisions on future supplies are urgent. The lead time for bringing power stations into production is quoted as between six and 12 years, depending upon the particular circumstances of the station under discussion. But to create an energy policy choices must be made. Only government can take the overview necessary to establish national criteria and only government can legislate in pursuit of national objectives. Professor Richard Eden and Mr. R. Bending of the Cambridge Energy Research Group in their book UK Energy suggest that any strategy must be based on consensus if it is to succeed. I quote from page 278 of their excellent book. In talking about the existing situation in the United Kingdom, (which at that time was only two years ago), they say:

"More could be done by way of departmental publications, or seminars, stating the problems and options that are under discussion—not the solutions in White Papers, nor the suggested solutions in Green Papers, but the problems and possibilities, presented at a stage where public opinion may still be effective, or expressions of government concern may be educational".

That last is an important point.

Consensus therefore will involve compromise and it will take time. Professor Eden and Mr. Bending go on to develop at some length the influence which government decisions in other areas can have on national trends in energy demand. While not suggesting that the Government should seek to intervene excessively in the energy market, they insist that:

"Energy policy should not be determined by default—at the very least government should be aware of the energy implications of other policies".

In this case I believe that they are referring to matters such as building regulations, the way in which new buildings are constructed with a view to energy conservation, and everything of that kind, all of which are policies which affect energy demand.

"More generally energy policy should seek to promote actions that will increase national benefits in relation to energy costs. The implications for energy demand should be a recognised dimension in national planning".

The validity of these views is surely self-evident and we on these Benches certainly subscribe to them.

"Had we but world enough and time",

we could take a more relaxed view of the Government's seemingly negative approach to strategy and consumption, but sadly we believe that we are running out of both.

My Lords, we are all particularly indebted to the noble Lord, Lord Beloff, for venturing into the energy field, which I believe is a new one for him, in his usual logical and rational way. He has introduced a debate which enables us to review energy policy, which we do from time to time. As he rightly said, in the terms of the Motion, energy plays a key part in the economy of the country. I think it is right therefore that we should come to it from time to time. This is the basis on which the noble Baroness, Lady Nicol, also made her contribution.

As I understand it, this is not the occasion for speaking in any depth about the recent White Paper on electricity privatisation. I hope that when the noble Viscount, Lord Davidson, replies he will confirm that at some later date we shall be able to have a debate on that subject, because I am sure that many of us have views that we should like to express on it, but I am refraining from doing so in the light of what the noble Lord, Lord Beloff, and the noble Baroness said.

Thus I shall treat this with the broad view with which they have done. I should like to say that from my experience in the energy industry, I think there are two basic considerations to be borne in mind in approaching the whole question of a strategy for energy. The first is security: making sure that we have the energy. I believe that this is far and away the most important issue, because we have seen what can happen when there is a deprivation of energy, whether it be on a temporary basis or on a longer term basis. That is the first matter that we have to take into account.

The second matter is to make sure that we have energy supplies on a competitive and as low a cost basis as possible. In my opinion the skill of the game is to reconcile these two objectives. So I should like to consider the position in the United Kingdom from those two points of view: to consider what our present policies appear to be, or what they might be if we were to try this basic reconciliation between security on the one hand and low cost competitive supplies on the other.

I begin by saying that I believe that the United Kingdom is unique among West European countries. First, we were the first country in history to realise the great benefits of harnessing energy resources for industrial purposes. Secondly, in more recent times, we are the one large country in Western Europe which has at its disposal virtually the whole range of known energy resources from the point of view of the substances themselves and the skills to work them. We have coal in abundance. We have oil and gas in the North Sea. We have nuclear expertise, electricity-generating expertise and expertise which we are developing also in the renewable resources to which the noble Lord, Lord Beloff, referred. So we start with a great advantage. The challenge to us is to make sure that we transform that advantage to the benefit not only of the generation in which we live, but to the benefit of future generations.

However, there is one problem in doing that, to which the noble Lord, Lord Beloff, referred; namely, that if there is one form of forecasting which is bound to be wrong it is what will happen in energy. I have been involved in the business of energy for nearly 40 years. I must admit straightaway that I was among those—the majority in this country—who never forecast the major changes which have occurred since the war. When I originally joined the coal industry in the post-war period our projections were for an ever-increasing demand for coal. Then suddenly the oil appeared and the forecasts then made were for ever increasing low cost supplies of oil. Then the oil crisis of 1973 occurred. At that time the projection was for ever-increasing oil prices. Then the collapse in the oil market occurred in 1985. What is the projection now? The projection can only be that we do not know.

However, the nature of the energy business is such that long-term decisions must be made. Investment must be made and research and training must be undertaken. We must make up our minds as to the best decisions to be taken in the circumstances, knowing all along that there is uncertainty. I agree entirely with the noble Lord, Lord Beloff, that we must have various options at our disposal but nevertheless we must commit ourselves to firm views on investment, research and training. If we do not do so we shall not have the energy in any event.

Let us consider the position in which we are in those circumstances. I begin with what I believe to be Britain's prime energy industry: coal. I know that the noble Lord, Lord Mason, will fully support me in saying that. Coal has served the nation well. For a variety of reasons, which I shall not mention but with which noble Lords are familiar, coal is going through a difficult time at the moment.

As regards government policy, I am disturbed by the fact that they do not appear to be committed to retraining a major coal resource for supplying a large part of our energy needs in the future. If I may say so, there is a large degree of ambivalence. On the one hand, the Government are putting a great deal of money into the coal industry; there is no argument about that. On the other hand—and here I regret that I must refer to the electricity privatisation measure—they are giving no support to the indigenous coal industry, even though special provisions are made for supporting the indigenous nuclear power industry. That appears to me to be a somewhat unbalanced position.

I believe that it is in our national interest to have some fall-back position for our indigenous resources, particularly coal. I am prepared to agree that we should also ensure the retention of nuclear expertise. I am slightly dismayed by the fact that the fall-back position has been erected in the nuclear power industry but that no such position has been erected for our own indigenous coal industry. I should be delighted if the noble Viscount would comment on that aspect of the situation.

I believe that there is an enormous future in our coal industry. We have substantial reserves and great skills in our mining engineers and mineworkers. We also have great skills among the manufacturers of mining machinery. I speak from personal experience of all those matters. Coal is a national resource which we should nurture and develop and I hope that that will be taken fully into account in any future discussions and debates on energy strategy.

The nuclear power industry poses certain problems. I am not opposed to nuclear power and I believe that the safety record that has been developed in this country in particular is second to none. I believe that we should develop that technology. However, I am most concerned about the economic case at the present time. There has been a massive reduction in fossil fuel prices. Apart from France, where the nuclear industry is wholly statecontrolled—and which, in the case of the British nuclear industry, the Government propose to give up—no country is substantially investing in new nuclear plant at the present time. Indeed, the private sector in the United States has not ordered a nuclear plant for the past 10 to 15 years. I believe that we should accept that nuclear power is not a competitive proposition at the present time. We should work in developing our expertise but we should not be committing large resources to that particular form of energy until it is needed.

I should now like to turn to oil and gas. With all the experienced people in the oil industry we have done a wonderful job in exploiting the North Sea. I believe that one of the most remarkable technological achievements of the present time is the exploitation of oil from the North Sea with its difficult physical conditions. We must make absolutely sure that from the fiscal point of view, and from the point of view of government intervention, every conceivable encouragement is given to further exploration and development. It is a risk that from time to time government fiscal policies could inhibit those efforts. Therefore I believe that we should explore the whole of that sector as fully as possible with every support.

There is a problem as regards gas because that industry was privatised as a monopoly. I must indicate that I am chairman of an energy firm which is seeking to compete with the gas monopoly. I am a great disbeliever in private monopolies. If we cannot have legislation to correct those monopolies, I believe that it is up to all of us to try to do so by other means. I believe that that is precisely the response which the Government would like to see.

I am a full supporter of the technology of the gas industry and its great skills. It is wrong that it should be in the dominant position in which it has been placed by recent legislation. I believe that that should be reviewed in the near future in the light of some of the measures which the Government have introduced in connection with the forthcoming privatisation of electricity; namely, to encourage a degree of competitiveness.

As regards electricity, a number of things can be said about the proposed measures but I shall refrain from commenting for the reasons given earlier. I shall say only that, to my mind, two major issues remain in the case of electricity as they have in respect of all other forms of energy. On the one hand we must retain security of supply; on the other hand, we must obtain the best deal for the consumer. Whatever measures are eventually taken to deal with that problem, I believe that those two issues should be kept firmly in mind.

I should like to deal next with the renewable question. I am delighted that the noble Lord, Lord Beloff, referred to that matter because I believe that we must experiment and develop alternative sources. I should, first, like to include in this category the reference made by the noble Baroness to combined heat and power. I believe that in this respect we in Britain are lagging behind. That is because of the very half-hearted way in which the Energy Act 1983 provided for private generation and particularly for combined heat and power.

I was personally involved in the discussions on the Energy Bill at that time and I know that the noble Lord, Lord Stoddart, was also involved. We considered that the provisions of the Bill would not lead to much private generation or combined heat and power and we were proved to be right. The acknowledgement of that is in the Government's White Paper on electricity privatisation. They accept that the 1983 Act never achieved the purposes for which it was designed but it could well have achieved those purposes. I am a great believer in diversifying the forms of electricity generation. We could have had a great diversity of electricity generation if the 1983 Act had been more firmly drawn in that direction. Therefore, we could have avoided the massive turmoil which is now envisaged in the White Paper to achieve that very thing. I put this point to the noble Viscount and I ask him, without trespassing too much on the White Paper, whether it is the Government's intention, pending the fairly long period before there is a change in the organisation of the electricity industry, to bring back the 1983 Act so that it could be amended to stimulate combined heat and power and private generation in the meantime.

I also believe that we should be giving a fair wind—and that is an appropriate word—to wind power and tidal energy on which great efforts have been expended and to which the noble Lord, Lord Beloff referred.

I conclude with one other form of energy to which I attach perhaps the greatest importance, which is efficiency in the use of energy. I think that in any strategy, in any objectives, we must give pride of place to efficiency. This country has been notorious for its inefficient use of energy and it is not hard to see why. The reason is that we have always had plentiful supplies. I think that we are beaten only by the Americans who are even more wasteful than we are. However, among European countries, taking any standard you like, we are the most wasteful.

The Government have taken a great interest in energy efficiency but they should be reviewing further measures which could be taken. Now that we are entering a totally new phase with the privatisation of two basic sectors of energy supply, I should say that the question of efficiency becomes all the more important.

Therefore, I have been delighted to follow on the example set by the two previous speakers by roaming fairly widely over the issues of energy. I hope that we shall be able to concentrate on the future of the electricity industry at some early date in the future, but in the meantime I recommend to your Lordships that we keep the general issue of energy policy under regular review.

My Lords, in the days when there was still some romance left in industry, the boiler in my company's power house had a Victorian plaque on the front of it which depicted a naked savage staring intently into a fire above which hung a pot of boiling water. Beneath that scene there was the splendid slogan:

"The Ancient did not dream of the power of steam".

Those words, which I suppose were penned by Ruskin or someone like that, seem to me to summarise exactly what today's Motion is about—the dramatic way in which the contribution of energy to our well-being and our economic progress has evolved in the last century through the direct application of the power of steam and today through electricity generation. I suppose that the Industrial Revolution could just as accurately have been called the Energy Revolution.

The recent White Papers on privatisation have projected right into the political arena the way in which in future power generation will be owned and managed. However, I shall of course follow your Lordships's excellent precept that maiden speeches should not be clouded by controversy and I shall not say a word either for or against the proposals. Instead I shall try to touch on some of the ways in which energy generation has an impact on different parts of our economy.

Understandably we hear a lot about the role of the consumer of electricity. However, there is a reverse side to that coin. It is a fact that energy generation in itself is a major customer of the electrical equipment industry. I should mention that I have an interest in that.

To remind ourselves of the importance of that industry to the economy, the members of its trade association, BEAMA, between them have an annual turnover of over £25 billion of which something like £10 billion a year is exported. Today these equipment suppliers enjoy two significant advantages in their relationship with the electricity industry. The first is access to a large home market where consistent specifications and technical requirements for their equipment currently prevail. That gives the basis which is essential to support a sustained and successful export effort.

A second benefit to many suppliers derives from the far-sighted attitude of the CEGB towards product development. This has enabled firms to pursue programmes which would otherwise be far beyond their individual resources and at the same time has given them operating references for their products which are vital to them in export markets. Of course that has cost the CEGB money, but in return it has better equipment available to it, and in terms of our national profit and loss account I know that the expenditure it has made has been paid back many times over through exports. I sincerely hope that, however the electricity industry is reorganised in the future, we shall find arrangements which will enable these benefits to the economy to continue.

I now turn to the balance of payments. Historically there has been very little significant relationship between energy generation and that aspect of our economy. In the past, imports of primary fuel or equipment, or even of electricity itself, from across the Channel have been rather modest. In the future I believe that that will change dramatically. For example, our equipment-makers will have to face much wider foreign competition by 1992, to say nothing of the possibility of importing cheap coal or indeed greater quantities of French power.

All these factors will affect our economy, whether in mining or manufacture, and we shall have to think carefully about the trade-off between the lower costs we may be able to obtain from abroad and the adverse effect on our balance of payments. Indeed, I believe that we would have to take a very sanguine view about our long-term export prospects to neglect this issue entirely.

Again, when we change the structure of the generating industry, there may be some other effects on the economy. One possibility with clear regional implications for industry could be the emergence of differentials in the price of power between various parts of the country. We might also see different policies on pricing in particular areas as between the industrial and domestic consumer. If there is going to be real competition in the industry I suppose that must be so. However, for the moment these matters are still rather obscure, but I suspect that they could become important issues in the future, and they are most certainly economic ones.

Finally, perhaps I could also remind your Lordships that coal and oil are dirty. They foul our atmosphere. I do not mention that because it is National No-Smoking Day today, nor shall I venture into the quagmire of environmental politics. Although I might be welcomed for wanting cleaner air and less acid rain, doubtless I would be equally unpopular with other environmentalists for wanting to achieve those goals through nuclear power. Instead I hope that we tackle the obvious problems of pollution with more resources and with more speed.

I know that the CEGB is spending £600 million on retrofitting some of its existing power stations in order to reduce sulphur emission; its new stations will incorporate just such equipment. Thay may seem a lot of money, but it is pretty modest compared with more than £1.5 billion which one German utility company, the RWE, has already spent in this area. The Japanese also are very far ahead of us in this respect. Moreover, little has been said and less done about the parallel and equally important problem, the emission of oxides of nitrogen.

We are not discussing environmental matters today, but I think that it is perfectly relevant to raise this issue because it will have a considerable economic effect both through the massive investment programme that will be required and also through the increase in the price of power in the future which we will need to pay to have a cleaner environment.

Your Lordships rightly ask that maiden speeches should be short so I will resume my seat, but not without first thanking the noble Lord, Lord Beloff, for giving us the opportunity of discussing this most interesting subject.

My Lords, on behalf of the whole House I happily congratulate the noble Viscount on his impeccable maiden speech. He never breached the conventions of the House: he was brief, non-controversial and informative. No doubt with the background of his knowledge of banking and industry he will certainly prove to be a worthy Member and obviously make many more knowledgeable contributions to this House in future. His speech showed both quality and depth. Though I shall never rival him and will be constantly at a disadvantage on those topics, I let him know that when he indulges in his hobby I shall be ready to stand by his side, cast a fly and compete with him.

In considering the role of energy generation in sustaining the growth and expansion of the British economy, it is also necessary to examine the future of supply and whether it is going to be adequate, for without that there cannot be any planned sustenance of economic growth. Coincidentally, if privatisation of the electricity industry goes ahead as planned I am concerned at what will be the likely consequences for the British coal industry when its major outlets have been privatised.

There is no doubt that coal, from whatever source, is going to be our main fuel provider for many years to come, but the threat from the numerous cheaper fuel alternatives will seriously further reduce the number of coal mines and coal miners. It will also reduce the number of industries that support the coal mining industry and their workers, nearly all of whom are in the traditional mining communities of Scotland, Wales and Northern England.

Your Lordships know as well as I do that the social consequences of past pit closures have been severe. Since the miners strike of 1984–85, 68 pits have closed and 82,000 men have been declared redundant. There has been a wave of misery, unhappiness, unemployment and depression and the outlook, as I see it, will mean much of the same.

At present the make-up of our fuel use is comprised of British coal (about 86 million tonnes), nuclear power (18 million tonnes of coal equivalent), oil (8.5 million tonnes of coal equivalent) and a hydro-electricity (1.7 million tonnes). We produce 15.7 million tonnes of opencast coal. We import French generated power via a 2000 megawatt link, and when in full stream that is equivalent to importing 5 million tonnes of coal per year Then, what will in the end prove to be disastrous for British Coal, we import 9.7 million tonnes of cheap coal from Colombia, China, South Africa, Australia, Poland and the USA. That is opencast coal. It is quarried. Those countries can mine it, transport it half way round the world and unload it in Britain cheaper than we can produce our own deep mined coal. In many of those coal exporting countries the mining operations are based on cheap, non-unionised labour—especially in China, Colombia, and South Africa.

I am afraid that there is going to be a growing dependence on cheap coal imports for many years ahead. Keen competition among the foreign coal exporters will ensure cheapness for the United Kingdom industrial market. Moreover, I believe that the privatisation of electricity will mean that few, if any, pressurised water nuclear reactor power stations will be built after Sizewell B, for who will be prepared at present and in the foreseeable future, with such an abundance of cheap alternative fuels available, to invest in new PWRs, bearing in mind the length and the cost of public inquiries, the time to build of 12 to 15 years and the doubtful competitive generating costs? I believe that it is more likely that coal and dual coal and oil fired power stations will be built.

Coal will still be our basic fuel, but how much of it will be British coal? I am aware of the vast investment in the British coal industry, most of which has been designed to slim the industry as fast as possible in the drive to make British Coal break even in 1988–89, irrespective of the heartrending social consequences in the coalfields. Of course always hovering on the horizon is a profitable, much smaller coal industry based on coal mining complexes of multiple units ripe and ready for privatisation.

Therefore energy generation to sustain the growth and expansion of the British economy will depend upon a base of British coal, albeit much smaller than today, plus the increasing and severe competition from the alternatives, most of which will be from foreign sources. Much depends upon what economic growth is achieved or is foreseen as to the demands that will be made on power generation. Even on a modest expansion of the economy, the CEGB will require at least 75 million tonnes of British coal in the year 2000—about the same as last year, 1987. The demand for coal could rise much higher to an estimated 93 million tonnes, if only Sizewell B is built and nuclear power is not to fill the gap.

Output from British mines last year was 88 million tonnes. Another 13 million tonnes could be added when Selby and Asfordby—those big new mining complexes—are on full stream. However, one must take into account the inevitable attrition of the coal industry: pits worked out, the problem of high cost, unprofitable pits and British Coal's declaration that the objective must be £1.65 per gigajoule its new measurement for the heat content of coal (in layman's terms, £42 per tonne) as "an absolute limit of acceptable cost". There are a number of pits which cannot achieve that level of costing; there were 24 at the last count. I estimate that British Coal will close between 3 million and 5 million tonnes of coal capacity in that bracket. Also the average exhaustion rate of collieries is around 2 million tonnes a year, so by the year 2000 nearly 30 million tonnes of present production will cease.

These factors—namely unprofitability, natural exhaustion and the severity of overseas competition—will mean that between 40 and 50 more pits are likely to close by the year 2000. There is bound to be a major gap between the total energy requirements of the CEGB—particularly its requirement for coal —and what British Coal can produce annually. There are some new pits in the offing; for example, Thorne in Yorkshire and Margam in Wales. They could help to maintain an added provision for the CEGB, but the go ahead is unlikely unless new working practices are agreed beforehand with the unions. Only on that basis would it have any chance at all to compete with its energy rivals.

The trend for coal is clear. In 1983–84 there were 170 pits, with 181,000 men. The output then was 90 million tonnes. Last month there were 102 pits, with 99,300 men and an output of 71 million tonnes. On Monday of this week the chairman of British Coal made a speech in which he said that the new pit figure has now been lowered to 96. By the year 2000 no more than 50 pits are likely to survive. As one who was born and bred into coal mining, represented it in Parliament for nearly 35 years and who has also been the Minister of Power, I must say it is really an absolute national disgrace. The noble Lord, Lord Ezra, was bordering on this criticism—namely, the way in which this Government have abandoned the coal industry, its workforce and all the families with the consequent ruination of our coalfield communities.

The investment in coal (the Government's excuse) is a sham. It was planned for the demise of coal and not its survival. The protection that this national basic industry needs is now going and with it a great national asset whose worth may well be missed by the turn of the century.

I have to face the facts as regards what will happen to coal while this Government are in office. Those pits with high productivity, having benefited from the investment by British Coal, may survive. Although based on the gigajoule criteria of £42 per tonne, they will still have great difficulty in matching the foreign imports of coal.

Changes in working practices are inevitable if these pits are to survive. Wild announcements by union leaders of pit closures have never helped. As it is an extracting industry, pit closures are inevitable and a dog in the manger attitude by the unions has not helped. It has given the Government the opportunity to close pits faster than was planned. In these new, quite alarming and changed circumstances that face British Coal and the coal mining unions, if a relatively large and basic rump of the coal industry is going to survive, a more enlightened attitude by the mining unions to their own industry and the future of their workforce is an absolute necessity bearing in mind that such vast quantities of cheap power station coal are available from many continents of the world for example, Australia, Africa, Latin America and China. In addition the private utilities will make contracts—and long-term contracts too—for many years to come. This is obvious from the plans that are being laid for the expansion of dock and port facilities for receiving and unloading.

