asked the Secretary of State for Industry whether he is yet able to announce the results of his review of the possible introduction of private sector competition for the telephone equipment market.

Not yet. We have almost completed our extensive consultations with interested parties, and my right hon. Friend expects to make an announcement about our detailed proposals shortly.

I thank my hon. Friend for that answer, but does he agree that the fact that the Post Office supplies the lines and the basic installations that does not mean that private equipment should not be used at the business end of the telecommunications market? Will my hon. Friend confirm that the Government are keen that that should possibly include conventional hand sets as well as all the other ancillary equipment?

It is our intention to open up the supply of equipment as widely as possible, and we have to consider the question of hand sets along with everything else.

asked the Secretary of State for Industry if he will take powers to provide industrial grants to firms which can prove financial loss as a result of Her Majesty's Government's policy of sanctions towards Iran.

No, Sir.

Is the Secretary of State against the principle of compensation?

I understand that there is no precedent for giving compensation in such cases.

Did the Secretary of State see the article in The Daily Telegraph recently, which suggested that as a result of sanctions there might be an increase in our trade with Iran which might deal with this question altogether?

No, Sir.

asked the Secretary of State for Industry when he proposes to announce his decision regarding further investment of public money in Inmos.

asked the Secretary of State for Industry if he will make a statement on the future of the Inmos project.

asked the Secretary of State for Industry if he will make a statement on the future of the Inmos project.

I am conscious of public concern on this matter. It presents complex and difficult considerations. Proposals are being considered by the parties concerned, but they are commercially confidential and there is nothing I can say about them at present. I will make a full statement as soon as possible.

While, obviously, my right hon. Friend wishes to reach the right decision on this complex and important matter, does he not think that his apparent indecision is causing damage to Inmos, its employees and the British microelectronics industry as a whole? Will he speed up his statement, and when he makes it will it contain a definitive view on whether there is a viable future for such a small manufacturer as Inmos?

My hon. Friend will, surely, recognise that since the beginnings of commercial negotiations are in hand it would be wrong to abort them when they are being considered by the NEB.

While the ability of those involved with the Inmos project is undoubtedly exceptional, is it not an extraordinary commentary on Socialism in action that the previous Socialist Administration should have set up a share incentive scheme that will provide £6 million for each of the three main participants—two of whom are Americans—if the project is successful?

Without confirming or contradicting the figure used by my hon. Friend I can say that when the Conservative Party was in opposition I thought it rather admirable—and I still do—of the Ministers concerned to recognise the value and effectiveness of private entrepreneurial motives. Whatever one may think about the application in this case, the acceptance of the principle was not to be condemned.

Notwithstanding his strictures on confidentiality, does the Secretary of State concede, that it is vital that he clarifies this matter as soon as possible and gives a clear indication that this is the type of project to which he would give assistance through the National Enterprise Board?

Yes, Sir.

Does my right hon. Friend agree that since, apparently, nobody really knows whether Inmos will succeed or fail, it might be wiser to let the first investment in Colorado Springs mature to see whether it is successful before deciding on the second investment? That would give the Government time to receive an independent view by outside experts—not committed to the scheme one way or the other—before the second investment is considered and decided upon.

I am sure that the NEB will read my hon. Friend's comments and take them into account.

Does not the right hon. Gentleman, with his ministerial experience, understand by now that British private enterprise is not particularly adventurous when it comes to taking risks? Does he agree that if the State does not invest, in whole or in part, Inmos will not happen at all?

I accept neither proposition in its unqualified form.

Does my right hon. Friend accept that Government Members support his Department's determination to reduce investment in declining industry, but that they will expect the Department to look sympathetically at all investment in expanding industries, particularly when private industry has declined to take part?

I have told the House that there is a commercial interest in Inmos from the private sector which the NEB is now testing.

Is the Secretary of State aware that most people who are worried about this technology are alarmed at his vacillating weakness? Is it not time that he made a decision and insisted that the new production unit went to a development area?

The hon. Gentleman is asking me to make good a failure in arrangements made by the Government whom he supported when they were in office. Surely it would be imprudent for me to force taxpayers' money upon the NEB when commercial interests are expressing an interest in replacing some of the taxpayers' money?

I thank the right hon. Gentleman for his praise of my right hon. Friends and his acceptance of the principle that they enunciated. Does he agree that considerable praise is due to the capitalist countries, including Japan to the extent of over £500 million a year, which put Government money into such spheres?

On the contrary, it was my right hon. Friends who accepted the principle that ventures tend to go better if those who invest in them stand to gain from success. As for the comparison with Japan, the right hon. Gentleman is taking into account a lot of public sector support for public utilities, which also occurs in this country.

asked the Secretary of State for Industry what is his estimate of the effect of the withdrawal of regional assistance to industry from many parts of the North-West upon manufacturing output and investment in the North-West.

It is not practicable to estimate the detailed effect of changes in regional aids on manufacturing output and investment in the North-West. The changes in regional industrial policy announced last July were designed to concentrate assistance, where it was most needed.

Is the Minister aware that since the Government's announcement last July unemployment has shot up in the North-West, including areas where assistance has been withdrawn? How much further must unemployment rise before industrial assistance is restored to such areas?

Where there is a change in the relative position of one travel-to-work area compared with others, we shall be prepared to consider fresh evidence if the hon. Gentleman presents it to us.

Will the Minister consult his colleagues about the problems of dereliction, which still afflict parts of the North-West? Will he see whether it is possible to retain the 100 per cent. dereliction grant to assist such areas?

The Government are reviewing the position of derelict land clearance areas in places that are due to be downgraded from assisted area status in 1982. When the Government have completed that important review, we shall make an announcement accordingly.

Is the hon. Gentleman aware that the Government's policies are creating a gulf between the North and the South? Does he agree that we are experiencing a further industrial decline of the North while the South faces less difficult problems? Does he accept that that can be put right only by a return to the type of regional policies operated by the previous Government?

The right hon. Gentleman should know that the policies pursued by the previous Government led to assistance being spread so widely that it was not really effective. We are seeking to concentrate assistance on the areas where it is most needed—the special development areas, and places such as Liverpool, Glasgow and Newcastle which, since the 1930s, have suffered most and have not been successfully treated under past policies.

Is my hon. Friend aware that I accept the basic strategy behind the Government's regional aid policy, but does he agree that the removal of any form of regional status from many areas of the North-West means that they are not eligible for any aid from the EEC? Since the areas have to compete with many areas in the EEC that receive regional aid, can a formula be devised to ensure that places that do not have special development area status can apply for EEC funds?

It appears that all the available funds from the EEC will be fully utilised in the assisted areas. Our priority is to give help to the areas where it is most needed.

Is the Minister aware that the excuse that he gives for cutting regional assistance in the Northwest—that he wants to concentrate more help on development areas such as Merseyside—does not bear examination, because help to development areas is also being cut? Is he aware that industry on Merseyside is becoming dissillusioned with the Government because they are restricting applications for regional assistance, making regulations more difficult and putting a barrier on investment, even in development areas?

The hon. Gentleman will know that we are not extending assistance to projects that will go ahead anyway. We are opening up a difference of 7 per cent. between special development areas and development areas which concentrates the assistance on special development areas.

