I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Appropriation Act 1983

2. Finance Act 1983

3. Miscellaneous Financial Provisions Act 1983

4. Diseases of Fish Act 1983

5. Coroners' Juries Act 1983

6. Marriage Act 1983

7. Solvent Abuse (Scotland) Act 1983

8. Mobile Homes Act 1983

9. Litter Act 1983

10. Social Security and Housing Benefits Act 1983

11. Importation of Milk Act 1983

12. Dentists Act 1983

13. Mental Health (Amendment) (Scotland) Act 1983

14. Education (Fees and Awards) Act 1983

15. Health and Social Services and Social Security Adjudications Act 1983

16. Copyright (Amendment) Act 1983

17. Road Traffic (Driving Licences) Act 1983

18. National Audit Act 1983

19. County Courts (Penalties for Contempt) Act 1983

20. Agricultural Holdings (Amendment) (Scotland) Act 1983

21. National Heritage Act 1983

22. Parkeston Quay Act 1983

I now propose to suspend the sitting of the House to enable me to shake hon. Members by the hand. We shall then return to normal business.

I call Mr. Alan Haselhurst, and I take my leave of the House. Once again, thank you.

My pleasure in having the opportunity to raise this subject on the Adjourment debate is tinged with regret that it still remains unresolved despite its having been aired in several ways during this Parliament. The possibility of electrifying the railway line between London and Cambridge has been chugging round for a long time between the British Railways Board and the Department of Transport. My hon. Friend the Minister will say today that he is still awaiting a final submission from British Rail before a decision can be made. Therefore, he may imply that I am jumping the gun, being impatient, or that I am pressing him when he does not have a specific proposal before him. However, I hope that he will understand the wider context in which I raise the matter.

My first consideration is for the luckless passengers, many of whom I have the honour to represent. In talking of the electrification of the railway line to Cambridge, obviously one is also concerned with the citizens of Cambridge and the catchment area for the railway station in Cambridge. It is a matter of concern to my hon. Friend the Member for Cambridge (Mr. Rhodes James), who greatly regrets that other engagements in his constituency prevent him from being here to support me this morning, but my remarks are in no sense prejudicial to the interests of his constituents.

I find it almost incredible that there could be so much delay in deciding on a relatively low cost project. I hope that the Government will take pity on the passengers using the line, a great proportion of whom are my constituents.

It is important to make clear that there are two railway lines to Cambridge and that any question of electrification has to embrace both of them. There is a route from King's Cross to Cambridge which is already electrified as far as Royston, leaving a relatively small gap between Royston and Cambridge. There is also the line from Liverpool Street to Cambridge, known as the Lea valley line, which is electrified as far north as Bishop's Stortford. Then the gap is slightly longer between Bishop's Stortford and Cambridge than it is between Royston and Cambridge.

My principal interest is obviously in the Lea valley line, along which I have five stations in my constituency and many commuters. I understand the inter-relationship between the two lines and I am aware that British Rail sees the two lines very much together as the prime option.

I maintain — although I dare say that many hon. Members would disagree with me—that the Cambridge line, and in particular the Lea valley line, is the worst line running out of London under the auspices of British Rail. It suffers from what is known within British Rail as the cascade effect, in that someone in the imperfect world in which we live has to be at the bottom of the heap. That tends to be the Liverpool Street operation of British Rail's Eastern region, and within that operation it is the Lea valley line which gets the oldest locomotives and the oldest rolling stock.

Over the years there has been a dreadful record of breakdown and delay, usually unaccompanied by rational explanation at the time. The journey from Audley End to Liverpool Street is at best about 52 minutes. The main train of the morning, which is heavily used by commuters with business appointments to keep, is frequently delayed, sometimes by as much as half an hour on a 52-minute journey.

The passengers on the line have had too much to put up with for too long, and electrification offers a prospect of real improvement. In its efforts to overcome the many problems on the line, British Rail has been forced reduce the level of service so that the poor standards have been alternated with changes in the timetable, reducing the number of trains. It is has been designed to improve the quality of the service but tends to lead to a yet further turndown in the corkscrew effect, resulting in a still lower standard.

I accept — and I am sure that the Minister will appreciate — that not everything can be secured by electrification alone. I am advised that an electric train is no more capable of moving than a diesel train if the driver fails to turn up. There are other factors involved, such as signalling and the narrowness of the approach between Bethnal Green and Liverpool Street, and the fact that there are two tracks along most of the length of the line. All those things have an effect on the service but, as I said, electrification opens up the possibilities of a real improvement in service.

The sad experience of my constituents was added to by their disappointment when the Government approved the Anglia East electrification project for the line to Norwich. I am happy about that approval but the Government did not at the same time, although it was part of the submission, approve the Anglia West scheme embracing the Cambridge electrification.

I understand that four options are being considered by British Rail in the preparation of its submission to the Department. The first is to electrify the line from Royston to Cambridge, with the prime service to King's Cross. The second option is to electrify the line from Royston to Cambridge and from Bishop's Stortford to Cambridge, again with the prime service to King's Cross. The third option is to electrify the line from Bishop's Stortford to Cambridge, with Liverpool Street as the prime service. The fourth option is to electrify the line from Bishop's Stortford to Cambridge and from Royston to Cambridge, with Liverpool Street as the prime service.

No one can say that the matter is not getting detailed examination. I am not sure whether there are any further combinations which could be considered. All the proposals — I stress this in the interests of my hon. Friend the Member for Cambridge—would seem to be of benefit to my hon. Friend's constituents, but the choice of option could very well have a serious effect on my constituents. Therefore, I should like to tell the Minister what I believe should happen and why.

I hope that the Minister will approve the fourth option. I believe it is the sensible option, because obviously it serves the maximum number of people. It brings an electrified railway service to the largest number of people. It must be clear that on the Lea valley line many more stations would benefit than if the Royston to Cambridge line alone were to be electrified. There are only three relatively minor stations between Royston and Cambridge, whereas there are many more—five in my constituency —between Bishop's Stortford and Cambridge.

It makes sense to me that, from an operational point of view, British Rail should be allowed to electrify both lines. One can readily imagine the possibility — one hopes that it would be a rare circumstance but it could arise —of serious breakdown on one line or the other. If both lines were electrified, it would be possible for British Rail to switch the service from one to the other in the event of a breakdown. Otherwise, British Rail would be forced to maintain both diesel and electric facilities at Cambridge. I gather that in practice it probably would not, therefore conditions could be chaotic if there were to be an accident or an electrical signalling failure.

I understand that the option to which I have referred may be shaping up as the best financial option of the four, and that the figure of £13·5 million, which has been mentioned as the overall cost, could yet turn out to be on the high side. I hope that the Minister will bear that in mind.

Another argument in favour of the fourth option is that there is to be a redevelopment at Liverpool Street—it is hoped by the end of the decade—and we shall therefore have a spanking new station on the site of the most inglorious, inaccessible and difficult station that is there now. It will be the ultimate in modernity, despite the efforts of conservationists to impose planning restrictions and qualifications on British Rail which have no relationship to the efficient running of the railway. It would be bizarre to have a magnificent new station with mostly electrified services running into it, and yet one poor line, the Lea valley line, still struggling to operate with diesel locomotives of deteriorating standards. It would seem to be the best terminal for what would or could be an upgraded service.

Moreover, there would be savings if Liverpool Street could operate electric traction throughout its services. I believe that there are two minor branch lines which could be electrified at minimal cost. If that is done, as British Rail expects, virtually as part of everyday expenses, the only line that would not be electrified into Liverpool Street would be the Cambridge line north of Bishop's Stortford. It must be obvious that there would be a saving if British Rail did not have to keep maintenance facilities at Liverpool Street to cope with diesel traction units as well as with electric units.

I understand that there are savings in the operation of electric multiple units and rolling stock in any case. I understand, too, that there can be greater efficiency, through better timetabling, if all the trains are electric and have the same acceleration characteristics. One of the problems on the Lea valley line is that trains catch one another up and there are delays for that reason. With an all-electric service, I understand that that difficulty can be more readily overcome. An electric service would be a much better service, particularly to intermediate stations such as Stansted, Elsenham, Newport and Great Chesterford because of the acceleration characteristics of the electric units.

If I have not said enough on the plus side of the fourth option, there is the real danger on the other side of the argument that if that option is not pursued the Lea valley line could deteriorate still further in future. If Royston-Cambridge alone were electrified, British Rail would have the option of diverting its trains north of Cambridge from King's Lynn into London at King's Cross, and the line north of Bishop's Stortford, between Bishop's Stortford and Cambridge, would then have a very minor role in British Rail's priorities and would decline to being no more than a shuttle service serving those stations. That is an appalling prospect for my constituents and the many passengers who use those stations. So unless a positive decision is taken, there could be a negative effect on a line which has already suffered badly over the years.

Above all, the passengers on the Lea valley line deserve a good service. Electric trains are more reliable and carry more people. For example, an eight-car electric multiple unit can carry 650 people, whereas a nine-car hauled train can carry at most only 520. Perhaps I should add that at present, while there are platform limitations at Liverpool Street, which it is hoped will be overcome with the redevelopment, most of the hauled trains are not nine-car but seven-car, and some of my constituents could tell my hon. Friend about waiting for the main train in the morning only to find that it turns out to be a four-car diesel unit. That causes further aggravation. Electrification of the line will attract more people to use the railway. That is surely a sensible aim of public policy. Indeed, British Rail avers that experience of electrification has shown that to be true.

Finally, I hope that the Government will not rely entirely on the rate of return on capital employed. This is not a £500 million project. The final figure may be no more than £11 million. Certainly I expect the Government to look at the cost-effectiveness of maintaining a rail passenger service, but I ask them to take into account all the factors, some of which, such as increased passenger usage, may not be easily quantifiable. More than anything, the Government should think of the customers. They should rid the Lea valley line to Cambridge of its "Dad's Railway" image, and match the facility to the new terminal that is to be created at Liverpool Street and the related electric operations that are to be based on that station. My hon. Friend may find, when he examines the submissions, that the arguments of justice and finance converge, and I believe that regard for the passenger should temper any financial stringency that may be in the air.

I ask my hon. Friend to approve the scheme, particularly option 4 to have both lines electrified, in the best interests of all the passengers. If we are to have a passenger rail service, let it be of a standard to grace the times. I ask my hon. Friend to approve the scheme without further delay. I am scared of the prospect which sometimes troubles my sleeping hours that my hon. Friend and I, or our ghosts, will be here as Parliaments of the future draw to a close, still debating whether we should electrify the railway to Cambridge.

One of the great traditions—I use that word advisedly; or should I say "freedoms"—of Parliament is to raise grievances on the Adjournment, and this is the Adjournment of Adjournments, in one sense.

This grievance should never have arisen. For reasons that I shall give in support of the hon. Member for Saffron Walden (Mr. Haselhurst), I believe that the House should not have to take up issues of this kind. Here we have an administrative and transport anomaly which should never have taken place, and we should not have to raise it on the Adjournment. My interest as a London Member is a personal one, because I have used the lines that serve the stations that were mentioned by the hon. Gentleman, in particular Audley End, Royston, Great Chesterford and Foxton, for over 50 years. So I speak as a consumer, rather than as a constituent.

I am sure that the hon. Gentleman will forgive me if I take up two or three points that he raised in his speech. He mentioned the age of stock, maintenance and breakdowns. I am sure that that is not what British Rail wants. Those of us who were in the House two days ago will know the representations we received from British Rail workshops. I am certain that British Rail would love to maintain stock, properly, no matter what its age —incidentally, some older trains are more comfortable than some of the new ones—particularly at Stratford in the borough which I represent and which of course was the centre and origin of the Great Eastern Railway, which originated one of the lines that we are debating.

However, I am not sure that certain policies allow British Rail to do that. Nor am I sure that some of the strictures and precepts that are set by cost accountants are realistic. I do not believe that they are. Under whatever Government—I say this in no partisan spirit—some of the accounting methods that were applied to both public and private enterprise alike are unrealistic in terms of the quality of service which consumers, both private and public, are expected to enjoy. Accountants do not bear in mind the quality of what money can buy; they take account of purely quantitative factors. In my opinion, that is the reason for some of the discontent about maintenance. The Hon. Member for Saffron Walden mentioned track. There used to be four lines serving the Lea valley almost as far as Broxbourne. Two have been taken out, no doubt for economy reasons—reasons which one could question.

As for a new station, no doubt Liverpool Street may be better, but I hope that it will not be made like Euston where taxi ranks have been provided but where stairs are needed to get to the taxis. That is an administrative nonsense by British Rail showing that sometimes the newest is not the best. The arrangements at Liverpool Street on the level installed in 1870 are far better than those of 1970 at Euston. We have administrative anomalies not only in Whitehall but in British Rail. Small though they may be, they are matters of great annoyance to consumers.

Of course, the hon. Member for Saffron Walden is right. The anomaly of this triangle of non-electrification being left was questionable from the start. It is a triangle with Cambridge at the apex, Royston to the west and Bishop's Stortford to the east. Perhaps the Minister will be able to tell the House the proportions of the capital cost if the whole scheme is proceeded with. Is the total £13 million or £30 million?

The figure is £13 million.

Perhaps the hon. Gentleman can say what the Royston-Cambridge leg would cost. My guess is that the figure is low in proportion to the remainder and the value of having the alternative route. I have known trains travel at short notice at times from Kings Cross to Cambridge, with would-be passengers at Liverpool Street advised to travel by underground to catch trains at King's Cross. That confirms exactly what the hon. Member for Saffron Walden said about an alternative route in cases of breakdown. It could even take excursion traffic. It is clear that the hon. Gentleman's fourth option is much the best value for money, for all the reasons that he gave.

The hon. Gentleman mentioned the East Anglia electrification from Colchester to Norwich, which is a welcome step. But the electification as far as Ipswich, Felixstowe and Parkeston Quay—in respect of which Royal Assent has just been given to a new Act—should have been done years ago. Even if the Norwich electrification may not have been so justified, to have cut off electrification at Colchester and not extend it to Ipswich, Felixstowe and Harwich was again a transport anomaly about which there can be no argument. It might have been a better option to electrify the line as far as Ipswich, to leave the Ipswich-Norwich section, and to electrify the triangle that we are discussing, although I would support the electrification of it all.