These factors could well sound the death knell for British Coal. As happened during the major coal strike we cannot expect support from the other unions involved—that is, the dockers and the transport unions—for their jobs too are at stake. So one can readily see that by the year 2000, even on a modest growth in the economy fuel and power for our industrial growth will still demand coal. It will be an unquantifiable tonnage, and as a past Minister of Power, I know that it is foolish to try to determine the percentages of the variables in fuel supply. But it is obvious that coal will be required.

British Coal is going to struggle to maintain its market. The security of supply will still concern us, but I admit that with so many cheap sources of energy available and competing with each other to establish firm toeholds in our market, security of supply may not be threatened or on the horizon but some years to come. The world is awash with cheap coal. But I warn the Government not to pursue this course too far and too fast. I ask whether we really want our electricity supplies to be in foreign hands. Of course we do not.

The supplies of North Sea oil and gas will run down, which has been prophesied many times, foolishly and mostly by politicians scoring political points. Eventually that will happen; it is inevitable. It may coincide with the rundown of our coal industry, which will then be unable to satisfy all our needs which is the situation today. With the loss of the balance of payments benefits of North Sea oil in particular and the commitment to millions of tonnes of coal imports a balance of payments problem will surely arise.

In the light of this analysis I say that the continuing battle between the major coalmining unions and British Coal will have to cease. There will have to be a coming together and this means British Coal too if the coal industry is to be saved. It now has a greater imperative to save it for the nation. Its high-handed management manners will have to cease too because the writing is on the wall. Being realistic, I believe that this Government will continue apace on this policy of electricity privatisation while they have the parliamentary majority. The die will be cast before the next general election. Once the private utilities have contracted vast millions of tonnes of coal imports it will be difficult to turn back the clock.

There is no longer any time for fractionalising or short-sighted industrial conflicts. Men and management, mining unions and British Coal must now work out a strategy and stand together to safeguard as much of the British coal industry as they can.

In conclusion I say to the noble Viscount who is to wind up this debate that we need seriously to consider the chief industry of all, which is coal. That is the industry which we shall depend on in future generations, by the year 2000 or 2010. I want assurances from Her Majesty's Government about the future of our coal industry. I want assurances about the security of supply and the growing concern about the balance of payments problem which looms ahead, bad even as that is today, under this Government.

My Lords, like the noble Lord, Lord Mason of Barnsley, I once represented a mining constituency and I have much sympathy with all that he said about coal. I should like to underline his particular reference to the fact that this is an extractive industry and that therefore sooner or later mines have to close. The problem is how to make the best use of what will remain and how best to turn coal to the best economic advantage. It is perhaps worth mentioning that the recent redundancies have been accomplished voluntarily, which warrants tribute to the common sense of both sides of the industry.

I do not go along with the noble Lord's great fear about cheap coal imports. If British industry were to try to import the quantities of coal which the CEGB now takes from British Coal, the world coal price would shoot up and the situation would come back into balance. I recognise that there will be some imports but the threat of imports on a large scale is bound to put up the world price and restore the balance almost automatically.

We are all in the debt of my noble friend Lord Beloff for opening this debate in the philosophical, knowledgeable and (may I add?) humble way that we have come to expect from him. I should like to join in congratulating the noble Viscount, Lord Weir, on a striking maiden speech in which he drew attention to the Central Electricity Generating Board's commitment to and support of research and development in the energy field which has been of incalculable benefit. This contribution does not seem to have been taken sufficient care of in the White Paper, to which we are not of course properly referring in this debate today.

I am sorry that the noble Baroness, Lady Nicol, is not in her place. I shall still say something nice even though she is not here to cheer me on. She produced a lovely maiden speech from the Dispatch Box and demonstrated assiduous prep. I have much sympathy for her natural plea for an energy strategy. I have voiced that plea on and off for 20 years only to discover that all energy projections are wrong and, moreover, that they usually become wrong within the period of time that it takes to build a new power station—about 15 years or the time between two or three general elections. That is why governments have on the whole not hitherto carried the can for their energy decisions, which is one reason why—and here I have a plug to make and an interest to declare—some years ago some of us set up the All-Party Parliamentary Group for Energy Studies of both Houses of Parliament to try to develop a consensus approach to energy problems.

When I was preparing for this debate some weeks ago and before the White Paper appeared I looked up the figures for gross national product over the past six or seven years. To my surprise I found that measured by GNP, growth has been of the order of 4 per cent. per annum, although of course economists would make various corrections for such a crude deduction. It is in the context of a steadily expanding economy that the Government now recognise (what in one of these debates more than four years ago they were warned about) that we are in for a shortage of generating capacity and that we need to increase its availability at the rate of about 3½ per cent. a year in the coming years. This in turn means making sure that when older power stations have been phased out we shall have 13 gigawatts—13,000 kilowatts—of new capacity by the year 2000. I should like to say to the Government whom I have gently chastised from time to time on this subject—my noble friend on the Front Bench turns his head as if in recognition—that there is more joy in heaven over one sinner who repents than over 99 just men; so let us not gloat.

The first question I ask is whether we shall get all this new capacity by the year 2000. Experience shows that the minimum period for bringing a new power station of 1,000 kilowatts into operation is at least 10 years. On paper the figure is 10½ years and sometimes it stretches to 12 years: that is from the planning stage right through to commissioning. At the present time three new power stations are being planned —Fawley, West Burton and Sizewell. Fawley and West Burton will be coal-fired power stations and Sizewell nuclear. Nine more are in what embryologists would call the pre-embryo stage. Three will be coal and six will be nuclear. Two or three of those are on coastal sites. Those nine are not yet into planning. Unless something happens very quickly this year, the year 2000 will be upon us inside of 12 years and we shall not get the 13 gigawatts that we need.

At the same time it is important to stress that it is mistaken for the coal industry to be too alarmed about the fact that several of the planned stations will be on coastal sites. Enormous capital investment is required to bring in coal on the scale that might be envisaged. There is the whole effect on the world price of a sudden new British demand for coal from abroad. I believe that the balance will right itself by the price mechanism. The real question I ask is whether the privatisation of the electricity supply industry will make this stiff investment development target of about £45 billion easier or harder to achieve. That is a mattter for later debates but it is legitimate to ask now whether the effect of upsetting or (shall we say?) rearranging the structure of the industry and bringing into being entrepreneurs with no generating track record will be to make available the funds needed or whether everything will be delayed as a result.

Have we any solace from some of the renewables? In his catholic survey of the situation the noble Lord, Lord Beloff, referred to wind power. We read in Government-sponsored publications that wind could make a "substantial"—I quote the word "substantial"—contribution. I believe that that is quite misleading. A wind farm that matched the ordinary scale of a generating station of 1,000 kilowatts would cover—wait for it, my Lords—400 square miles. That is the scale of site wind power requires. There is one in California and there are many smaller sites around the world. However, if one is going to compete in scale with the generating capacity of a normal coal, oil, gas-fired or nuclear power station, one will need a site of approximately 400 square miles. The comparable figure of a thermal or nuclear station might well be 400 acres.

People have one or two sites in mind to take account of that and they are offshore. Some thought is being given now to siting an offshore wind farm in or off the Wash. Carmarthen Bay is also being spoken of. However, just think of the protests of fishing interests and shipping interests. If one were to plant these things in the highlands, in Wales or on Exmoor there would be an outcry from the environmentalists. However useful windpower may be in certain local areas like Orkney and here and there for small areas of distribution, it is not an answer to the main problem we face.

What then can be said about hot rocks—geothermal? My noble friend Lord Beloff has referred to the work of the Camborne School of Mines. Hot rocks are only to be found in very special places. It is not just ordinary granite that you need; it has to be a special kind of granite which is to some degree radioactive. (I was hoping that the West of Scotland, which is built on granite, would be suitable but apparently it will not be). There is this geological situation in the South-West of England and there the Camborne School of Mines is investigating hot rocks generation.

However, two difficulties have emerged. First, the longer one generates heat from hot rocks the cooler they become. That may sound extraordinary but it is true. Whether that process is due to the wearing out of the heat or to wastage and leakage, I believe that no one yet knows. At any rate, the contribution of hot rocks and geothermal in the UK is bound to be minimal.

Tidal power is another concept altogether, but I believe it is coming nearer into the focus of possibility, subject of course to the survival of a company big and strong enough to raise the necessary finance. The Severn Tidal Barrage scheme is, at the very least, of the scale of the Channel Tunnel. Is that something that the so-called G1—the larger chunk of the CEGB—will have the muscle to undertake when the time comes? We shall see. However, it is fair to raise the question. Or has this privatisation scheme simply knocked that possibility on the head? The Mersey scheme is a smaller one and may stand a better chance.

One point that has emerged from the Government's commissioned research into tidal possibilties is that there are many places around the country which might possibly have something to contribute. I was most interested in a site situated in the North West Highlands called Kylesku where there is a very narrow entrance to a sea loch, which has two fingers to it, as it were, with a tidal range of 4 metres. As an amateur I have always supposed that that site might be a good possibility.

It is worth giving the House the benefit of some material which was sent to me originating in the studies by Messrs. Binnie and Partners undertaken for the Government and which says this about small tidal schemes:

"The energy output of a tidal energy barrage is proportional to the square of the tidal range. Hence the unit cost of tidal electricity generation is in inverse proportion to the square of the tidal range. Unfortunately, the tides along most of the Scottish coastline are relatively small with a mean spring tidal range of typically three or four metres. This compares with the much higher ranges to be found along the Western coasts of England and Wales. For example, Kylesku"—

that is the place I refer to—

"has a mean spring tidal range of only four metres, compared with eight metres for the Mersey at Liverpool and 11 metres for the Severn at Cardiff. This factor"—

that is, the tidal range—

"outweighs the apparent attractiveness of many Scottish lochs resulting from their relatively narrow entrances enclosing substantial volumes of water".

The material I have been supplied with mentions that there is a formula, which Binnie and Partners have worked out, taking as a critical parameter—to use the in-word for today—in these studies the area of the water to be enclosed by a barrage. I ask my noble friend whether perhaps later on he could write to me—of course I do not expect an off-the-cuff answer to this question today—when he has had a chance to check up on the matter. My question is whether the algebraic formula used by Binnie and Partners, to summarise its own measurement of the different opportunities, is correct in considering only the area of water enclosed and not the volume. However, whatever the case may be, if the Severn Barrage could go ahead that would provide us with seven of the 13 gigawatts we require; but it may be that the financing of that project is going to prove very difficult indeed under the new arrangements.

I turn now inevitably to the Continental Shelf and to the onshore search for oil and gas. Onshore fields require planning consent and most of those that have so far been identified are pretty small. However, if they are near the coast and can be worked by deviated or horizontal drilling from off shore—such as, for instance, the Wytch Farm extension—there may be greater possibilities. But generally the onshore fields, whether of oil or of gas, are small and raise hideous environmental obstacles.

As regards offshore possibilities, we have a different situation. There is still plenty of oil and gas on the Continental Shelf to go for, but at a price. Seventeen dollars a barrel today is not the 30 dollars a barrel of the boom years that we remember so well. If peace were to break out in the Gulf war the price might well fall even lower. On the other hand, if the Iranians were to take Basra, the repercussions throughout the Middle East might well send oil prices right up again. There is enormous uncertainty and volatility in oil pricing and a consequential hesitation in going for relatively small fields.

On the whole, the new fields that are being found in the North Sea are complicated. They are small in size; they very often stretch across several licensed blocks, which in turn involves the developers, if they are going to go ahead with it, in very complicated unitisation negotiations with one another, to say nothing of the necessary sharing both in transportation pipelines, processing and terminals at the end. Therefore there are heavier on-costs relative to the small fields now being discovered in the North Sea though they would be countered somewhat should the oil price recover.

The other consideration is that on the whole the relatively shallow waters of the North Sea have now been pretty thoroughly explored— of course there is always room for more—but generally speaking they have been thoroughly explored and what remain are the deeper waters. Those deeper waters are much more expensive to drill in, let alone develop. Of course there have been technical advances in the platform design—notably a construction called "the tension leg platform" which happily can be moved and does not have to be destroyed when the field is brought to an end. Indeed one of the on-costs with which the oil fields of the past 10 years are now beginning to wrestle with financially is that of removing such platforms. That is a difficult incubus on the industry.

The marginal fields are smaller and trickier and they require joint transportation and terminal facilities, with very complicated and difficult negotiations to share them out. As I have said, unitisation agreements of great complexity are needed. Therefore, unless the oil price increases there is not a great deal of joy to be found on the Continental Shelf as regards oil and gas supplies.

To return to previous surveys of energy documents, the noble Baroness, Lady Nicol, had a jolly good reference library of material. I hope that she has not attempted and will not try to read it all, but at any rate she knows where to find material with the aid of a good index and a research assistant. I think that what the Government are now saying is merely that which has been said by all governments since the war: because of the uncertainties in energy pricing and the uncertainties in the costs of getting energy, getting it up or getting it harnessed, one simply has to keep all the options open.

If my memory serves me right, a White Paper was published in the days of the Government of the noble Lord, Lord Wilson, or it may have been earlier still. It was a Labour Government White Paper which became ridiculed, for a very silly reason which I never understood, as the "four fuels" White Paper. That is the basis of the matter. There are four fuels available. The trick is to balance them and to decide now what will be the right balance 10 or 15 years hence when new generators have been constructed. Nobody but an astrologer can really answer that, and we have to hope for the best.

Having said that, I must say that I have some reservations about some of the recent remarks of the Government. When the CBI met the Secretary of State for Energy about energy pricing it was told, as was everybody else that energy costs were only 0.2 per cent. of industry's average costs. We know that that is the average, but what about chemicals, what about paper-making, what about the capital-intensive industries? They have energy costs which may rise to 30, 40, 50 or 60 per cent. of their running costs. They are the industries which are rightly concerned about the threat of rising energy prices.

We have been told that the Government believe in the free market principle for the energy industry. That is all well and good. Apparently it is acceptable to import French electricity, so why not be equally free with the export of gas from the UK Continental Shelf? I believe that we are at fault in this country in not regarding our energy situation in the light of what I would call the energy geopolitics of the western world in general and of Western Europe in particular. Enormous supplies of gas are coming right across Europe from Russia. Is there anything wrong with Russian gas? Does it smell worse? If there is to be a war they will cut it off anyway. The idea of taking gas from the Continent is not a stupid one; equally the idea of selling our gas to the Continent makes sense. One of the failures in our current energy policy is that of failing to think in European and Western European terms.

We are told that privatising the electricity supply industry will produce a more efficient industry. Well, we shall see. The best of British luck is all I can say about that. It certainly will not be more efficient (in terms of the merit order operated now by joint ownership of this grid), when that is replaced by a spot market between rival producers who must either collude and pool to have surplus capacity ready, or have wasteful surplus capacity on their own.

Following the confusions of the past few weeks—of which I think there is no doubt, the Government having said that they did not know a fortnight or three weeks ago whether or not they would produce a White Paper, and then they suddenly produced one—we should all shed a tear of sympathy for my noble friend Lord Davidson. He has to speak for the department in this House on a very difficult and complicated subject, and speak for a department of which he is not an integrated member. Of course he is part of a team and he has access when he wants it, but he must have time to use that access. I believe it should be said again, as I have said more than once, that the spokesman for energy in this House should really be in the department. I wish my noble friend the best of British luck. I think that he is going to need it.

My Lords, from these Benches congratulations are in order to two noble Lords. One is the noble Viscount, Lord Weir. I join in congratulating the noble Viscount on what was a model maiden speech. I congratulate him also on another count. He is the head of a large engineering company in the West of Scotland. In that area there has been a rapid decline of engineering and heavy industry, but Weirs of Cathcart have shown something which is relevant to the discussion in the House today. They have adjusted and adapted to the changing market in which they operate. As a result Weirs of Cathcart contribute greatly to the survival of heavy industry in the West of Scotland. On that account also the noble Viscount deserves congratulations.

The other congratulations are due to the noble Lord, Lord Beloff, who introduced the debate. I can say with much more honesty than the noble Lord that I am not an expert on this subject. His broad-range review set the agenda for a very interesting and informative debate. I was tempted to speak only because of the events of the last few weeks in the Scottish courts when two nationalised industries have fought on the question of the price of coal and the right to import. I accept the constraints that have been put on our discussion with regard to nationalisation. I reserve comment on the White Paper until a later date.

There are however, two things I should like to say. I notice from the report of the debate in the other place that the exercise of the monopoly is extremely dangerous. British Gas, in the first nine months of 1987, had 35 per cent. more disconnections than in the previous year. There is an extreme danger that when you give a private organisation a monopoly in the market, this can be abused. The matter will certainly be looked at when we consider the White Paper.

The other comment I should like to make which has some implications for the nationalisation issue is the attitude of the South of Scotland Electricity Board. It has a management I much admire. The board is operating within the remit that it has to produce electricity as efficiently and as cheaply as possible. In exercising that managerial duty, it proposes to import a million tonnes of cheap coal from abroad. I should like to add my voice to that of the noble Lord, Lord Mason of Barnsley, in connection with the importance of retaining a healthy coal industry. The trouble is that if you create, as in the White Paper, a private monopoly in electricity generation, then it will be compelled to take the action that has been exercised by the SSEB. Its prime duty to the shareholders will be to maximise profit without consideration of the consequences on the mining community, the national interest and the balance of payments. In fact, if the policy of the SSEB is pursued, 3,500 jobs could be lost in the Scottish mining industry. This would cost about £60 million in redundancy payments. So other factors than simply the price of imported coal should be taken into account when these about-to-be-privatised monopolies operate.

I was delighted—I say this in the presence of the Minister of State at the Scottish Office, the noble Lord, Lord Sanderson—to read in the Glasgow Herald today that the two parties are now coming round the table. I hope that there will be a reasonable and balanced solution to a very difficult problem. In fact, I would commend the statement made by the SSEB before the Monopolies Commission in 1987:

"Although the Board will continue to monitor the price of imported coal it is not considered to be in the long-term interest of the Board's customers to import foreign coal in present circumstances".

I hope that a more reasoned view will be taken of the long-term supply situation by the SSEB. I am delighted to have said this without raising passions or creating physical danger for the Minister of State following my contribution. I accept that the SSEB and other industrial consumers have a substantial interest in a reasonable price for coal.

I was encouraged to participate in today's debate after having attended the all-party minerals group in the House last week. We were addressed by representatives of the opencast division of British Coal. I should like to offer one or two comments. More than 50 per cent. of the total production of coal in Scotland is now opencast. The opencast sector of British Coal now produces, at a profit, something like 12 million tonnes a year. A total of £200 million profit was thrown back into the pool of British Coal from opencast production to assist in the subsidy of less economic pits. The operating costs suggest that opencast coal can be produced at something like £26.8 per tonne against the current imported price of approximately £30 per tonne. Thus, opencast coal produced in this country is competitive with imported coal. Compared to deep-mined, which is £1.60 per gigajoule, opencast is about £1 per gigajoule.

People hold up their hands in horror at the suggestion of opencast coal. But it is important to the economy of the mining industry and there are regional implications. A good deal of opencast development is in areas of high unemployment where coalminers have become redundant. It is estimated that 15,000 employees are now employed in those areas. A subsidy of £200 million is given to the deep mining industry. A good deal of the deep-mined coal would be totally unusable if it were not blended with opencast. Opencast coal therefore makes a contribution to the deep mining industry and should riot be regarded as a competitor to deep-mined coal. It is supplementary and complementary.

There is unfortunately the same deep resistance to any change in the landscape which I encountered when I was chairman of the Forestry Commission. While this is not always justified, sometimes it is. I can see deep resistance to change outweighing some of the economic advantages that can be gained from an expansion of opencast mining. I have seen examples of what has been done by the opencast division of British Coal in the restoration of sites that were formally derelict. After three or four years, it has built golf courses and community centres and has carried out landscaping so that trees now grow in areas that had no trees previously. After four or five years of activity, it has restored a good deal of the landscape to a much more acceptable and better condition than that in which it found it.

Nobody likes an opencast development on his doorstep. The planning laws are such that, in order to carry out the necessary development, one has to apply to the local planning committee. That committee, being the conscientious and socially responsible body that it is, is dominated frequently by local miners, members of the NUM, who are not always sympathetic. Sometimes, on a very narrow-minded and short-term basis, they have no great enthusiasm for it. Opencast mining is carried out by the Transport and General Workers' Union. There has therefore been a good deal of frustration in seeking planning permission. Between the process of examining the site and the granting of planning permission, a period of five years can elapse before one is able to proceed with the development, on the assumption that planning permission is ultimately received.

Because of the pressure of environmental interests, some of which may be well intended and justified, the number of decisions in favour of opencast mining from March 1984 to August 1986 represented 52 million tonnes. That figure dropped to 11 million tonnes last year. The rate of success of applications to develop opencast was 40 per cent. in 1984–86. The figure has now dropped to 10 per cent. There is a balance to be struck. The opencast division of British Coal should consider the extent to which it can compensate communities for environmental disruption in areas where it intends to develop and should encourage the local communities to work with it. Greater publicity should be given to the achievements and social objectives in restoring and enhancing sites after opencast has been pursued for three or four years.

Unless a reasonable balance can be achieved in planning, an important national resource will die and imported coal will come in. Opencast production can produce coal at a competitive price. I ask the Government to face what is a real dilemma, namely, how they can resist the total decline of the industry due to planning restraints and so enable coal to be a competitive fuel.

My Lords, I too thank the noble Lord, Lord Beloff, for introducing this interesting topic. I add my congratulations to those of other noble Lords to the noble Viscount, Lord Weir, on an excellent maiden speech. I am sad that he is not present to hear my welcome.

Whenever I speak on energy topics in the House there seems to be some kind of ghost around. Last time the Sizewell inquiry report was imminently awaited, and we were not allowed to mention it. Today the ghost is in the form of the privatisation White Paper. I shall follow the tradition that we have established and refer to it no more than necessary.