When can the North-East Lancashire development association expect an answer to the deputation that went to see the Minister's colleagues some time ago? Is he aware that the association has been awaiting an answer on the question of an extension of time between now and when assistance is removed? When my hon. Friend talks about concentration and gulfs, will he explain why the area represented by my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) will continue to receive assistance while Darwen will not, although it needs it just as much?

The representations made by the North-East Lancashire development association are being carefully considered. Of course we shall be prepared to consider my hon. and learned Friend's representations about Darwen if there is a change in Darwen's relative position compared with that of Lancaster.

asked the Secretary of State for Industry what action he is taking to assess the effect of the regional policies instituted in 1979.

Most of the changes that I announced on 17 July last year do not take full effect until 1 August this year. But the health of the economy of these regions does not depend primarily on the amount of regional assistance they receive ; it depends on the vitality and competitiveness of industry and commerce there and the degree of co-operation between managements and work forces.

Is the right hon. Gentleman aware of the rapidly deteriorating position of the Northern region? If he really believes what he has just said, he is living in cloud-cuckoo-land. Is the right hon. Gentleman further aware that the effect of the policies that he announced last year is the opposite of what was intended? Does he agree that there is a lack of business confidence? Has he read the newspaper report describing how one of the most successful North-east businessmen is contemplating building a factory in the United States? Will he issue a report on the effect so far of his statement?

The effect of different stages of regional policies cannot be judged until several years after they have been implemented. I remind the House that by August 1982—that is at the end of the transitional stage—88 per cent. of the working population of the Northern region will still be in an assisted area, and 81 per cent. in a special development area or development area.

Does my right hon. Friend consider that, even after the fining down operation that he has carried through, the regional policies of the Government are sufficiently sharp and discriminating to deal, in particular, with short-term intense difficulties, such as occur in parts of my constituency, where male unemployment is approaching 25 per cent. in certain places?

Yes, and I think that the House should recognise that by removing, over a period of three years, the competition with the special development areas and the large number of assisted areas that are being reduced in status, the likelihood of new expansion in those areas most needing expansion is sharply increased.

In view of the rapidly increasing unemployment rate, should not the right hon. Gentleman now consider whether he should totally revamp his regional policies and pump in even more and massive financial aid?

The hon. Gentleman speaks as though what he calls massively increased aid comes out of the air. It does not. It comes out of the pockets and the handbags of the taxpayer and causes damage, perhaps even in the assisted areas as well as everywhere else.

Cannot the Secretary of State understand that the combination of downgrading areas and the relaxation of industrial development certificate policy, coupled with enterprise zones and the fact that every forecast is now predicting a decline in manufacturing production and investment, will have the effect of undermining any regional policy? Is he not intending to do any specific monitoring of the effects of these policies?

I totally disagree with the hon. Gentleman's diagnosis. He speaks as if it were possible to shift extra resources into the regions without any damaging effects elsewhere.

asked the Secretary of State for Industry which of his measures to support small businesses has been most successful.

It takes a considerable period for the effects of changes in policy to show themselves. The restoration of incentives and the reduction of burdens are likely to prove most successful in improving the business climate, once interest rates have been reduced.

That is an amazing reply. Does the Minister agree that public expenditure cuts, the level of sterling and the high interest rates are proving even more devastating to small businesses than they are to large businesses? Since, far from providing one extra job in every small business, the level of liquidations and bankruptcies is much higher than ever, does it not show up the Government's oft-repeated statements of support for small businesses as a lot of empty rhetoric?

That is the real world.

I accept that many small business men are today mesmerised by the consequences of the high level of interest rates that they are having to pay on their borrowings, but that is a temporary phenomenon. When interest rates come down, small business men will find that, in a multitude of ways, we have changed the climate for their benefit.

Does my hon. Friend agree that the biggest boost to small businesses in the long term will be the curbing of inflation, and that therefore the Government must be steadfast in their policies in order to bring about a lasting fall in inflation?

My hon. Friend is right. Inflation is a destroyer of jobs, a destroyer of businesses and a destroyer of business growth. Labour Members who peddle the causes of inflation have little right to complain when we have to deal with the problem.

Before the last general election the hon. Gentleman and his colleagues appeared to be on very good terms with, and frequently to meet, organisations representing, or purporting to represent, small business men and the self-employed. Will the Minister tell the House what is the relationship today between those organisations and Ministers in the Department? Is it as cordial as it appeared to be before last May?

The hon. Gentleman is correct in saying that before the general election I maintained a constant stream of contacts with organisations representing small firms. It is also true that, since I have been in office as a junoir Minister with responsibility for small businesses, I have continued, on a basis that has been more open than it has ever been, regularly to receive all the organisations representative of small firms.

Is my hon. Friend aware that all the good that the Government are trying to do, and have been doing, for small businesses will be undone if interest rates carry on for too long at a very high level? Will he therefore press upon his right hon. Friend, working within the Cabinet, to get a phased reduction of interest rates so that we go down by two points not too far from now instead of waiting for a big reduction later on? That, at least, would help small businesses.

I know that my right hon. and learned Friend the Chancellor of the Exchequer is aware of the points that have been made by my hon. Friend, and I am sure that he will take them into account in his calculations about how soon he can make the move that has been asked for.

In spite of what the Under-Secretary said, it has not taken the Government's policies very long to produce massive increases in company liquidations. The hon. Gentleman said that we would have to wait for the results, but they are already apparent. Is it not clear that reductions in public expenditure and reductions in private sector investment programmes and capital outflows, together with high interest rates, are creating a situation in which it is becoming impossible for small business men to make investments in small businesses attractive? Is not that the death knell of small business opportunity?

On the contrary. Once interest rates come down, hon. Members will find that we have made a substantial number of changes, by reducing burdens and by reducing taxes, that will restore incentives to small business men. In addition, the hon. Gentleman should take account of company births as well as company deaths.

asked the Secretary of State for Industry to what extent the industrial policy of Her Majesty's Government is taking account of the effects on industry of the low real rate of return which industry is making, especially in the manufacturing sector.

Raising the profitability of British industry from the dangerously low levels of recent years is a major objective of our economic and industrial policy.

My hon. Friend will be aware that industry's real rate of return is now down to about 2 per cent., which is dangerously low. Will he and his colleagues do more to encourage British management to explain economic reality to its employees so that we are more likely to get realistic pay settlements in the coming pay round?

I confirm that my hon. Friend's figure is about right for the present time. He might note that the figure has been in the region of 3 per cent. since 1974. One of the features of post-war British industrial history is that too much has been taken out in wages, and another is that insufficient profitability and investment have been allowed for. It is a message that must be put across again and again because the present profitability levels are too low, and that will prejudice jobs and prosperity in the future.

Will the Minister confirm his Department's latest official forecast that manufacturing investment will fall by between 8 and 12 per cent. this year, with another fall by the same amount next year? Is not a reduction in manufacturing investment of 25 per cent. in two years a disastrous record for the Conservative Government? Will the Secretary of State go to the Cabinet meeting on 16 July to demand the expansion of the economy, and not its destruction?

It is true that, faced with worldwide recession, the level of investment is likely to be lower in the coming year, and the forecasts are also lower. But investment depends upon a large number of factors : first, on profitability, and, secondly, on having the funds available for that investment. It also depends on confidence in the future, and confidence in the future will come about when the battle that we have waged against inflation is successful.