We are discussing an issue which has been debated over the past two years in Committee, on the Floor of the House and during Question Time. It has been one of the continuous themes of this Parliament. We appear to be unable to reach a consensus among the main parties about the electrification of British Rail. This is where some people who look upon our politics as being too partisan have a point. But I believe that this should not be a matter of party political contention. There is an overwhelming case for a rolling programme of railway electrification on certain lines. The order of priority can be worked out ahead. The speed at which it is implemented can be varied according to the resources available.

When I was a young man, I was told that in times of depression a Government should speed up such investment for all sorts of reasons of economics which I shall not go into now because there is a difference of opinion in the House. But one would expect a rolling programme of this kind to be speeded up when we have the manpower and the capacity available in industry to do it, instead of which other criteria are applied.

I hope that in a future Parliament a policy of this kind will be agreed at least in terms of priorities and a rolling programme which can be varied according to the resources available. Perhaps we should take a leaf out of the Dutch book. They have had a rolling programme of land reclamation thinking decades ahead. In the 1950s, they were planning a rolling programme lasting up to the year 2000. Perhaps we should look to China. In that great civilised country, albeit one with different traditions from our own, they plan ahead even longer.

Our great civil engineering assets, of which our railways are one of the major features, deserve this type of approach. It is an approach which the public expect and which they have a right to expect from the House and from Governments of whatever colour. We must use these public assets to the optimum benefit. By day, they can carry passengers rapidly at speeds of up to 120 mph. By night, they can carry freight, urgent goods and mail, and perhaps over weekends they can carry outsize loads. With matters as they are at the moment, it appears that this innate flexibility is not being used to the maximum benefit. Bearing in mind that we have track which was designed and laid down by such people as Stephenson and Brunel and we can incorporate modern devices of electronics and safety, it is difficult to understand why we do not use it to maximum effect. Electrification is one way in which we can do that.

The current requirement for investment of this kind which has been set recently is about a 7 per cent. return on the capital invested. But the social returns on top of that are almost inestimable. I remind the House that the former right hon. Member for Wallasey, the late Ernest Marples, agreed in his Government's time that the Victoria line in London should be built even though, according to the accountants, it was not expected to return as much as 1 per cent. If Mr. Marples could agree to that investment in the Victoria line on the basis that it would not pay even 1 per cent., I suggest that any Government should agree to the moderate investment proposed by the hon. Member for Saffron Walden without very much difficulty.

I hope that in future Parliaments matters of this kind will not have to be aired in Adjournment debates and that future Governments will agree on a long-term rolling programme with a realistic and modest calculation of return which includes the cost benefit to the community. In that case, I suggest that the figure, whether it be 7 per cent. or 5 per cent. on capital return, can be reduced considerably. There is a good case for saying that even if there is no visible return in accountancy terms, it is good investment from the point of view of the taxpayer. If we can come to that kind of agreement in a future Parliament, this Adjournment debate will have served its purpose.

The House is often given a reputation for partisan and fierce argument and debate. Hon. Members always know that there is an enormous amount of business done both on the Floor of the House and upstairs in Committee on what might be described as good public administration. The majority of hon. Members believe in good public administration and the standard of public affairs which is a strong tradition in the country and in the House. The issue under discussion falls into that category. It would be a pity if such issues continued to be bones of contention in future Parliaments needing continuous Adjournment debates on the grievances of our constituents. A matter of this kind should not be a source of grievance. It should be the subject of agreement between all politicians desirous of seeing the optimum use of our great civil engineering heritage and the technology of which we are the inheritors.

It gives me great pleasure to speak after the hon. Member for Newham, South (Mr. Spearing) on an issue on which we can agree once more. I have served with him on several Committees and he is always seeking ways in which the Labour and Conservative parties can agree on a programme. On this occasion it is the electrification of the line from Bishop's Stortford to Cambridge. I am also glad to be able to support my hon. Friend the Member for Saffron Walden (Mr. Haselhurst).

I am sure that my hon. Friend the Under-Secretary of State knows that the case for electrification made by my hon. Friend is unanswerable in view of the future costs of the replacement of equipment on that line—presumably with diesel equipment if the line is not to be electrified. My hon. Friend the Minister has in mind the fact that the electrification of this line will not give any return on capital. In fact, it will continue to make a loss. The line from Hertford North in my constituency to Moorgate was electrified, resulting in a much improved service. The passenger traffic increased, as my hon. Friend the Member for Saffron Walden said, by far more than the accountants had predicted in their financial case to the Department. It increased by nearly 50 per cent. when only a 30 per cent. increase had been expected. People came off the roads and went on to the trains. Nevertheless, that line continues to make a loss. I am sure that my hon. Friend the Minister is looking at that problem.

We must deal with the problem of commuter transport into London. Therefore, we should not look purely at the return on capital and I hope that my hon. Friend will not adduce that argument. When he is considering the problem, I hope that he will bear in mind two terrible examples. One is the electrification of the Bedford to St. Pancras line where, since July last year, the trains have been ready to run but we have not been able to reach an agreement with the unions as to how that can be done effectively and efficiently. Here the hon. Member for Newham, South and his party can bring influence to bear on the National Union of Railwaymen to make sensible arrangements about the management and manning of the line that is to be electrified before a commitment is made to invest capital in it. I hope that my hon. Friend the Minister and British Rail will reach an agreement with the unions before this project goes ahead.

Will the hon. Gentleman confirm that that agreement has now been reached? Will he also agree that matters are not always as they appear in the newspapers? For example, when the HS125 was introduced on the Western region when I represented an area on it British Rail wanted those trains to by run by a single driver at the front. I and the unions objected and there was an occasion when a driver died at Slough and the train was brought to a rest and driven on by the second man. Had British Rail had its way on that occasion there would have been legitimate public concern. Although the dispute was unfortunate, perhaps the hon. Gentleman will agree with me that things are not always as they seem from the newspapers.

The problem that the hon. Gentleman raises is one which could lead us into a contentious argument, and I do not want that. I am asking for his support in resolving such difficult issues, obviously with the safety and convenience of passengers in mind, but also to ensure that they run efficiently. Single manning is a criterion which the Minister must take into account if he is to approve the electrification of this line.

The second terrible example that I want to bring to the attention of the House is the management of the Lea valley line which is electrified from Bishop's Stortford to Liverpool Street and from Hertford East, through Ware to Liverpool Street. As my hon. Friend the Member for Saffron Walden said, the management on that line is appalling. Carriages are not simply badly maintained but are filthy and there can be no excuse for that. The seating is so revolting that many of my commuters have to use cushions to protect them from the filth.

The signalling system and the bottleneck at Liverpool Street cause endless delays and make the line extremely unreliable. The management of the stations on the line is also appalling. They are overmanned, yet they are filthy and repairs are left undone. The toilets are in an appalling condition. No effort is made to help passengers when alterations to services are made. Such things infuriate many commuters and waste much time when business men are delayed in reaching their appointments in London.

We must insist that when the line is electrified—I hope that it will be—the stations are manned efficiently and the trains cleaned. There should be proper signalling arrangements so that the trains can run on time into and out of Liverpool Street to give the commuters the service that they deserve. Undoubtedly, on the case that has been made by my hon. Friend the Member for Saffron Walden, electrification must come about on this line. I hope that my hon. Friend the Minister will tell us that he will approve this but on the condition that British Rail and the unions ensure that they provide an efficient service which runs on time and is clean and pleasant to use.

I recognise the anxiety expressed by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) about the quality of rail passenger services between Cambridge and Liverpool Steet, London. My hon. Friend has been most diligent in pressing upon the Department and the appropriate officers of British Rail's Eastern region, as well as upon the chairman of the British Railways Board, his views on the improvements that are needed to cater adequately for his constituents' needs.

I understand my hon. Friend's frustration over the continuing uncertainty about British Rail's proposals to electrify the line between Bishop's Stortford and Cambridge. Let me summarise the position. Last year we asked the board to provide additional information about its proposals to electrify services between London and Cambridge on this line and on the line to Cambridge from Royston and Kings' Cross. It is still giving careful and serious consideration to those points. We expect to receive that information during the summer and we shall then give urgent consideration to the board's proposals and will announce a decision as soon as possible.

Before I talk in more detail about the electrification proposals, I want to say a few words about the importance of the railways' customers. The hon. Member for Newham, South (Mr. Spearing) and my hon. Friend the Member for Hertford and Stevenage (Mr. Wells) rightly placed much emphasis on that. I also want to say a few words about the Government's approach to railway electrification in general. I welcome the strong emphasis on the customer in the board's report and accounts for 1982, published on Wednesday. The chairman is right to say that the future of the railway is as much to do with the quality of its products and services as it is to do with finance and politics.

We have encouraged the board to move closer to the customer through its reorganisation into separate accountable businesses. I trust that the new section on the customer in the report and accounts will, over the years, be able to chart a steady improvement in the quality of rail services. I note the matters raised by the hon. Member for Newham, South in that connection and the other aspects of railway affairs. Only by achieving that steady improvement in the quality of railway services will the railways flourish.

We recognise the advantages of electrification and we have accepted the principle of a 10-year programme of main line electrification. But because the main beneficiaries on these routes would be the inter-city and freight businesses, which have a remit to run at a profit, we expect the board to justify main line electrification on commercial grounds. We are currently considering the board's detailed proposals for electrification of the east coast main line to Leeds and Newcastle. We consider that electrification is part of the line's future, but there must be a satisfactory financial prospectus for inter-city before we can decide on the timing. The hon. Member for Newham, South is right to say that this issue is not a matter for party difference.

As for more local services, such as those from London to Cambridge, we do not expect the railways to make a commercial return. That was an important point raised by my hon. Friends the Members for Saffron Walden and Hertford and Stevenage and by the hon. Member for Newham, South. Local services are not expected to make a commercial return. We acknowledge the social value of these services through the public service obligation grant that we pay to the board that amounts to £2·3 million a day. We expect the board to provide, and where necessary renew, the services in the most cost-effective way, which may involve electrification.

The board's decision to electrify rail services to Cambridge is complicated by the fact that we have to decide on the proposed electrification of two lines converging on Cambridge both with services from London stations—King's Cross and Liverpool Street. The line from Royston to Cambridge is 13 miles long and the fixed work would cost about £5 million. The line from Bishop's Stortford to Cambridge is 24 miles long and would cost £8·5 million to electrify. We must decide whether the potential savings and revenue gains would justify electrifying both those lines.

I have noted the views of my hon. Friend the Member for Saffron Walden on the subject of priorities and the support that was given to that subject by my hon. Friend the Member for Hertford and Stevenage and to the consumer and management aspects that my hon. Friends spoke about so strongly.

At present the main service between Cambridge and London runs from Liverpool Street via Bishop's Stortford and Audley End, which are in the constituency of my hon. Friend the Member for Saffron Walden. The service south of Bishop's Stortford is provided by electric multiple units that operate at frequent intervals. I understand that my hon. Friend the Member for Saffron Walden has been in touch with Eastern region about the new timetable being introduced on Monday 16 May. My hon. Friend will be aware that the board has sole responsibility for decisions on timetabling. Such decisions will always involve difficult judgments about the best way to serve the railways' customers and to make the best use of available resources. Any change is almost certain to discomfort some passengers, and the board has to weigh disadvantages for them against the benefits for others. Electrification would not end the problem, as my hon. Friend the Member for Saffron Walden acknowledged.

The board's dilemma is exemplified in the timetable changes that are to be introduced on the services out of Liverpool Street. Customers in Cambridge will benefit from the speeding up of the non-stop service to Liverpool Street. My hon. Friend the Member for Cambridge (Mr. Rhodes James) has expressed pleasure in this respect. Customers on the line between Ely and Norwich will benefit from the introduction—

Reintroduction.

—of a through service to London. However, customers using the stations between Bishop's Stortford and Cambridge will experience a reduction in the quality of service between the morning and evening rush hours. During this off-peak period, customers using Audley End station will have a through service to London every two hours and not hourly as now. They will also have the use — as will customers using the other stations — of a two-hourly shuttle service between Cambridge and Bishop's Stortford. People using this shuttle will then have to transfer to the electric service between Bishop's Stortford and Liverpool Street. However, I understand that newly refurbished electric multiple units are to be introduced on the service during the summer. My hon. Friend the Member for Saffron Walden will be pleased to know that these trains will provide a standard of comfort comparable to new vehicles.

The British Railways Board submitted proposals to electrify services to Cambridge together with proposals to electrify services from Colchester to Ipswich, Harwich and Norwich. These proposals were put forward in 1980 because the diesel multiple units that provide the local services will need to be replaced during the 1980s, and because a relatively modest extension of overhead wiring on the lines out of Liverpool Street would enable most of the remaining diesel services to switch to electric traction.

The board proposed that it would be possible to extend the present electric services on the Great Northern line out of King's Cross from Royston, where they now terminate, to Cambridge, thus restoring through services, and to extend the present electric services north from Bishop's Stortford in each case without any increase in the vehicles required. The changeover from diesel to electric traction would result in a more efficient use of rolling stock and reduced maintenance costs. It would increase revenue by reducing journey times, particularly by reducing delays due to traction change at the margin of the electrified network.

In December 1981 my right hon. Friend the Secretary of State for Transport approved electrification to Ipswich, Harwich and Norwich because he was satisfied that there was a strong financial case for that part of the board's Anglia electrification proposals. The appraisal of this scheme was fairly straightforward because it involved a single line from Colchester to Norwich with a short spur from Manningtree to Harwich. The decision on electrification to Cambridge was much more difficult because of the existence of two converging routes.

The board demonstrated that it would be better to electrify both lines to Cambridge from Royston and from Bishop's Stortford than to renew the present diesel trains. It assumed that the line to Bishop's Stortford would be electrified because it carries the through service between London and Cambridge and would, on its proposals, continue to provide the main service. The board's investment submission demonstrated a reasonable case for electrifying the Royston line as an addition to the electrification of the Bishop's Stortford line, but the case for electrifying both lines seemed less strong than the case for electrifying just one.