The noble Baroness, Lady Nicol, spoke of the need for an energy strategy. I have often thought that the only thing that energy strategies are useful for in the long term is as historical documents to compare with the revised energy strategies later on.

One thing is clear. As the noble Earl, Lord Lauderdale, so ably set out, we shall need much more generation capacity in the near future whether under the private sector or from the CEGB as it is now. One of the problems of electricity generation is that it is mostly best done on a mega or, dare I say, giga scale in large coal-fired or nuclear power stations. I suppose, at the same time, one could advance respectable arguments that security of supply comes from diversity and that a large number of small generating units could offer greater security in the long term than a relatively small number of giant power stations.

Of course, the problem is that economics always militate against cottage industry power generation since small scale means high cost. Hence, such security could only be achieved if electricity prices to the consumer were, on the face of it, very much higher than they are today. There are perhaps some exceptions to this rule in that small generating units could usefully contribute directly to the regional or local grids on a cost-effective basis either for peak sharing or perhaps even base load.

Much attention has been given to energy savings since the oil price shocks of the 1970s. I have often felt that it is rather like asking a poacher to turn gamekeeper to expect the CEGB as a seller of electricity to press the case for energy conservation. However, the next stage beyond energy conservation is to try and collect the energy which could be generated by small units and harness what would otherwise go to waste.

The CEGB's record in encouraging smaller and unusual sources of power generation since the 1983 Act has not been particuarly good, as the noble Lord, Lord Ezra, noted. Indeed, by all accounts, the CEGB has been at pains to discourage small suppliers of electricity through the price mechanism and with arguments such as, "Small generators cannot guarantee long term supplies of constant quantity and quality". That has always seemed to me a slightly spurious argument. Obviously, while individuals may not be able to do so, groups of small generators can probably collectively guarantee a reasonable average contribution to base load. Perhaps they could even get together in small associations.

I can think of one example where there exists the possibility for small generating units to supply relatively constant good quality supplies of electric power directly into local distribution networks at a competitive price. In recent years, a number of small onshore gas discoveries have been made but many remain shut as uneconomic for the purposes of commercial production in conventional terms. Either the calorific content of the gas is too low or there are insufficient quantities to justify the capital costs of gathering, treating, compressing and conveying them into the BGC pipelines.

However, at the micro end of the scale, a conventional car engine can be modified quite easily to take natural gas straight out of a wellhead and harnessed to a small generator will run for long periods with rests only for maintenance. If adequate volumes of gas are present—and the determination of that is pretty easy for petroleum engineers—then larger generating capacity can be placed right at the wellhead to produce a megawatt or more through unobtrusive quiet, portable, even perhaps skid-mounted equipment—a sort of crocodile clip on to the local grid. When the gas runs out, that can be moved elsewhere. In this way, otherwise unusable reserves of gas can be effectively utilised for power generation and oil and gas exploration companies can get a return on the capital investment which they would otherwise probably have had to write off.

I believe that an EC directive has been in existence for some time restricting the use of gas for the purposes of electricity generation. But, according to an article in The Times of 29th February this year, that directive is, I believe, to be deleted or amended shortly. I hope that perhaps the noble Viscount can confirm this in his reply.

Small gas-fired generators are perhaps one example of alternative sources of low volume but potential base load electricity supply which could be encouraged to contribute to our national security of supply. Given some real encouragement, I am sure that the private sector can come up with a number of other examples outside the ambit of the conventional electricity generating industry. I hope that in the context of privatisation the privatised area boards will not just have the right to purchase electricity otherwise than from the grid but that they will be given an incentive and perhaps a duty to encourage potential local generators outside the conventional electricity industry to come forward and offer supplies and that those latter contributors will be greeted with a pricing policy that gives them a fair living.

My Lords, I, too, would like to add my congratulations to the noble Viscount, Lord Weir, in his absence, for a maiden speech of remarkable quality. I am sure that we shall hear more from him in the future. I thank my noble friend Lord Beloff for an opportunity to air not exactly my expertise but at least my enthusiasm for this subject. I was almost brought up with the generation of electricity. My grandfather built Barking power station. My father ran it and developed a private utility company or group of companies which supplied most of London and, I think, about two-thirds of the southern counties with electricity up until 1946 and nationalisation.

I was a little young at the time but I remember being very conscious of the pride with which a service was given to both private individuals and to industry. It may interest noble Lords. I remember when I went into the City in 1960 there were still jobbers—sadly, they have now disappeared—who were market makers in the shares of my father's and my grandfather's company. It was called the County of London Electricity Supply Company. I have looked at the records of the company since 1896. There was a graph showing the pre-tax profits and the megawatts produced per year. It was a remarkable and very consistent growth record through times of real difficulty in the 1930s, not to mention two world wars in which this country was much involved. There was a very consistent record of growth. I say that knowing that we are not discussing the privatisation of the CEGB but just to show that there was a precept for private generation and a responsible one at that.

I must declare another interest in this subject. I am a director of a firm of technology consultants. We have as one of our main interests energy, energy conservation, sources of energy and so on. Although I would not be one of the technical people involved, some of the thinking and work rubs off on me, which maintains my interest in this area. We have heard a great deal about the problems of the fossil reserves in this country, the need to maintain employment and the need also to conserve fossil materials for future generations in the next 100 or 1,000 years. I would differ perhaps from previous speakers in looking not 10 or 20 years ahead but 1,000 or 2,000 years ahead. The fossil materials of this planet must be considered in finite terms. We should look upon quite a bulk of those which have been discovered and those which are as yet to be discovered as a legacy for the inhabitants of this planet who will come after us. I also think that we have a real responsibility for the environment in which those people will live. We must be very conscious of the potential damage that the burning of wood and fossil fuels can cause unless safeguards are implemented.

My plea is that there should be very real concern on the part of the Government that the quality of research should be maintained and increased to make sure that emissions are not damaging, that there is research into how damaging they really are and in which direction they travel. I believe that there is a real case for more work to be done, for more research to be carried out and for more finance to be provided for research in that area.

I hope that the energy requirements of countries, including this country, will grow and with it their economies. The noble Lord, Lord Beloff, quite rightly said that that was the subject of the debate and that we must prepare for the future. If we are going to maintain a proper supply to industry, and to people, of course we must look possibly to other forms of electricity generation.

Some research is being done. I believe that we spend something in the order of £16 million a year looking into renewables, whereas the sum spent on nuclear research is something of the order of £250 million. I wonder whether that is perhaps the right ratio in view of the importance of the industrial activities which are involved in researching into renewable forms of energy generation being successful.

There is the obvious concept of addition to the grid which is an argument for promoting renewables. There is also the fact that some forms of electricity generation which we enjoy in this country are not possible in other parts of the world. Expertise generated in this country in wind power or tidal power, for example, or other forms of power could be exported to countries where it is not possible to use our forms of energy generation.

Most forms of renewables have been mentioned this evening and I do not want to take up your Lordships' time in repeating them; but I think that two which have not been mentioned before this evening are worth mentioning. There is a case for renewables in that usually the material involved is free: for example, the wind or the tide. But there is one form of alternative energy where one could be paid to take it away. I am talking about refuse-derived fuel. There is a form of pelletising refuse which produces pellets with about 60 per cent. of the energy content of coal. There is a considerable amount of activity going on in this country in connection with that fuel.

As my noble friend Lord Torrington was saying, one of the problems about producing renewable forms of energy is access to the grid. I ask my noble friend Lord Davidson to address himself to the question of whether there are problems in various areas of getting access to the grid in financial terms which make sense and are truly competitive when compared with the coal powered or the nuclear generating stations.

I feel that in some cases there may be discrimination as regards the rateable value of some generating stations. That seems unfair. Wind generation has flourished in places such as California where a local grid has guaranteed or made an offer at a fair price for the electricity so generated.

Another source of energy of which there is an enormous volume is hydrogen. In fact, it is one of the most prolific substances on earth. Work initiatives are going on in Germany conducted by industrial companies to look into the use of hydrogen as a form of energy production. The production of hydrogen involves water and electric energy is needed to create it. But off-peak water energy could be used to produce hydrogen which in itself could then be used to create energy. That seems to be an area where I do not believe that much research is going on in this country. I ask the noble Viscount if he can advise me on that subject.

I feel that we are at a time of low oil prices. We have perhaps been lulled into a false sense of security as regards our national energy scene, especially with our massive coal stocks. But things can change very quickly in this world, and we should act responsibly in being more diligent in our encouragement of private and public sector funding for alternative forms of energy.

My Lords, I too should like to thank the noble Lord, Lord Beloff, for introducing this debate and for introducing it in so philosophical a way. He has certainly given us all food for thought; and indeed the debate so far has taken up a number of the points that he raised.

I also wish to congratulate the noble Viscount, Lord Weir, on his maiden speech. I trust that we shall hear many more speeches from him. I was particularly struck not only by his kind and correct references to the CEGB in relation to equipment suppliers, but also by the point he made that one of the consequences of privatisation may mean differential pricing in various parts of the country. That is virtually the only reference which I shall make to privatisation. However, it is a point to be borne in mind. I hope that the Government, and the noble Viscount who is to reply in this debate, will take that into account.

I should also like to congratulate my noble friend Baroness Nicol who has taken my place very ably on the Front Bench. I congratulate her on an apt speech which was well-delivered and also on getting to the central point of the argument. That point is that we need, one way or another, an energy strategy. In my view, such a strategy must ensure two things. The first is security of supply which will mean ensuring a proper balance of fuels at a reasonable price which will give good energy supplies to all who need them, whether they be domestic consumers or industrial and commercial consumers. That is a matter which we shall have to consider very carefully indeed.

So far, the strategy of the Government (if it can be called that) has been based simply on market forces and intervening in the price structure as a means of conservation. Frankly, I do not think that that is good enough. No doubt the Government will be thinking about their strategy over the next few months and we shall hear more of it in what I hope will be a proper and long debate about privatisation. Perhaps we shall have that debate later on in the year.

We have also heard a good deal in this debate about energy projections. I believe that in another place only this morning the Secretary of State was castigating the CEGB to the Select Committee on Energy. I do not know what he said so I cannot comment upon it. But I know from my own experience that energy projections can go very wrong indeed.

When I worked at a power station in the electricity supply industry, we were told in the 1960s that the great new fuel must be oil. As the noble Lord, Lord Beloff, has pointed out, there has been a great glut of oil at times, as there is presently. We were told that in future we must switch over to the generation of electricity from oil. We were told with a great wave of enthusiasm—the noble Lord, Lord Ezra, and my noble friend Lord Mason will remember it—that we must build many power stations which were fired by oil. And we did so.

We built about 10,000 megawatts-worth of oil-fired power stations. Later (and indeed at the present time) those had to be mothballed because the cost of running them was so huge that it could not be sustained. In any event, oil supplies had become very short. I remember that ordinary shopfloor workers at my power station and at others warned the Government of the day that it was bad policy which would rebound later on. And so it proved.

I also remember that the CEGB made a projection of demand for electricity which would have meant consuming 200 million tonnes of coal a year. I remember speaking in another place and suggesting that if those projections were realised, and if we did burn 200 million tonnes of coal a year it would affect the weather. I suggested that the weather patterns of our island would be affected. I do not think that people took me seriously at the time. But perhaps they would do so now because it is beginning to be realised that heat and CO₂ emissions have a serious effect on our environment. Energy projections are difficult to make and they often go dangerously wrong.

Perhaps I may now refer to coal. The noble Lord, Lord Ezra, and my noble friend Lord Mason dealt with that subject so well that perhaps nothing more needs to be said. However, I should like to add one or two more points. If the Government do not maintain a strong indigenous coal industry, then at some time in the future we shall have such a crisis of both electricity and power supply as we have never known before. It must be emphasised that a pit closed cannot be opened easily, if at all. A pit which has not been sunk cannot be brought into production for another 10 years. That is the problem we have. That is why it would be an enormous mistake to allow the amount of imported coal to increase to a substantial degree.

What is more, if we allow a substantial amount of coal to be bought on the world market, not only will we put our coal and electricity supply at the mercy and whim of foreign countries, shipowners and so on, but we shall affect the price structure worldwide as well. Therefore, we must be careful what we allow in the matter of importation of coal.

There is an argument going on in Scotland. It was referred to by the noble Lord, Lord Taylor of Gryfe. It is an important argument, and what he said should be noted by the Government. He said that there were 3,000 jobs at stake which would cost the Goverment £60 million. The Secretary of State for Scotland, Mr. Malcolm Rifkind, has said that that is merely a trading matter, and that he does not wish to intervene in a trading matter between the SSEB and the Coal Board.

Have we come to a situation in which the chairman of the South of Scotland Electricity Board or any other board should make the policy of the Government? That is what is happening and that is what he is doing. If he has his way, undoubtedly the coal industry in Scotland will be badly hit. Pits will be closed and the Government will have to fork out a lot of money in redundancy payments and in unemployment pay. Therefore, the Secretary of State ought to intervene and see that a proper balance is struck.

I noted when I was a member of the Select Committee on Energy in another place that in Scotland there is a surplus capacity of some 130 per cent. Scotland has a capacity to generate 130 per cent. more electricity than is needed there. One of the values of an integrated supply industry ought to be that the South of Scotland Electricity Board should be able to export a good deal more of its product to the South of England than it does at the present time. If they did that, there would be an outlet for every tonne of coal that could be produced in Scotland, and what is more there would be a saving in capital expenditure in building power stations in England and Wales. That is a policy which I believe the Government ought to consider.

I shall now turn from coal to oil. As the noble Lord, Lord Beloff, said, it is true that there is a glut of oil at the present time. The glut may become worse; on the other hand, the Middle East is in such a seemingly permanent turmoil that that glut could be turned into a shortage at any time. We have to bear in mind that, with the best will in the world and on the best series of estimates, we shall lose all our exportable surplus of oil by the mid-1990s and we shall probably have lost self sufficiency by quite a considerable amount by the year 2000. Therefore it is necessary to conserve our oil supplies and to ensure that at the same time as we have a depleting oil supply we have not closed down our coal capacity. As I mentioned previously, 10,000 megawatts of oil-fired power stations are not being fully utilised at present; and I think that consideration should be given to converting some of those oil-fired stations to coal firing. We should start to do so at an early stage.

Most of the points that I wish to make have probably already been made; but I wish to draw attention—and particularly the noble Viscount's attention—to the necessity for conservation and efficiency. As has been mentioned by a number of noble Lords this afternoon, one of the best ways to conserve fuel is to institute combined heat and power projects. Such projects will give very good returns. At the present time, we are building power stations—2,000 megawatt, 660 megawatt sets—and we produce only electricity from them. We also heat the atmosphere for no good reason or pump hot water into rivers, which is wasteful. The power stations provide an overall thermal efficiency of about 38 per cent. As my noble friend Lady Nicol mentioned, it is possible to obtain overall thermal efficiencies of up to 90 per cent. from combined heat and power stations.

Clearly, even though we have coal, oil, and nuclear power, we should be conserving the energy that we have. In this respect, I believe that the plans for building new power stations at Fawley and West Burton should be reviewed. To build a further two 2,000 megawatt power stations (perhaps with 900 megawatt or 660 megawatt sets) would be wrong. For load balancing reasons, I understand and appreciate the need for power stations to be situated in the South. But there is absolutely no reason why four 500 megawatt power stations should not be built near conurbations. They could provide electricity to the grid and perhaps also to the local area; but, most importantly, they could also supply heat to the local area. In that way, we would obtain the best possible efficiency from those power stations.

There is much more that I should like to say, particularly about nuclear energy. However, my time is up and I do not wish to go beyond the 15 minutes recommended in your Lordships' report. In conclusion I urge the Government and the noble Viscount to take great heed of what has been said in this debate, even though it is understood that the Government, before very long, want to divest themselves of all responsibility for electricity generation and indeed the whole of energy policy itself.

My Lords, I should like to add my thanks to the noble Lord, Lord Beloff, for initiating a topical and important debate. Conforming with other speakers, I shall try to keep to the narrow path and not touch on privatisation as a framework for the future, attractive as that might be. I can talk briefly about the present plans for increased generating capacity, which is so necessary if the security of power of which the noble Lord, Lord Ezra, spoke is to be achieved. Those plans are CEGB plans. As far as I can see they have been adopted in toto in the Government's privatisation plans and in that way are quite uncontroversial.

As your Lordships know, it is proposed that electricity generation should be broadly divided between nuclear and coal—six nuclear stations and four rather larger coal stations. Whether those can be financed and built on time are topics on which I should like to touch in a moment. I am a convinced supporter of the nuclear part of the programme allowing for the phasing out of the Magnox stations by the end of the century. That will leave the division of power broadly as it is now—80:20, or something of that order.

There is much argument about the cost of nuclear power. One tends to adopt the conclusion which is most attractive to one's argument. The difficulty about comparing the cost of coal and nuclear power is that the composition is so different. The CEGB estimates for Sizewell show that the capital ingredient of nuclear power is nearly two-thirds of the cost; in the case of coal-fired stations fuel represents over 70 per cent. of the cost. The conclusion one reaches depends on the assumptions that one makes about the financing of the nuclear stations or the price of coal in 20 years' time. In the Government's calculations a discount rate of 5 per cent. was used, which I think on the whole is low. On the other hand, it was assumed that the price of coal would not change by the end of the century—an assumption which I think is hazardous.

It remains true that the Layfield Report concluded positively that nuclear power was cheaper than coal. Certainly our European partners in the Community are very much of that opinion. As your Lordships know, the French are 70 per cent. dependent on nuclear energy, and that percentage is moving upward. They can offer us power in bulk at a lower price than any of our existing power stations. That is an argument for its cheapness.

The main argument is surely that we must have an alternative to coal. Nobody argues that coal will not be the main fuel for power stations at the end of the century and well beyond, but there must be an alternative and from what I have heard and seen, I do not think that the renewable fuels can realistically be expected to be usable in this generation of power station.

The noble Earl, Lord Lauderdale, mentioned the acreage required for a substantial wind station. I think that his figure was low and that the acreage required for the equivalent of a main nuclear station is nearer 400 square miles. However, surely either figure would be acceptable. I am sure that offshore is too costly. Oil is attractive, with the price of oil tending to come down, but the current price of oil is almost immaterial. The question is: what will be its price over the average life of a power station—that is to say, 30 years on? As the noble Lord, Lord Stoddart, said, by that time many things could have happened in the Middle East and the price could be totally different. I think therefore that the alternatives are coal and nuclear and I should have thought that the balance between those two sources was probably about right.

To touch on a slightly controversial point, perhaps I may mention finance. The figure for the return on capital of the CEGB which was quoted by my right honourable friend in another place last week was 2.45 per cent. I do not believe that any industry can produce expansion for the future on that kind of return. I am quite certain that a very different picture would be required in any privatisation scheme. It seems to me that that is ample justification for the increase in price, whatever happens, because we need the power.

As regards privatisation, which is perhaps an awkward subject, the amount of capital required for the new stations will be equivalent to that required for between three and four Channel tunnels, which is large. If the cost of privatisation is added, the total bill will be about the same as for nine Channel tunnels. I cannot but wonder whether those sums will be available for the period of which we are talking.

Perhaps I may say one last word about planning permission, following up something that was said by the noble Earl, Lord Lauderdale. If the planning permissions cannot be speeded up, we shall not have any power stations at all. We need 10 of them and so far planning permission has been obtained for one—Sizewell B. It is very understandable. In my own little village the parish council was foolish enough to ask the residents where they thought some additional housing should be built and every answer said in so many words, "Not near me". That is the way any locality feels when it is faced with the prospect of a neighbouring power station, whether it be coal or nuclear.

My only constructive suggestion is that the Government, if they can, should restrict the discussions to local subjects. At Hinkley Point, which I know very well, there are problems of local roads and the construction of housing which are eminently suitable subjects for discussions about planning, whereas the overall justification for nuclear power is not, given the fact that the power station will be identical with Sizewell B. I end by repeating my earlier words: security of power is essential.

My Lords, I do not intend to deal at any length with the White Paper, despite the fact that I know that the Minister believed that some noble Lords would do so. I had the opportunity of putting forward some general criticisms when we discussed the enabling legislation. I shall therefore follow the convention that has been established today and make only one remark; namely, that the six principles seem to me to be nothing more than a political statement and a pious hope, without any real foundation for their realisation.

For some years—in fact for so long as we can foresee—we shall have to depend to a great extent on electrical generation by coal. To put coal and nuclear power in perspective, it is worth being reminded that coal is not the clean fuel that some people would like us to think it is. In the flue gases it produces as much radioactivity as the sum of all our nuclear stations and related processing activities. In addition, the coal-fired stations spew out large quantities of toxic heavy metals. More important, of course, is the acid rain from not only sulphur but also nitrous oxides. The latter will be reduced in new power stations only by about 30 per cent.

What is truly worrying is the increase in carbon dioxide and the consequent greenhouse effect. This is likely to have most disastrous consequences for the world's climate some time in the future. Of course that is not certain, but it is a strong possibility. It will happen when the icecaps start to melt and produce a devastating increase in sea levels. Furthermore, in 1984 in our own coal mining industry there were around 400 new cases diagnosed of pneumoconiosis, a chest disease of miners. It is probably much less prevalent today. But if the figure is projected on a European scale, in one year it is likely to produce as many potentially early deaths as the effects of Chernobyl. I conclude that until other means of generation such as renewables can provide a substantial means of power we must continue to rely on nuclear and coal generation.

That situation must lead to greater emphasis on the alternatives. The first and potentially most important is conservation and the efficient use of energy for which there is great scope in industry. To their credit, the Government are doing a great deal to promote it. For some reason, however, their efforts in the domestic private sector, which consumes about 30 per cent. of our total energy, seem feeble, to say the least. The Government decline to help in the construction of energy-saving houses by promoting an energy audit of houses for sale, as is done in Denmark. In spite of the interest of the EC in this matter, they prefer to do nothing until the EC's legislation is produced in the long distant future.