Does my hon. Friend agree that the profitability of British industry is inhibited and reduced by two factors : on the one hand, as my hon. Friend said, by unrealistic wage settlements, and on the other by a very high level of interest rates? On the first the Government can exhort, and on the second they can act. When does my hon. Friend expect a steady and continuing reduction in interest rates?

This subject has already been raised, and it is rightly a matter of concern to the House. However, as the Prime Minister, the Chancellor of the Exchequer and my right hon. Friend have made clear on many occasions, a reduction in interest rates depends upon getting down both the public sector borrowing requirement and the level of public expenditure. When that is done, and when the money supply is clearly seen to be under control, interest rates can fall.

I take as an example the low-wage industry of textiles, where it is acknowledged that wage settlements do not play a part. As high interest rates and the high value of the pound are playing their part in that industry, and as the Government refuse to limit the penetration of imports and have cut down on regional assistance that might help, can the Minister say how the real rate of return is to be increased?

The right hon. Gentleman has moved some way from the point, but I do not think that his references to wage settlements in the textile industry are correct, because in certain sectors of that industry wage rates are good. In the textile industry, just as much as in any other, it is important that those settlements should be of moderate nature in the coming wage round. The right hon. Gentleman also alleged that the Government were doing nothing to deal with low-cost imports which affect the textile industry. He is as well aware as I am that Government support for the multi-fibre arrangement is strong. We have said that there will be another arrangement when the present one runs out. However, his party, and he personally, while supporting the multi-fibre arrangement, are apparently advocating a policy that would take us out of Europe and destroy that protection.

Is the hon. Gentleman really saying that where an industry, in part, has good wages, that means excessive wage settlements, because that was what he talked about earlier? Of course it does not. If he is saying that, can he tell us in what way the Government are preparing for a real rate of return—because that was the question—in this industry that will save it from extinction, or is he saying "I shall not deal with import penetration or increase the grants "?

The right hon. Gentleman's point was that there were low wage levels in the textile industry. I corrected him, because wage rates are high in certain sectors of that industry. As to the return on investment in the textile industry, there is at present a sufficient level of protection through the multi-fibre arrangement. That gives management and those who work in the industry the opportunity to put their house in order so that they can earn sufficient in the future.

asked the Secretary of State for Industry what discussions he has had about efforts to maintain a ship repairing industry on Mersey-side.

The Department is fully aware of the difficulties being experienced by the ship repair industry generally, and it was for this reason that last year we extended the home credit scheme to conversions. The market remains depressed, however, and the level of ship repair activity has to be a matter for the commercial judgment of the companies involved.

This is proving a fascinating Question Time. Is the Minister aware that two weeks ago one of his colleagues in the other place—the Minister of State, Ministry of Defence—promised a delegation of Merseyside Members that discussions would take place with the Secretary of State for Industry or his Department about the CBS ship repair yards on Merseyside, which are threatened with closure? Is he further aware that if those yards close the ship repairing skills that exist will be lost to the nation for ever and that there will be no ship repair yards at all on that coast?

I am aware of the conversations to which the hon. Gentleman referred. As he said, my noble Friend the Minister of State, Ministry of Defence, had conversations with CBS Engineering, but he had to tell it that, on the defence front, there were not many potential orders in the pipeline and that a commercial approach would have to be adopted.

Is the hon. Gentleman aware that there have been thousands of redundancies in the ship repair and other industries on Merseyside since the Government came into office, most of which have been directly attributable to their policies? Will he therefore, at the Cabinet meeting in 16 July, ask his right hon. Friend to support a change in economic and regional policies, or, alternately, would he like to admit that he is proud of the ever-lengthening dole queues on Merseyside?

I cannot accept the hon. Gentleman's premise. The decline in that business has been consistent over a number of years. No one enjoys it, and no one wants to see anything but a change in its fortunes. However, the world shipping industry faces great difficulties at the present time.

asked the Secretary of State for Industry what additional capital will be made available to the British Steel Corporation in the period 1981 to 1983 to continue the process of modernisation.

asked the Secretary of State for Industry when it is intended to set the cash limits of the British Steel Corporation for 1981–82.

The Government expect to announce the BSC's external finance limit for 1981–82 later this year at the same time as the limit for other nationalised industries. This would include provision for BSC's investment in fixed assets. It would be premature to take a view on the provision of funds for 1982–83. My right hon. Friend will, of course, be discussing these matters with the chairman-designate when the latter has had time to take stock.

Is the Minister aware that, even in the present state of world steel demand, a sustained and high level of investment is essential for a modern steel industry, and that that investment cannot be turned off like a tap because of ideological monetary dogma?

I note the hon. Gentleman's comment, but he will perhaps appreciate that Mr. MacGregor, the chairman-designate, has recently said that since the plans to produce a capacity of 15 million tonnes were made the problems of the BSC have been increasing rather than decreasing.

While in no way wishing to discourage sound capital investment projects in the BSC, may I ask whether my hon. Friend recognises that, in the allocation of taxpayers' money, priorities suggest that most people in the country would be well satisfied if the reduction in the BSC's external financing limits next year compared with this year was of the same order as this year compared with last year?

I appreciate the force of my hon. Friend's question. The fact is that the corporation has received more than £4 billion in the last five years, of which about £2½ billion have gone into capital investment. The British taxpayer cannot go on putting in large sums of money unless he sees some return on the massive investment that has already been made.

Does my hon. Friend accept that if the Government are to make any funds available to the BSC for capital projects those funds should be reserved strictly for capital projects, such as the furthering of continuous casting within the BSC?

I am certain that the BSC will take note of my hon. Friend's point. It is certainly one that I have argued in times past.

asked the Secretary of State for Industry what is his estimate of the total volume of steel which will be required by the United Kingdom during 1980 and in 1981.

This assessment of the market is a matter for the steel industry and not for my right hon. Friend.

If Mr. MacGregor concludes that the very low level of steel production currently envisaged is inadequate to meet the national requirement for steel, may we take it that he and we will be assured that without hesitation there will be approval and encouragement for increased activity?

Obviously, when the chairman-designate comes forward with his proposals we shall want to look at them very carefully. One wants to see the thrust moving in the way suggested by the hon. Gentleman. However, he must appreciate that until we have had the chance to assess the impact of the strike and the degree of lost markets it is difficult to take a firm view.

Does my hon. Friend accept that 15 million metric tonnes of liquid steel is not necessarily the ideal level, but that there may be distinct advantages in giving the British Steel Corporation a longer period than is envisaged at present, in order to reach the optimum level, which might be higher or lower?

My hon. Friend has followed these matters closely, and he makes a valid point about the uncertainties in the level of steel making. However, he will recognise that at a time of particular difficulty in the steel industries throughout the world, the problems currently facing the BSC are problems about which we shall need to take a firm view as and when the new chairman has had an opportunity to study these matters with care.

Has the Minister attempted to make an estimate of the decline in the quantity of coal that will be required by the steel industry? In that context, how many miners' jobs will disappear in the foreseeable future?

The right hon. Gentleman tempts me to go down avenues which you would not approve, Mr. Speaker. I shall give him my private opinion on matters concerning another Department when I meet him outside this Chamber.

asked the Secretary of State for Industry what steps he is taking to encourage the development of growth industries in the West Midlands ; and if he will make a statement.