In any investment submission, as my hon. Friends will understand it is necessary to consider alternative possibilities to establish that the preferred option offers the best value for money. In this case it would be physically possible to undertake the schemes in the reverse order from the one that the board had assumed—it was clearly right to test that option—and to establish what return would be given by electrification from Royston to Cambridge on its own and whether, if that were done, the board would then be justified in electrifying the line from Bishop's Stortford to Cambridge as well.

Consequently, when we approved the eastern half of the board's Anglia electrification proposals 18 months ago, my Department asked it to look at this alternative possibility for the Cambridge electrification. The board has taken time to complete the work, because it has had to consider what services it would be appropriate, and indeed possible, to run on both lines in the event of electrifying the Royston to Cambridge line without having electrified the Bishop's Stortford to Cambridge line. As I have said, we hope to get the results during the summer. Once we have heard from the board, we shall reach a decision as quickly as possible. If the board shows that there is a satisfactory case for electrifying both routes, considered separately in the way that I have described, the way will be clear for a decision in favour of electrification of both routes.

Before the House adjourns I should like to raise a subject that has been of particular interest to me since I was first elected to the House. I should also like to rebate a short, personal anecdote to introduce the subject.

I was elected to the House in 1968. When I was contemplating the contents of my maiden speech, I had the extraordinarily good fortune to win the first place in the ballot for private Members' motions. I chose the subject of the transferability of pension rights. Before I entered the House I had given that subject some study and it was a topical matter as long ago as 1968. After that we had a series of Government Bills on pension rights and I had the good fortune to serve in Committee on two of them. I also had the good furtune to enjoy the collaboration of an hon. Member who had won a place in the ballot for private Members' Bills in 1969. I refer to Miss Quennell, whom many hon. Members will still remember with respect and affection. She worked, together with me, on the introduction of a Bill to provide a solution to the problem of the protection of pension rights on changing employment. I subsequently also introduced a Bill of my own and from time to time in subsequent years I have sought to draw the attention of the House to the problems of early leavers in occupational pension schemes and to put forward worthwhile solutions.

In all those years I do not know whether we have made much progress on protecting the pension rights of early leavers, but I am sure that the subject is even more topical now than it was when I and other hon. Members first sought to raise it in 1968. It so happened that I entered my name, as I normally do, in he ballot for private Members' motions earlier this year, and once again I had the amazing good fortune to win first place for the debate on 14 February. I thought that nothing would be better or more fitting than to raise the same subject again, and I should like to read to the House the motion that I tabled for 14 February. Unfortunately, the debate on it did not take place, because a debate under Standing Order No. 9 took precedence over it on the day.

By courtesy of Mr. Speaker, however, I have been allowed to raise the subject today and it might be helpful to read out my motion, as it covers the subject that I want to raise with the Minister. It stated:

"To call attention to protection of pension rights and other entitlements on termination of employment; and to move, That this House recognises that the Social Security Pensions Act 1975 holds out the expectation of benefits in retirement for which the working population in the future may be reluctant to pay either through taxation or through higher national insurance contributions; stresses therefore the importance of provision for retirement through personal and occupational pension schemes; deplores the fact that those who leave pensionable employment before retirement age frequently incur a loss of their pension expectations; notes that few schemes are able to maintain the real value of pensions in payment against changes in their purchasing power; urges employers and pension scheme administrators to give fuller protection to the entitlements of their beneficiaries; and recognises that legislation may be required to ensure that a minimum standard of provision is fully funded in every case."

Before dealing with specific recommendations I should like to comment on the general outlook for provision for that element of the population that has retired from active work. Many disturbing factors are already plainly discernible and they will be very troublesome both to the House and to the nation in the next 10 to 30 years. When making plans about pension rights, it should be borne in mind that a pension contract is of extremely long duration and is probably the longest contract that anyone enters into in the course of a lifetime. It is common for people to join occupational pension schemes in their early 20s. Many people are members of their schemes for 40 years before they even start to draw benefits from it. They may then have many years ahead of them. The total time span is likely, on average, to be at least 60 years. Perhaps that is an exaggeration, but it gives some idea of the span of time involved.

In looking 60 years into the future of the British economy and the demands that will be made on it, we must take account of certain factors. Indeed, I hope that the Department is taking serious account of them even now. Each of the subjects that I have in mind to mention could be debated at length, but I shall hurry through them, partly because I know that my hon. Friend the Minister is well aware of them and scarcely needs to be reminded of them. However, we must bear in mind the lower fertility rate of the population and the lower mortality rate. Both of those trends are likely to exaggerate the difficulties of making adequate pension provision, with a shrinking work force and an increasing number of people making claims upon it. We must also consider the rather slowly increasing productivity of the British economy and the still rising expectations for living standards in retirement. In considering the British economy and its role in the world economy, we must recognise the increasingly fierce competition, particularly from the economies of the Pacific. They are now drawing ahead of us so quickly that if we do not take urgent steps to overtake them it will become impossible to do so and Europe will become a world "Distressed Area".

There is a trend, which probably cannot be stopped, towards earlier retirement. It is partly due to the change in employment patterns and to the accelerated rate of change in the skills that are required at work. People's skills become obsolete at a much earlier point in their working lives. There is also a problem because of the longer periods of induction for work. As work becomes more complex, longer training is required. Those being trained have to be borne by the rest of society and are not adding mean-time to the total amount of wealth.

It should be recognised also that we are still dependent upon the tremendous capital investment of Victorian and early 20th century times. Much of that capital stock is now obsolescent and urgently needs to be replaced. However, in putting our productive effort into replacing water services, roads and so on, we are not adding to the immediately available stock of goods for sale. That represents a further strain on the economy, which it will have to bear. In recent years we have developed a strong propensity to consume and have lost our impulse as a nation towards thrift. There are many reasons for that, and it is quite understandable, particularly as inflation creates an unpredictable climate in which to save.

But even those savings that we have been making seem to have been excessively devoted to the purchase of existing assets or assets that do not create wealth direct, particularly housing. Other investments that pension funds have been making in recent years, such as in works of art, do not seem to me to be proper for pension funds to invest in. However, shrewd people have thought it wise on behalf of their beneficiaries to make such investments, and that is a sign that there is something badly wrong with the way in which we use the nation's savings and the opportunities offered by the capital market.

It would be highly desirable if we also took a long look at the promises being made between the generations. We have a Government pension scheme that holds out rosy hopes to people now at work for the level of income that they can enjoy in retirement. However, I am not certain whether our children will say, when we start to make claims on them in our retirement; "Did you do for your parents what you are asking us to do for you? If you are making claims on us because of an Act passed in the 1970s or the 1980s, that does not establish a moral claim." We may find that our children are reluctant to pay the price of the pension provisions that we have installed for our own benefit and which we are still counting upon, perhaps unwisely.

There are already signs of restiveness in the working population about the burden of providing for those in retirement. In particular, there has been a strong campaign, mounted from the Government Benches as much as from elsewhere, against the indexation of public service pensions. I have never joined that campaign, except to cast some doubt on the commitment to the retail prices index as the particular index that we should use to uprate these pensions.

On the other hand, there has been, and there is now, a strong outcry against any hint of a cut in real retirement benefits, at any rate against a cut in the flat rate of retirement benefits. At the same time, occupational pensions payable after award in the private sector have in recent years almost always been uprated at less than the rate of inflation. This seems to be a circumstance that people are prepared to accept without too much controversy. It is rather surprising that beneficiaries of private occupational pension schemes do not raise more hubbub, and compare their lot with that of people in the public sector.

lately there has been some suggestion that employers could and should give full indexation after award. I am not an expert, but I understand that in Germany and the Netherlands there has been a much greater tendency for occupational pension schemes to accept that it is incumbent upon them to uprate pensions after award in accordance with the change in the value of money. For the future this should indeed be a possibility in Britain, too, because of the much lower rate of inflation, thanks to the efforts of my right hon. Friends, and because the Government are now offering indexed stocks which are freely available to pension fund managers. Whether employers can now gove full protection to the pensions that they are paying to people after retirement must depend on the profitability of the individual business and the performance of the paper currency over time.

As indexed Government stock is now freely available, new circumstances have arisen in the long-term planning of pensions. I welcome the Government's innovation in this, though I personally should like to see the measure of indexation related to gross national product rather than to the retail prices index. That, however, is a different point. Whichever index is used, the rate of interest to the pension fund investor is only about half the current rate of depreciation of the currency in terms of the rise in retail prices. The Government have to pay about 10 per cent. To raise long-term stocks in the normal gilt market, but they pay only about 2·5 per cent. interest on indexed stocks, at a time when the permanent rate of depreciation of the paper currency in terms of retail prices is proceeding at about 5 per cent. Thus there are many puzzles in estimating the real long-term returns available on the amounts that pension fund managers have to dispose of year by year for investment to protect their beneficiaries.

One has also to look at the level of retirement living standards that people are entitled to expect. Hitherto, occupational pension schemes have not normally attained the rate of two-thirds retirement income which is implicit in what is now coming to be regarded, not just as the best, but as the standard occupational pension scheme. It will be obvious to everyone that I am much indebted to Mr. Stewart Lyon—and have been for many years—for his wise advice on pension provision. He has estimated that in 40 years' time, pensioners' net income could be approaching 25 per cent. of total consumer expenditure. That is nearly twice its present level. I do not believe that the Government or the private capital market have even begun to prepare themselves for the increase in demand that is implicit in those figures.

The conclusion that we must come to is that we must learn to save a far higher proportion of our national income than we are now doing. We must deploy our savings so as to achieve much higher productivity. This is not just a matter for the tax collector. I do not see thrift being organised through higher taxation and the use of more funds for investment by Government agencies. Every citizen must want to save and have every encouragement to do so on a scale far greater than now; and should be given the facilities and the incentive to examine the way in which his savings are being used, so as to ensure that investment skills are of the highest order. The nation's savings must be invested to the best possible effect.

There are two things, which I shall mention in parenthesis, that are necessary if our investments are to be more profitable in real terms. We have to get back to a longer time-span in investment discretion. Nowadays, merchant banks and people advising businesses on investment projects tend to think in terms of a time-span so short that it is barely possible for anything but the most sparkling and fruitful investment to be profitable within the time allowed by the capital market. I am thinking of three-year, five-year and seven-year returns. People cannot look further forward into the future than that and therefore investment of the kind that is likely to be the most profitable of all—the investment that bears fruit over 20,30 or 50 years, in major projects such as the Suez canal in the last century and the Severn barrage in this — is not within the capacity of the private capital market even to contemplate. We must also make the most of the Common Market, working for stabilisation of exchange rates and the creation of a united European market for capital. Without those essential pre-conditions we are failing to create the context within which investment fund managers can succeed in making the necessary provision for their beneficiaries.

To return to the future of occupational pension schemes in particular, I would venture to remind the House of the provisions that Miss Quennell and I worked out in 1968 and 1969 and incorporated into our Bill. Those provisions have stood the test of time—which goes to show what excellent advice we had at that time—and I believe our recommendations for the most part would still be a good idea if the Government were now to implement them. We said then that the trustees must provide copies of the rules of the scheme to all the members; that all approved schemes must be brought under the supervision of the Registrar of Friendly Societies; that annual returns should be published in a specified form; and that the value and the nature of the assets and commitments to the scheme — and therefore the level of funding — should be disclosed. We also provided that all employees should be notified of the level of funding of the scheme at each annual valuation.

The average beneficiary of a private occupational pension scheme, particularly of a final salary scheme, assumes that money is in the hands of the trustees to meet the commitments of the scheme, but that is often not the case. Many schemes are only partially funded, and that is not necessarily bad financial management. A prudent actuary may advise an employer to take a long time to bring his fund up to the full matching requirements of the claims that will ultimately be made by the beneficiaries.

When considering the rights of the early leaver, the level of funding of a scheme is important. That is why the Bill specified that the members who hope to become beneficiaries of a scheme must be notified annually of the level of funding of the scheme.

The Bill provided that self-investment should be limited to one per cent. of the value of the fund; that the auditors of the scheme should not be the auditors of the sponsoring employer, that there should be triennial actuarial assessments and that the rules of the scheme should state what post-retirement increases, if any, would be given. That would be a difficult requirement for many employers to comply with nowadays, but I should like that suggestion to be considered further.

The Bill proposed that trustees must observe explicit rules of management, that in schemes with fewer than 50 members the employees should be entitled to elect one trustee and that in larger schemes they should be entitled to elect two trustees. We said that the procedure for tackling the valuation of a beneficiary's entitlement should be laid down and that there should be provision for arbitration in the event of dispute.

The valuation of the entitlement of an early leaver is such a knotty problem that we need to lay down rules to clarify the position.

The Bill provided that transfer payments must take account of the funding level, so as not to weaken the assets retained for other beneficiaries. In recent circumstances, when industries have been undergoing rapid change, there have been all too many instances of firms having to shed many jobs, perhaps through the closure of one of two factories, which could dramatically reduce the size of the work force and, hence, the number of members of a pension scheme in a short time.

If it were obligatory on a firm to pay the early leavers the whole of their pension entitlement, the fund could be bereft of money and those who remained with the firm could find that the pension fund was bankrupt. That would obviously not be fair.

The Bill provided that the level of funding should be calculated on a stated basis and that the benefits for the early leaver should be calculated on his estimated trajectory to retirement, multiplied by the level of funding. Let me explain what we meant by that. In a final salary scheme, some people, probably the junior and less well remunerated staff, may retire at a similar level of earnings as that at which they began work—apart from changes in the value of money. But the high fliers in a business are likely to retire at an income that is much higher than that at which they started work. The final salary scheme gives a tremendous inducement to senior managers, who may have much to offer a business, to stay with the firm until the end of their careers. Their pension will rapidly rise in value in their last years of service.

However, if a high flier, looking after himself and the planning of his career, decides to leave in his 40s how does one value his pension entitlement? Obviously, what the actuary has to set aside in respect of that person should be related to what he might be expected to earn if he stayed with the business until the normal age for retirement; but his earnings in mid-career are likely to be much lower, quite apart from changes in the value of money. A man in his 40s is unlikely to be earning as much as he would if he were appointed to the board or to high office in a firm in his late 50s or 60s.