In a series of Questions for Written Answer, I have pointed out that if the Government were to pay for at least the loft insulation of existing housing stock, there could be an energy saving equivalent to that provided by one modern power station; that is to say, a sum of about £1·5 billion. That calculation takes into account the possibility that most people will use some of the savings for increased comfort rather than energy conservation.

Because of the remote risks inherent in nuclear generation and the objections to coal which I have mentioned, so far as is reasonably possible we should press forward with the other alternatives apart from energy conservation. We could and should start to build wind turbine farms. However, unless they are put out to sea and therefore become uneconomic, their contribution will be limited by environmental considerations. For my part, I believe that they could not contribute much more than 5 per cent. of our energy requirements. Some people have quoted a figure of 10 per cent. We shall only know when we have the public's reaction to the environmental effects of wind farms.

Moreover, wind farms can only provide an intermittent and lower output than their rated capacity. Even with 3 megawatt turbines, at least 800 units are needed in windy sites to match the output of one 1200 megawatt power station, and they would occupy an area of some 400 square miles.

In this context we must be quite clear that there is a limit to how far power can be shipped through the grid. First, there are the direct losses incurred in doing so, amounting to around one half of 1 per cent. for 100 miles. Secondly, unless you convert to direct current, the inductive properties of the grid transmission put the alternating voltage and current out of phase and destabilise the network. These considerations limit effective competition between distant power stations.

There are two other areas where a non-polluting source could provide a substantial contribution on a national scale. The first is the Severn barrage scheme. Accountancy and economic assessment is, to say the least, always suspect because of the assumptions that have to be made with many unknown variables. It appears, however, that the Severn barrage could well produce power at competitive rates. Most certainly, it would do so over an anticipated life of 100 years.

Most of us think that the real cost of energy will inevitably rise, probably faster than the Government's projection. The real problem is in financing the scheme. By privatisation the Government have made this much more difficult. Some government finance has always seemed necessary. Surely, the Government should provide for this and other similar purposes out of the proceeds from selling off the assets in the electric supply industry. The Government must surely realise that private industry and the market place are primarily concerned with relatively short-term financial gain. The Severn barrage is a very long-term project.

I shall make a plea on much the same grounds for combined heat and power and government financial help in launching a demonstration scheme in one of the 10 major cities which Atkins and Partners thought could be viable. Such schemes are common on the Continent. Our difficulty is that we do not have any large district heating schemes to which connection can be made. It follows that any such scheme here has a long lead time before it becomes profitable. There is the uncertainty of how many consumers would change their existing heating arrangements for connection to a heat main and the need to dig up streets to lay the heat mains. For these reasons, I believe that large district heating schemes supplied from combined heat and power will simply not get off the ground unless the Government are prepared to some extent to underwrite the cost.

I must emphasise that I also support other alternative energy projects such as heat from bore holes, landfill gas, waste utilisation, inshore wave generation, and so on. However, protagonists must realise that they can provide only a small, though useful, proportion of our energy needs.

Finally, let me say this on privatisation. It is incredible to me that, without any substantial change in the surrounding circumstances, the Government seem to veer from one extreme doctrine to another. Yes, let us have privatisation where there is a prima facie case for it. However, do not let us forget a previous view expressed as the unacceptable face of capitalism with its short-term financial objectives. It never pays to uproot an existing organisation unless there is a very strong case for doing so. It takes a long time to realise any possible potential benefit and sometimes such benefits do not exist.

My Lords, I should like to apologise sincerely to the House for not being present at the beginning of the debate, and in particular to my noble friend Lord Beloff for not being there to hear what I understand was his very philosophical speech.

I do not apologise for talking about electricity because it is very much on our minds at the moment. In electricity, generation is at the heart of supply and it is encouraging to see all the public sector supply industries getting back into the private sector again and joining their manufacturing counterparts. Services such as piped water, gas, cable communication, broadcasting and power supply are all engines of growth with customers in front of them and manufacturers behind them.

I wish to look at electricity in particular because I am employed by one of the British heavy electrical manufacturers. There is only one other, and my noble friend Lord Prior will know exactly which one that is. I have supported electricity as an alternative energy source in transport. I have researched it and I support its privatisation.

In England, the first lights were put on in 1880 by a private company in Godalming and I expect that my noble friend Lord Renwick knows all about that because his family have been very much involved in private generation. I hope that the new distribution companies will keep them on all over the country in the 1990s. Nationalised service has had a short lifespan in this industry. In human terms it has been ashes to ashes—in electrical terms, earth to earth—in something less than 50 years. We are reminded today of this by the name of our maiden speaker, whose grandfather, as I understand it, opened the way to integrated supply in 1925. I should like to congratulate him on the relevant points that he made in his short and excellent speech.

The White Paper covers generation, transmission, control and distribution, so everybody will know their place, but absolutely nothing is said about research and development. The noble Earl, Lord Lauderdale, mentioned the subject in his speech. It is a very significant part of the equation which at the moment sits plum in the middle of the CEGB. If, as we are told in the CEGB report, the R&D spend in 1986–87 was £162 million, I believe that we cannot afford to forget it. Of this, 55 per cent. is spent extramurally; and on top of it all government departments and the Commission in Brussels put more money in. What will happen to this valuable, and most invisible, resource? We must ensure that it is properly mobilised to meet the privatisation challenge.

Technical backup is needed for four different nuclear fuel cycles and for the fast reactor if we look into the future. Further ahead there comes fusion, so there is a fifth cycle to deal with. In addition technical backup is needed for all the non-nuclear areas such as fossil firing and pollution—and this includes prevention and cure.

An interesting point was made by my noble friend Lord Weir about the foreign competition that we shall face. Because we let all the sulphur dioxide go up the spout, no development work has taken place on flue gas desulphurisation. The result is that we shall have to rely on foreign companies—probably from Japan in particular—to supply the equipment under licence to put into effect the £600 million programme for the retrofitting of the power stations here.

My noble friend also mentioned prevention. A lot of technical work is being done on prevention looking at fluidised bed combustion and also Lownox burners and that kind of thing. This means that we shall be able to rely on British manufacturers to supply in the future in this area. We need technical backup for renewals, the grids, alternative uses, advanced generation and electrical storage. It does not all happen by magic. R&D depends on people, and in order to deal with all the processes that I have mentioned a lot of qualified manpower is needed.

The lead times in power engineering are long and, where people are concerned, any sudden change such as we are now going to face can be disruptive. It takes time for people to adjust and to know how to work the new system. Meanwhile a temporary vacuum is created. The danger is that foreign competitors can move in and capture some of the ground before we have the time to pick ourselves up and face the situation, as perhaps they have already done with flue gas desulphurisation.

We must not let that happen. I implore the Government and my noble friend's right honourable friend to make absolutely certain that in going private we do not lose the essentials of the R&D resource. There must be no squabbling between Big G and Little G over who gets what. The right intramural/extramural balance must be established and the Secretary of State must make sure that he can still sponsor vital R&D work which would not otherwise be done by the new companies.

I am reliably told that the shock of having to compete in generation now means that the technical planning and research divisions of the CEGB will have to start looking at the options from scratch. In effect, all the hard work now has to begin on finding out how best to deploy all the R&D resources in the most effective way for the future. Although it might appear to be a straightforward exercise I think that that is very far from being the case when one looks at the way it is all scrambled together at the moment. For example, the Electricity Council has a controlling share in Chloride Silent Power, which has brought the new sodium sulphur batteries near to commercialisation after absorbing the General Electric research efforts in the field.

What is to happen to that initiative? What is to happen to British Electricity International, the consultative arm of the supply industry, which engineers systems for overseas customers based on British practice and hardware developments and tries to introduce British innovations into overseas power networks? In whose hands will the responsibility lie for securing EC research support for power generation, whether it be nuclear, tidal, wind, superconducting or fossil-fired? What will happen to the collaborative research panels set up by the CEGB to discuss R&D requirements and programmes with the manufacturing companies in the main plant areas? These have only just been set up to replace the Power Engineering Standing Committee, which provided up-front money for future prospects.

Who, by the way, is to supply the JET experiment at Culham with its pulsing power? Is it to be Big G or Little G or the distribution companies? If I were the director of the JET project, I should shop around for the cheapest. My noble friend Lord Weir has already mentioned that there are likely to be many differing tariffs available. The Director is French, so he might try to get his supplies from EDF via some part of the network. Who is to support UKAEA projects, BNFL projects, new combustion techniques, combined heat and power developments? I shall not go any further, because the list is endless, but the point I want to make is that R&D work in energy must be co-ordinated.

I should like now to consider the various options that we have. The first, and perhaps the worst, is that the new companies should be left to sort themselves out, which means squabbling over the resources. Some is bound to get trodden on and may disappear. I do not favour dealing in this way. Secondly, the Secretary of State can seek professional advice and referee the carve-up to make sure that none of the essentials becomes lost. That is much better, I think. Thirdly, I should like to propose that the Secretary of State draws on the resources in the heavy electrical industry to ensure that the momentum of energy growth is maintained in the power engineering field: that it drives economic growth, not the other way round. This means, too, getting science out of the universities and on to the shop floor. That is not easy, but the contract research organisations built up in this country from research associations and independent institutes have shown how to bridge the gap between the two.

I should like to propose that serious thought should be given to forming an electrical power research institute in one of the regions such as the North-East where power engineering is already strong right across the board from generation through to application. The creation of a private sector centre of excellence to serve our energy needs would be invigorating, and I hope that the Secretary of State will consider that option seriously.

In the electricity industry, we are faced with converting a primary fuel into a secondary fuel. My noble friend Lord Renwick talked about hydrogen. That is another case of converting a primary fuel into a secondary fuel. At the moment much waste heat goes up the chimney, but we must remember that other premium uses for coal may come along—liquefaction in transport, chemical feedstocks and that kind of thing. We must therefore bring some synergy into the power engineering R&D sector. What better way to do that than by creating a private sector centre of excellence in the North East which already has produced world class innovators such as Armstrong, Parsons and Swan. Edison did not get his patent on the filament lamp. It was a Swan-Edison patent. The power generation system for the SDI kinetic energy weapons comes from Newcastle. We have a shortage of power engineers in the UK. In energy-conscious countries such as France, Germany and Japan, R&D programmes in the power engineering field are highly co-ordinated and often 100 per cent. funded by their governments.

We must make sure that R&D gains ground on privatisation, that we avoid duplication and that our efforts in the shorter-term development needed for such projects as the 900 megawatt coal-fired stations match the longer-term efforts aimed at the distant prospects.

My Lords, we are indebted to the noble Lord, Lord Beloff, for introducing this important topic. Let me say to him apropos his opening remarks—or perhaps I should say it to the noble Viscount, Lord Davidson—that there is no danger of fisticuffs, verbal or otherwise, this evening. Indeed given this lovely spring day my mind turns to quite other subjects.

The debate was introduced by pointing out that we must not simply extrapolate from the present circumstances into the future. We must take the long view and the long position is extremely hard to forecast. Indeed, I stand second to nobody in your Lordships' House for making errors in forecasting. At best I hope that my forecasts are about as good as random, but I sometimes fear that they are worse than random. However that is by the way.

We must bear in mind how difficult it is to forecast, but, given the nature of the topic, it seems to me that some degree of forward looking is unavoidable. Therefore essentially built round the debate must be the paradox that it is hard to look forward, but it is extremely important to do precisely that. What is vital to be borne in mind is that what we observe at the moment need bear no relationship to what we shall see in the future. Because at present there does not seem to be an energy constraint on economic performance, and because we do not observe anything like that at the moment, we should not assume that in due course such a constraint will not appear. The difficulty is that we must look not merely into the future but a long way into the future. I am rather frightened by the literature that I read in the sense that it talks of energy shortages in the year 2020 when few of us will be here. That is a subject to which I shall return in due course.

The lead times are quite enormous. Curiously enough the general public has little idea of how long the lead times are. We are indebted to several noble Lords for reminding the House that the lead times are long with regard to coal mines in particular. One does not simply decide that one needs more coal tomorrow and start to dig. One must take as much a forward look with respect to coal as with almost any other relevant energy technologies.

While we agree that we must be efficient and economical—which are themes on which I shall have more to say—it would be a mistake to assume that the economy can grow without a growth in the demand for energy; in particular without a growth in the demand for electricity. In other words, I do not think that the argument that there is an easy way out as regards efficiency stands up for one moment. That does not mean that we should allow the efficiency argument to fall by the wayside. It means that we should be grown-up, sensible and realise that this country will require a great deal more energy input over the period with which we are concerned.

As regards economic considerations, it is obvious that we need energy which is produced as efficiently as possible—that is, technically efficient—but we also mean economically efficient in the least cost sense. However, the price that is paid for energy must represent a proper return for the resources now being put in and it must also generate a return to justify the research and investment for the future. In particular, if one is concerned with coal it must be economic to produce coal and therefore the price must be such as to justify that. With respect to oil, it must certainly be the case that we must not take our oil decisions on a price so low that it does not remotely pay companies to explore for oil in the future. We should like to have the price instantaneously as low as possible but it would be a great mistake if the system worked so that it was so low as to produce no return to justify investment for the future.

Many noble Lords, including the noble Lord, Lord Beloff, in his introduction, referred to security of supply. Security does not come for nothing; it must be paid for. It may well be that the public disproportionately wants security and that they are slightly irrational. I can remember that on the day of the great storm last year my power was cut off for approximately 12 hours. I became incredibly miserable, as did many other people, but it was for only 12 hours. I would have paid a large sum of money not to have been cut off even for 12 hours, but that is being rather irrational. Nonetheless, we have a great desire to have the power available, particularly electricity. We shall debate that in due course when discussing privatisation, but it means that there must be sufficient capacity in the system to meet the maximum demand and no less than that. However, that is not a subject for today.

Another aspect of security of supply which has been raised is imports. It is clear that the ability to buy any of the goods that we need from abroad is always advantageous. It always provides us with a buffer stop which makes life easier. It may concern the occasional import of coal or the transmission of electric power across the Channel link, and I am certain that in due course we shall be re-importing natural gas. My view on security is that it would be foolish for us to base our energy policies on external supplies. We must be as near to being self-sufficient in the production of energy as we possibly can be. I shall have a little more to say on coal in a moment but I believe that it is vital to support our coal industry and not say that it is another item that we can buy from abroad and that there is no need to fuss about it. I believe that to be an entirely mistaken view. Security of supply is important and the easiest and most sensible way to achieve it is on the basis of domestic production.

Before speaking about the possibility of energy scarcity, the energy gap and the future of coal and nuclear power, I should like to say that, as an economist, I take a rather dim view on the question of the environment. The obvious point to make is that, while a good environment is ipso facto desirable, it does not come cheaply and one cannot have something for nothing. I believe that the notion that there exists somewhere a magical supply or source of energy which is not environmentally damaging is completely preposterous. I have not yet come across one which does not have an environmental disadvantage here, there or somewhere. All the sources which seem so nice, including windmills, have certain unattractive environmental qualities. I understand that the Severn Barrage is not without its environmental impact.

That is not to under-value the importance of the environment but to say that if one wishes to have a good environment it will be expensive and one may have to pay for it in terms of more expensive processes of energy generation. It is a question of the choice people wish to make. It is important to point out that a good environment is not available for nothing.

I should now like to deal with coal. The noble Lord, Lord Mason, gave the House a rather doom laden view and uttered certain words of warning. I do not think that he was mistaken in uttering those warnings, which the noble Lord, Lord Stoddart, also mentioned. They are not mistaken in saying that there is at least one scenario for the coal industry which would lead one to be pessimistic.

However, if one carries out any kind of analysis of the likely demand for a basic fossil fuel in electricity generation, one sees that the demand for coal will start well before the end of the century and will rise rapidly. Looking at the potential supply of coal in this country, I believe that there is no reason whatever why it cannot be produced here at economic prices. What is required is a policy starting today preparing for the digging of appropriate coal mines on a large scale.

It is all very well for everyone to blame the National Union of Mineworkers for the difficulty. I do not believe that it is either right or fair to single out the NUM as the reason for us not moving ahead with coal production. The finger could be pointed elsewhere. I do not wish to become involved in such a rowing but I point out that there is no reason whatever why the coal industry cannot have a first-class future and why the demand for coal will not rise quite rapidly before the end of this century. That time is not so far away and if the demand is to be met there are things which we must do now.

I should now like to turn from coal to nuclear power and declare the reverse of an interest in saying that I speak for myself on this subject. The subject of nuclear power is fraught with controversy and one dare not commit anyone else on it. I regard the question of nuclear power as being technical: what is the least cost way of producing electricity? My difficulty is that to which several noble Lords have alluded. It goes back to the years when I advised the Select Committee on Nationalised Industries when the noble Lord, Lord Stodart, was a member. I believed then, as I believe now, that there is no one in this field whom one can trust to give genuine data from which one can calculate what is of least cost. My answer in respect of nuclear power is that such stations provide the cheapest electricity. Other things being equal, I have no doctrinaire objection to producing nuclear electricity. My worry is: who will tell me the truth about what is the actual cost?

One other matter with respect to nuclear power which has already been mentioned is the very high discount rates—and the noble Viscount, Lord Hood, mentioned the relevant rate of interest—and nuclear power ceases to be economic very rapidly indeed, which is a great pity. No industry, or very few, that I can think of would benefit more from lower discount rates than the nuclear power industry. I emphasise that from the point of view of power generation the question one asks is: what is the cheapest way in terms of long-running costs to produce this?

Perhaps I may return to one of the matters introduced by the noble Lord, Lord Beloff, because I believe that we can then infer from that what is the correct policy. He emphasised how difficult it is to forecast the future and that we have a range of options. What follows from that is that quite clearly our technical processes of production should be a mixture. Indeed, as with almost any decision of a portfolio kind, if one does not know what is going to happen for certain, then various options are chosen—a mixture of methods of production—which will minimise the risks. My view would be that we require an energy policy which sees coal, oil, gas—which we have not said much about—nuclear power and renewable sources as all parts of the relevant strategy. I introduce a slight word of controversy. The difficulty as I see it from my side is that we do not seem to have an energy policy in the first place. We ought to have this mixture, but who will take responsibility for seeing that we have it? Nonetheless, whichever way we approach the matter, a mixture seems to me of great importance and indeed is the correct way to do things.

Several noble Lords—the noble Earl, Lord Lauderdale, the noble Lord, Lord Renwick, the noble Lord, Lord Ironside—referred to research and development. I suppose those of us who press this point are always accused of riding our hobby horses, but I cannot think of any aspect of the problem which is more important than the need to reinforce research and development right across this sphere.

Perhaps I may refer to the Department of Energy. It engages in research and development, but reading the document on the subject I believe that it has a slightly grudging attitude. That may be matter of tone, and I should like it to be more encouraging, but the department does not write about research and development as if it really believes in it; that is the difficulty.

One aspect with which I totally agree is that there is already a great deal of available technology which we do not use in this country and the Department of Energy believes that one of its roles is to persuade industry to use it more broadly. There I agree. But the future of our country requires a great deal more than that in terms of research and development. At this point I shall not rise to the fly cast by the noble Lord, Lord Ironside, on privatisation. I shall save that until we debate privatisation. However, I should have thought that privatisation will fall as a case because it cannot meet the R&D test. However, I withdraw that remark because I do not wish to argue about it at the present.

Before making one or two economic comments let me say this. Several noble Lords referred to tax concessions as a way to encourage R&D, to encourage efficient use of energy and indeed to encourage more general conservation. The Government should look again at the tax side of this. As several noble Lords pointed out, it is in the national interest that we use energy economically. Therefore it is worth considering whether changes in tax structure will help in that direction. I do not put it any stronger than that.

I referred to energy gaps. Until now I have not congratulated the noble Viscount, Lord Weir, on his maiden speech. The reason I delayed is that in his excellent speech he introduced certain aspects of the balance of payments side of energy. At the moment the position is not too bad. There is still an enormous oil surplus which is a tremendously important contribution to the balance of payments over the 10 years from 1975 to 1985. We have moved from zero gross exports of oil and enormous imports to the reverse by the mid-1980s, of enormous oil exports and much less in the way of oil imports. Therefore, we have a net positive balance of payments again from oil.

However, what of the future? Even on fairly optimistic views of what will be available—and I must admit that I tend to be on the more optimistic side—the oil will start to run out by the end of the century or thereabouts and we shall start to move into deficit with respect to the oil account. If we follow what some of us believe to be the wrong path on coal imports we shall also be running into deficit on the coal account. Therefore, far from energy making a positive contribution to the balance of payments, it will begin to make a very important negative contribution. The noble Viscount was right to draw that to our attention. Again it is a matter to which we shall return.

We are indebted to the noble Lord, Lord Beloff, for introducing the debate. The topic is important and has been well worth the time devoted to it. We look forward to the answers to our questions from the noble Viscount, Lord Davidson, My theme is that these are also matters for action and in our opinion the Government have a more active role to play in supporting research, in helping to improve the environment and in preparing for the future. If the Government—and for that matter the rest of us—do not make the right choices in energy it will not only be us who suffer but future generations.

My Lords, this has been a fascinating debate and I start by thanking all noble Lords who have taken part in it. I shall ensure that my right honourable friend the Secretary of State for Energy is fully informed of the feelings and views expressed in your Lordships' House.

It is less than a year ago that the House discussed similar topics in great depth during a debate initiated by my noble friend Lord Lauderdale. Although there may not have been great changes in energy policy or improvements in knowledge in the intervening months, nevertheless I am grateful to my noble friend Lord Beloff for introducing today's debate which has been wide ranging and to which your Lordships have made many interesting and thoughtful contributions.

Apart from the interest that it has generated, the debate gives me the opportunity to congratulate my noble friend Lord Weir on an excellent maiden speech. He brought to the debate a wealth of expertise and experience and we look forward to hearing from him on many occasions in the future. I should also like to take this opportunity to congratulate the noble Baroness, Lady Nicol, on her major maiden speech as the official Opposition spokeswoman on energy. I noted that she had not forgotten to bring her expertise on environmental issues along with her—presumably in her handbag.