The Government's policies are designed to encourage the development of competitive growth industries throughout the country.

Does not the Minister accept by now that that answer must seem pretty hollow to the 3,000 men who have been made redundant by Lucas, and to the tens of thousands more who will lose their jobs in the West Midlands this year? Will he consider the need to encourage the development of Government research centres in the West Midlands, of which the area is devoid? They act as useful forecasts for high technological growth.

I join the hon. Gentleman in regretting the loss of the jobs concerned, but, as he will recognise, jobs are available only when, as the result of co-operation of men and management, goods are produced at a price that the customer is prepared to pay. That is the essential problem that lies behind the unemployment to which he referred. I shall examine his suggestion of a research and development centre in the West Midlands.

Is my hon. Friend aware that some of my rougher friends in industry in the West Midlands ask why the Government cannot set an example by cutting down bureaucracy more quickly and controlling wage awards, instead of getting industry to do their dirty work for them?

As my hon. Friend knows, from observing newspaper reports and the complaints of the Opposition, the Government are doing their best to cut down on the Civil Service and bureaucracy.

The reply that the Under-Secretary gave to my hon. Friend the Member for Cannock (Mr. Roberts) is totally inadequate. There is a jobs crisis in the West Midlands, with ever-increasing redundancies and closures. What do the Government intend to do to help the West Midlands, and where is there any evidence of the galvanising of employers that the Government promised when they took office?

With regard to the specific problems of the West Midlands, there has been cause for complaint for a long time that industries are being enticed away from it by the large area of the country that has had assisted area status in the past. By concentrating assistance on the areas that need it we have taken away some of the pressure on the West Midlands having seduced from it projects that would otherwise have been developed in that area.

Is my hon. Friend aware that the policy on IDCs that was pursued by the previous Government has done immense damage to industry in the West Midlands? Does he agree that the rundown of the motor industry is at the root of a great deal of the troubles in the West Midlands, and that that rundown will be arrested only when there is wage restraint in the motor industry and a wholehearted co-operation between the work force and management, for the well being of industry?

My hon. and learned Friend is right to draw attention to the importance of the motor industry in that part of the country. He is also right to draw attention to the fact that wage settlements, and those who negotiate them, must take account of the ability of the industry to pay. If industries pay too much, men may lose their jobs as a direct result of extravagant wage claims forced upon employers.

Bank employees, please note.

As the bulk of the British Leyland closures will take place in the West Midlands, and as heavy redundancies, including those at Lucas, are already taking place throughout the component industries, will the Minister tell the House what the growth industries in the West Midlands are expected to be?

It is not for the Government to decide what should be the growth industries in the West Midlands. It is for the Government to create the climate in which men and management will seize the opportunities themselves. The substantial changes contained in two Budgets have already set in train the changes that are necessary to recreate the incentives for people to do that.

asked the Secretary of State for Industry what was the total value of the grants made to industry in the United Kingdom from the European regional fund in the most recent 12-month period for which figures are available.

In the 12 months ending 6 June 1980, grants of £96·5 million from the European regional development fund were approved for the United Kingdom in respect of industrial projects.

Does my hon. Friend agree that that figure provides further evidence of the benefits that accrue to this country because of our membership of the EEC, and particularly to those areas affected by the decline of the steel and shipbuilding industries? Is he satisfied that the United Kingdom is receiving its fair share of the 5 per cent. non-quota section of the European regional development fund?

Tell him what it is costing Britain.

I agree with my hon. Friend about the benefit to the United Kingdom of EEC membership. With regard to the European Steel and Coal Community, it is true that substantial help towards the problems caused by the retraction of the steel industry will flow from European funds. With regard to my hon. Friend's final point, the answer is that we are anxious to secure for Britain everything that is available from the EEC at present.

Following the Prime Minister's statement that our budget contributions to the EEC will be reduced in favour of increased regional assistance, will the Under-Secretary tell the House what form that increased regional assistance will take? Perhaps he will make a statement to the House in order to help hon. Members representing regional constituencies.

I am sure the House will recognise that the arrangements have been so newly made that it is not yet possible to make a detailed statement on the way in which Britain's drawings from Europe will be affected. I assure the hon. Gentleman that every possible means will be explored to obtain whatever is available.

Is my hon. Friend aware of the report of the Select Committee on European Legislation &c, in which it was pointed out that over the last two years less than 50 per cent. of the money available was programmed for the United Kingdom because so many schemes were not being put forward in time?

I am grateful to my hon. Friend for drawing attention to what has been happening. I shall ensure that in the future we shall learn a lesson from what he has said.

Will the hon. Gentleman explain how it is beneficial for Britain to pay phenomenal amounts to the EEC in order to receive back trivial sums, such as £96·5 million? Would it not be far better for the Government to give that sum, and a great deal, to British industry by not paying it to the EEC?

The hon. Gentleman will know that that is a matter that has exercised Governments of both parties. For the last five years Labour Members and their Government have talked about it. This Government have succeeded in making an agreement that changes the balance substantially in our favour.

asked the Secretary of State for Industry if he will direct the National Enterprise Board not to sell its 50 per cent. holding in Ferranti.

No. Sir.

Does not the Minister share the views of his leader, that Governments should not interfere in industry? If so, can he explain why he has interfered with a stable arrangement that provides the basis for a remarkable expansion of that company, which has increased its factory space in Scotland by 50 per cent. in six years? Is he prepared to contemplate this company being taken over by GEC, with which it is in all too successful competition?

The hon. Gentleman cannot at one and the same time advocate interference and non-interference. The NEB has said that it intends to sell its share in Ferranti. It is required by the Government's draft guidelines to do so, having regard to the interests of the taxpayer and the company.

I welcome my hon. Friend's reaffirmation of the commitment of the NEB and the Government to dispose of industrial assets. However, will he accept that there is concern at the growing number of disposals that are not offered for subscription by individual members of the public, thereby not encouraging the widest share ownership? Will my hon. Friend give an assurance that, even though Ferranti is being disposed of to one company, he will pay due regard to the need to encourage the widest possible share ownership of public assets, and not encourage private deals between these holdings and one or two select merchant banks or large industrial companies?

The way in which the 50 per cent. shareholding in Ferranti is disposed of is still a matter for the NEB. I am not aware of any bids yet forthcoming. We have always said that there is merit in wider share ownership, including by the employees of companies, but we have to reconcile that with the need to obtain the best return for the taxpayer.

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

In passing, Mr. Speaker, I thank you for your indulgence in selecting amendment No. 3 in place of admendment No. 2.

In moving this clause we give the Government an opportunity to enlighten the House and employees of the Health Service about their broad approach to personnel problems and the human factor in the reorganisation. I stress the phrase "broad approach", because on the Labour Benches we accept that protection of staff and redundancy arrangements are essentially for negotiation through the Whitley machinery. Nevertheless, when the Health Service was last reorganised the House legislated to provide a staff commission to protect the staff. That staff commission clause was contained in the National Health Services Reorganisation Act 1973. We are not breaking new ground. That is why we have to raise the matter on the Floor of the House.