Notwithstanding that fact, it is almost universal practice for occupational pension schemes in which the entitlement of a beneficiary is related to his final salary to regard the final salary as the man's earnings when his connection with a firm is severed, even if he is only in mid-career at that time. That is clearly unfair to the early leaver. On the other hand, it is almost impossible for an actuary, the most far-seeing personnel manager or the most benevolent employer to estimate what might have been the career of a man who has chosen to leave. There are serious difficulties in trying to arrive at the entitlement of an early leaver on the basis of the entitlement that he would have had if he had stayed in a final salary scheme.

The Bill that Miss Quennell and I introduced did not tackle that issue in what I now believe is emerging as the right way. However, we were beginning to move in the right direction and I would like to put some ideas to my hon. Friend the Under-Secretary of State for Health and Social Security. In some ways, the schedules were the glory of our Bill. In one of them we suggested that the accounts of the trustees should be separated under four headings — a beneficiaries' secured account, a beneficiaries' accrued rights account, a beneficiaries' unallocated account and a reserve account.

I believe that prudent investment management requires that the assets of a fund should be separated under those headings. If it became the practice to have a separate secured account in all occupational pension schemes, it would be much easier to identify the claims of each individual member. I am working towards the view that we ought to provide a statutory core in every occupational pension fund, which would be fully funded and secured, directly related to the career pattern of each beneficiary on a money-purchase basis uprated at compound interest and protected from depreciation in accordance with the index used for Government indexed stock.

Such a recommendation was not feasible until the Government started to issue indexed stock that was freely available and traded in the capital market in large volume, so that the price was predictable and pension funds would have no difficulty placing their entire reliance, if they wished, on ownership of such stocks to meet their minimum statutory commitment.

If we were to specify by legislation that employers' schemes must include an element of deferred pay, building up in secured accounts on a money-purchase basis and indentifiable for each individual, it would be possible for the individual to take that money out if he moved. Indeed, an individual could contract out from the start of his service so that he had nothing in the firm's fund and could make his own provision from the beginning of his career in an approved outside scheme, as he would if he were self-employed.

If an employee took out that money he would not damage the interests of the employer or put any strain on him; and he would not damage the interests of other members who remained in the scheme. Of course, an employee might wish to leave his core of entitlement to accumulate in the employer's hands rather than remove it and have to exercise his discretion as to what he did with the fund. In any event however, the employee should not be allowed to withdraw from the fund and spend it as he chooses, because there is a taxpayers' ownership element in occupational pension schemes. Part of the money comes from the employee's contributions and part from the sponsoring employer's contributions; but while such schemes enjoy the benefit of tax concessions which are of great value because interest can be added to the fund without incurring tax, the taxpayer also has a growing entitlement in the fund and is justified in laying down rules as to the way in which the fund is operated.

If there were a provision that every occupational pension scheme should include a statutory minimum indexed core secured for each employee, it would not prevent an employer from operating a final salary scheme which left him with discretion to add whatever amount he chose. The majority of employers—unless the statutory minimum was set so high that it was placing a serious burden on the fund—would want to offer their own inducements, just as in the past they had incentives to introduce pension schemes for job enrichment, the improvement of the standard of living of their long-serving employees or as an aspect of personnel policy, to encourage people to stay with the firm after they had acquired valuable skills.

There would be no harm in employers having discretion in the extent to which they allowed the bonus element in the pension fund to be withdrawn by the early leaver. But it should not be left entirely to the employer to decide what should be done with the balance of an employee's entitlement above the central core, because the taxpayer also has a stake in the fund and is, therefore, entitled to lay down certain rules.

An important point has been made by my right hon. and hon. Friends about legislating for the future of occupational pension schemes. We could perhaps institute a scheme starting this or next year under which future contributions to pension funds would be protected in a certain way and the rights of the early leaver would be specified for future years—in respect of contributions to be made after the passing of such a Bill. But some people are reluctant and fearful of the consequences of legislating in a way that might appear to be retrospective. Employees who will retire within the next 20 or 30 years will already have started their careers in occupational pension schemes and some provision will already have been made for them under existing Acts.

If one laid down new provisions in respect of the entitlement of beneficiaries now in mid-career, one might be placing burdens on employers which they had not provided for and which they could not meet. If an element of discretion is provided for employers in regard to the treatment of existing entitlements, one would have to say that a fund that chose to comply with the guidelines on the treatment of the early leaver would continue to enjoy the benefits of the tax concessions that are provided for such schemes. An employer who preferred to flout the guidelines and operate his scheme at his own discretion, without protecting the accrued rights of people now at work for him, would have part or all of the tax concessions enjoyed by the occupational pension fund withdrawn in respect of future years. I believe that that would be a proper sanction for the taxpayer to apply in the future. That provision would not be retrospective. It is, however, a matter upon which actuaries and occupational pension fund managers will no doubt have much to say.

I hope that this debate has been useful. Legislation will be needed in the coming Parliament. I am sure that all hon. Members would be delighted if the Minister were the man charged with the responsibility of introducing such a Bill. We look forward to what he now has to say. He may have some reservations, but I hope that I can dispel his doubts and that legislation will soon follow.

This important subject has been drawn to my attention frequently by my constituents over the past three or four years. I congratulate my hon. Friend the Member for Kensington (Sir B. Rhys Williams) on bringing this vital matter before the House.

We all accept the principle that a pension should be related to the salary and responsibility of the working life and achievement of the individual, but that there should be a minimum below which a pension should not be allowed to fall. There are three unfairnesses between pensioners which should be drawn to the attention of the House. First, some people contribute more than others, in percentage terms, to their pension. That seems unfair. Secondly, some pensions are payable at an earlier age than others, although the contributions have been similar. Thirdly, some pensions are index linked and some are not. I do not carp at those who have enjoyed the best aspects of those three points, but I believe that it is right to draw the attention of the House to those who do not enjoy such advantages.

Another important point, which is being put to me constantly at my surgeries and in letters, relates to the taxation of pensions. Pensioners find it hard to understand why, when they have worked all their lives and paid for a pension, they should be taxed on it. That causes considerable distress. I am conscious of the enormous improvement made by the Government in reducing taxation on occupational pensions, but there is a long way to go. I invite my hon. Friend the Minister to underline the principle that, as soon as reasonably practicable, the Government will seek to end the taxation of pensions earned by individuals during their working lives.

It is important that the elderly should be active in their retirement. If society expected the retired to sit down and be inactive they would soon curl up and die, and the experience that they acquired during their working lives would be lost to society. They would cease to be the catalyst to show younger members of their families the best way to go.

An adequate pension is essential. Expenses do not change just because one is old. Rates and food costs remain the same. Pensioners have considerable concessions in relation to their basic expenses, but we must respect the pride of elderly people who try to live on their pensions and do not like what they call charity.

People who save for their old age must be rewarded, or at least they must not be penalised. That is an important principle. Contributions from people in work towards the pensions of others are not always understood or welcomed, because to a young person a pension seems remote. The principle of the pension and its importance should be explained and studied at school. Young people should be taught that the pension is a necessary part of life in a civilised society, that society should make steady provision for the future elderly during their working lives and that that should be bolstered by their children and their children's children. It is right, fair and equitable in a civilised society for the subject to be covered in schools where it can be absorbed at an early and receptive age to enable people to understand that important part of life.

I am very disturbed, as are many of my constituents, by the Labour party's proposal to use pension funds for their own purposes. The proposal is immensely disturbing. If, by a ghastly mischance, a Labour Government are elected to power to run the country, they intend to take by force and statute at least £6 billion from pension funds. They intend to take the money accrued by people throughout their working lives for their pensions and direct it to schemes which they think are deserving. That is deplorable and terrifying to people at work and to all who believe that it would be a gross intrusion by the state into the freedom of people to work and save to provide for their old age in the best way.

The country will assert on 9 June that pension funds should be in the hands of those best able to use them profitably, so that pensions provided out of them are as high as possible. If the money is taken away and used for the state's purposes as Ministers direct, it could be frittered away and wasted, as Labour Governments have already wasted so much money. That is why people are frightened.

I thank my hon. Friend the Member for Kensington (Sir B. Rhys Williams) for the trouble that he has taken on this subject. I appreciate the way in which he spoke because of the long-term interest which he has shown in the subject, as he revealed in his historical survey. It is appropriate that my hon. Friend should raise the subject on the last day of a Parliament.

I am glad that my hon. Frend the Member for Ealing, North (Mr. Greenway) joined the debate. He will understand that I am hesitant to discuss the differences between the contribution rates and retirement benefits of various schemes because that would lead me to an even broader discussion on the discrepancy in the retiring age under the national insurance pension scheme on which a Select Committee reported recently.

I am glad that my hon. Friend linked those two points. It shows how important are the unfairnesses. I thought it right to draw the attention of the House to those unfairnesses in the private sector, although they exist elsewhere, and something must be done about them in due course.

I was not complaining about my hon. Friend mentioning the subject, but excusing myself from dealing with the topic when the Government are considering their response to a Select Committee report.

I apologise in advance to my hon. Friend the Member for Ealing, North for not dealing fully with the taxation of pensions. The Government have made substantial reductions in taxation that will affect my hon. Friend's constituents, particularly by raising the age allowance level. That will have been of considerable benefit to-many. The taxation of occupational pensions, or the treatment of them as taxable income, historically is linked with the fact that contributions are tax relievable. If the pension income were regarded as being non-taxable, the tax relievability of contributions would be put in question.

I am glad that my hon. Friend the Member for Ealing, North discussed the current plans of the Labour party for the use of pension funds. It must be stated firmly that the assets of pension funds represent the savings required to pay benefits to about 11½ million people when they retire and the benefits of their dependants when they die. The money is held in trust for them and their dependants. Only an unwise political party would seriously threaten to direct those funds for primarily political purposes. When understood, the prospect of a Government, even in the guise of a national investment bank, using private funds for schemes based upon political judgments will cause widespread public alarm. My hon. Friend's remarks this morning will make that prospect better understood. My right hon. Friend the Secretary of State was right when, in a speech to the Natonal Association of Pension Funds last weekend, he said:

"Millions will say quite simply 'Hands off our pensions.'"

The Pensions Act 1975, under which pensions are provided, was a considerable political achievement. Under it, a partnership has been forged between the state and good occupational pension schemes. It has a bearing, directly or indirectly on the pension rights of all employed persons. About half the working population participates fully in the state scheme, but over 10 million employees are in occupational pension schemes contracted out of the state scheme. Occupational schemes had investments of £50 billion in 1979 and currently the figure is probably nearer £75 billion. About half of that amount is invested in equities and about one third is invested in fixed interest securities. We must recognise that we are dealing with a major social issue—the pension rights of millions of employees—and that pension schemes are a considerable source of institutional investment.

Contracting-out arrangements have been a major success. The Government have reaffirmed their commitment to the parternship with occupational pension schemes. We have tried to ensure that that commitment is reflected in the revised contracting-out terms that have operated from April 1983, while maintaining our overall objectives of stability and fairness to everyone involved. The 1975 Act at last provided for substantial pensions related to earnings during working life. The state scheme provides a flat-rate pension for everyone who meets contribution requirements. In addition, a substantial earnings-related pension will become available as the new scheme matures.

The difficulty was to ensure that those provisions worked in harmony with occupational pension schemes, the members of which already contributed to earnings-related pensions. Indeed, it is because occupational pensions got there first that the complex and intricate fabric of contracting-out arrangements evolved. The overriding objective was plain enough. Good occupational pension schemes should have the option to contract out of the earnings-related element of the two-tier state scheme. They should pay lower national insurance contributions but would have to satisfy the Occupational Pensions Board of their ability to meet strict conditions which were aimed at safeguarding members' rights. The most important of those conditions was a minimum guarantee of a pension broadly equivalent to what would be payable for those not contracted out under the state earnings-related arrangements.

At the time there was great anxiety among employers responsible for occupational pension schemes and those advising them that they would be entering an open-ended commitment as accrued rights would be related to future earning trends. There was also uncertainty about the future return from investments. In opposition, the Conservatives welcomed the concessions for which we and the pensions industry pressed, and applauded the substantial political consensus which accompanied the passage of what was then the Bill.

The basis of our present system is partnership between good occupational pension schemes and the state social security arrangements. It is also the duty of the Government of the day to maintain a fair balance between the interests of those who are participating fully in the state scheme and those whose rights are secured in contracted out schemes.

The foundations of our social insurance system laid down by Beveridge in his historic report were intended to provide income for people when their period of earning was interrupted for whatever cause. The longest period of interruption of earnings may be said to be retirement and the state has a duty to assist people in the provision of income for old age.

We now have a system whereby about half of the working population is covered by occupational pension schemes and the other half is covered by the state earnings-related pension scheme. All of the working population contribute to and are covered by the state basic retirement pension scheme. There is, of course, no barrier to the further development of coverage of occupational pensions. All that is needed is that the schemes should conform to specified minimum criteria, but after the surge in the growth of membership of occupational pension schemes from the 1950s, we have probably now reached a period when growth will be somewhat slower.

It is, of course, for employers to decide, in the light of the needs of their organisation, whether they should set up an occupational pension scheme. Having so decided, in consultation with their employees, they should decide whether their employees should be contracted in or contracted out of the state pension scheme. I believe that that is right. Contracting out represents an arrangement which has the support of the pensions industry, employers and employees. The extent to which contracting out has been adopted well over our original estimates shows that it has produced an attractive harmonisation of interest in which all sides can work together constructively.

We must recognise that occupational pension schemes are still developing and have a long way to go to reach a point when the benefits they pay out match the contributions they receive. Already, however, we can see a significant increase in the numbers receiving occupational pensions and in the level of those payments. Since 1979 it is already estimated that the amount of such payments by occupational pension schemes has risen by 50 per cent. In 1979 it was estimated that the average occupational pension was about £17·60 per week whereas in 1981 it was about £27 a week — a 54 per cent. increase. Also, the numbers of pensions have risen by 15 per cent. between 1979 and 1981.

I therefore suggest — I hope that my hon. Friend agrees—that in the first five years of the new pensions arrangements we have got off to a good start. There are, of course, those who say that we are promising too much and that this will provide too great a bill for future generations to meet. Clearly we must review that. Various other points have been made, but I suggest that five years is far too short a period to start contemplating major surgery.

The Social Security Act 1973—or rather those parts of it which were allowed to survive by the new Government in 1974 — also set up the Occupational Pensions Board. That body, which was initially charged with looking after the arrangements for preservation of occupational pensions, is now also responsible for the supervision of the contracting-out arrangements and the equal access requirements of the Pensions Act 1975.