My noble friend Lord Beloff introduced the debate in his usual inimitable style. He covered the subject so comprehensively that I wondered whether there would be much left for your Lordships who were to follow him. However, there is such a wealth of knowledge and expertise on energy issues in your Lordhips' House that I need not have worried.

My noble friend Lord Beloff said that this was not an occasion for discussing the recent White Paper on privatisation of the electricity supply industry. Your Lordships were good enough to translate that into an instant convention. Perhaps I could remind your Lordships that when I repeated my right honourable friend's Statement in your Lordships' House a fortnight ago I mentioned, as a matter of courtesy, the fact that there was to be this debate today. However, I also said—and I repeat it emphatically now—that as it now appears certain that your Lordships will wish to have a full debate on the White Paper, this will of course be arranged through the usual channels.

This has been such a wide-ranging and knowledgeable debate that I doubt whether I shall be able to cover all the points raised and questions asked. If, as I suspect, I am not able to do so, I shall of course write to your Lordships where necessary. However, I will do my best.

My noble friend Lord Beloff was right to point to the changes that can occur in energy prices and to the impossibility of forecasting the future of the energy market. The noble Lord, Lord Ezra, also drew attention to that. It is precisely for this reason that the Government recognise the need for diversity in energy supply, as the noble Lord, Lord Peston, said, and to make full use of oil, coal, gas, nuclear energy, the renewables and so on. However, we have seen in the past the mistakes following from government trying to plan our energy economy. We aim to free the market and to allow producers and consumers to make their own judgments and decisions.

The noble Baroness, Lady Nicol, quoted from Hansard our last debate in July to indicate my view that the Government did not believe in an energy strategy. The noble Baroness hoped that I might have changed my view. My noble friend Lord Torrington gave the noble Baroness the short and the precise answer to that. There is only one certainty when it comes to planning for uncertain energy futures; that is, you are bound to be wrong. Trying to plan for energy supplies simply ignores the fact that one cannot determine decisions by consumers and one cannot decide what will happen in the world energy markets.

My noble friend Lord Beloff compared the fear today of possible dangers from nuclear power with the fear of witchcraft in the Middle Ages. I can confirm to my noble friend that nearly 90 per cent. of radiation to which the population of the United Kingdom is exposed comes from natural sources. Of the rest, almost all comes from medical diagnosis and treatment. The United Kingdom nuclear industry contributes much less than 1 per cent. of the total average exposure.

The noble Baroness, Lady Nicol, asked what research and development is in progress on combined heat and power. I believe the noble Lord, Lord Stoddart of Swindon, also mentioned this point. The short answer is that 18 research and development and demonstration projects worth £5·6 million are currently supported to the tune of £1·2 million from Department of Energy funds. The noble Baroness also mentioned the importance of energy efficiency and I welcome her remarks. Energy efficiency is in everyone's interests—producers and consumers alike—and there remains a great deal of scope within our economy for industrial, commercial and domestic users to make economic energy efficiency investments. The Government have played a leading role in establishing awareness of the case for energy efficiency and this has been done successfully, leading to gross annual savings of some £700 million.

The noble Baroness, my noble friend Lord Weir and others referred to the over-riding need to protect the environment. Both sides of the House recognise the need for the protection of the environment. The Government are firmly committed to this aim and the energy industries have an excellent record on the environment which we want to see maintained. Very high standards currently exist to ensure the protection of the environment with respect to both conventional and nuclear power stations.

The United Kingdom has an excellent record in controlling acid emissions. Annual total sulphur dioxide emissions have been reduced by 42 per cent. since 1970. Emissions of nitrogen oxides have remained broadly stable over the same period, while in many countries they are still rising. The CEGB's programme for the installation of emission controls at certain existing and all new coal-fired power stations will further reduce both sulphur dioxide and nitrogen oxide emissions. In addition, radioactive discharges from nuclear power stations have been and will be maintained at extremely low levels—well within the limits set by the environment departments.

I wish now to speak about oil. The noble Lord, Lord Ezra, expressed concern about the United Kingdom Continental Shelf fiscal regime and its possible adverse impact on offshore activity. The fiscal regime is, of course, a matter for my right honourable friend the Chancellor of the Exchequer, but I should point out that the United Kingdom has a good record of flexibility in adjusting the tax rules to reflect changed circumstances, and this is recognised by the industry worldwide. Offshore activity dropped in 1986 following the sudden fall in the oil price but over the last year it has picked up substantially.

My noble friend Lord Lauderdale gave your Lordships much information about renewable forms of energy generation. The noble Lord, Lord Ezra, hoped that the Government would give a fair wind to wind and tidal power. Both wind and tidal power are considered to be the most promising renewable technologies for electricity generation. Government funding of a major research and development programme is aimed at developing cost effective and environmentally acceptable technologies for both wind and tidal power and a wide range of other promising technologies.

Research and development is an essential ingredient in ensuring the continued growth and expansion of the UK economy. No government have done more to support research, particularly on the alternative or renewable sources of energy. The Government are supporting a comprehensive research and development programme aimed at exploiting the significant renewable energy resources in the United Kingdom. Over £121 million has been invested by my department since the inception of the programme and strong support will continue to be provided to ensure that their full commercial potential is realised. The level of expenditure is carefully related to the needs of the technologies. Over the next three years we expect to be spending £50 million on work in this area. United Kingdom industry and the generating boards are playing an active part in the programme, which I very much welcome.

I should reply in a little more detail to the points raised by my noble friend Lord Lauderdale. As regards tidal power, the United Kingdom has access to a substantial tidal resource and a number of sites have potential for tidal power. The Severn estuary is one of the best potential sites in the world due to its exceptionally high tidal range. The Government and the Severn Tidal Power Group have jointly funded a study of the economic viability of a private sector tidal barrage in the estuary.

Support has also been given to a preliminary evaluation of a smaller but nonetheless potentially attractive scheme for a Mersey barrage. The department is contributing to further studies to reduce uncertainties over the Severn and Mersey estuaries as part of a £7.7 million tidal research and development programme, started in July 1986. I could go into more detail but perhaps I should say that the environmental aspect is being considered very carefully.

My noble friend Lord Lauderdale asked whether a formula in a Binnie and Partners report on the potential for tidal energy from small estuaries in the United Kingdom was correct. As my noble friend said that he did not expect an answer from me today, I will of course write to him.

As regards wind, the Government's policy is to support the development of wind energy so long as it continues to look promising and until the technology has improved to the point where its cost effectiveness in UK conditions can be demonstrated, which is unlikely to be before the mid to late 1990s, following which it will be expected to compete with other energy sources without further financial support. The programme is being undertaken in close collaboration with the wind turbine manufacturers and the ESI with whom its funding is being shared.

My noble friends Lord Beloff and Lord Lauderdale both referred to geothermal hot dry rocks. The Government's geothermal hot dry rock research and development programme is working on the very frontiers of science and the Camborne School of Mines research team is to be congratulated on the advances it has made over the past three years. It was only last week that we announced a further £8 million programme of work in this area aimed at developing the technology further to a stage where a full-scale prototype HDR system can be considered.

My noble friend Lord Ironside expressed concern about the future of research and development in a privatised electricity industry. The industry will continue to need to undertake and to buy in R&D. It will be for the industry to decide how to run this aspect of its business, but I agree with my noble friend that it is vitally important.

It may well be that the two new generating companies and other parts of the privatised industry will wish to collaborate on research and development, and there is no reason why they should not do so. Outside research and development contractors will be free to compete for the industry's business. I am sure that the privatised electricity supply industry will continue to value the expertise of outside research bodies. We shall be discussing in detail with the industry over the coming months how the privatised industry can best continue its research and development. Of course, we shall be debating the subject in due course. As regards the future of AEA and BNFL work, privatisation will make no difference.

I come now to coal. The noble Lord, Lord Ezra, the noble Lord, Lord Mason, in his usual forceful style, the noble Lord, Lord Taylor of Gryfe, and the noble Lord, Lord Stoddart of Swindon, all expressed views about the future of the coal industry. Coal will continue to be the major source of fuel for electricity generation well into the next century. I am confident that British Coal can rise to this challenge if it can produce coal competitively and reliably. However, it would be imprudent to rely on a single source of fuel or a narrow group of fuels.

As I have said, we need diversity in our energy supplies to contribute to the security which noble Lords have rightly emphasised. Therefore on privatisation we shall place an obligation on the distribution companies to take a specified minimum proportion of capacity from non-fossil fuel sources. This will be set at a level achievable on privatisation. The companies will be able to contract for nuclear capacity, though renewables such as tidal and wind will have an important part to play. The obligation is aimed at encouraging diversity and security rather than in protecting a particular fuel. It will ensure that the industry takes full account of the broad national interest. I am sure that it would anyway. It is right for the Government to state clearly our strategic priorities.

Her Majesty's Government believe that coal can play a vital role in meeting the long-term energy needs of the nation. The Government have demonstrated by the high levels of investment in the industry (over £2 million every working day) that they are committed to the future of the coal industry.

As regards industrial relations, challenges facing the coal industry over the next few years will need the co-operation of all the workforce and of the mining communities. I do not wish to go into the details of the NUM dispute at this stage.

Regarding investment, the BCC is investing over £2 million every working day; and almost £6 million have been invested in the coal industry since 1979. That alone demonstrates our commitment to the industry and our confidence in its future potential.

The noble Lord, Lord Taylor of Gryfe, and I believe also the noble Lord, Lord Mason, raised the question of opencast coal. The noble Lord, Lord Taylor, referred to the fact that more than 50 per cent. of the coal mined in Scotland is opencast. I agree completely that opencast coal is an important low-cost energy resource that should be exploited. It is a vital national asset against imports and we wish to see the sector develop. It is just as important to the coal industry as deep-mined coal.

The noble Lord, Lord Taylor of Gryfe, also mentioned the subject of the current negotiations between the SSEB and the BCC. There again, all I can say today is that I hope the South of Scotland Electricity Board and British Coal will now resume commercial negotiations with a view to agreeing mutually satisfactory arrangements for coal supplies. Those are commercial matters for the two industries.

My noble friend Lord Weir spoke of his concern for the future of equipment manufacturers under privatisation. My comment upon that is that privatisation will not only provide a challenge for equipment manufacturers; but most importantly, I am sure that it will bring many new opportunities. My noble friend Lord Renwick asked what research the Government are undertaking in hydrogen. As part of our renewables programme, we have carried out a vigorous assessment of all those technologies which offer the promise of making a useful contribution to the energy supply of the United Kingdom. This has included a review of the potential of hydrogen. The review concluded that in the United Kingdom hydrogen is a long-term prospect as an element of energy supply. This remains our view, and we are continuing to maintain a watching brief on activities elsewhere in the world. I shall ensure that a copy of the review is placed in the Library of the House.

My noble friend also asked me about the expenditure on renewables compared to nuclear R&D, and whether it was a fair balance. There is no reason why the expenditure on the renewables R&D should bear a proportional relationship to expenditure on nuclear R&D. Both programmes are regularly reviewed by the Secretary of State for Energy, the Advisory Council for Research and Development and the department's Renewable Energy Advisory Committee. Both committees consider that the size of the present renewables programme is about right. It is an expanding programme with a planned increase of £2 million in 1987–88, which represents an increase of about 15 per cent.

My noble friend also asked about emissions from power stations which I have dealt with to a certain extent. I add to that by saying that we are committed to ensuring that all fossil-fuelled plant is subject to proper emission controls. This will be the case whether the stations are in the public or the private sector. In addition, 6,000 megawatts of existing generation capacity will be retro-fitted over the next decade.

My noble friend Lord Torrington asked about private generation and the problems that might arise. The 1983 Energy Act (to which the noble Lord, Lord Ezra, referred) has to some extent encouraged private generation. There are now twice as many private generators supplying the grid as there were in 1983. The CEGB has enjoyed an effective monopoly of generation. Our privatisation proposals will introduce competition into generation and allow all generators to have equitable access to the grid. Privatisation will therefore encourage small private generators in a very real way.

My Lords, perhaps I may ask the noble Viscount if he can say whether meanwhile—as it seems to have been hinted in the White Paper—there could be some modification to the 1983 Act?

My Lords, I took note of the point raised by the noble Lord on that matter, and I had better write to him about it.

The question of rating was also raised by my noble friend Lord Renwick. I agree that private generators should be rated on an equal basis. The Department of the Environment is currently undertaking a major review of the rating system including the statutory formula by which the ESI is assessed. This will be completed in 1990 and it is hoped that equal rating for private generators will then come into effect.

My noble friend Lord Torrington also asked about the status of the EC gas directives, and whether they would continue in force. I understand that within the Community we are discussing the removal of the directive which places an obstacle on the operation of the market. Agreement has not yet been reached. I shall be glad to check the position and write to my noble friend if there is anything I can add.

The noble Viscount, Lord Hanworth, called the six principles set out in the White Paper a pious hope. As I have already said, we shall soon have the opportunity to debate the White Paper in full. In response to the noble Viscount, I say that the principles of our privatisation proposals are very much intended to bring real benefit to the electricity consumer by ensuring that downward pressure is put on cost through competition, and that future decisions about electricity supply are taken with the interests of the consumer in mind rather than being driven by the views of a monopoly producer.

The noble Viscount also asked about the national grid and made some technical points about its operation. I hope he will forgive me if I am unable to respond immediately to them. I assure the noble Viscount that I shall look at the Official Report, and that I shall write to him and give him any information that he might find helpful.

Perhaps I may conclude by emphasising two themes. No doubt the noble Baroness, Lady Nicol, will be quoting part of what I say at some future date. First, energy markets work best when governments get out of the way and allow private enterprise to move in. Secondly, governments, nonetheless, have a strategic role. They have to take a long-term view to ensure continuous security of supply. We want customers to be free to choose the type of energy they want knowing that there are thriving industries able to provide it on competitive terms. We are not in the business of producing state-directed plans laying down how much of each energy should be supplied, by whom, when and on what terms. Whenever and wherever that planned approach has been tried it has been proved to fail. There is surely a moral in the fact that those countries in Europe with the most severe energy problems are those with the most heavily-planned energy policies. I am referring to the countries of the Eastern bloc. It does not follow from that that we do not have a plan or a strategy. We do. For a start, we are committed to enlarging the role of the private sector in the production and distribution of energy. We believe that private enterprise operates more efficiently than state-owned industries. Privatisation can also allow competition to move in on monopoly, and that is good for costs. What is good for costs, is also good for prices.

We have already made substantial progress. When we took office in 1979 only 41 per cent. of energy in the United Kingdom was privately produced. The figure is now 73 per cent. I must not anticipate the debate, but following the privatisation of electricity it should increase to 87 per cent. We also believe that free markets offer the most reliable way of ensuring secure energy supplies at stable prices. The market may not be a perfect system but it is the best there is.

The fact is that government retain duties within a free market economy. As I have already stated, in energy one of them is security of supply. It is our view that diversity is the key to this. Britain is very fortunate in its energy. Nature was generous with fossil fuels. We have rich reserves of coal, oil and gas, and expectations of their extent are rising. We are self-sufficient, and we are determined to follow policies that put all our resources to good use. However, by the end of the next century the world's known finite energy resources will run out. So it would be an act of complete selfishness and recklessness if we did not now provide for other forms of energy to take their place. That is why we must diversify now out of fossil fuels. Future generations would not forgive us if we failed them.

My Lords, after a most interesting debate I am sure that your Lordships would not wish to stand further in the way of the noble Lord, Lord Mayhew, in his efforts to bring peace to the Middle East. I shall not endeavour to go over any of the ground that has been covered except to say that, even so, a great deal has not been covered. In regard to energy resources no one has mentioned biologically produced energy. There is, for example, methane from waste, which may become, and in some countries is already, an important energy source. Perhaps most surprising of all no one has mentioned the experiment on nuclear fusion, which has been going on at great expense, only partly covered by this country, at Culham in Oxfordshire. The fact that we could spend the afternoon on energy and not discuss something which if it happened would revolutionise all our thinking on the subject shows what there still would be if we had a further debate.

However, my original purpose in getting your Lordships to contribute to my education has been thoroughly fulfilled. I should like to thank all noble Lords, and in particular the noble Viscount, Lord Weir, for choosing this occasion to make his maiden speech. Having dipped his toe into the water, I hope that he has not found it too cold to come back sometime. With that, and with thanks to the Minister for his attention to all of us, I beg leave to withdraw the Motion.

rose to ask Her Majesty's Government whether they will promote an international conference on the conflict in Palestine.

My Lords, the noble Lord, Lord Mayhew, has I think done us a good turn this evening by putting down this Unstarred Question at this critical and delicate time. I shall not dwell on events in Gaza and on the occupied West Bank, save to say that the Palestinian INTAFABA has alerted worldwide opinion to the urgent need to find a lasting solution to the Arab-Israeli dispute. Strangely, Israel's operation which they call "Peace in Galilee"—which achieved none of its objects—did not have the same effect in spite of the awful casualties (at least 15,000 people were killed) which resulted from it. I shall not dwell on that aspect, either.

I want to look forward and not back to the Balfour declaration, Suez, the 1967 war, and the partition of Palestine, because all those, and other things, are water under the Allenby bridge. Since 1945 I have consistently expressed my views that Palestinian rights were being endangered and might be extinguished. That opinion has led to my receiving a good deal of abuse, both verbal and written; it has been very unpleasant—but perhaps my skin is too thin. The question that I have asked myself consistently is this: where do British interests lie and how can one be even-handed between Jews and Arab? I should like to strike a personal note here. My Jewish mother, the daughter of Henry Simon (well known in Manchester) often gave me excellent and balanced advice, as, indeed, did my uncle Ernest who was well known to many of your Lordships as Lord Simon of Wythenshawe. We frequently discussed those issues from the time when I first went to Palestine as a young soldier in 1938. The essence of their advice—and of many other Jewish friends of mine—was that peace in Palestine could never be achieved by force or repression. I believe that that assertion is as true now as it was then.

I think that Eretz Israel and Palestinian rights are incompatible, and I am sorry to have to say that. However, I sincerely believe that Israelis, within their 1967 armistice lines—because that is what they are—with their age-long experience of democracy world wide, could thrive and prosper beside a reborn Palestine. Despite what is happening today in Gaza, and in the occupied territories, the Palestinians and the Israelis now have the opportunity, if they will seize it, to practise:

"the art of living together in harmony".

Those words were used in the dramatic maiden speech made by the noble Lord, Lord Jakobovits —although in another context (col. 377 of Hansard for 4th March). I refuse to believe that Israeli security and Palestinian self-determination are mutually exclusive. That is how they were described to me by a very distinguished and senior representative of the Israeli Government the week before last. I refuse to believe it.

Therefore, where do we go from here? The European Community, with Britain in the lead, pointed the way in 1980 through the Venice Declaration. I thought the principles that were then laid down could not be criticised, and were entirely right. Unhappily, the follow-up to the declaration has been feeble, leaving aside only the Prime Minister's own brave initiative when she went to Amman, which, unfortunately, came to nothing. It did, however, prove certain points.

The noble Lord, Lord Mayhew, spoke of the importance of the European Community playing a leading roll in finding a solution to the problem. I should like to see them playing a much more forceful role. I should also like to see this country in the lead because of our unrivalled experience in those parts of the world, in spite of all the mistakes that we have made. The United Nations created the problem that we are discussing this evening when Palestine was partitioned. I say that not because Palestine was partitioned, but because the partition was ill-thought out and unpoliced; it therefore led to the disaster that we now see. Why cannot the Security Council make a supreme effort to find the path to peace now? I am sure it exists. Is it not possible that the United Nations might take on the trusteeship of the West Bank and Gaza? That is a very difficult undertaking; but do not let us forget that UNWRA are on the spot and already have trusteeship for all the Palestinian refugees. Do not let us forget, either, the great success the UN have had in Cyprus since 1964, on the Golan Heights since 1974, and in Sinai after Israel's withdrawal. Admittedly, their efforts in South Lebanon have been a total failure; but the reasons for that are clearly understood and they lie at Israel's door.

Is it not possible that during the coming months and years work can be done in great detail on a blueprint for demilitarisation and policing after Israel's withdrawal behind the 1967 armistice lines so that Israel's genuine fears—and I accept that they are genuine—can be stilled? Is there any hope in trying to find an Austrian solution, as I call it, by which I mean writing into the Palestinian constitution non-alignment and a ceiling on forces? Had that not been done with Austria, the Soviet Union would still be occupied in the Soviet zone. Is that a possibility?

Lastly, I should like to turn to a few points in fairly quick succession and in telegraphese on some of the things which concern me and on some of the phraseology which has been used. We talk about autonomy. The autonomy of a state means the right of self-government, according to the dictionary. It can occasionally be qualified by political, local or administrative considerations. But the United States' policy, as expounded by Mr. Schulz, will go no further, according to The Economist—I think this is an accurate summary—than "semi-autonomous" Palestine in federation with Jordan. How can one have a semi-autonomous country in federation with another country? I do not begin to understand that. I say this without disrespect, but that sounds to me like some sort of gobbledegook.

On the subject of self-determination, surely the Palestinians have as much right to seek to regain their statehood as had, for example, the Polish Home Army during the war under General Bor-Komorovski or, for instance, as have now the Mujahadin in Afghanistan. I do not think that can be denied.

Having mentioned the PLO, I wish to make some criticisms of them. They always go for all or nothing. That is a dead end. They can only achieve their rights step by step. All too often the PLO trump their own aces. In spite of that, I do not believe that it is possible to short circuit the PLO. Too many efforts have been made to try to do just that.

On the same subject, I wish to see the Palestine National Council, and therefore the PLO, change the charter which denies Israel's right to exist by promising to strike out any such references to Israel immediately Israel recognises their right to self-determination. We are entitled to ask for that.