The Minister will remember that we raised the matter in Committee, and were not satisfied with reactions to the clause. We did not vote in Committee, because we wanted to leave maximum freedom for negotiation on the Whitley machinery. However, we gave notice that we should return to the matter on Report. That is why we have retabled new clause 9 in exactly the same terms as in Committee. The new clause almost exactly mirrors the 1973 clause. There can therefore be no major objection in principle to its acceptance by the Government.

One of the main reasons why this reorganisation in the Health Service is being carried out is to improve the morale of employees, which was badly shattered as the result of the reorganisation carried out by a Conservative Government in 1973. The human factor is therefore very important. Once the reorganisation has been carried through, we must ensure that we do not return to the situation that prevailed between 1973 and 1980.

The signs are that the Government are mishandling the industrial relations side of the reorganisation even at this early stage. They told us in Committee that they did not want to disclose the details of their approach to these problems in Committee because they wanted to be precise and make precise proposals to the staff. To some extent we accepted that. We appreciated that the Government could indicate only a broad approach, and that certain problems exist Having consulted the staff side of the Whitley council, we find that its criticism of the Minister is that he is being vague with it. The hon. Gentleman was vague with us in Committee and is being vague with the staff through the Whitley machinery. Do the Government know what they are about in carrying out the reorganisation? If so, this is an opportunity for them to tell us.

It is clear beyond peradventure that the staff side wants a staff commission to look after the interests of its members. I do not suppose that it is particularly concerned that it should be a legal staff commission, as opposed to an administrative one, but it feels that it needs a staff commission to look after the interests of its members in the coming reorganisation. The staff side has had much experience of such machinery.

The unions worked with staff commissions when the GLC was set up in the early 1960s ; when the local government reorganisation was carried out by the right hon. Member for Worcester (Mr. Walker), who is now Minister of Agriculture, Fisheries and Food ; and on the new towns reorganisation and the Health Service reorganisation in 1973, as I have already said. It feels that the management and staff members of the Whitley council, committed to the guidelines issued by the council—which would have caused the trouble in the first place and upon which a staff commission would have to adjudicate—would not be the ideal body to carry out and supervise the reorganisation. A staff commission would have a chance for a second look at the situation, uncluttered by any preconceptions arising from the negotiation.

In addition, the staff representatives are not keen on one of the hon. Gentleman's bright ideas—local, regional, area and even lower-level negotiations on staff redundancy.

In Committee the Government rejected a staff commission. I hope that they have reconsidered the matter and will now accept the idea. The opportunity for legislation in this House is disappearing. If the Government want to give the staff side legal guarantees of security during the reorganisation, they have an opportunity this afternoon, which will not arise again. The idea of a staff commission cannot be rejected in principle or drafting detail. As I said, the Conservative Party accepted a commission in 1973, and we have put forward that same clause for adoption today. It is not time for Government undertakings. If a staff commission clause is introduced by the Government in another place, we shall want to debate it when the Bill returns to this House.

If the Government embark on a reorganisation of the Health Service with- out a staff commission, they will not carry the staff with them, and will prejudice the final outcome of the reoganisation. The idea that there should be a sub-committee of the Whitley council to negotiate the reorganisation is entirely different. That would be a different piece of machinery for an entirely different purpose, and does not meet the desires of the staff side.

Two other points arise. There are groups of functionally organised disciplines whose members stand to be decimated as a result of reorganisation, such as some nurse managers, works officers, catering officers, laundry officers and many others. These people have had a system of functional report up to area level, and that is threatened with extinction, together with a number of professional jobs.

I know that the functional organisation is a matter of controversy within the Health Service. However, the individuals concerned have been sent there by the Government to do jobs in those places. They have done those jobs conscientiously, in accordance with their best lights. In some cases they have made considerable improvements. It will be through no fault of theirs if those jobs are done away with. We have had no indication from the Government so far that they even recognise that there is a problem for such groups. I hope that the Government will say something about their future this afternoon.

Finally, there is a major change in the mood of the staff in terms of the reoganisation and its timing, of which the Government should be aware. I believe that the permanent secretary to the Ministry has mentioned reorganisation taking place over four years. I have said that it might take two years. The National and Local Government Officers Association would like the reorganisation carried out as rapidly as possible, and based on an appointed day.

That is a mood that we must take into account in approaching the reorganisation. The view is simple. It is based on the fact that if reorganisation is piecemeal across the country and spread over a long period, those who are reorganised first will not be aware of all the jobs that are coming up in the NHS for which they might apply when they lose their jobs and are forced to decide about their future employment.

The staff would like the reorganisation to be confined to as short a time as possible, so that if they are then declared redundant they will be aware of the wide range of employment available throughout the NHS when they have to take a decision about moving elsewhere.

A staff commission will be necessary to ensure that the staff know that there is a powerful independent body to look after their interests. The Government will be wrong if they continue to resist the plea of the staff side of the Whitley machinery for a staff commission. We shall be pleased to hear what they have to say about it.

I agree with much of what the right hon. Member for Lewisham, East (Mr. Moyle) said about the need to deal as expeditiously and fairly as possible with the feelings of the staff about reorganisation, but I part company with him on his preferred method of doing that.

There is no doubt that another reorganisation, following quite speedily on the previous one, will inevitably create another area of uncertainty for the staff concerned, some of whom are being reorganised for the second or third time in their professional lives. It is necessary that the Government should take seriously the uncertainty that is bound to be created by such a situation.

I also agree with the right hon. Member for Lewisham, East that the sooner that the reorganisation is completed the better, so that those who may have to change jobs may know as quickly as possible where their new responsibilities will lie. I am sure that there is no argument on either side of the House about those general principles.

However, I doubt whether setting up a new body is the right way to go about it. Safeguarding the interests of the staff on reorganisation is primarily a matter for the established bodies. It can be argued that the Whitley councils have not been entirely satisfactory to some in their method of operation, but they represent an established, well-known procedure which has existed for many years. It would be much more satisfactory to use that established machinery rather than to set up a new body which would inevitably lack experience of the problems involved and would lead to delay rather than to speedy decisions for the staff concerned.

If one considers the propositions in the new clause and the detailed duties of the commission one sees that it would be a well-meaning, busybody advisory committee, which would be much more likely to hold up the process of reorganisation and getting people into new jobs. I hope that my hon. Friend the Minister for Health will be able to assure the House that decisions will be taken as speedily as possible, in the interests of the staff concerned, but that he will resist the invitation to set up a new body which would not be in the interests of the security of employment of the staff.

The Government would be well advised to accept the new clause. There are strong feelings among the staff on a variety of issues, one of which is the proposed reorganisation. It was a traumatic experience for them in 1974 when they were put through a reorganisation imposed by the previous Conservative Government, which led to many difficulties and much sorting out. Those of us in the succeeding Labour Government had to spend much time getting the position settled again.

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To embark on reorganisation again, as both sides of the House recognise that we need to do, will impose further strains on the different sections of the staff. We know the difficulties in industrial relations and the need for staff to be able to meet round the table in order to avoid some of the difficulties that have beset the NHS over the years.

There is a great deal of ill feeling, concern, and even anger about nurses' remuneration. I am not suggesting that a staff commission should replace the Whitley council negotiations, but the Secretary of State has done a great disservice to the nurses, including the Royal College of Nursing and the trade unions, by seeking to suggest that the 14 per cent. cash limit imposed by the Prime Minister and the Secretary of State on nurses puts them into a comparable position with the medical profession.