The board has established a unique reputation for thoroughness, impartiality and being a centre of informed knowledge on occupational pension matters. I should like to pay tribute to the work that it has done and the way in which it has adapted to the varying demands that have been made on it. It has produced authoritative reports on such subjects as occupational pensions for the disabled, equal treatment, solvency, member participation, disclosure and, more recently, on early leavers and the security of pensions rights.

It is obvious that not all of the board's recommendations have been acceptable to the Government of the day. However, with regard to the early leaver report, the Government have accepted the recommendations to ban franking and to relax the requirements for transfers between contracted-out occupational pension schemes. On the latest report, the Government announced on the day of publication that they accepted in principle the need for legislation to compel schemes to disclose information to their members.

I shall say a little about the solvency report and the Government's response to it as I know that it interests my hon. Friend the Member for Kensington. The report had three main themes. The first was the risk of insolvency. It concluded that there was no general risk of insolvency and that it would be inappropriate to impose statutory funding standards on occupational pension schemes.

Secondly, the report recommended that legislation be introduced to compel all schemes to disclose information to members, especially in the form of annual reports containing accounting and actuarial data. The Government especially welcomed that proposal as it is one of the most important ways in which to help pension scheme members to ensure that schemes are managed in their best interests. We attach the utmost importance to that and my right hon. Friend the Secretary of State has announced that the Government accept in principle the need for legislation to regulate that aspect of pension scheme management. I know that my hon. Friend the Member for Kensington will welcome that.

Thirdly, the report called for a review of the legal framework within which pension schemes operate. Most schemes are set up as trusts. The Government have set up a working party of senior officials and expert advisers to assess the representations that were received during consultation on the report to set out the strategic options for dealing with the issues that were raised and related matters. The working group has completed its studies and will present its conclusions to Ministers.

There are, of course, those who declare that we should be better off without the contracting-out arrangements. That would be to ignore that pension schemes are a vital source of institutional investment, and any decision affecting the contracting-out partnership could permanently depress the level of institutional investment. There would also be effects on the stock market if schemes sold investments to buy back into the state scheme. All of that points to the fact that the current partnership between state and occupational schemes is something that we firmly feel should continue. Moreover, some stability is necessary. The new arrangements for the state scheme do not mature until another 15 years have elapsed, and we are only five years into the new scheme. We must maintain confidence in those arrangements. The unique spirit of cooperation between the main political parties when the original terms were settled and the political consensus that formed the basis of those pension arrangements should not be disturbed. That is one reason why I am anxious about the signs that some parts of that consensus may well be disturbed by some recent Opposition proposals.

My hon. Friend referred to Mr. Stewart Lyon and to the help that he has provided for many years. In his presidential address to the Institute of Actuaries last October, Mr. Lyon made a thoughtful and subjective review of the long-term outlook for pensioning or, as he said,

"The question of how far one generation can stake a claim to the next generation's production and get away with it."

We have an aging population, with currently 9·5 million people over pension age. By 2019 that figure is expected to reach 10·5 million. Some people have predicted dramatic changes in mortality as our remaining killer diseases—cancer and heart ailments—are cured, which would increase the numbers of pensioners still further. One can make reasonably accurate projections of the future number of pensioners to about 40 or 50 years ahead, because they are already born.

However, estimates of the future working population —the other half of the equation—present many more hazards. Future fertility rates could vary, and, if the replacement rate falls, a smaller working population must finance a larger pensioner population. I recognise the importance of some of the considerations that my hon. Friend mentioned in this context, although I cannot spend much time discussing future prospects for the population in the time available to me this morning.

Will the departmental study group's report, which my hon. Friend says has been completed, be published as a Green Paper, or do the Government intend it to emerge in due course as a Bill?

The Government intend to study the conclusions of the working group's report when they have been presented to Ministers. At the dying gasp of the present Parliament, I do not wish to give a commitment beyond that, not even in response to the charm with which my hon. Friend asks his questions.

We must remember that occupational pension schemes are set up voluntarily. Ultimately the employer must decide whether to embark upon such an arrangement, although normally today he would also take into account the views of his employees and/or their trade union representatives. At present, there are 90,000 such schemes in the United Kingdom covering more than 11.5 million employees. The number of employees covered by a scheme varies enormously. Some are individual arrangements while others include hundreds of thousands of employees. The decision to set up a scheme could result from pressure from employees, or from a desire to provide employee benefits so that employees think carefully before going elsewhere.

Given the voluntary nature of the schemes and the scope for negotiation between employer and employee about benefits, contributions and the general basis of operations, it is hardly surprising that the early leaver—who I know is one of my hon. Friend's main concerns —has so far fared rather badly. Who will look after his interests? The existing employees would not regard his claims as having priority on resources compared with lower contributions or higher benefits for them, and employers are reluctant to increase their contributions for people who may have gone to seek higher pay elsewhere. For similar reasons, trade unions have not pressed the claims of early leavers.

The Social Security Act 1973 was a big step forward in that it promised some pension rights for those leaving pension schemes before retirement. Before that many people received only a refund of their contributions and had no other rights. The criticism is that the Act required pension rights only to be preserved, with no requirement for indexing or increasing them in the years to retirement. The inflation rate during the past 10 years was such that people now doubt whether a preserved pension will be worth having by the time they retire. Due to the general concern about early leavers, the occupational pensions board was asked in 1978

"To consider what further steps should be taken to protect the occupational pension rights and expectations of employees who change employment including the transfer of rights between pension schemes; to review the financial and other implications and to make recommendations".

The board's report, completed after taking evidence from all interested parties, was published in June 1981. The main or majority recommendation was that the preserved pensions of early leavers should be revalued in line with earnings up to a ceiling of five per cent. A minority suggested a rate of increase no lower than 8.5 per cent. The board estimated that the extra labour costs in a model scheme would be about one per cent. of payroll for men and two per cent. for women. That excluded any knock-on effect caused by pressure to increase pensions in payment by the same amount as deferred pensions. However, it must be stated that employers and the pensions organisations have not reacted with enthusiasm to those recommendations. Their basic argument has been about the costs involved.

Having carefully considered all the representations, my right hon. Friend the Secretary of State announced last October that there was no intention to legislate on the matter for the moment but urged employers to make improvements voluntarily while the matter was kept under review. Nevertheless, other recommendations by the board have been accepted. The first is the abolition of franking, which everyone agrees had to be done. It became clear that insufficient consideration was given to franking during the run-up to the start of the new contracting-out arrangements. Many, looking back, would probably have given different advice at the time.

There are many forms of franking, and we do not intend to ban them all. It will continue to be the case that a scheme may include all benefits, before and after 1978, to meet the requirement to provide guaranteed minimum pensions. We intend to legislate only in respect of future early leavers, and will not ban franking in respect of those who have already left, because that would be unfair and would impose new burdens that were not budgeted for. We intend to deal with the practice whereby the required increases to guaranteed minimum pensions that must be provided by contracted-out schemes are obtained by reducing other benefits. The effect will be to erode benefits in excess of the guaranteed minimum pension for the early leaver. It is generally accepted as, to say the least, a dubious practice, and draft regulations have been referred to the Occupational Pensions Board.

The abolition of franking in this area demonstrates the Government's resolve to improve matters for the early leaver. The board pointed out that transfers of pension rights between contracted-out schemes were inhibited by some revaluation requirements. They were relaxed in regulations recently laid before the House. Meanwhile, there has been evidence of initiatives from the pensions industry designed to assist the early leaver. New types of insurance policies have been introduced whereby the early leaver would, depending on investment yield, possibly receive a higher pension at retirement while guaranteeing the minimum level for conteracting out.

Another development about which I can inform my hon. Friend and the House today, and which I hope will please him, is that the Government have today laid regulations to enable the pensions industry to offer a further option for early leavers. They ease the contracted-out requirements for early leavers who wish to purchase an insurance policy instead of having their benefits preserved in their previous pension scheme.

Hear, hear.

I am glad to have generated so much pleasure in my hon. Friend. Although only the guaranteed minimum pension is guaranteed, higher benefits could result depending on the yield of the investments.

Another relevant matter is the central fund proposed by a prominent group of members of the National Association of Pension Funds. The fund would accept transfers and use investment yields to provide increases for the deferred pensions concerned. The suggestion has been adopted as official association policy and has received considerable press publicity. It has been implied that all that is required to start the scheme is ministerial approval. Unfortunately, I have to tell my hon. Friend and the House that, as so often, life is not quite as simple as that. If the idea were to be accepted, it would require primary legislation.

Full details of the scheme were sent to my Department and to other Government Departments. The comments received from the Occupational Pensions Board and other Departments highlighted a number of problems. For that reason my right hon. Friend, at its conference last Saturday, invited the National Association of Pension Funds to consider whether the proposals could be recast in a form that would be acceptable under the Insurance Companies Act 1982.

It should be stressed that neither the fund nor the insurance-based initiatives to which I have referred do anything to improve the level of payments made by funds to early leavers. That is where most of the criticisms are levelled. All the new initiatives are doing is to invest the early leaver's money with a view to obtaining for him the best possible return. What is really needed is improved payments by funds, either in the form of higher transfer values or increased deferred pensions.

To that extent I welcome the move by the Confederation of British Industry. In its publication "Guidelines for Employers on Early Leavers", it has asked employers to review the arrangements for early leavers and consider the possibility of voluntary improvements wherever those are practicable within the scheme's resources.

There is also the interesting paper just published by the Centre for Policy Studies entitled "Personal and Portable Pensions for All". It suggests that the problems for early leavers might be solved if each pension scheme member had his share of the fund individually attributed to him in units. Those units would be made up of his own and his employer's contributions. He could then, on leaving employment before pension age, use the units to transfer into another scheme, to purchase his own preserved pension, or retain his units in the scheme so that he and his new employer could contribute to that scheme.

Obviously the proposals need very careful study. No firm decisions have yet been taken and I must stress that the proposals undoubtedly present very considerable problems. Therefore, I have to acknowledge to my hon. Friend that for the moment we are trying to use the carrot rather than the stick. We are well aware that if the carrot does not have the necessary force in encouraging action we may well have to grasp the stick. It is certain that the early leaver problem will not go away; rather it is liable to increase as the trend is for people to have not one job in a working life but several. Many professional associations claim that such changes of jobs are essential to provide the varied experience needed by their members, and we must ensure that beneficial moves of that kind do not entail concealed penalties in the pension expectations.

As I have said, the bulk of the complaints arise from the involuntary early leaver — the person declared redundant with little chance of finding another job. From my correspondence and the correspondence in the Department, it appears that he usually wants one of two things. He either wants a refund of his pension contributions to enable him to pay off debts or set up in business, or, alternatively, he seeks protection of the value of his pension rights against inflation.

With regard to refunds, although I can appreciate how useful such a sum of money would be, they ignore the purpose of pension contributions—to provide income in retirement. I admit that in the past many people have looked on pension schemes as savings banks from which their contributions could be withdrawn. However, that is no longer an option, except for short periods of service. The Occupational Pensions Board considered the question in its report and decided that no change was appropriate.

The OPB looked at special pension arrangements for redundant early leavers, and its view was:

"With regard to the plea for special treatment for redundant workers and others who are involuntary early leavers, we do not feel able to recommend that particular categories of early leavers should be singled out for special protection by the law".

It is open to employers to make special arrangements such as added years, immediate pension and the like, but that is at their discretion. That again serves to illustrate the flexibility of the private occupational pension schemes. As the pensions movement has developed it has shown its capacity to adapt to changing circumstances and new demands. I hope that it will be able to respond to the growing challenge that is being faced in relation to the early leaver problem.

I have already referred to the 90,000 pension schemes that we have today in the United Kingdom. Over the last decade the most significant factor has been the move towards final salary schemes. Over 90 per cent. of scheme members are now covered by final salary type pension arrangements. Such arrangements ensure that the pension is based on earnings near to retirement and therefore take account of inflation and salary increases to that point.

I am aware that there are those — and even more aware that my hon. Friend is one of them—who favour instead the money purchase type of scheme. Under such a scheme employer and employee pay fixed contributions, usually a percentage of salary. The pension produced cannot be predicted, because it is the amount and length of time over which the contributions are invested and the yield, which together determine the rate of pension. Small contributions paid early in the career, together with larger contributions paid later, produce varying rates of pension. Increases in salary towards the end of the working life cannot in any way be reflected fully in the eventual pension. That means that there is no relationship in a money purchase scheme between the pension and salary before retirement.

It is significant that the final salary scheme has largely replaced the money purchase scheme. There are those—my hon. Friend is among them—who are now trying to revive interest in money purchase arrangements. The suggestion is that such arrangements can produce a better deal for early leavers. It could be true for the young early leaver if the final salary scheme offered no increases on the deferred pension.

The other claim that is made is that the cost of such a scheme can be quantified, as against the final salary scheme with escalating costs. Money purchase schemes, it must be stressed, are not acceptable for contracting-out purposes. That is because the emphasis is on the contributions paid, whereas for contracting out the pension is all important.

Several ingenious hybrid schemes are now coming forward that will need to be carefully considered. This again provides an example of the way in which the pensions industry can respond to challenge and innovation. The parliamentary pension scheme, of which we are all members, is itself a final salary type arrangement.

The Government remain very firmly committed to the partnership between the state scheme and occupational schemes. We wish to continue to encourage the development of good occupational schemes. It is important that the pensions industry should continue to grow in strength, because its contribution to our economic recovery is essential. That emerged from some of the things that my hon. Friend said in his speech.

Glad as we are of the investment potential of such funds, the pensions industry must also be responsive to the criticisms which are being made, particularly with regard to the early leaver. We have all heard the well-worn phrase that early leavers pay for the stayers' benefits. Whether it is put in those words or any others, it is clear that improvements for early leavers have to be paid for. That means either higher contributions or cutting the existing cake in a different way.

At the same time, many other improvements are being called for—equal survivors' benefits, flexible retirement, increases for pensions in payment, equal pension ages, touched on by my hon. Friend the Member for Ealing, North schemes for part-time workers, and so on. Each scheme and employer will have their own ideas as to priorities.