Turning to terrorism, is it not as wrong to label the whole PLO as terrorists, as has been done fairly often (the noble Lord, Lord Paget, is guilty of that, and may have some riposte to make), as it would have been to label the Haganah or even the Jewish Agency as terrorists because of the shocking things done by Irgun, Lehi and the Stern group? I say that bearing in mind the equally shocking things done by Abu Nidal and other minority groups which come roughly under the umbrella of the PLO, though I think their activities have never been condoned by Arafat.

Yet under this heading the PLO are asked to renounce terrorism and the Israeli Government are not. At the same time the PLO are asked to recognise the 1967 armistice lines before they can attend a conference, but Israel is not so asked. The PLO are asked to recognise Resolution 242, which incidentally Yasser Arafat did quite recently and I have the date here. He has done so on several occasions. Why is there undue emphasis on that resolution which regards the Palestinians as refugees and which was specifically drafted, I think by the noble Lord, Lord Caradon, immediately after the 1967 war came to an end, requiring Israel's withdrawal? It had nothing to do with Palestinian rights and was not intended to have anything to do with them. None of this seems to me to be even-handed, which I suggested was the first important principle.

To conclude, I mention two glimpses of the obvious. First, the status quo is not sustainable. That has been said on both sides of the Atlantic and by many people whose opinions we must value. Secondly, the parties—as they are so frequently called from my own Front Bench—will not solve this problem on their own. I am certain that there is no chance of that at all. The noble Lord, Lord Mayhew, said that time is running out for Israel, and I agree with him. Their survival depends on their coming to terms with their Arab neighbours and coming to terms with themselves.

I should like to see a United Nations trusteeship of the West Bank and Gaza which would give a desperately needed breathing space of several years during which a series of conferences could be held and many working parties could get down to work to try to find the way to a comprehensive peace settlement under strict UN supervision. I fervently pray that that will happen.

My Lords, during one of the recent demonstrations in Jerusalem a mullah was heard to shout through a loud-hailer from the steps of a mosque, "The Ayatollah demands a martyr a day". That remark is very revealing about the present troubles in Israel—not a series of spontaneous riots but a carefully organised and carefully sustained uprising, as three weeks ago President Reagan said was the case, based on information the Americans had from intelligence sources.

The uprising is organised from Moslem fundamentalist sources outside Israel, the same sources which hold most of the hostages and which are trying constantly to destabilise the moderate Arab governments in the Middle East. Is it not significant that in all this trouble criticism of Israel from the surrounding Arab countries has been extremely muted?

The uprising has been nurtured by the world's press and the media. The spectacular and sickening daily stone throwing, the throwing of Molotov Cocktails, the wielding of knives and guns, have been as manna from heaven for the 800 representatives of the world's press who are now in Israel. I am told there are more there than in any other country in the world. There are well authenticated examples of stone throwing actually being organised by the media to enable the cameras to get their pictures.

The uprising has presented young Israeli soldiers—they are not professional but 18-year-old conscripts—with a situation that they were never trained to handle, any more than our young soldiers were trained to handle the situation into which they were put in Northern Ireland 20 years ago. The functions of the soldier and the policeman are quite different. Of course there have been excesses—terrible excesses—which we and everyone in Israel very much regret.

The International Federation of Human Rights in Paris recently carried out an investigation and published its report last week. Perhaps I may quote from the report:

"The Israel Defence Forces, responsible for maintaining order in the territories, did carry out acts of punishment, but those were departures from, and not part of, deliberate policy".

It continued:

"The members of the delegation confirm that they did not find evidence of the use of dum dum bullets by the Israel Defence Forces, in contrast to the charges voiced by the British Labour leader, Neil Kinnock".

When a kindly English lady visits Israel she is whisked off immediately to hospital to see tragic young Arabs who have been wounded. She would be less than human if she did not shed a tear and less than human if she did not see her own son in those boys there. But we are entitled to ask what they were doing when they got themselves wounded. They were throwing bricks through the windscreens of Israeli army jeeps; they were throwing Molotov cocktails; or they were wielding knives or guns. That is how they got wounded. Then perhaps the kindly English lady should go to the other hospital and see the 300 young Israeli soldiers who have been wounded, who are lying there and who also look like her son.

The image that the world press has fostered in recent weeks of savage, inhuman, ferocious Israelis against peace-loving, gentle Arabs is as far from reality as it could possibly be. Quite apart from the hundreds of acts of terrorism—the noble Lord, Lord Mayhew, knows that there are hundreds of examples—by the PLO in Israel and abroad which, for example, in 1985 alone, caused 124 deaths, there are most appalling examples of the way in which Arab countries have dealt with dissent and riots in their territories. Let me quote one or two. A few years ago in the town of Hama there was a riot. The town was circled by the Syrians, who levelled it with artillery fire and killed 20,000 people. In 1980 the Syrians killed 5,000 people in the El Zatar refugee camp in Lebanon. In 1987 the Amal militia laid seige to Bourj-al-Barajneh and killed hundreds of people by bombardment and starvation. At the university of Yarmouk in Jordan, the Jordanian authorities killed eight students in putting down a minor riot. I could quote many other examples of the way in which the Arab countries deal with dissent in their territories. Of course, none of these was reported at any length in the world press. The press was not there; the cameras were not there.

Between the Atlantic coast of Morocco and the borders of India there is one democracy, the state of Israel—one country alone where the press is allowed to come and go as it pleases and photograph and report whatever it likes. But does Israel get any credit for this? Of course not. All that happens is that its democratic freedom is abused.

In the grossly distorted image being projected in the world today, there is, I believe, a clearly discernible strand of anti-semitism. Anti-semitism in my opinion is the biggest blot there has ever been on Western civilisation. After centuries of persecution culminating in the holocaust, the Jewish people must have the added dimension of a secure homeland. I believe that the West must ensure that security.

Britain, of all the nations in the West, surely has a major responsibility for this commitment. We were responsible for the Balfour declaration. We were the mandatory power after the war. We were the people who walked out on the mandate and left Jews and Arabs to fight it out. The present impasse is the result of 40 years of Arab rejection of two nations, a concept that Israel has been prepared to accept ever since it was proposed by the United Nations in 1949.

The noble Lord, Lord Mayhew, talked about land for peace. He forgets that Israel has offered land for peace. In 1956, in 1967 and in 1978 it traded land for peace with the Egyptians and concluded a peaceful settlement with them. The PLO, on the other hand, has consistently reaffirmed its position as "no peace, no negotiation, no recognition".

Displaced persons are always one of the saddest and most tragic consequences of war. In Europe after World War Two there were millions of displaced Poles, Germans, Czechs and others. Mercifully they are now all resettled. When we walked out on the mandate there was a vast number—approaching a million—of displaced Palestinians. The Arab states then set about creating another million displaced persons by expelling all Jews from their territory. The number of Jews displaced by the Arab countries was certainly as great as the number of Palestinians displaced after the war of liberation. All those Jews displaced from the Arab countries were quickly absorbed and resettled by Israel in spite of its limited resources and limited territory. The Arabs with their vast territory—one sees from a map of the Middle East that Saudi Arabia is as big as most of Europe —and their vast resources from oil could have settled the Palestinians refugees quite easily. But they choose not to do so.

The United Nations offered resettlement. Its offer was spurned. Since 1971 the United Nations, with Britain acquiescing, passed the most astonishing resolution. It has passed a resolution 17 times calling upon Israel to desist from rehousing the refugees and to leave them in squalor in the camps. The last time was 30th October last year. Britain voted for the resolution. It now includes the West Bank as well as Gaza.

Appalling though the squalor of the camp is, anyone who knows Cairo will be aware that it is not as bad as the slums of Cairo. That does not make it any better; but let us keep it in perspective. It is not as bad as a thousand Arab villages across the Arab world. In spite of the United Nations resolution, however, Israel, from its limited resources, has rehoused 10,000 refugees in nine separate residential projects. Of those 10,000, 70 per cent. were given land and allowed to have houses built according to their own preferences.

In addition, Israel has built an infrastructure in the area of the camps. It has started many new industries—carpet making, furniture making, floor tile making and so on. It has created many new facilities and services, including universities, public buildings, mosques and clinics.

To hear the press accounts, one would think that Gaza was a slum from end to end. I wonder whether your Lordships are aware that some of the most opulent housing in the whole of the Mediterranean is in Gaza, some of it occupied by rich Saudis who are only too glad to live in the state of Israel. But a completely distorted view is given of Gaza. Why do not the media give a complete picture of the situation instead of this simplistic picture of goodies versus baddies, of Arabs versus Israelis? Their failure to do so simply hardens the intransigence on both sides and does not help to find a solution one little bit.

There is one point I want to make quite firmly because we must bear it in mind. Israel must restore order no matter what the cost—the tragic, unfortunate cost in loss of world esteem and goodwill. Bearing in mind the overthrow of the Shah's regime in Iran, which none of us thought was possible before it happened, by a mob inspired by religious fanaticism, Israel cannot allow the situation to get out of hand because Israel is unique in the world. It can never afford to lose. Israel is a one-chance country and it cannot afford to be beaten.

I do not often praise Her Majesty's present Government. Leaving aside the aberration of Mr. Mellor, I want to applaud them for the efforts they are making to get agreement on a Middle East conference. I know from a number of sources that they are making real efforts to get a conference under the auspices of the five members of the Security Council. But the Prime Minister knows, as we all know, that the major impediment to holding such a conference is Mr. Shamir.

I should like to ask that Mrs. Thatcher use her considerable influence to try to persuade her fellow Conservative prime ministers to show a bit of flexibility about this conference. I am sure she is doing that. I do not say this at all critically because I have applauded all that she is doing to try to get a conference. I also applaud Mr. Shultz for his efforts. His modest plan probably represents the maximum common ground among the maximum number of participants in the region. It certainly holds out the prospect of a short-term, even a medium-term solution, which, if the will is there, could lead to a long-term solution. I sincerely hope that it will do so.

My Lords, I should like to start by thanking the noble Lord, Lord Mayhew, for his very revealing speech, with which I entirely sympathise. As your Lordships may know, I have spoken four or five times on this subject in the past four or five years; the last occasion was in a debate which I myself initiated in April last year. Noble Lords also know that I am sympathetic to the Arab cause, although of course not in any way opposed to the Jews themselves.

I shall not dwell on the press reports, the broadcasts and the television reports which we have had about the horrors in the part of the world we are talking about. They must be familiar to many noble Lords. The noble Lord, Lord Glenamara, who has just spoken, referred particularly to Gaza. I see the noble Lord, Lord Molloy, looking towards me: he knows a good deal about this subject also. I would only ask him to refer to the speech that I made in April 1987 about conditions in the Gaza Strip which have been described by many people. There are such horrible things as the deprivation of water rights for the Arabs in that area, torture and so on, with conditions in the hospitals which have been accurately described as quite appalling.

I do not want to go into the details of the horrors and persecutions, the tortures, stonings and so on because I think that is quite pointless. But there is growing evidence that the Israelis themselves are turning against their own regime. I can quote two examples of this from the Israeli Mirror. That is a paper which is produced in Israel and it is strongly critical of the Israeli Government. One of these reports describes an ex-brigadier calling on his soldiers to refuse army service. Another one which I think even more revealing is by an Israeli army doctor who said: "I never imagined Jews could do this". This is the story, it is quite brief:

"I am of European origin and I know what my parents suffered. Not even in my worst nightmares did I ever imagine that we, the Jews, would do to another people what the Germans did to us."

I think that is a most revealing statement.

"We may not be building gas chambers and we have no organised extermination structure, but we are not very far from that. All those beatings and humiliations. They were sent to me"—

these are the patients—

"wet and covered in mud and marks of beatings, blindfolded and with their hands tied. I saw signs of blows on their hands, legs, backs and sometimes heads. The soldiers have learned to administer dry beatings, that hurt a lot and leave marks, but do not cause damage…I saw two cases of swollen testicles but could not tell whether they were caused by blows or illness."

I emphasise again that that is by an Israeli doctor.

Secondly I want to deal with the PLO, which has been referred to by most speakers so far. I remind your Lordships that, as has already been said, the PLO is by no means a wholly terrorist organisation, though I feel sure that the noble Lord, Lord Paget, will challenge me on this. Although the point was made previously I feel that I must make it again that the largest of these groups, Al-Fatah, is a most moderate group and that the PLO's own representative in London, Mr. Faisal Awaidha, has been consistently moderate and helpful in every way. We know of course that one of the most extreme terrorist groups is Abu Nidal, which has been mentioned by the noble Lord, Lord Mayhew. But I must emphasise that it is not typical of the group as a whole.

I should like to call to the notice of noble Lords something which has not been mentioned before and which I think is particularly important. That is Arafat's own peace plan. This peace plan was presented in Tunis at an international press conference two or three months ago. In this declaration, Arafat lists four stages. Stage one: transfer to the United Nations for a period of six months of the rule in the occupied territories; UN forces to be stationed on the Palestinian side of the border for an unlimited period, as long as the Israeli government wishes. Stage two: general elections to be held in the West Bank and the Gaza Strip. Stage three: an international peace conference to be held, attended by all sides including the Israeli government and the PLO, the PLO taking part in an independent capacity. Stage four: the establishment of a Palestinian state, and also co-existence between the Palestinian state and the state of Israel for as long as the Israelis wish.

A great deal has been said on this very difficult and delicate issue over many years. I feel that there is nothing of any great substance that I can add. But I hope strongly that the Minister will continue to press Her Majesty's Government to do all they can to use their good offices to achieve this conference, which we all feel is of the utmost importance. I hope that the inclusion of the PLO will be one of the prime factors of the conference.

My Lords, I find this a rather curious debate because of the degree of naivety with which a world which is unknown to the participants in the debate is being described. The situation is so utterly unlike that when one gets over there. This conflict is represented as a great national uprising of a people trying to get their own country back. Curiously enough Palestine is a country that has belonged to a great many people. The only people to whom it has never belonged at any point is this Levantine—Arab is a false name for it—population. That population has never been there except upon the basis of being in somebody else's country.

When we go back, we find that the Philistines lived there. They were Achaean Greeks who were driven south and to the sea by the Dorians. Then we find it was Egypt. Then the Jews came over. There was a period under David and Ahab when Israel established an empire that reached from the Nile to the Orontes. Then came Assyria and Babylon who divided Palestine between them. Then came Persia. Then came the Greeks of Alexander and again for a short period the Jews under the Maccabees. Then came the Romans, the Byzantines and the Franks of the Crusades. Saladin was the only Arab who ever ruled and he certainly was no relation to the present Levantines.

Finally there came the Turks and the British. But the British rule was the most interesting because it came after the First World War. Our mandate was to provide a national home for the Jews. We did not do very much about providing a national home for the Jews. The Jews provided themselves with a national home. Basically they bought it. To a very high degree Palestine was bought by the Jews in deals with the Arabs carried out at the Hotel Georges V in Beirut. There was a room kept for the purpose.

Then we come to the post-war period. This is where the participation of the noble Lord, Lord Mayhew, becomes so interesting. The question then was the desperate search for a home by the victims of the holocaust. They passionately wanted to get into Israel. That really was a case of people looking for a home.

We had Ernie Bevin in charge. He was a tremendous man but he was certainly not without blemish. His dominant force was hatred. He hated the employers: he had to put them down. He hated the Germans. I shall never forget one occasion when I had to go and see him when I was working with Victor Gollancz in trying to get some food to the Germans in that awful winter when they were down to 700 calories.

Ernie Bevin said to me, "Tell your friends in Germany to go and look at the concentration camps. That is all that interests me." He was a very very formidable person. But to him the Jews were the sweatshop masters in the East End against whom he had organised. One could never persuade him that the people who were ruling Palestine were very different from that. If at that period Ernie Bevin was our Batman, the noble Lord, Lord Mayhew, was his Boy Robin. He was there when these awful things occurred. Ernie decided that we would end the mandate and that we would withdraw our defences and the army and leave four Arab armies, including the famous Arab Legion under the command of Glubb Pasha, in the region free to invade. It was Ernie's intention that Israel should be destroyed and smashed. We know what sort of mercy it would have received then.

In those circumstances, when the noble Lord, Lord Mayhew, tells us that all he is saying about the need to compromise and to help the PLO armed terrorists is for the good of Israel could there be any man from whom Israel would be less inclined to take advice?

Then we come to the noble Lord, Lord Chelwood. I am sorry that he is not here for the moment. He came out with the to my mind quite terrifying suggestion that these areas where order must be kept should be handed over to the United Nations. Just look at the record of the United Nations here. There is the complaint of the damage that has been done. In 1971 the Israelis were building very substantially in Gaza at the rate of 12,000 yards of brickage a year. In that year and in every year since the United Nations has passed a resolution calling upon Israel to cease its housing efforts and to take effective steps immediately for the return of the refugees concerned to the camps from which they were removed. That is the body which it is suggested should act as trustee. The one thing that can be said about the United Nations is that if things are bad almost anywhere in the world one can rely upon the United Nations to make them worse.

The Arabs repeatedly condemn rehousing, apparently because they realise that reasonably contented people cannot be exploited for political ends. In the Gaza Strip the camps are administered by the United Nations, which is also responsible for the housing, the sewage system and other services there. We should not be sending for the very people who are responsible for what we are complaining about and putting them in charge. That is not a practical or a sensible idea.

The Arab nations have had all the facilities in the world to take in every one of the refugees. They had the money. They had the industry. They could have absorbed the whole lot of them. But they have kept them in Gaza and maintained them there as a propaganda instrument. That is why they are there. They would not be there otherwise.

Now there is an Arab rising. Could anything be much more disgusting than to see how such a rising works? The fathers keep under pretty safe cover and the children are sent out to throw the stones. Anybody who comes along to the hospital is shown those wretched beaten children. What were they doing to get themselves beaten?

The important matter is order. I do not happen to agree with my noble friend in his call for a conference. I do not think that in such conditions a conference would be worth a damn. What we ought to do is to leave the job to the Israelis, who are the people who know the job, and we should get out of the way. But that job has to be done and order has to be restored. The system was working fairly well until a few months ago; now it has gone bad. But the job can be done if we get out of the way. The highly efficient Israeli army were not originally trained to deal with such matters. They are getting trained and we know that. The last thing we ought to do is to send people out to tell them how to do their job.

The Foreign Office sent out a minister who proceeded, in circumstances of violence, to dress down an Israeli army colonel who was in charge of the situation. Nothing can be more important than the prestige of an officer in charge; and to undermine the officer's prestige was wrong. If the colonel had told a sergeant to take the young man along, paste his bottom and send him away until he had learnt manners, he would have been entirely within his rights. I wish he had done that. It was disgraceful conduct.

The Israelis are highly able people and they can do the job if we will keep out of the way and not try to tell them that their real interest is to surrender a strip of land which runs the length of their country and another strip of land that pinches them to within 20 miles of the sea. The noble Lord, Lord Mayhew, said that it was to Israel's strategic advantage. It is not to Israel's strategic advantage to place the whole of its country within artillery range from three directions at the same time.

My Lords, it was just a little over 50 years ago that the eminent Zionist leader, Dr. Weizmann, addressing a Royal Commission described the Jewish-Arab conflict as not so much one of right and wrong as of two rights and two wrongs. He added:

"And ours is much the smaller wrong".

A moderate and fair-minded Arab might well have made a similar remark, though I do not know whether any such remark is on the record.

The prerequisite of peacemaking is even-handedness and compassionate understanding. I respect the consistent and staunch endorsement of Arab causes by the noble Lord, Lord Mayhew. But I cannot help feeling that the fair-minded even-handedness which is so often present when he speaks on other issues was missing from his speech. Of course we all deplore transgressions and repressive acts of violence on the West Bank and in Gaza. But anyone who claims first-hand experience of one party's excesses should pause to ponder on the foul deeds of the other.

Have those who are so forceful in their attack on the Israeli authorities that try to restore order and protect human life ever been in a casualty ward where wounded Israeli soldiers, maimed civilians or mauled innocent bystanders languish? Have they paused to reflect that Israel has since its very inception been pleading for the razing of refugee camps and the reintegration of refugees? Have they thought that the Israelis are in the West Bank and Gaza simply because 20 years before King Hussein joined Nasser in his high-risk venture to smash the Jewish state—the state which on the morrow of the Six Day War asked for negotiations, only to be met by the famous "three nos of Khartoum": no recognition, no negotiation, no peace?

Today we are debating the need for an international peace conference. It is an old notion of mixed parentage and varied motivation. Mr. Brezhnev was the first to advocate such a format to allow the Soviet Union to re-enter the Middle East arena. For a long time the Americans saw little point in it. Presidents Nixon and Ford stonewalled the idea. But when President Carter seemed to warm to it, a wary President Sadat, who had only recently ejected the Russians from Egypt, was prompted—one might almost say stung—into flying to Jerusalem for his bilateral initiative.

King Hussein favours a conference under the United Nations Security Council umbrella, for he cannot afford to replicate the sweeping magnanimity of the late leader of Egypt. The King of Jordan does not have the sort of claims to support in the West Bank and Gaza without ambiguity that would allow him to make far-reaching concessions. He needs an international cover.

Europeans have favoured a wider conference for complex reasons—a nod to the Arabs, a wink to the Soviets and a traditional penchant for diplomatic congresses with echoes of Vienna, Berlin, Versailles and Geneva. Now that America is a latecomer to the idea, Mr. George Shultz's timetable is one of neckbreaking speed. Israel is divided to the point of making it an issue for a probable rush election, with Vice Premier Shimon Peres for and Premier Shamir against. World public opinion is understandably on Mr. Peres's side.