The Secretary of State grossed up some figures and said that pay awards since April 1978 to both doctors and nurses totalled about 65 per cent. Anyone who makes inquiries into the matter will discover that that is not so and that the comparisons are grossly misleading. I have done my own arithmetic, taking April 1978 as the base line for both doctors and nurses. Nurses received a 9 per cent. increase in that April, followed by a Clegg award of 20 per cent., the adjustment of hours, worth roughly 6·7 per cent., followed by the 14 per cent., on offer now. That takes us to 58·5 per cent. The grossed-up figure for doctors is 65 per cent. There is a sharp difference.

I know that when the differences were put to the DHSS it was claimed that like was not being compared with like because the total salary bill for nurses and doctors was involved. There are more nurses employed now than there were two years ago and it may be that the total payment for nurses has gone up by 65 per cent. However, I know that there has also been a substantial increase in the number of doctors and dentists. Therefore, the Government are not comparing like with like.

In the Secretary of State's attempts to deal with the problems that have been raised by the Royal College of Nursing and will be raised by the nurses' unions, he does not help his cause—I say this with some experience—to try to fool or mislead the organisations on such matters.

I hope that the establishment of a new staff commission would lead to better relations between one section of the staff and others so that we should not have the present sort of conflict. I hope that the Secretary of State or the Minister for Health will come clean about the comparison that the Government have sought to make between the doctors—I accept that an 11·7 per cent. rise was a commitment undertaken by both sides of the House and that the rate of inflation took it up to over 30 per cent.—and the nurses, whom, we are told, have to live within a 14 per cent. increase. There is no more important group than the nurses in the National Health Service. It is important that there should be co-operation between nurses and doctors and others who work within the Health Service. I hope that Ministers will come clean so that the public and the nurses are not mislead—

My right hon. Friend will perhaps recollect what the Minister for Health and the Secretary of State had to say about the previous Government's treatment of the nurses. He will recall the criticisms that were made and the stand that they took at the time. That can be contrasted with what is happening at present.

It is true, looking back over the last 12 years, that the biggest improvements in nurses' pay have occurred under Labour Governments and not under Conservative Governments. I did not wish to make a point of that, although I agree with my right hon. Friend. If the Secretary of State and his ministerial colleagues think that they will be able to force the nurses into a totally different position from that of the medical and dental profession, they have another think coming.

I have seen anger among the nurses. Nurses have been angry with previous Governments, including the Government in which I was Secretary of State, but I do not think that there has been a time when they have felt more angry than they are at present. Their anger is increased when they see the Secretary of State deliberately distorting the figures and making comparisons that the nurses know do not stand up to examination.

I wish to commend strongly the new clause moved by my right hon. Friend the Member for Lewisham, East (Mr. Moyle). It was interesting to hear the contribution of the hon. Member for Somerset, North (Mr. Dean). It is a typical instance of how hon. Members on both sides of the House who are knowledgeable about these matters can have the same objective but differ about the means of achieving it.

I hope that the Minister will be more forthcoming than he proved to be during a similar debate in Standing Committee. The concern is already apparent. One has only to go back to 1973, to the period before the 1974 Act and its appointed day, to recall how morale in the Health Service was shattered from top to bottom because no one knew what was happening or when it would happen. It was perhaps no coincidence that the 1974 Act came into effect on 1 April, All Fools' Day. The Act has certainly proved an all fools' Act. The Opposition have supported the Government in trying to rectify some of its worst provisions.

The problem of morale in the National Health Service extends back for an even longer period. One of the contributory factors has been uncertainty about the future. I remind the Minister of answers that he has given me about what is to happen in my own health authority. The area medical officer has resigned. It is not known when or where changes will take place. Throughout the country, 90 area health authorities are to be replaced by between 150 and 190 district authorities. How that is supposed to save money baffles me.

The uncertainty about the number of people in posts between now and the time when the reorganisation comes into effect will mean a further lowering of morale in the National Health Service. It has been suggested that the problems can be solved through some medium of the Whitley council. Lord McArthy's report on revision of the Whitley councils was far-reaching. With due respect to Administrations of both parties, little has happened. My view is that the Whitley council machinery is not the best for the Health Service. Only 10 years after the Act was passed in 1948, doctors had contracted out entirely from the Whitley council machinery and had their own review body.

When the future of jobs, the transfer of jobs and the protection of employees are involved, the new clause could solve the problems that lie ahead in the next two years. The comments made by my right hon. Friend are relevant to the situation in which the nurses find themselves. I recall the fight in which area nursing officers and the nurses in the district management teams were involved. There seemed to be one scale of salaries for finance officers and other administrators and another scale for medical officers. In the reorganisation that took place in 1973 and 1974, the nursing officer was always bottom of the list That is what lies behind the new clause put forward by the Opposition. It is an attempt to get some sense into the change-over.

The big problem faced by nurses in the past two or three decades is that they catch up only temporarily and, two or three years later, find their conditions of service eroded in comparison with professions supplementary to medicine and especially the medical profession. Nurses are not especially political. They are not particularly attached to party labels. In my experience, nurses have not been especially anxious to see a Labour Government. It was with some delight that I noted that the journal of the Royal College of Nursing paid tribute to the fact that the only time nurses have received anything was while a Labour Government were in power. The Halsbury award, made at the time that Mrs Barbara Castle was Secretary of State, was a breakthrough. By 1978, however, that award had been eroded. The nurses are to have a ballot—

Order. I am sorry to interrupt the hon. Gentleman. His right hon. Friend referred to nurses' pay, but this is not a debate on nurses' pay. The hon. Gentleman should stick to the new clause. He can allude to that matter, but not debate it.

I am endeavouring to relate my remarks to the new clause. This provision might be relevant if there were to be negotiating machinery for the transfer, and the safeguarding of conditions, of employees, especially nurses. I accept your ruling, Mr. Deputy Speaker. The matter is very much on the periphery of the new clause and I shall not pursue it much further. The ballot taking place in the nursing profession over its conditions of service and whether for the first time it should take industrial action is a further argument that I would put to the Government. If the nurses could see a little daylight, at least on the issue of the transfer of engagements, this might help the Department and Ministers in defusing the future situation.

We face a situation of blight. Hon. Members know the situation that exists when it is discovered that a new trunk road is to go through one's constituency. The whole area immediately becomes subject to blight. I submit to the Government that the new clause seeks to prevent a serious blight over a whole range of posts that are now at risk.

Apparently the accepted proposal, although the Bill only provides permission to do it, without taking it any further, is to transfer responsibility from 90 area health authorities to between 150 and 190 district authorities, with all the officers concerned—administration, paramedicals, medicals, the nursing service and even the architects and surveyors of the present regional health authorities. All the 1 million people employed by the Health Service are likely to be affected.

My right hon. Friend's attempt to rescue the Government from their dilemma, therefore, should be commended and accepted.

This debate is very important to the staff of the National Health Service, and I hope that the Minister will make a clear statement about how he intends to deal with the staff in the proposed reorganisation. His statements so far have been confusing and contradictory. On many occasions the staff have not understood precisely what the Minister has been saying to them, not through any fault of their own but because the statements have been to say the least unclear.