The Occupational Pensions Board recently recommended that whatever increases are given to early leavers should apply to pensions in payment. If a scheme has large numbers of women, it is only to be expected that they will press for widowers' benefits. For the moment the Government have ruled out legislation to compel improvements for early leavers, but our initiative to ban franking will of itself produce improvements. Similarly, on equal survivors' benefits and part-time workers, there are initiatives from the European Commission which could have a significant bearing on future developments.

The Government respect the voluntary nature of occupational pension schemes and do not seek to impose new liabilities on employers with such schemes, but we have set out our anxieties and some of them reflect the anxiety of my hon. Friend. I hope that those involved will consider their priorities and ensure that within the limits of their resources they are offering a fair deal to all members—workers, early leavers and pensioners, men and women alike. In some cases it may be necessary to renegotiate the benefits to introduce integration or to reduce the accrual rate in order to provide a more balanced structure of benefits.

I assure my hon. Friend that the Government will be keeping a very close watch on the situation. Our decision in principle to legislate on compulsory disclosure of information to pension scheme members should ensure that eventually all concerned are better informed as to the scheme's finances—what it can and cannot afford to do —and that they will therefore be in a better position to influence priorities in provision. There is now a greater interest in pensions than ever before. My hon. Friend, characteristically doing his job well on behalf of his constituents and others, reflected that in his speech.

I trust that the pensions industry will rise to the occasion and confirm that our confidence in the partnership that exists rests on firm foundations.

With the leave of the House, I thank my hon. Friend the Member for Ealing, North (Mr. Greenway) for his contribution to this debate and, in particular, I thank the Minister. I made my maiden speech on this subject, so I wondered whether I was tempting providence by raising it again on the last day of this present Parliament. I certainly hope that none of those who have spoken today will find that they have made their last speech in this place.

The subject is one that affects many millions of people. My hon. Friend has chosen this morning to make a most important and helpful analysis of the Government's position on the matter. In particular, he made an announcement that will bring relief and satisfaction to many, particularly to Conservative Members who have campaigned for an improvement of the rights of early leavers. So I am extremely grateful to the Minister for the trouble that he has taken, and I believe that at last we are on the way to doing something that will establish the rights of the early leaver on a proper footing.

I make no apology for returning yet again to the subject of the sinking of the Belgrano. I am particularly glad that the hon. Member for Plymouth, Sutton (Mr. Clark) has said that he wishes to take part in the debate, because for the past 13 months his contributions have been serious and heavyweight, albeit from a very different point of view.

In The Times Literary Supplement this morning, a two-page review of Falklands books ends with the words:

"Max Hastings quotes a soldier saying of the Falklands 'if they are worth dying for they have got to be worth keeping', but only now do the implications of keeping them become clear."

Max Hastings sang a different tune in The Standard last month:

"Nobody least of all the Falkland Islanders themselves believe that Britain can continue to defend them with a full task force in perpetuity".

So Hastings is one of many who is beginning to change his mind. The review ends:

"Those who supported the war ask what the consequences for England and the world would have been if Mrs. Thatcher's Government had given in to illegality and appeased the aggressors, questions of which their nature cannot be answered".

Those who opposed the war have their own questions which will become more and more insistent with time. A brilliant and daring campaign whose record will always be stirring was fought to reconquer a bleak and barren spot in the ocean of which no use could be made unless it were a place of exile for the hypocrites of patriotism. It would be good if the world were in some measure a better place for last year's war. That is an imponderable. What seems more likely is that the British people and Government may yet find themselves saying with Johnson

"May my country never be cursed with such another conquest".

I say that because, whether we like it or not, these questions will not go away.

If there are two sides to the argument summed up by The Times Literary Supplement today, I shall place the hon. Member for Sutton on the other side of this serious argument. However, it would be churlish of me —whatever the hon. Gentleman may have said last night —not to acknowledge that I have greatly inconvenienced the Minister and, no doubt, his officials. I hope that the inconvenience is not too great.

The Minister asked for longer to reply last night. In today's debate he has ample opportunity. If this debate needed any justification, it is that last night's debate at least elicited more new information. Indeed, every time a Minister says more, he raises more real—not trifling or pernickety—questions. For example, it was not known until last night—and I quote from last night's Hansard:

"The result of those conversations was telegraphed to London at 22.15 GMT"—

I should point out that that is 23.15–11.15 British summer time—

"over three hours after the attack on the Belgrano. It could not be telegraphed before, because it was not possible to get a clear and concise statement before that time of what was in the air".

That is a completely new fact. In a moment I shall address myself to the obvious questions about how on earth it was that, having sent the Foreign Secretary to Washington, the Government did not at least check with him before embarking on this cataclysmic act, predictable and predicted, foreseeable and foreseen, of sinking the Belgrano.

I do not in any way criticise Hansard, who took very accurately the speech that I made last night, but I want to put in context one change of sense. I asked, and I repeat:

"What we really must establish is the gap, in technical terms, between the sending of the message to Conqueror and its time of reception. At what time did the captain of Conqueror receive the order to sink the Belgrano'?"

Surely that question can be answered this morning. Surely, also, the next question that I asked can be answered this morning:

"How continuously well informed were the authorisers of the sinking? What was the timing of the despatch of the authorisation to fire the torpedo in relation to any incoming news that agreement was being reached on the basis formulated by the Peruvian Government and that it was imminent?"

The correction comes now:

"If the Government did not know that agreement was imminent and sent instructions, I concede it is different from sending instructions, I concede it is different from sending instructions with the knowledge that the agreement was imminent. The timing in this matter is important. I asked the Government when they heard that agreement was close and what was the timing in relation to the despatch of the authorisation to sink and whether that authorisation was given before or after it was known that the Peruvian agreement was so close — [Official Report, 12 May 1983; Vol. 42, c. 1009–11.]

Those questions are repeated, and I hope that we shall have detailed answers.

I believe that there is one question above all others to which the House must now address itself. Before taking so drastic a step as sinking the Belgrano, which had a crew of more than 1,000 and where inevitably there would be loss of life in those waters, why was no check made with the Foreign Secretary in Washington and New York and why was no check made with the Government of the United States of America, because their hemispheric relations would be affected by such an action?

It seems only elementary, given what this Government are asking the Americans to do about cruise, Pershing and Trident missiles—and it happens that I do not go along with it — given their view of the United States of America and the Prime Minister's own personal relationships with President Reagan and knowing their concern, at least to have asked the Americans. Not checking finally with the Foreign Secretary is mind-boggling, because the stated reason for the Foreign Secretary going to Washington was to get peace.

I do not believe that the Foreign Secretary regarded it as a cynical negotiaton or a journey for the sake of pretence. In all our 20 years membership of the House, I do not believe that the right hon. Gentleman has ever gone in for that kind of cynical charade. But there is supporting evidence for what I say. On that Sunday, having arrived earlier in Washington, the right hon. Gentleman made it clear that there would be no bombs, no attack and no action. He said specifically on that Sunday that the attack the day before with cluster bombs on Port Stanley had been to bring the seriousness of our purpose to the attention of the Argentines and to concentrate the minds of the Argentine authorities.

In those circumstances and against that scenario, how can it possibly be convincing that it was done for military reasons if the Foreign Secretary in that negotiating position in America was not checked with?

Is not my hon. Friend being too charitable to the Foreign Secretary? Surely if the right hon. Gentleman was there, it was his prime responsibility to report back post haste to the War Cabinet that a settlement of some kind was in the air. Perhaps the War Cabinet quite reasonably assumed that if peace proposals were coming forward through the Americans, the Foreign Secretary's first action would be to transmit them within minutes and not, as we now learn, after many, many hours.

My hon. Friend is right to say "many, many hours." At least five and probably six and a half hours elapsed. Checking yet again this morning, I understand that the Foreign Secretary was with Al Haig over the breakfast period. I am not talking about the toast and marmalade, but from early that Sunday morning the right hon. Gentleman and Al Haig were together. This is established fact.

Has the hon. Gentleman heard from either the Americans or the Argentines whether the Argentine Government had told the American Government that there would be no attack or physical threat to the British forces in the South Atlantic while the Foreign Secretary was in the United States of America?

There was constant contact between the Argentine Government and the Americans over this period, and there is no doubt that Haig and other officers of the American Government were in constant touch with the Argentines. If I am asked whether I can produce what transpired between them, the answer is no, because that is an inter-governmental relationship.

Is it not the case, therefore, that the British Government faced a position in which there was no guarantees on the table for the safety of British forces in the South Atlantic? If that is the case, as I think implicitly the hon. Gentleman is saying, is not that a factor which so far he has forgotten to add to the equation that he is presenting to the House?

I do not think that it is a factor. I went into these matters in great detail last night and will do so again. In answer to the hon. Gentleman's intervention, which I take seriously, I say simply that at the time the Belgrano was sunk she was going towards her home port of Ushuaia and the entrance to the Strait of Magellan on a 280-degree course. I tell the hon. Gentleman with a certain friendliness that if he wants to establish his point he should press his Ministers for that which they have not produced in all these months, which is the course over the previous 24 or 48 hours of the Belgrano and her escorts. If that course had been made known, obviously it would affect the hon. Gentleman's argument.

The 280-degree course which the hon.Gentleman cites frequently does not lead to Ushuaia. It leads to a point some 60 or 70 miles north of that position. In fact, the inference was drawn quite properly that it was circumnavigation rather than a direct course to Ushuaia.

I checked the co-ordinates and had them checked by others. The course that I described takes us to the entrance to the Strait of Magellan.

I return to a point made in last night's debate by the Minister. He described me as speaking yet again every time

"a journalist eggs him on."—[Official Report, 12 May 1983; Vol. 42, c. 1011.]

I must make one matter clear in a personal sense. In all this, I cannot remember taking the initiative in approaching any journalist. The truth is that a large number of journalists have approached me. Of course, when I am approached by a member of the Lobby of the House in the first instance, yes, I keep up the relationship if that journalist is interested. But I do not think that there is any member of the Lobby of the House of Commons who can say that on this subject of the Falklands he did not ask me first. In fact there has been no contact with certain papers which do not care for my point of view.

I can give a long list of discriminating and serious journalists who have approached me, and it is fair to say that I have gone back to them having been approached in the first instance. But I did not approach George Carey of "Panorama", Rodney Cowton of The Times, Paul Foot, Arthur Cavshon of AT, Andrew Graham-Youll of The Guardian, Ted Harrison of the BBC, Steve Hewlett of Channel Four, Norman Kirkham of the Sunday Telegraph, Gerald Morgan Grenville, Chris Mullin of Tribune, Richard Norton Taylor of The Guardian, John Pilger of the Daily Mirror, George Rosie of The Sunday Times, Germon Sopena from Argentina, John Wear, nor Andrew Wilson of The Observer. On each occasion, the initial approach was made by a serious journalist, and I do not think they can all be brushed aside. As I say, the parliamentary lobby is made up of discriminating people, and I do not think that it can really be said that I am likely to be egged on in this way. I suggest that that is not the way to put it.

Another matter ought to be made clear. Last night the impresson was given that here was a weird eccentric man going on and on about this subject. Not all my colleagues were here last night and I must say that 155 Labour Members of Parliament signed early-day motion 480 asking for an inquiry into the circumstances of the sinking of the General Belgrano along the lines of that into the Jameson raid. I do not say that that is the most perfect comparison. I should not like to be pressed by the hon. Member for Down, South (Mr. Powell) on the history of Joseph Chamberlain and the Jameson raid, but it is the nearest analogy. The inquiry into the Dardenelles has certain disadvantages, as do the inquiries into the Mesopotamia and the Crimean war, but I believe that there should be some kind of inquiry. Some of my most tough-minded parliamentary colleagues have signed that early-day motion. They are Members who do not sign any old motion that is shoved in front of their noses.

It is also said that I am obsessed by the Belgrano. It is because in the sinking of the Belgrano that I believe the good name of Britain has been besmirched that I raise the matter. When history comes to be written the sinking of the Belgrano will be seen as a dreadful episode in our history. I believe that it was no accident that the early-day motion was entitled

"Conduct of the Prime Minister"

because I believe that she has shown disgraceful, personal conduct. If I am accused of being over-personal, I must draw attention to the astonishing fact given by Hastings and Jenkins that from 2 April until 5 May — 33 days—the Prime Minister did not call a full meeting of her Cabinet on the Falklands. It was only after the attack on the Sheffield that she had to go to the Cabinet for endorsement. So I am afraid that this is a very personalised situation. All that is in me—this is why I go on about it —is outraged by the fact that she should have got away with it for so long. From February 1982 she has behaved wickedly about the Falklands issue, and the Belgrano is but one tenth of the iceberg of infamy.

I refer particularly to question 4 yesterday. The Prime Minister, in reply to my question, said:

"The hon. Gentleman's allegations are utterly ridiculous. The Belgrano was sunk for military reasons and the threat was real."

I strongly dispute that statement. The Prime Minister continued:

"News of the Peruvian proposals did not reach London until after the attack."

That begs many questions about the relationship with her Foreign Secretary. She continued.

"The record shows that our efforts to reach a negotiated settlement continued until 17 May, 15 days after the sinking of the Belgrano on 2 May."—[Official Report, 12 May 1983; Vol. 42, c. 922.]

That is technically true but, of course, once the Belgrano had been sunk it was an entirely different ball game because the whole war had moved from a basically non-fighting war into a completely different area. I believe that after the torpedo was launched, the chances of a negotiated settlement had been transformed.

The Prime Minister's second statement is astonishing and it must be examined because if it is true it implies that the Foreign Secretary should resign forthwith for dereliction of duty and that heads should roll in the Foreign and Commonwealth Office for incompetence. As I have said, I have been a defender of the Foreign Office and I do not believe that it was incompetent. As I said yesterday, and have said many times previously, the Foreign Office officials are not incompetent, certainly not in this situation, where they did their duty.

Does my hon. Friend agree that on the question raised by that second statement about the timing of the knowledge reaching London, in her remarks the Prime Minister established a six-hour credibility gap, but, in his remarks later in the evening, the Minister of State established that it was nearer to nine or 10 hours before London was informed late in the evening of what the Foreign Secretary had known at breakfast time. Is not the credibility gap widening rather than narrowing.