But before we succumb to the rather fashionable bias against the Israeli Premier, let us consider some of the pitfalls of an international conference which might abort. In doing so I am not defending or indeed quoting Mr. Shamir. I am calling on another witness—the distinguished former United States Secretary of State, Dr. Henry Kissinger. He can justly claim that his achievement, his technique and indeed his philosophy of negotiation in the Middle East changed belligerency into non-belligerency and disengagement, and ultimately led to the only peace treaty between Israel and an Arab neighbour—the Camp David Accord.

In a recent article in the Washington Post, Dr. Kissinger argues that peace comes piecemeal and not necessarily through the fiat of an international conclave. Often step-by-step diplomacy and interim arrangements of a durable kind are preferable to contractual peace. He questions whether some of the procedural devices mooted by Mr. Shultz and Mr. Peres, and apparently condoned by King Hussein and President Mubarak, would stand up in the event; whether the Soviets, on the one hand, would be content with the role of fig leaf or umbrella and the Americans, on the other hand, would go through with their commitment to help the parties either to break through or break up but not to have a settlement imposed on them.

Above all Dr. Kissinger argues that if a conference is to come off the diplomatic groundwork before it opens has to be as thorough as possible. Indeed, unless the parties concerned sit down with a wide measure of tacit agreement the outcome is likely to be negative, which would have a demoralising effect. It would be far more destructive than if no conference had been summoned.

It cannot be stressed too strongly that it would be truly beneficial if Her Majesty's Government, either by themselves or in concert with their EC partners, were to play a prominent part in reassuring the parties that if a conference takes place it can succeed only if there is no whiff of a diktat from above and least of all a carefully stage-managed performance designed to put pressure on the Americans to put pressure on Israel. That country, after all, holds the disputed territories. That is one of the reasons why we should take trouble to appeal to both sides of the Israeli coalition.

Compassionate understanding of the Palestinian Arab case impies support for political self-expression, autonomy and possibly sovereignty. Compassionate understanding of Israel implies support for her need of iron-clad security, open borders, the breaking of the economic boycott and human ostracism. It also implies understanding of the broadest band of public opinion. After all, it was Mr. Begin who signed away the Sinai, including the Jewish settlements, in the grand tradition of General de Gaulle's withdrawal from Algeria.

I believe that a genuine will for peace on the part of her Arab neighbours would influence the broadest possible spectrum of Israeli opinion and allay the suspicions that the conference, as envisaged by some Russian and Arab spokesmen and possibly some European governments, might be a trap, a straitjacket or an invitation to a beheading.

Mr. Peres's eight-point programme for an international conference is on the record. It seems to me to contain some very positive suggestions. Negotiations to solve the Palestinian problem in all its aspects are to be conducted in three bilateral geographical committees: a Jordanian-Palestinian and Israeli delegation in one, a Syrian and Israeli delegation in another and a Lebanese and Israeli delegation in the third committee. A fourth multilateral committee would include all the delegations with the addition of Egypt. Whereas the bilateral committees would be engaged in solving the conflicts of the past, the fourth committee would deal with charting opportunities for the region's future.

It is here that Britain and Europe, as friendly bystanders, can be most effective in pledging as well as charting a future for the region that would bring it economic prosperity, social justice and the premium educational, health, technological and cultural offerings of our civilisation. If the people on the ground were to feel that at the other end of a long tunnel there was not just a paper peace, not just a set of hollow declarations but a tangible promise of prosperity it would be worth the risk, the sacrifice of deeply held ideals and the replacement of traditional tenets of faith with a fresh catechism of hope.

My Lords, many people, myself included, believe that Israel deceived the United Nations at the time of its admission to that body. Israel has never honoured the obligations clearly stated and agreed to by her at that time. I refer to General Assembly resolutions, and in particular Resolution 181, which concerns itself with the territory and boundaries of the Arab and Jewish states, the city of Jerusalem, the Holy Places, and minority rights; Resolution 194, which stipulated that all Palestinian refugees be repatriated; and the additional violation of Resolutions 181, 194 and 303 under which Jerusalem remained an international zone. Furthermore, in launching the wars of 1956, 1967 and 1982, Israel has continued to flout the principles of the UN charter and international law.

The state of Israel has argued from its birth that its Arab neighbours pose an intolerable threat to its security and boundaries and that those same neighbours wish to drive all Jews into the sea. This has since been exposed from within Israel as being so much Zionist propaganda. Jews and Arabs had lived for centuries in harmony long before the arrival of the first Zionist. However, some Zionists used that argument as an excuse for their own acts of terrorism against innocent civilians, including many British, during and up to the end of the period of the British mandate. We can all remember with horror the blowing up of the King David Hotel in Jerusalem. No methods were deemed off limits by the Stern and Irgun gangs who were responsible for some of the most hideous atrocities ever committed. Organised terror, both physical and psychological, was used against the British and Arabs in an effort to get both to leave the country—the British to return home and the Arabs to go to any other country to which they could be pushed.

When we speak of the present unrest, the rioting and violence in the West Bank and Gaza, we conveniently overlook the fact that it did not begin last December. It began over 60 years ago, grew to a revolting crescendo in 1948–49 and has been a festering sore ever since. It has been responsible for engulfing the entire Middle East in instability. Responsibility for this situation must rest firmly with Great Britain, the architect of the Balfour Declaration of 1919, which created the mess in the first place, and with the United States for its systematic undermining of UN resolutions in support of Israel and at the expense of the Palestinians. These unfortunate people have been the victims of Western duplicity for all that time. Is it any wonder that they are now united in their wish to throw off the yoke of oppression and occupation?

I wonder how many noble Lords from all sides of the House would have reacted differently. Would we all have sat down quietly and happily handed over our country to someone else simply because it suited politicians in a far-off land with an eye on their careers? Would we have acquiesced meekly or would we have resisted stoutly? Whenever invasion threatened the United Kingdom we responded as one. We put aside our differences and squarely faced our enemies, even though it meant making sacrifices in terms of lives lost and comfortable lifestyles compromised. We defended our basic human rights, our families, our land, our freedom and our democracy. We fought fiercely and only once did we lose. Not since the Normans have we been invaded and occupied, although we came very close to it in 1940.

The Palestinians have not been so lucky. They were invaded first in 1948, then in 1956 and yet again in 1967. All their land has either been taken from them by force or is under military occupation. Have they not a right to oppose this? Have they not the right to resort to any method to rid their homeland of the aggressor? In fact, is it not their duty to do so? Would it not have been our duty if the same had happened to us in 1940?

There have been many who have criticised the PLO as being a terrorist organisation—myself included. If we have any respect for the sanctity of human life, we must reject and abhor acts that take away the most basic human right of all, that of the right to life. But should we not remember that the PLO grew out of a desperate need to respond to gross acts of terrorism as practised by members of Jewish terrorist organisations against the Palestinian Arabs? How were Palestinians supposed to react? Were they not supposed to object to having their land taken away, their families and friends killed and maimed, to being deported or squashed into squalid refugee camps, to having their houses blown up or even to being massacred? Surely there is not one Member of this House who would have tolerated any of those acts had they happened to him.

What is the difference between our commandos in World War II entering a German town and planting a bomb designed to kill German civilians and Palestinians going into Jerusalem to do the same thing to Israeli citizens? There is no difference, yet we praise the first as an act of heroism and condemn the second as an act of terrorism. That is hypocrisy on a grand scale. Do we really have a monopoly on justice and morality?

Until recent television pictures began to give us hard evidence of the brutalities taking place we found it expedient to look the other way. Now we cannot ignore them. It is to our undying shame that it took television finally to force us to bear witness to the hideous reality that is the illegal Israeli occupation of the West Bank and Gaza and the relentless persecution of the Palestinian Arabs.

To quote from the current issue of the New Statesman, the PLO:

"has for years put forth a moderated negotiating position, often with considerable clarity, and they have found no politically significant partner in either Israel or the United States".

The noble Lord, Lord Chelwood, said that Yasser Arafat on several occasions has accepted UN Resolution 242. I am glad that he drew the attention of the House to that fact. However, that news was deliberately suppressed in the United States. What Yasser Arafat said on 14th January 1984 was:

"The PLO would recognise Israel's right to exist if it and the United States accept PLO participation in an international Middle East peace conference, based on all United Nations' resolutions including UN 242".

The PLO is and has been ready for direct negotiations with Israel but has only met with US support for Israeli intransigence and a continual refusal by the United States to recognise that it is the recognised representative body of the Palestinian people. It would be interesting to discover just who the United States thinks represents the Palestinians. Apparently it would accept almost anyone except the Palestinians. The present round of US-led peace mission diplomacy is not aimed at obtaining a just solution to the Palestinian problem but rather at bringing a halt to the violence in an effort to save Israeli and Amercian faces from continued embarrassment. It is doomed to utter failure if it continues to deny full PLO participation.

The United States says that it is seeking a formula acceptable to Israel and Jordan. What about asking the Palestinians? They are the people who are trying to live in that country, which is their right, and whose country it was for centuries until 1948 when Israel was given some of it and 1967 when she took the rest by force. I have every sympathy with the victims of the horrendous holocaust. Indeed there is not to be found a more repulsive example of mass persecution and extermination. What I have no sympathy with at all is those same methods which were used by Hitler against the Jews in Europe in the 1930s and 1940s being used against the Palestinians today by the very people who ought to know better from their own bitter experiences. Two wrongs do not make a right.

The United States holds the key to the lock which could open the door to peace. So far it has been reluctant to turn that key. Time is running out. If the violence, oppression and brutality are allowed to continue, when the United States finally recovers its morality and dignity and goes to turn the key, the lock will have been changed and the key will no longer fit.

My Lords, I shall try to be brief and avoid repeating points already so well made by other noble Lords, particularly the noble Lords, Lord Glenamara and Lord Paget. I should like to ask just one question: are we not looking too narrowly at what is happening at the moment in Israel?

I have recently returned from Israel. There is positive evidence that the instigators of the present troubles are not the PLO but the fundamentalist Jihads. The situation is a creation of Khomeini. I believe that we are witnessing an attempt to reestablish the fundamentalist Islamic empire which extended from the Caspian Sea to the Iberian peninsula. How did Khomeini rise to power? Was it not by taking exactly the same route that is now being taken in Israel. Women, young people and children are brought out into the streets in Tehran.

Certain criticisms of the Shah, which may have been justified, are highlighted. The world media aided and abetted Khomeini. All the sympathy was for Khomeini who was claiming to right the alleged excesses and tyrannies of the Shah. What defeated the Shah was the sympathy and support of the world media. Little did the press realise at that time that the Shah's injustices would be replaced by something far more horrendous and tyrannical. The methods worked.

The next attempt was on Iraq. The Russians now find that even they have problems in Azerbaijan with the Shi'ite fundamentalists. Israel is merely a rehearsal. The process can be repeated and if it can work in Israel it can work anywhere. One can certainly find injustices in Amman and try to de-stabilise the regime there; one can find injustices in Egypt and try to de-stabilise Cairo; one can go straight on from there. Apart from responding to an appeal for sympathy, is it not worth pondering whether this is a problem of the West versus a planned and hoped-for tyrannous dictatorship by the Islamic fundamentalist empire?

Why is the criticism about what is happening in Israel so muted in Cairo and Amman? Why did all the trouble start after the Amman meeting, which attempted to pave the way for a settlement? I should like to ask the Minister to consider whether there is a wider interest than our just assigning right and wrong. Incidentally, if I may return to the question of why there is so much reservation and anxiety in Israel about an international conference, the Israelis are very conscious of that other international conference which was called in the case of Czechoslovakia in 1938 when, in the interests of peace, the Czechs were advised and forced to trade land for stability. One should consider what happened to them.

It would be helpful if the media were to reflect not only on what they are doing but on the further consequences of their actions. My other points have been made so much better by previous speakers.

My Lords, I rise first to thank the noble Lord, Lord Mayhew, for giving us this opportunity to discuss a matter of such very great concern, and also to support most strongly the observations of my noble friend Lord Chelwood. I set the context of my remarks in something that he mentioned: the Austrian peace treaty. I shall look about the Mediterranean basin for evidence—which most certainly exists—of diplomatic successes that have led to peace treaties and the resolution of very longstanding problems over the past 35 years. I realise that the Danube basin is a little further away than the Mediterranean but the noble Lord mentioned the Austrian peace treaty as a prime example. I should like to mention another, which is the diplomatic success at Trieste that was achieved in 1953 after a period of years. That again concerned an area closely constricted by mountains and sea. It is a very narrow corridor which was disputed for many years by Austria and Italy. The treaty represented a solution to the problem of a very important and much disputed territory.

Another area of concern for centuries has been the disputes between Greece and Turkey. Only a matter of weeks ago there was the spectacle of the conclusion to the preliminary phase of negotiations—the starting point of an accord of some description, the precise nature of which is a little unclear at this time, between the Prime Ministers of Greece and Turkey. Those are all matters for considerable optimism. I feel that the Question the noble Lord, Lord Mayhew, has put before your Lordships this evening has seeds of optimism within it, although certain contributions this evening would perhaps make that seem difficult.

Perhaps I may join with my noble friend Lord Chelwood over the nub of his principal argument: there should be trusteeship in the West Bank and in Gaza. He quoted the most important statement of the noble Lord, Lord Jakobovits,

"the art of living together in harmony".

That is what the principal substance of peacemaking is about.

The Venice Declaration was the subject of the debate held in your Lordships' House, introduced by my noble friend Lord Chelwood on 22nd May 1985. On re-reading that debate, I was particularly struck by the speech of the noble Lord, Lord Cledwyn of Penrhos. He reminded your Lordships of the exact terms of the Venice Declaration. I most warmly commend once again to noble Lords one phrase that he used. It is the statement from the Venice Declaration that justice for all people implies the recognition of the legitimate rights of the Palestinian people. I may be accused of taking this out of the general ambit of the Venice Declaration. Nevertheless, it is part of that statement and it is one that should be commended in general terms.

Reference has been made in considerable detail to both the West Bank and Gaza. I should like to take up the points on Gaza raised by the noble Lord, Lord Glenamara. Once again, we should bear in mind that in Gaza there are in general terms over 700,000 Arabs and about 3,500 Israelis. I do not know whether the noble Lord would agree with those figures, but I am speaking in general terms. The Israelis now own about one-third of the land—and approximately that encompassed by the best survey that we know at the present time. If one considers therefore the question of the Venice Declaration, it is incumbent upon those who feel that the situation in Gaza should be examined to consider that justice for all people implies justice for the Palestinians in that territory.

I turn now to the Government's preparation for this conference. I feel that all the efforts that the Government have made for a step-by-step approach are most welcome, and perhaps even more so if it is behind closed doors. There are so many cases where diplomacy in that area can achieve more without the blaze of publicity. However, it was very welcome indeed to hear from the noble Lord, Lord Glenarthur, yesterday of the trouble that the Government have taken to increase their grant to UNRWA. That was announced yesterday in reply to a Starred Question in your Lordships' House. It is an increase to £5.25 million for the year 1988, and a further £5 million towards the European Community contribution. All this is most welcome, and it assists in the general ambit of interest and care that the Government are putting behind the European Community's initiative and the general care that they have towards the Palestinian problem.

I have said that I join with my noble friend Lord Chelwood over the concept of trusteeship. I do so for a very particular reason. I believe that this country, having held the mandate responsibility from the inception of the League of Nations up until 1948, has a particular fund of knowledge which may be drawn upon. It may well be said that anything that took place prior to 1948 is irrelevant. Nevertheless, in the archives in Whitehall there will be found Cmnd. Paper 6019, which was the Government's White Paper of May 1939. It was very significant because it expressed the desire to see established ultimately an independent Palestine state separated from the national Jewish home.

In this step-by-step approach for a conference, I am quite sure that the Government will examine all the past models, and all the past maps and proposals made over a very long period by extremely experienced administrators. Each one had limitations. Each one had drawbacks and each one now can be claimed to be irrelevant. Nevertheless, in examining those White Papers, and in examining models of this very restricted area, there must be points to be raised and taken on board.

I close with the view expressed by the European Community five years ago in 1983. This is again a statement that is very well known to your Lordships. The EC remains convinced that a just, lasting and comprehensive peace in the Middle East can only be secured on the basis of the principles which they have stated so many times in the past.

My Lords, like previous speakers, I should also like to thank the noble Lord, Lord Mayhew, for giving us a further opportunity to debate the almost frightening subject of the Middle East. I find it particularly poignant. I was one of those who, in 1936, with the TUC contingent from Wales, marched to London. I had never been there in my life. I got to know Gardiner's Corner, Whitechapel Road, Commercial Road and all the streets where Jewish people lived and where the Fascist movement was out to disrupt. We did our best to foil that, to stop it. Within four years, Europe was threatened by Nazism and this nation stood alone. If we had surrendered and given in, the holocaust that followed would have been a thousand times worse. I believe that Great Britain's great role should be put on the record.

I remember also spending some time in the East End. I was reading geography and the German language. As an extramural student in the University of Wales I stayed here for two or three months. It was pointless to go home. There was no work. The docks and the pits were closed; most of us were on the dole. During that period I learned to speak a great deal of Yiddish. I began to understand the difference between a separdime and an ashkenazi. I could understand those issues. I hope that it will be understood when I say that my country stood alone. It gave a massive contribution to anyone who believed in freedom and was opposed to any form of terrorism. However, I also happen to believe that, just like the Palestinians, just like those on the West Bank, just like those in the Gaza Strip who have resisted another nation occupying their land, we in this country would have resisted any Nazi occupation. We might not have been PLO, but I am convinced that we would have been a British Liberation Organisation, led no doubt by people like Winston Churchill, Clement Attlee and Ernest Bevin. I firmly believe that this would have been the role at that time.

It seems to me that mankind will never understand this issue. It arises in Northern Ireland and the Middle East. One of the most terrifying aspects of all political activity is the territorial dimension. When you occupy and steal—I repeat, steal—somebody else's homeland, you are asking for trouble. I am totally convinced that, whatever it may be doing in some respects that is distasteful, the PLO has the same determination in its guts and its heart as we would have had had the Nazis invaded and occupied this country. I should have been very proud to have been a member of the BLO. Therefore, I think that has to be taken into consideration.

When the war was over, we were told of the most appalling crimes in mankind's history—the holocaust and the shudders, the horrors and the terrors, it caused. Anger rose in all our breasts. There was total confusion when our British soldiers were slain by the Irgun Zwei Leumi, and they, too, have a right to be honoured and mentioned. I am doing that right now because I think they were quite innocent lads. They were doing their duty. They were certainly not anti-semitic. But they suffered and were slain by the Irgun Zwei Leumi.

One of the most disturbing features of the whole situation is that it might not have arisen had only the tremendous co-operation and brilliant thinking of Mrs. Golda Meir and King Abdullah become a reality. I believe that would have contributed towards bringing lasting peace between the semitic nations. If one is anti-semitic one is anti-Arab as well, as I understand it.

When Golda Meir and King Abdullah arrived at their conclusions, it seemed to me, and to people much more clear than I who were interested in Middle East progress, that here was a way forward that would be of great help and assistance. Unfortunately King Abdullah was assassinated and things went from bad to worse.

The major issues in this debate have already been raised. It would be boring and upsetting to go over them all again. Late in the debate there is not a great deal more to say. I shall, however, mention one frontier that we all have to endeavour to arrive at. In the words of Aneurin Bevan, the trouble with all mankind is that we seldom arrive at the frontiers of undertanding until our own souls are smitten with grief. The hearts of those Jewish people who were in Europe at the time of the haolcaust, who lost people but who survived themselves, were stricken with grief just as much as a Palestinian mother or an Israeli mother, and just as much as a British mother when her son was killed by the Irgun Zwei Leumi. We have to put all these things together, for if we do not we shall never arrive at the frontiers of understanding.

I believe therefore that there is enough goodwill if we can only find it and bring it together. That is why I believe that an international conference is so sane. The words of Churchill are still as appropriate today as when he first uttered them against killing, slaying and maiming. Let us have jaw, jaw which is far better than war, war. If we have an international commitment, it must be gathering together people of different nations. The proposal submitted by the noble Lord, Lord Mayhew, and supported on all sides of the House, has at least a modicum of possibility. The coming of peace may be a long way off, but I believe that there is a chance if we stop talking and acknowledge that if someone stole somebody else's land 10,000 years ago they are still thieves.

I remember the problems in the United States of America. I am not anti-American. My grandchildren were born and bred American. I have one little, brilliant granddaughter who may well be the first woman American President. But there was a terrible time when we were fighting the Fascists. Terrible things were happening in the United States of America. In some parts of the deep South in the mid 1930s it was not particularly safe to have a different skin pigmentation from a white man. It was not particularly easy to live in some parts of the Mid-West if one belonged to some kind of Indian tribe. This form of racial hatred has gone on and on.

The tragedy is that if the Anglo-Saxons could not agree on one thing or another, or the Europeans, surely the great semitic nations can find an answer to the problem that now confronts them. I believe that if the determinations and decisions of an international conference were accepted and honoured by all sides, then the desert of enmity could blossom into lasting friendship and understanding and so allow Arabs and Jews, the great semitic peoples, not only to contribute to each other's wellbeing but in so doing could give an example to all mankind.

My Lords, I am very aware of the major contribution that many noble Lords have made this evening. I, too, am grateful to the noble Lord, Lord Mayhew, for bringing this Unstarred Question before your Lordships' House. The hour is late and therefore I shall not detain the House for longer than is necessary. But I speak this evening with a deep feeling of respect for the many soldiers of this country and of the Commonwealth who laid down their lives in Palestine in the name of peace. I also have great respect for the many governments and people who have attempted to initiate and to bring about a lasting solution in Palestine. We have become aware tonight of the most serious, indeed the most dangerous, situation developing in the West Bank and Gaza Strip. The revolt on the West Bank continues to serve as a grim reminder that the present state of Israel has no right, apart from forcible occupation, to any part of Palestine.