I wish to draw attention to some developments today to which the right hon. Gentleman should have some regard when he replies to this debate. I refer to the decision of the NALGO conference today when discussing the reorganisation of the National Health Service. It has decided to give its executive authority to take industrial action about the reorganisation of the NHS and specifically to black work on the reorganisation envisaged in the Bill because of the way in which the Government are dealing with the pay dispute with the administrative and clerical staff in the Health Service. There is a direct link therefore, between the way in which the Government deal with the pay negotiations of the administrative and clerical staff and the way in which they respond to this new clause. I hope that the Government will have serious regard to that when deciding whether to establish a staff commission.

A staff commission, amongst other things, is really a question of confidence. Government supporters often talk at great length in economic debates about the importance of confidence for the good of the economy. They tell us of the need for the City of London to have confidence in the future. The staff of the National Health Service need to have confidence in the future as well, and I should have thought that the establishment of a staff commission would give the staff in the NHS that confidence. The absence of such a commission may result in their believing that the Government have it in for them or intend to act in a way which is against the interests of the more than 1 million people who work in the Service.

I draw attention to the fantastic disparity between the policy which the DHSS is following and that being followed by the Department of the Environment. The Department of the Environment is establishing a staff commission to deal with the 5,000 people who are being transferred from the GLC to the London boroughs as a consequence of the sale of council estates by the GLC to the London boroughs. A staff commission is to be appointed to deal with them. An order has been laid before this House and approved to deal with that question for 5,000 people. Yet here we have the Secretary of State saying that it is good enough for 5,000 people but that it is not good enough for 1 million people. That is convoluted logic which I do not understand. Many people in the National Health Service will be deeply dismayed by the Government's failure so far to give clear assurances about this matter.

My right hon. Friend the Member for Lewisham, East (Mr. Moyle) said that the Whitley council staff side wanted a staff commission. It was my hope that the Minister would be in a position to respond positively to that statement and to establish a commission along the lines agreed with the staff side of the Whitley council or those set out in new clause 9. If that does not take place, we may be in for a period of serious mistrust and distrust on the part of NHS staff about the Government's intentions.

I know about discussions going on at the moment in a number of trade unions which have members working in the National Health Service about the way that they propose to deal with some of the present industrial disputes with the Government in the Health Service. I refer especially to the administrative and clerical staff dispute, the nurses' pay dispute and the trouble with those in the professions supplementary to medicine. There are those in those unions arguing that one of the ways of persuading the Government to change their minds about their decision to freeze the nurses' pay offer at 14 per cent. is to say that, if the Government want this reorganisation so badly, one of the actions that might be taken by the unions to pursue their claims is to black the reorganisation work which will be carried out at area and regional level and also to black work in the NHS dealing with the area and strategic plans, the closures of hospitals and—another clause in this Bill—the compulsory cash limit.

The Minister ought to have regard to those views, which are being discussed at the moment, because one way of dealing with these problems would be to establish a staff commission in this area. At the very least, that would give the administrative and clerical staff especially the feeling that the Minister was not trying to bludgeon through a proposal which was against their interests.

I come back to an argument which I put forward to the Minister in Committee. If we do not have a staff commission or something very like it to deal with reorganisation and the change in engagements which will flow automatically from the establishment of a staff commission, the Secretary of State will have a great deal more work to do.

One of the interesting features of new clause 9 is its fine print. I remind the House, for example, of subsection (3)(a) :

'The Secretary of State may … give directions to each Commission with respect to its procedure" ;

and there is a string of proposals set out in the clause designed to do one thing and one thing only—to establish machinery whereby people can take disputes about jobs, gradings and other matters and resolve them in a way which does not involve their political masters either at the level of the health authority or at that of the Secretary of State.

I am sure that my right hon. Friends the Members for Norwich, North (Mr. Ennals) and Lewisham, East will accept the honesty and logic of doing that. There is nothing worse than political intervention in what are essentially individual cases. I should have expected the Minister to respond to that kind of approach, because it is eminently sensible from his own point of view.

Reference has been made to the importance of industrial relations in the National Health Service. In my view, if the Government do not accept something very like new clause 9, they will be accused, correctly, of deliberately worsening industrial relations in the NHS. I am sure that that is a brickbat that they will wish to avoid. Therefore, in their own interest it would be advisable if they were to accept something on the lines of new clause 9 before we move any further since we shall have an extremely argumentative debate later this evening about the impact of certain measures that the Government are about to take in the NHS.

No doubt reference will be made later—at greater length than in this debate—to nurses' pay and the pay of administrative and clerical staffs. The Government will have to tell us what they propose to do about that in relation to the Bill, and if they do not introduce something like a staff commission to deal with the problems of the NHS they will be in for a much rougher ride than is necessary.

I emphatically support new clause 9 and the setting up of a staff commission. May I say what a pleasure it is to see a Welsh Minister on the Government Front Bench? We did not have the pleasure of the presence of a Welsh Minister in Committee when we were discussing the reorganisation of the NHS in England and Wales. I am glad that something has been done to rectify that.

There is a general acceptance of the need for a change aimed at the simplification of structure and management arrangements in the NHS. The general principle involves the removal of a tier of management and the need to strengthen local management. Our main concern is how this change is to be managed and whether the likely extent of disruption entailed in such change is fully understood. It is beginning to be fully understood by the staff who will be affected by the changes.

Effective measures must be planned in order to minimise any harmful effects on the services, the patients and the morale of staff. Much Government thinking appears to be centred on the elimination of waste and general inefficiency in management. Such aims are admirable, but they are undoubtedly limited in scope and distribution and they must not be achieved at the staff's expense.

In planning the integration of services, much has been achieved over the past five years. However, I immediately stress my doubts about the Government's current proposals and thinking because I fear that they may put into reverse what should be a continuing process. It has to be emphasised that the turbulence that followed the reorganisation of 1974 contributed to the demands for more change. Those demands led directly to the present proposals.

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I believe that the Government wish to avoid wholesale upheaval, but disruption will be inevitable since so much that is proposed is deep and radical. The proposals apply not only to individual career prospects but, more seriously, to the service as a whole. For a considerable period management effort will be diverted by the dismantling of existing structures and the designing of new ones. Permeating all this will be uncertainty about the future which could undermine the resolve of those who have to tackle the more difficult problems.

At the individual level changes will be all the more disruptive for staff because they will come so soon after the 1974 reorganisation and will, in so many cases, affect those most affected by the changes of 1974. For some there will be demotion. That is sometimes called lateral promotion. The changes will mean blocked career progression and foreshortened career structures. Sadly, it will be inevitable that with such changes management effort will be both diverted and diluted. It may not always be a case of patients first.

An Act of Parliament does not achieve change in itself ; it merely formalises the beginning of a process that will take a number of years during which pressure for further change will build up, just as it built up in 1975 and 1976. I fear that that pressure will build up, if we are not careful, even before these changes are fully implemented.

The hon. Member for Carmarthen (Dr. Thomas) will, of course, be aware that we do not anticipate a major upheaval in Wales. We have stressed that at paragraph 47 of "Patients First". We have also stressed the need for stability. The hon. Gentleman will also know that we have said that consultations will pay particular attention to staff interests.