Yes. In addition, Paul Foot went through the Reuters telegrams and discovered that on 3 May at 10·9 am the Downing Street spokesman was distraining all knowledge of the negotiations, which strengthens my hon. Friend's point.

The Prime Minister's third point shows what a limited person she is. The idea that negotiations could go on meaningfully reveals someone who does not understand much about South Americans and less about human nature among foreigners. I campaign because at home she appeals to the worst jingoistic elements of the English. I am entitled to say that in view of the amendment to the motion on the conduct of the Prime Minister. The bravery of the armed forces has never been in dispute, but anybody who reads the amendment in the name of the hon. Member for Tiverton (Mr. Maxwell-Hyslop) will see exactly what I am getting at.

In dealing with the military threat, I want to refer to the interview with Lord Lewin on 30 January. It is curious that in a reference on 2 May last year to the sinking of the Belgrano, the chief of staff said that the vessel was sailing towards the task force whereas the Ministry of Defence has admitted that it was sailing away from the task force and towards Argentina on a 280 degree course. Lord Lewin said that it was a threat to the task force whereas in reality it was an obsolete status symbol whose guns had a range of seven miles less than the Exocets fitted to the 15 ships of the task force. He said that Argentina had escalated the conflict the previous day with an air attack on task force ships whereas that attack, which injured one sailor, was in response to Vulcan and Sea Harrier attacks and a substantial naval gunnery bombardment of the Stanley airbase earlier in the day which killed 19 and injured 37 Argentines.

Lord Lewin claimed that the General Belgrano and its escorts represented one part of a co-ordinated attack on the task force which also involved Argentina's only aircraft carrier, whereas repeated parliamentary questions seeking information on this attack have been met with the response that it would not be in the public interest to disclose the extent of the Government's knowledge of Argentine naval activity.

In addition to Lord Lewin's reasons, the Minister of State for the Armed Forces stated

"Concerned that HMS "Conqueror" might lose the 'General Belgrano" as she ran over the shallow water of th Burdwood Bank, the task force commander sought and obtained a change in the rules of engagement."—[Official Report, 29 November 1982; Vol. 33, c. 104.]

When it was sunk the General Belgrano was 45 miles outside of the Burdwood bank, known depth 25 fathoms, and heading away from the bank towards its home port.

Is it true that the submarines were directly responsible to Northwood and were not at that time under the control of the task force commander? My understanding is that the submarines operated direct from Northwood. The sinking of the General Belgrano is seen as one of the pivotal events of the Falklands war. As we are faced with a tissue of contradiction from Government sources, should there not be a public inquiry? The evidence goes against the Prime Minister's assertion that the sinking of the General Belgrano took place for military reasons. Do the Government still maintain that HMS Conqueror first contacted the General Belgrano on 2 May? An inquiry should examine people such as Commander Wredford-Brown, Surgeon-Commander MacDonald and Petty Officers Billy Guinea and Billy Budding. As a result of talking to two members of the crew of HMS Conqueror, it became clear that the General Belgrano was detected not on 2 May but on 1 May. That information has not just arisen from my gossiping with the crew. It is in the Sunday Times book and in the book by Hastings and Jenkins. Furthermore, it is accepted in the corpus of knowledge. Do the Government still maintain that the Belgrano was detected on 2 May, because they are now saying that the Belgrano was detected some hours earlier. On 4 and 5 May, the then Secretary of State for Defence, the right hon. Member for St. Ives (Mr. Nott), made clear that the Belgrano had been initially detected at 8 o'clock London time on 2 May. The radio programme "The World at One" recently broadcast that clip in Mr. Ted Harrison's programme.

I have received a letter from a relative of a member of the crew of HMS Conqueror asking if I undersood how exhausted those boys were when they returned and that they had, naturally been extremely frightened and had a rough time. I understand all of that. I am not criticising the crew or our service men. I am criticising the political direction of the war. Was the authorisation to sink Belgrano given before or after it was known that peace was in the bag? My hon. Friend the Member for Battersea, South (Mr. Dubs) has referred to telegrams that are printed in the New Statesman. The telegrams are important and I will refer to them.

"Lima, May 2, Reuter — Peruvian President Fernando Belaunde Terry said today that peace negotiations between Argentina and Britain were under way and that both countries had agreed in principle to cease hostilities. He was speaking at a press conference here on the efforts to end the fighting between Britain and Argentina over the disputed Falkland Islands."

That telegram was sent at 00.30 hours.

The next telegram reads:

"0045: Falklands—Belaunde 2 Lima. President Belaunde said that both parties would be willing to accept peace proposala set out by Secretary of State Alexander Haigh who conducted a peace shuttle mission between London and Buenos Aires before fighting broke out.

The President said that he could not go into further details but added: negotiations are under way and that in a short while total peace can be established in the South Atlantic and there is a will on both sides to cease hostilities."

The next telegram reads:

"0054: Falklands—Belaunde 3 Lima. As President Belaunde made his announcement Argentina's ruling miltary junta are meeting in Buenos Aires to discuss the Falklands crisis.

0109: Falklands — Belaunde 3A Lima: In London, a spokesman for the Prime Minister Margaret Thatcher's office said he knew nothing of the reported negotiations or agreement in principle."

As the Foreign Secretary was in America doing precisely that and was presumably in contact with ambassador Charles Wallace in Peru — a very able diplomat—it is mind-boggling and astonishing that such statements can be made. Again—

"0123: Falklands — Belaunde: President Belaunde said Argentina and Britain were studying a seven-point peace plan drawn up by Mr. Haig. He said that at present General Galtieri was discussing this with Argentine leaders, adding: 'If this effort fails it will be a tragedy for Latin America and perhaps for the world."'

once more—

"0158 … snap: London, May 3, Reuter … A British submarine torpedoed the Argentine cruiser General Belgrano in the South Atlantic last night, the British defence ministry said today. The cruiser was believed to have been severely damaged, the Ministry said."

Given what was going on, how could such an order have been given by people seriously interested in peace? If the spokesman was inaccurate or did not know, we should be told about that. The questions that I asked yesterday as reported in col. 109 of Hansard are important and fit into the argument. We need a point by point denial and not the blanket denial that we received last night. Did the Foreign Secretary have a working breakfast with Al Haig in Washington? Do the Government deny—I have cross-checked this again—the statement that Peter Snow made on 29 April? I reiterate that I am talking about journalists who are very careful. The Newsnight transcript states:

"At breakfast time in Washington Haig and Pym had a long meeting."

Did they or did they not have a long meeting? The transcript continues:

"Our American source tells us that it was now clear to Haig that Mr. Pym wanted a settlement"—

I do not doubt that for a moment—

"and was working hard for it"—

I do not doubt that either.

"We're told that Mr. Haig personally phoned Mrs. Thatcher."

Is that accurate or inaccurate?

"So, according to the Peruvians and the Americans Britain was aware—at the highest level—of all that had developed at the time they were getting up from lunch at Chequers"

Is that accurate or inaccurate? The transcript continues:

"now what no-one is telling us is exactly when the war cabinet at Chequers made its decision to give the Navy the green light for the Conqueror to attack the Belgrano."

Perhaps we could have an answer to that. The transcript goes on:

"whether or not the full reported details of President Galtieri's alleged acceptance of the plan were known to Mrs. Thatcher when she finally said Yes to Commander Wredford Brown there should have been time to attempt to call the mission off in the intervening five hours."

If there was no contact, why did not the whole Foreign Office machine at least contact the Foreign Secretary to find out what he was up to in America? That is the astonishing thing. Yesterday I quoted the reaction of Sir Nicholas Henderson, who went white when he heard what had happened to the Belgrano. People are beginning to talk and we should establish why consultation did not take place with his own boss. Why did not consultations take place with the Foreign Secretary, Sir Anthony Parsons, Sir Nicholas Henderson and our ambassador in Lima over that crucial decision? By what means did the Peruvian proposals reach London, and was the ambassador in Lima negotiating with the Government of Peru with the approval of Her Majesty's Government before any information on those proposals reached London?

The answer will be "By telegram", and "no".

In that case, I shall be interested to see what Mr. Paul Foot writes about his interviews in Lima with senior officials and Ministers of the Peruvian Foreign Office. The implications of the Minister's "no" is that Mr. Arias Stella and a number of senior people in Lima, Mr. Wagner and others, are not telling the truth.

The implication also is that in some sense the ambassador was acting off his own bat in Lima.

Nonsense.

I hope that that comment goes into the record, because it is a matter that must be pursued.

Had all the Foreign Secretary's activities gone on unbeknown to the Prime Minister? is that what we are expected to believe? As I have said, it is all very well saying, as the Minister did last night, that I am "egged on" by journalists, but Mr. Foot has been to the place where the information comes from. That is why I must have a point-by-point reply. He says in his researched article:

"The Belaunde proposals, it is safe to conclude, were taken seriously by both sides. They were drawn up into a treaty which was expected to be signed. And they were put to flight by the sinking of the Belgrano."

Is it said that there were no proposals?

"Senor Arias Stella, who is a fellow of the Royal Society of Pathologists in London and has no anti-British feeling, generously ascribes the Belgrano sinking to military accident. He told me that he and all his colleagues had assumed that some hothead submarine commander had let fly at the cruiser without any idea of the state of negotiations in Lima, Buenos Aires and Washington.

This has been indignantly denied by the submarine commander himself. He insists he received clear orders to sink the cruiser."—

and said so when he returned to Faslane on 5 July.

Mr. Foot continues:

"Nor have Tory Ministers been slow to claim their part in the action. Margaret Thatcher told the House of Commons on 4 May last year: 'With regard to that particular event [the sinking of the Belgrano] and all events other than the mere tactical ones in the South Atlantic, the task force clearly is and was under political control.'"

What was the control? We have to be clear about this. When the order was given to the submarine commander to fire the torpedo, who was in control?

Mr. Foot continues:

"A few minutes later, Nott, the Defence Secretary, was asked by Willie Hamilton: 'Will the Minister confirm … that the decision to launch the torpedoes was a political decision—in other words, it was made either by the Prime Minister or by the Rt. Hon. gentleman, or by both together? Or was it made by an admiral on the spot?' Nott replied, rather evasively: 'The overall political control remains with the government.'

There the matter rested until last October, when a mysterious leak to the newspapers (printed in all of them) 'revealed' that the decision to sink the Belgrano had been taken by the 'war cabinet' (minus Pym) in pre-lunch discussions with the service chiefs on 2 May.

This version comes out in The Battle for the Falklands by Simon Jenkins and Max Hastings as follows: 'Sir Terence Lewin went to the war cabinet meeting at Chequers on the morning of Sunday 2 May to request permission under the rules of engagement to sink the General Belgrano some 40 miles South West of the total exclusion zone.' After some discussion, the book goes on: `No Minister demurred. The order was issued before lunch.' One difficulty about this is that the cruiser was not actually sunk until about eight hours afterwards between 3 and 4 pm Argentine time—8 and 9 pm GMT. Even given the difficulties of contact with a submerged submarine, this does seem a huge time gap.

I refer again to the interview given by Lewin on "The World at One" on 30 January when he said distinctly that there were no difficulties at that time in contacting the submarine. He made that clear in that interview and it is on the record.

Foot states:

"Another problem is that the war cabinet meeting with the defence chiefs was not just a discussion about the Belgrano. It was, as reported in the newspapers on 4 May, a full-scale assessment of the state of the war, which went on for four hours. At any rate, the direct responsibility of Thatcher, Whitelaw, Nott and Parkinson for the Belgrano sinking has never been denied. The question then arises: how much did they know of the progress of the Peruvian peace talks?"

That is a question which must be asked. What was known at Chequers about the progress of the talks?

Paul Foot states:

"The seven-point plan had been agreed between Haig and Belaunde the previous night (in Britain, the early hours of the morning). Was it conveyed to Chequers that night? Did the War Cabinet meeting not have before it 'the latest from Francis in Washington'?"—

something must be explained about the contacts between the war cabinet and the Foreign Secretary.

"Even if they did not, they knew that Pym had gone to Washington in a last bid for peace"—

What on earth was the Foreign Secretary doing there if he was not taking part in major negotiations? That is the criminal part of not contacting him before pressing the trigger—

"However hopeless such a mission seemed in the eyes of the hawks in the war cabinet (and by all accounts they were all hawks except Pym), they knew that the armed forces could not be seen to cut the ground from under the Foreign Secretary's feet."—

I believe that the ground was cut from under the Foreign Secretary's feet—and how.

"On arrival in Washington the previous evening, Mr. Pym gave an impromptu press conference."

It is obliging of the hon. Gentleman to read out all the quotes that he read into Hansard yesterday evening, but I am not sure that it is necessary for him to repeat himself at such tedious length.

I take that intervention calmly. I hope that it means that the questions that appear in yesterday's Hansard will be answered at length. The parliamentary opportunity exists for a proper answer.

I put it to the Minister that had there been a convincing answer to all this it would have been sensible to give it before now. Whatever others may say, my track record is that if I am given convincing answers I am man enough to acknowledge that. I have done so in the past on a number of subjects.

Let the Minister of State reflect on whether, if I had merely been repeating questions that did not deserve an answer, there would have been so much interest from many other serious people. I am not asking questions only for myself; I am asking questions for a largish and growing section of the community who want to know how their country became involved in such an episode. Foot states that the Foreign Secretary

"explained that the attacks on the Falklands that day had been intended to concentrate the Argentines' mind on a peaceful settlement."

Nicholas Ashford reported in The Times on 2 May that the right hon. Gentleman said:

"No further military action is envisaged at the moment, except to keep the exclusion zone secure."

Foot says that

"This pledge was kept — right up to the sinking of the Belgrano.

At the very least, then the Cabinet that Sunday morning knew that Pym was trying for peace and that a period of calm was vital if he was seen to be trying. That is the background, apparently, in which they gave the order to attack a ship on the high seas, with a complement of 1,000 men, when it was outside the war zone that they themselves had designated."

I am not greatly impressed by what the Minister said last night about generalised warnings. Why establish a zone unless action will be taken only inside it?