Some 70 years ago this country took possession of Palestine by right of conquest: a conquest that was duly recognised as we have heard by mandate agreed at the San Remo peace conference in 1920 and subsequently approved by the League of Nations two years later. It was as result of terrorist activity by the Zionist organisations and other ideological groups opposed to our occupation that orderly government became totally impossible. We were forced to give up the mandate in May 1948, but I suggest to the House that our sovereignty over the country has never been surrendered.

Being a soldier, I should like to speak for a short while on the military situation. I believe that a similar military situation exists today in Palestine as it did when this country was the paramount power. Israel today has a young and inexperienced conscript army, as we had during the intervening years after World War 2. The young conscript is trained in conventional war, but not in combating carefully orchestrated terrorism. The Israeli army is learning the hard way by painful experience.

Today in Palestine we see an additional element, as again has already been mentioned—the power of the media. The media influence opinion across the world. On our TV screens we have seen the media in their almost daily involvement in street battles. It is clear that the press is adept in setting up traps for the Israeli security forces. Time and again one sees the young, inexperienced and often very frightened soldiers acting in a most fanatical and brutal fashion. However, I remind your Lordships that a similar situation faced this country in the early part of 1946. There were, over a period of four months, 20 acts of terrorism involving our forces and our equipment. These culminated in the destruction of the King David Hotel by the IZL organisation on 20th July, as has already been mentioned. That act alone resulted in 152 deaths, injuries and people missing, principally among civil servants and soldiers and included the Postmaster General, his two assistant secretaries and the Economic Adviser to the Palestinian Government. After that explosion, 700 Jews were interrogated and 30 were detained. Many allegations of brutality followed from both sides to no avail.

Political pressures and worldwide media attention has led to universal condemnation of the Israeli Government for the brutal manner in which their armed forces have been trying to suppress the violent protests of the indigenous population of the occupied territories. As highlighted by a scathing attack by one of the Ministers of Her Majesty's Government, the criticism is sadly justified. However, the cause and the background behind much of what happens is either misconstrued, not understood or deliberately changed to meet the situation.

On the Palestinian side, the deep sense of despair, and the growing sense of patriotism among the ordinary people, cannot forever be ignored. I suggest that the ordinary people regard the Palestinian Liberation Organisation as their own army created as a result of the Arab summit conference of 1964. Under Yassir Arafat's chairmanship the PLO has gained considerable international acceptance as the sole legitimate representative of the people, committed as it is to the elimination of Zionism in Palestine. I do not want to enter the argument as to whether the PLO should be included in any future peace conference. However, the PLO's intransigence and its record of extreme acts of terrorism in recent years must be taken into consideration. I reject the suggestion made by the noble Lord, Lord Mayhew, that it should be included at the present time, but I believe that there may be a place for it in future negotiations.

In its Resolution 608, passed in January this year, the Security Council also condemned the Israeli Government's decision to deport Arab ringleaders and called for negotiations to take place to end the Israeli occupation. Comparisons with the situation in Northern Ireland are totally false. I suggest that this country faced a similar situation in Cyprus when we were instrumental in the deportation of President Makarios in the hope of bringing about a more peaceful situation at that time.

This country has consistently stood by its belief in the right of Israel to exist within secure boundaries, but it has never recognised the right of Israel to govern the City of Jerusalem. Sadly, one must acknowledge our diminishing influence and power in Palestine and the greater involvement of the superpowers in recent years. I believe that, as a member of the European Committee, we have a great deal to offer and an important role to play, as the noble Lord, Lord Sandys, pointed out.

We have a hope as a result of the active diplomatic efforts of the US Government. Agreement exists between Mr. Peres and King Hussein as to how an international conference might work. Though this move is temporarily blocked by the Israeli Government, it has the support of the 12 Foreign Ministers. I applaud the efforts of our Government and those of the US Government to find a solution in an important part of the world. We also have a residual responsibility, and I should like to join with other noble Lords in urging the Government to bring about an international conference which will eventually lead to a lasting peace in the area by every means possible.

My Lords, I had not intended to speak in the debate but several points have been made which I believe require answering. I should first like to deal with a point made by several noble Lords. It is that the violence that has been observed on the West Bank was greatly exaggerated by the media and that it was a media creation. Reference was also made to the fact that 800 journalists were present and that they affected the projection of the violence to the outside world. The South African Government have always used exactly that argument as regards violence in South Africa and it is unjustified. We know that film editors show the worst pieces of film and not the best, and viewers understand that. There is no doubt that the conditions in the West Bank and the Gaza Strip have created the violence that has been seen on television, just as in South Africa. I understand the concern of lovers of Israel that she should not try to defend the indefensible. I believe that one cannot blame the media for the violence that is taking place when one considers the violence from the Israeli troops that has been seen on television.

I wish to deal with the point which directly followed from that and which was raised by the noble Lord, Lord Paget of Northampton. He criticised the Foreign Office Minister, Mr. Mellor, who intervened in the actions of the Israeli colonel. I should like to ask the noble Lord what he would have done if he had been invited to another country and had seen an officer commanding troops who were acting in what was to his mind a totally unjustifiable and unjust manner. I remind him of the Nuremberg judgments where it was held that even obedience to the orders of a superior officer was no defence when the acts being perpetrated were against common humanity.

I believe that the Palestinians have suffered displacement and an injustice. Until that is put right the position of Israel will steadily become less secure. The ayatollahs were able to use the festering injustice felt among the Palestinians to put forward their extreme views and I believe that that has not been sufficiently appreciated in the Middle East.

My Lords, the noble Lord, Lord Mayhew, has chosen the right moment to initiate this debate on the problems of Palestine. We listened to his speech with great interest, as we have listened to all the speeches that have reflected the differing views on both sides of the problem. The House is aware that there are a number of crises in the Middle East and I find it difficult to separate one from the other. From Teheran and Baghdad to Beirut and the West Bank and Gaza the whole of the Middle East is in a ferment. The need for a settlement of the various disputes is obvious and acute. The slaughter in the Iran-Iraq war continues unabated. The Lebanon is an almost uncontrollable shambles. We were shocked to hear of the recent kidnapping of Mr. Peter Coleridge and were delighted and relieved to hear today that he has been released. We hope that Mr. Terry Waite and others will also be released in the near future. The fact that good men are so mistreated reveals the black depths of the problem.

As has been explained in the debate, the violence has now extended to the occupied territories. It has resulted in many deaths and more casualties and in some excesses, as described by my noble friend Lord Glenamara. That is most sad, and we are concerned because of our respect for Israel and her democratic tradition. Such events must mean that she has—temporarily, we trust—lost ground in international esteem. That has not helped Israel's longer-term interest. However, it is necessary to add that part of the problem is the failure of all Arab countries save one to endorse United Nations Security Council Resolution 242, which implicitly recognises Israel's right to exist within secure pre-1967 war boundaries. This has lain at the root of Israel's reactions and fears from the start. Furthermore, Arab countries, especially those with great wealth, may wish to ponder their own record on the refugee problem over the years.

The noble Lord and others have dealt with Mr. George Shultz's troubles in an effort to find a solution and to seek agreement for an international conference, which appears to find almost universal approbation in the House in this debate. Mr. Shultz deserves the utmost praise and our support for his persistent efforts. I am glad that both Government and Opposition in this country gave him sympathetic support.

Mr. Mellor, the Minister of State, has recently visited the Middle East, as have my right honourable friends Mr. Kinnock and Mr. Kaufman, and we have of course noted their reactions. Mr. Kaufman believes that the Israeli Prime Minister Mr. Shamir, should indicate his willingness to sit down at the conference table and negotiate with the Arab countries. Mr. Kinnock was moved by the damage the conflict is inflicting both on the Palestinian people and on the Israeli democratic tradition. He also said that he believes the key to the solution lies in the attitude of the Israeli people in that at the end of the day they must choose between the seemingly military option offered by Mr. Shamir and the prospect of peaceful negotiations offered by Mr. Shimon Peres, who supports the proposal for an international conference. I quote my two honourable friends because they have recently returned from Israel.

From Britain's viewpoint, therefore, it is encouraging that we can all agree upon the need for a conference and that we should do all we can to bring it about, and that, I believe, was the view of the noble Lord, Lord Mayhew. But there are complications and these have been manifested during Mr. Shultz's strenuous travels. At the start the United States Secretary of State appeared to be pessimistic in his comments on the chances of success. He was not receiving a very warm welcome. On 1st March the Guardian stated:

"Syria was unhelpful … and Jordan sceptical",

and that he was marching from one inconclusive meeting to another. However, I am not as pessimistic as the noble Lord, Lord Mayhew, because mercifully there is another mood abroad and this has been reflected in the more helpful remarks of the distinguished Israeli Foreign Affairs expert, Mr. Abba Eban. He referred to the statement of over 100 leading Israeli academic figures, including some who had never before issued a controversial political word but who urged an early end to the occupation regime. He recalled the last words written by Mrs. Golda Meir to the nation, which was referred to in the speech of my noble friend Lord Molloy. Her speech to the nation included the fact that no sane Israeli ever believed that Israel could permanently rule all the territories and populations in the West Bank and Gaza and that new borders would have to be fixed with Jordan. In my view, that is the spirit of the Venice Declaration, to which the noble Lord, Lord Sandys, referred.

We also recall the London Agreement of 11th April 1987 in which King Hussein, who must be praised for his constant efforts to seek a solution to this problem, and Mr. Shimon Peres elaborated a scenario for bringing the Israeli-Palestinian problem under serious negotiation.

Mr. Shultz can take comfort from this as he comes to the end of his very difficult mission. However, as has been said already, the problem is the division within the Israeli Government themselves. We must hope that Mr. Shamir will find a compromise which will enable him to move towards a conference which we all think should be held. Mr. Abba Eban has asked the crucial question:

"Can Mr. Shamir maintain his position against the opinion of the entire world including the United States and half the Israeli people?"

I should be grateful to the noble Lord if he could clarify one matter. Can he say what steps were taken for Mr. Shultz to meet representatives of the PLO during his mission? The timetable proposed by Mr. Shultz is that the conference would be convened by the United Nation's Secretary General in mid-April and that negotiations between Israel and a joint Jordanian-Palestinian delegation on an interim arrangement of limited self-rule for the 1·5 million occupied Palestinains would start in mid-May; talks on a final settlement would be next December. As I understand it, that was the timetable which the United States Secretary of State had in mind.

The aim of the negotiations would be United Nations Security Resolution 242, which, as the House will recall, insists on the:

"inadmissability of the acquisition of territory by force".

The latest news is that Mr. Shamir will pay a crucial visit to Washington next week and we must hope some constructive results will emerge from what could be an historic visit.

As the noble Lord, Lord Weidenfeld, said, we must appeal and not dictate. He referred to the necessity to avoid a diktat from above. I thoroughly agree with what he said. It would be a tragedy if the Shultz initiative drifted into the sand.

As I have said before in these debates, there is a limit to what Britain can do, although we are conscious of old historic associations; but we must give this worthy initiative all our support and encouragement. We can work through the United Nations, which, if I may say so to the noble Lord, Lord Paget, is given the most thankless tasks in all the world's trouble spots and which, contrary to his view, I believe does a remarkable job in all the circumstances. We can work with the United States, which is our ally and friend. We can work within the EC, which has taken positive initiatives to seek a settlement. We should also keep in contact with the Soviet Union.

We owe this to the innocent people of the Middle East who are suffering so much this time. Furthermore, we know that the beginning of stabilisation in the Middle East, which is a great prize and must be a great objective, would be a huge step towards the creation of more stable world peace.

My Lords, I believe we all agree that the question of the noble Lord, Lord Mayhew, is timely. It is taking place at a time of intense diplomatic activity on the subject and against a background of disturbing events portrayed in almost nightly reports on our television screens. I am grateful to him for enabling us to discuss a matter of considerable international concern. One matter which this evening's interventions have made clear is the deep interest which your Lordships have in a part of our history in that part of the world and the deep concern we all feel about the situation in the occupied territories and the need for early progress towards a negotiated settlement of the underlying Arab-Israeli conflict. Perhaps I may make it perfectly plain at the outset that the Government fully share that concern.

The toll of suffering and death in the occupied territories since the current wave of unrest began on 9th December last year has been immense. At least 80 Palestinians have been killed. We deeply deplore these acts and all acts of violence such as those which the noble Lord, Lord Glenamara cited and, indeed, the sort of matter to which the noble Viscount, Lord Buckmaster, referred. We call on all sides to exercise maximum restraint in order to avoid further bloodshed.

The noble Lord, Lord Mayhew, referred to what I think he described as our alleged ambivalence towards the PLO. The PLO is an umbrella organisation which expresses the aspirations of many thousands of Palestinians to secure their legitimate rights. We deplore the terrorist activities of several of its component organisations. However, I have taken careful note of the points made by the noble Lord.

We fully agree that the Palestinians must be allowed a voice in the negotiations which will determine their future. However, for the PLO alone to represent that voice it is necessary for the PLO to end the ambiguity of its policy on three points which will have to form the core of any negotiations: that is, the acceptance of United Nations Security Council Resolutions 242 and 238; recognition of Israel's right to a secure existence and renunciation of the use of violence to achieve its ends.

My Lords, may I be permitted to intervene? My point was that that is a requirement unilaterally imposed on the PLO. If Israel and the PLO agree to recognise each other and jointly rejected violence and terrorism that would be splendid. Why do the Government put those conditions only on the PLO and not on the Israeli Government?

My Lords, I hope that, by taking note of the point made by the noble Lord and by explaining to him the importance that taking into account those three points has in considering whether the PLO represent that voice of the Palestinians which the noble Lord seems to indicate in his remarks it does, he will understand why I have made plain those three points since they govern whether the PLO is to be included in the sort of negotiations which the noble Lord seeks.

History such as we have heard this evening and particularly as referred to by the noble Earl, Lord Winchilsea, the noble Viscount, Lord Allenby, whose name is much associated through his forbears with that part of the world, my noble friend Lord Sandys and the noble Lord, Lord Molloy, is important and it is relevant. Like my noble friend Lord Chelwood, I should like to deal with the present and look towards the future.

We have expressed our concern vigorously to the Israeli authorities, both bilaterally and, as many of your Lordships would have us do, with our European Community partners. In particular, we urge the Israeli occupation authorities to refrain from the use of lethal force and beatings. These only fuel Palestinian resentment and escalate the violence. The appalling nature of this policy was recently demonstrated most disturbingly by the burying alive of four Palestinians and the shocking pictures of soldiers attempting to break the limbs of Palestinian detainees. Those responsible for these and similar abuses must be brought to book.

Until Israel eventually withdraws from the occupied territories, we will continue to urge it to administer the occupation in strict accordance with international law and respect for human rights standards.

My Lords, are we going to say that to the Russians, too, in regard to the lands that they occupy? Are we to tell them that they must occupy those lands humanely and not, as we do in the case of Afghanistan, tell them to stop occupying someone else's country? Why not say that in the case of Israel's occupation?

My Lords, it is always easy to draw instances from other parts of the world and not compare like with like. I suspect that that is what the noble Lord may be doing in citing instances of the sort that he mentioned. Let us deal with one subject at a time and concentrate on this particular problem, which we all agree is most disturbing.

The noble Lords, Lord Glenamara and Lord Kagan, regretted the picture of the situation in the occupied territories which is given by the world's press. It is true that the media will focus on the sensational. I understand the point made by the noble Viscount, Lord Allenby, about the role of soldiers in these circumstances, particularly young soldiers. However, it is also true that the reports of acts of violence which the press publish also bring home to us the need for an early negotiated settlement. We all agree that the suffering must be brought to a quick end. However, essentially that is a short-term measure and will not solve the root causes of the unrest.

I have to say that I have some reservation about the analysis offered by the noble Lords, Lord Glenamara and Lord Kagan, that this unrest stems from a Moslem fundamentalist conspiracy. I do not believe that the available evidence bears this out. Palestinian protests arise from a deeply felt resentment at the suffering experienced over the years. The current violence adds fresh urgency to the search for a just and comprehensive negotiated settlement of the Arab-Israeli conflict.

With the diverging views that have been expressed, this debate has also highlighted the many difficulties that exist in promoting and establishing the settlement we all wish to see. In his excellent speech based on his wide experience, my noble friend Lord Chelwood pointed to some of these problems. The principles for a settlement are clearly established; indeed, they have been rehearsed many times from this Dispatch Box and they were referred to by the noble Lord, Lord Mayhew. They are the right of all states in the region, including Israel, to a secure existence within recognised borders and the legitimate rights of the Palestinian people, including their right to self-determination. I can assure your Lordships that the Government are actively involved in promoting all efforts to help the parties to achieve a settlement on this basis. I am grateful to my noble friend Lord Sandys for his recognition of that. We are in close touch with several of those concerned. For example, my right honourable friend the Prime Minister met King Hussein last week. We remain in step with the King's courageous work to advance the cause of peace.

I listened with care to the noble Lord, Lord Paget of Northampton, but I have to say that I found very little with which to agree, perhaps particularly on the matter of an international conference. I hope that he will accept that there is broad agreement, and he will have heard much of it this evening, that an international conference involving the parties to the conflict and the five permanent members of the United Nations Security Council can provide a suitable framework for the necessary negotiations. The conference would have no right to veto solutions reached by the parties or to impose solutions on them. It is true, as the noble Lord, Lord Glenamara, indicated, that Israeli government policy remains opposed to the holding of an international conference to resolve the dispute. He asked whether my right honourable friend the Prime Minister would use her influence with Mr. Shamir to advance progress towards a solution. We take all available opportunities to make clear to the Israeli Government our firmly held belief that it is in their own interests to trade territory for peace, and to reach a settlement which will guarantee their own long-term security.

We have given our full and active support to the proposal for an international conference. Support for the idea was reiterated after the Prime Minister's recent meeting with King Hussein, and in another place on 2nd March. The support of the 12 member states of the EC was most recently expressed by the Foreign Ministers in their statement of 8th February.

My noble friend Lord Chelwood has advocated a more prominent role for the United Nations in bringing about a solution. The Security Council and the General Assembly pay close and continuous interest to the issue that we are debating. However, for the present I am sure that we are right to lend support to the initiative taken by the United States as the noble Lord, Lord Cledwyn, did in his remarks. We stand ready to play our part in further consultations in the Security Council at the appropriate time.

My noble friend, supported also by my noble friend Lord Sandys, suggested a United Nations trusteeship as a solution for the occupied territories. I hope that both my noble friends will accept that for us to espouse precise arrangements for a settlement is at present premature. Those directly involved in the dispute must be encouraged to enter into negotiations themselves which they find mutually acceptable. We would not rule out a role for the United Nations in an eventual settlement. I believe that my noble friends will agree that time and negotiations will show whether that is appropriate.

Several of your Lordships have referred, as I did just now, to the current initiative by the United States to advance the peace process. My right honourable friend the Prime Minister had valuable discussions with President Reagan and with his Secretary of State, Mr. Shultz last week. She welcomed the steps being taken by the United States to give fresh impetus to the search for a settlement, and she encouraged Mr. Shultz to continue his efforts. I am very grateful to the noble Lord, Lord Cledwyn, for his endorsement of those efforts.

The noble Lord asked specifically about the aborted meeting which was to have taken place recently in Jerusalem between Mr. Shultz and the Palestinian representatives. Obviously, I cannot comment on the details of the shuttle of Mr. Shultz; however, I am aware that such a meeting was proposed but that the Palestinians concerned declined it.

We hope that the parties will be able to reach early agreement with the United States on detailed proposals which can offer a sound basis for progress. I believe that to be compatible with the scenario given to us by the noble Lord, Lord Weidenfeld. We support the American approach towards the peace process. It provides for careful preparation for a conference and a solution by stages. I agree with him that what we are aiming at is a conference which offers not a trap for the participants but an opportunity for lasting peace. The American proposals are not intended as a substitute in any way; they would build on the wide consensus in support of a solution. We shall continue to work with those directly concerned in order to achieve the measure of common ground and compromise necessary if a peaceful settlement is to be found.

I am grateful to the noble Lord, Lord Weidenfeld, for his remarks about the long-term future and economic prosperity of the area. I agree that we must not lose our vision of the future. We are convinced that the first need is a political solution to the present conflict. We remain prepared to play our part, once a settlement is in place, in the reconstruction of the economies of the area where development has been so sadly held up by the failure to obtain peace.

Perhaps I may say (as the noble Lord, Lord Cledwyn, referred to it) that any discussion of the region would be incomplete without at least some reference to the tragic occurrences in the Lebanon. The Lebanon has suffered a tragic waste of human and material resources during almost 13 years of war. Its economy is under increasing strain; it has become the base for numerous terrorist groups and it is one of the world's major drug-producing centres.

As I have said to your Lordships at Question Time yesterday, we remain committed to the Lebanon's sovereignty, unity, independence and territorial integrity. External intervention from whatever quarter cannot solve her problems. Only by the Lebanese themselves working together to rebuild their country can a solution be found. A restoration of central government authority appears essential. The international community is not immune to the Lebanon's problems. As the noble Lord, Lord Cledwyn, reminded us, we have a constant and a grim reminder in the fate of foreign hostages. We are doing all we can to secure the release of British hostages within our firm policy of making no substantive concessions to terrorism. Concessions only feed more hostage-taking. We were delighted to hear of the release, unharmed, of the two UNRWA officials who were kidnapped last month and of Mr. Peter Coleridge of Oxfam.

We have an interest in peace for the Lebanon as much as for any other part of the Middle East. A settlement there should not have to wait on a resolution of the wider Arab-Israel dispute. Equally, it is difficult to envisage Lebanon not being present at an international conference. Meanwhile we continue to press Israel to complete her withdrawal from Southern Lebanon in accordance with Security Council Resolution 425.

I hope I have made clear the Government's concern at the suffering and the tragic waste of human lives and resources which result from the failure to bring about just and lasting settlements to the conflicts besetting this troubled region. I can assure your Lordships that we remain determined to play whatever part we can in helping to restore peace in the area.