I thank the Minister for his remarks, but, as he has reminded me in answers to parliamentary questions, he has received more than 500 representations from people at all levels in Wales about health services. That is a fair amount of representation. The people of Wales will not be content to see a reorganisation in England while being told that everything in the garden is lovely in Wales. It would be a good thing if we in Wales could discuss changes in the Health Service here in Parliament and not through extra-parliamentary means such as the leading columns of the Western Mail.

I fully support new clause 9, which advocates the setting up of a staff commission. There is much discontent and misgiving in Wales and it is sad to reflect that the Minister may not be aware of it.

New clause 9 does not include provision for a staff commission for Scotland. That is not to say for a moment that we are not concerned about the implications of the provisions of the Bill for staff problems in that country. My hon. Friend the Member for Wood Green (Mr. Race) referred to the decisions that have been taken by NALGO at its conference in Eastbourne today.

As the House knows, I am sponsored by the Confederaton of Health Service Employees which will no doubt be taking decisions on these precise matters at its conference next week. There is a good deal of concern about the implications of the Bill for staff employment. We shall no doubt have the chance to discuss, in the early hours of tomorrow morning, the Secretary of State for Scotland's paper "Structure and Management of the NHS in Scotland". Page 11, when dealing with implications for staff says :

"The Secretary of State recognises that although his proposals do not involve any major reorganisation of the service "—

though that is challenged—

"they have considerable and wide-ranging implications for many members of staff. The Government intend to be as fair as possible to all staff involved in the changes ; and at an appropriate time will be discussing with staff interests arrangements for the filling of posts and for the protection of the interests of those adversely affected."

That is all and I presume that that means, by implication, that there will be the fullest consideration within the Whitley council procedure and with all the relevant trade unions. I guess that that will be the gist of the Minister's answer. But the Whitley council machinery is not adequate. The Minister and the Departments recognise that the Whitley council machinery leaves a lot to be desired. That is one of the reasons why we are putting forward the proposition in the new clause.

Though I have racked my brains, I find it difficult to see any merit in the Bill which is designed to do two things. It aims, first, to transfer resources from the public to the private sector in order to make people understand that their health depends on the depth of their pocket rather than on the willingness of the taxpayer to foot the bill for our health services. That is the main purpose of the Bill.

It is significant that the White Paper produced by the Scottish Office lacks any public relations element compared with the White Paper produced by the English Department. At least the English Ministers try to kid the people that patients come first. The Scottish Office is honest and more brutal. It never mentions patients once in its document. The English Department is disarmingly deceptive. It tries to convince the people that it is concerned about patients—but not about nurses. I shall say something brutal to the Minister about that later.

Whatever the merits of the Bill, there is no doubt that, since we are dealing with the second major upheaval in the National Health Service initiated by a Tory Government, whose record is appalling, there will be a deepening crisis of confidence among the staff and users of the Health Service. When the full implications of the Bill are realised there will be a serious deterioration in the morale of employees—and there are 1 million of them. The Health Service is one of our major industries.

The Bill, with the Government's overall policy to cut public expenditure on every other social service including education and housing, will lead to increasing bitterness among employees. In a relatively modest way we are seeking to remedy the situation. We are trying to decrease the bitterness and to give workers the knowledge that they will participate in any discussions that affect their jobs, their promotion prospects and the Service. The Government would be well advised not to reject the new clause out of hand. They should not argue that the Whitley machinery is adequate to deal with the problems.

If the Government cannot accept the new clause they should at least accept the principle behind it and emphasise the imperative need to negotiate with and consult the staff at all levels. If a worker in the Health Service, or anywhere else, loses his job he will find it almost impossible to get another. No alternative employment is available in many parts of the country, not least in Scotland. I hope that the Minister will not reject the new clause out of hand without outlining in detail how he sees the solution to the problems that will occur during the transitional period.

I am not as worried today as I was in Committee ; because we appear to be getting one or two approving nods from the Government Front Bench. However, I am worried because in Committee the Minister threw the document by the Royal Commission on the National Health Service into the Thames and said that he was not prepared to accept its contents. He said that he and the Government would make up their own minds about what was to happen to the National Health Service. I have seen nods of approval. I hope that that is an encouraging sign.

I sincerely believe that my right hon. and hon. Friends who have contributed to the debate are correct. The Conservative Government made a hell of a mess of the last reorganisation of the Health Service. Some of us were involved in that in one way or another. The lowering of the state of morale which occurred at that time is being repeated. Each individual fears what will happen within the Health Service. The message is loud and clear in my area. People are frightened to death about what will happen this time.

A commission such as that suggested in the new clause would give each individual in the Health Service the opportunity and right to know about and to contribute to the shape of the Service. There is a feeling of bitterness. People remember what happened last time. They are all jockeying for positions in preparation for what is to happen. Certain individuals will be hit, as they were on the last occasion. Jobs will be given to people whose faces fit. I believe that the suggestion in the amendment is correct. I hope that, in the interests of everybody who works in the National Health Service, the Government will consider seriously what has been said.

I have listened with great care to what the Opposition have said because this is an important matter. The right hon. Member for Lewisham, East (Mr. Moyle) put the case for a staff commission reasonably and clearly. Naturally, we are as concerned as any Opposition Member that we should get the matter right this time. Large numbers of people are involved. We are seeking a procedure which will be sufficiently flexible to enable individuals to be considered and properly fitted in because their careers are at stake.

The hon. Member for Fife, Central (Mr. Hamilton) said that there was need for consultation at all levels. I took that point strongly. We shall not be able to carry the restructuring through without the good will of the staff. I believe that we have that good will and that the majority are as fed up as we are with the present structure and want to see a change. At the same time, they are anxious and insecure about how the restructuring will affect their careers.

The Opposition are on the wrong track in going for a national staff commission. I believe that the staff side of the Whitley council was wrong when it at first took this line.

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I was interested in the remarks of the right hon. Member for Lewisham, East to the effect that the staff side was still in favour of a staff commission, because I had hoped that it was coming to the same conclusion that we had reached—that this time something slightly different would be more to its advantage. There was a national staff commission in 1974 and it was very widely criticised, largely because of the lack of flexibility in regard to individual appointments. As I have already indicated, we are very concerned that that sort of problem should not arise again.

There is a problem over timing. We should all recognise that. I was very sorry when the hon. Member for Wood Green (Mr. Race) started to convey what sounded suspiciously like threatening remarks from some of the unions that, if necessary, they would slow down the whole process if they could not get then-way. That would be a most unkind and inhuman action to take.

There is a problem over timing. If we go very fast, it will be difficult for individual members to be looked after properly. If we go very slowly—allowing time for more individual variation—we shall leave large numbers of people in a state of uncertainty for a long time. So we have to strike a balance, if we can, that is fair between those alternatives.

We hope that our timetable is a reasonable one. In July, we shall publish our paper, the regions will report back to us by the end of February next year, and then we shall be able to start implementing the changes.

What the Minister has said on timetables is helpful, but the crucial issue with regard to the staff is how long the reorganisation will take, beginning with next February. Will it be a year or two years, three years, or even four years, as some people in the Department have said?

I do not think that we can answer that question clearly until we have seen the advice that comes back from the various regions and until we have seen the exact procedure that the staff side wants to follow.