Foot continued:

"As the afternoon and evening went on, however, Mrs. Thatcher and those Ministers who stayed in contact can have been left in no doubt as to the progress of the Peruvian peace talks. By noon US time, 5pm GMT, after all, the seven-point plan had been agreed between Belaunde, Haig and Galtieri. Even before he sat down to lunch wih Haig, Francis Pym must have known about this, and expressed his own agreement. He must, too, have conveyed it back to Chequers."

He had not. The evidence of Senor Stella, upon which the hon. Gentleman relies, is that that had not been agreed. Senor Stella plainly said that there were a number of areas upon which agreement had not been reached. He has given evidence publicly that there were a number of points that had to be referred to the junta. It was no different from all its predecessors in negotiating terms.

If that is so, why is there no record of contact between the Foreign Secretary in Washington and Ministers in London, albeit it was a Sunday? When the hon. Gentleman, who is well informed and has studied this matter seriously, asks such questions, they beg more questions. How was there an information gap, given that the Foreign Secretary's stated purpose was to seek peace in Washington? I do not believe that it was a cynical move, because I do not believe that the Foreign Secretary would have been party to such a move. Why was it all not reported?

Foot claims that the Foreign Secretary must have conveyed the information back to Chequers. Foot stated:

"If the order to sink had in fact been given at lunchtime, there was still time to countermand the order, or to try to countermand it. For the Belgrano was not sunk until three hours later."

I quote from page 9 of the transcript of 30 January. Christopher Lee, the BBC correspondent, asked whether approval was immediately forthcoming. Lewin said:

"Yes, immediately forthcoming and was taken with legal advice in terms of international law and we were within international law and the attack was justified under Article 51 of the United Nations Charter which permits you to take action in your own self-defence."

Lee asked:

"From the time that the Conqueror sighted the Belgrano to the time that it sank the Belgrano, how long did it take?"

Lewin answered:

"A matter of hours. Communications with nuclear submarines are not continuous and 100 per cent., because this would restrict the nuclear submarine's operations. But on this occasion, the communications worked very quickly."

That was the view of the chief of staff, not mine.

The Government do not deny that they were prepared to accept the Belaunde proposals. Foot claims:

"The official Foreign Office document, 'The Falkland Islands; negotiations for a Peaceful Settlement', published on 20 May last year, says: 'The next stage of the negotiations was on proposals originally advanced by President Belaunde of Peru and modified in consultations between him and the United States Secretary of State … Britain was willing to accept the final version of these proposals for an interim agreement, but Argentina rejected it.' The document does not point out that Argentina rejected it under the most savage provocation imaginable, namely, the sinking of the Belgrano."

That is not true.

If it is not true, the Minister must spell out why. Will the Minister make a note of that and add to our knowledge?

If the interim agreement had come into force, what would have happened? All forces would have been withdrawn: 1,000 lives and several thousand million pounds would have been saved; the British forces would have left the Falklands for the time being; and a settlement respecting the needs of the islanders would probably have been reached. Not everyone would have been satisfied, but at least the Falkland Islands would have had a future as a place where people live and work rather than as a military bunker.

The only organisation seriously undermined by a settlement would have been the British Conservative party. Its press and its Right wing would have been let off the leash. Only war and conquest would have satisfied them. For the Iron Lady, donning the ill-fitting garment of peace and compromise, the future would have been bleak indeed.

That is why the details must be examined in depth. I repeat that the action, like so many other actions throughout the Falklands campaign, was taken on the basis, not of military necessity, but of political necessity. The threat was not to the task force but to the Prime Minister's position.

Now we are left in an appalling position. Our country is trapped. Sooner or later we shall have to negotiate. Today we hear news that the Rev. David Shepherd, the bishop of Liverpool, has come back to say that there are two sides to the case. The difficulty is that those who put forward views may go away, but the questions themselves will not go away. Time is not on our side, and sooner than we think we shall have to negotiate it. It is better to negotiate in the knowledge of the truth of what happened.

The Belgrano is just one of the tips of the iceberg. I wonder why on the evening of 7–8 April, five days before the submarine spy could have got there and, as the American Secretary of State was in midair on his way to see her about peace the British Prime Minister decided to impose a military exclusion zone. Anyone concerned about peace would not have acted in such a pre-emptive way. Indeed, if one refers to the Franks committee report, one realises that we must have military contingency plans. It is becoming clearer and clearer that orders were placed for explosives in the shipyards of the Tyne as far back as February. It is now clear that the Argentine junta decided to invade on 12 January. It is also clear that our MI6 performed properly. How could this country have gone on so long with that knowledge without saying to Argentina, "If you invade we will react"? In life, it is quite acceptable to take a hard line and then compromise. To start with a soft position and then take hard action is utterly unacceptable.

The Government would be well advised to give a great deal more information as soon as possible. People are beginning to talk. I wonder what the memoirs that Al Haig is busy writing will reveal. I also wonder what the memoirs of the right hon. Member for Sidcup (Mr. Heath) will reveal. They will be revealing because the right hon. Member for Sidcup had plenty to say during the first week in May about the Peruvian peace proposals and asked in what respect they were unacceptable. Indeed, he went on television to make that point at some length.

When the history of this affair is written, complexities about the internal domestic politics of the Conservative party will be revealed. It will reveal the Prime Minister's worries about her Foreign Secretary's old loyalty to the right hon. Member for Sidcup. That was right as he was the right hon. Gentleman's Chief Whip. I believe that the right hon. Member for Sidcup and the then Foreign Secretary would have done the right thing. It is quite clear that no British Prime Minister since Churchill, and probably not Churchill, would have acted as has the present Prime Minister on many occasions throughout the crisis. That is why so much of what I have said about the Prime Minister's conduct is personalised.

The hon. Member for West Lothian (Mr. Dalyell) opened and concluded his speech with the familiar cry that we must negotiate. We all know what he means by that. He means that we must give up the Falkland Islands to Argentina. If he had been to Argentina, he would know that they simply want to forget about the whole affair. They hate the subject and want to put it at the back of their minds. All of the literature, the television shows, the displays and the discussions that have emerged since the war display a mawkish introspection and an exculpatory quality.

The nearest comparison that I can make is with the American literature that swamped the United States for three of four years after that country had withdrawn from Vietnam. It is impossible to get away from the impression that the Argentines feel a sense of shame and humiliation and are trying to put the affair at the back of their minds. They are no more likely to attack the Malvinas—they simply occupied them last time — than is the United States to send its forces back to Saigon. It is not realistic to suppose that Argentina will embark on a head-on confrontation in the next 20 years. The hon. Member for West Lothian makes our flesh creep on this subject. If he studied Argentine literature such as "Los Chicos de la Guerra", which has come out since the war, he would realise the truth of what I have said.

Before I deal with the substance of the hon. Gentleman's triangular argument, I must point out that he is keeping rather bad company. He quoted Paul Foot at great length. Paul Foot and others like him, such as Anthony Barnett, and those on the extreme Left who are convinced Marxists, hate their country so much that they will even take sides with President Reagan's favourite hit-man in that hemisphere—President Galtieri. It is an extraordinary paradox that the far left and Marxists are so resentful of the military triumph and the accretion of prestige that came to Britain out of the Falklands that they will gang up with Jeane Kirkpatrik, the extreme oppressive Right in the State Department, and the private armies and repressive gangsters of South America, and recommend actions and policies that would keep them in power. However, they do not welcome actions and policies that would unseat them.

I move on to the hon. Gentleman's arguments, if one can call them that. We must admire him, because he has created an enormous artefact, part substance, part imagination and part inference feeding on supposition and on instinct. It has the tiresome quality of a show that is sometimes generated under the pretence of scholarship—the dramatised documentary—in which a real historic event is presented with actors and with a script that pays scant regard to the disciplines of scholarship. It is given a quasi-verity. Those who do not know the real facts and who have not read the books and considered the sources are left with the image of his dramatised documentary, which does not even follow the set form of some of those deplorable works. There is a hint of Bunuel's film "L'Annëe Passe a Marienbad"—

Order.

It should be "Last Year at Marienbad", although I foolishly gave it the Common Market title. In that film, figures drift across a misty scene. Figures appear and reappear, and one wonders whether that is the person about whom the narrator was speaking, because he is unrecognisable. The hon. Gentleman's account is highly fictionalised, but it rests on the arguments, first, that the sinking of the Belgrano was needlessly brutal and provocative; secondly, that it prejudiced negotiations that were realistic and in train; and, thirdly, that it was directly related to the internal policies of the Conservative party.

That third argument is the most ludicrous and unrealistic of all the hon. Gentleman's predictions. I shall not dwell on it, because almost every sentence—each one more preposterous than the last—was prefaced with the words "I believe that", and no evidence was adduced. The next proposition is that this event prejudiced serious negotiations that could have delivered a peaceful solution. The phrase used by the hon. Gentleman was, "peace was in the bag", but, as I said in an intervention, his own principal witness, the Peruvian diplomat, Mr. Stella, has denied that. When Mr. Stella has been subject to independent cross-examination by other commentators, he has admitted that the negotiations had had a cursory provisional acceptance but that they had to be referred back toBuenos Aires where they would be examined in detail. He explained that other provisions had to be attached to them and they were no different in substance from the negotiations that had been continuing for a long time. It is clear that the purpose of those negotiations was to buy time. They were all artificial, and the junta had at the back of its mind the fact that the south Atlantic winter was approaching, that in a matter of weeks it would be impossible for military force to be applied in the area, and that in the fullness of time the United Nations, the Organisation of American States and the World Court—I remember the Leader of the Opposition recommending the use of the World Court at one point—would get in on the act and be left in possession. Nothing that the hon. Gentleman has brought to the attention of the House distinguishes those negotiations in any serious qualitative sense from any others that preceded them.

Finally, there is the hon. Gentleman's argument that the sinking was needlessly brutal and provocative.

If that is all true, why was the Foreign Secretary in the United States? Was it a cynical visit? I do not think it was. I thought that he was negotiating meaningfully. How would the hon. Member for Pymouth, Sutton (Mr. Clark) reply to the suggestion that it would at least have been wise to consult our own Foreign Secretary before taking such a step?

The hon. Gentleman asked me what I think the Foreign Secretary was doing in Washington. No doubt the Minister will enlighten us to the extent that he thinks appropriate. At the time in question, if United Nations resolution 502 could have been complied with—if the junta had been serious and complied with it—it would have been our duty to maintain contacts at the highest level.

I suppose that the hope at the back of the minds of Mr. Haig and the Foreign Secretary was that the junta would show good faith and make the sort of concession that it would be obliged to make under resolution 502. But the hon. Gentleman maintains the petty and repetitive charade that Senor Belaunde had acted partly out of his personal rivalry with Senor Perez de Cuellar, whom he was determined to do down. I do not propose to detain the House in dealing with intricacies of that sort.

The hon. Gentleman asked me whether it would have been appropriate to consult the Foreign Secretary first. I do not agree that it would. I do not know whether he was consulted, but I can well understand that it was an operational decision that had to be made. The circumstances were that night was coming on, there were difficulties in maintaining contact, and there had been ample evidence in the preceding days of hostile action. Battle had been joined.

The hon. Gentleman admits that the raid on Port Stanley had caused casualties. He admits, although he plays down, the efforts of the armada to attack the task force on its voyage south. All those circumstances had effectively generated a state of war in the area. Here was a principal target. It offered an opportunity to show the strength of the SSN, a weapon against which Argentina had virtually no answer.

There is evidence, which the hon. Gentleman has not cited, that another SSN had contacted the Argentine aircraft carrier the Veintecinco de Mayo in earlier days. It had been under instructions to stay with it, not to sink it, and had lost it. So there was the other major capital ship south of the Falklands. If that, too, had been lost, the consequences would have been completely unpredictable. I am certain that that single action was the most decisive of them all, the most economical, and saved more lives than any other, because, after the sinking of the Belgrano, the Argentine fleet scuttled to port and did not emerge again.

Following that, we removed the risk of any subsequent naval engagement. Had the Argentine navy behaved with even one fifth of the bravery and skill shown by the Argentine air force in going to almost certain death, as we know, the consequences would have been incalculable. The hon. Gentleman knows that many hundreds of members of the Royal Navy, and I know that many hundreds of my constituents, who are at present alive might have been drowned or burnt. For that reason, I believe that it was the most decisive moment of the Falklands engagement, and was certainly the most effective and the most beneficial.

On that argument, the bereaved of Coventry, Antelope, Ardent, Atlantic Conveyor and Sheffield might have been saved their bereavement. However, I shall not pursue that argument further.

The fact is that, on arrival in Washington, the Foreign Secretary made it clear that the actions of 1 May had been carried out to suggest that we were in earnest and to concentrate the mind of the Argentines, and that there had been peace—no action—throughout that Sunday. To say that it was simply an operational action, a matter of operations, is surely a grotesque underestimate of the predictable effect of sinking a capital ship—whatever its previous course, and one would like to know—which at that moment was going back.

What the hon. Gentleman said about nightfall, bearing in mind modern sonar on the Conqueror, was very strange, because night time makes no difference to sonar.

I had in fact concluded my speech. The point about the bereaved emphasises the whole force of my argument, because all the people who were killed on those ships were either killed or injured by the actions of the Argentine air force. How much greater a multiple there might have been had the Argentine navy also pressed its attack and used its Exocet missiles is a matter for conjecture. I am happy to leave the other points about the diplomatic exchanges to my hon. Friend.

I am particularly grateful to my hon. Friend the Member for Plymouth, Sutton (Mr. Clark) for his extremely effective and witty intervention. He saved me the need to say a number of things that I might otherwise have said about the speech of the hon. Member for West Lothian (Mr. Dalyell), who on this occasion I thank for leaving me rather more time today in which to reply than I had last night. However, I shall not detain the House long. In fact, there are few outstanding points that I was unable to clear up last night, or that the hon. Gentleman raised today, which are substantial enough to detain us long.

On the minutiae of naval movements, I hope that the hon. Gentleman will understand that if he wishes to pursue the subject he should do so with the Ministers at the Ministry of Defence, either in correspondence or questions, whichever he feels is the best way. I must leave him to do that, because I cannot answer his questions on that subject now. I only wish to say that it is my personal belief that the way in which the hon. Gentleman has chosen to pursue his disgraceful vendetta against the Prime Minister comes close to being a gross abuse of the procedures of the House. When he says that he intends to do it in the next Parliament, I hope that the intervening weeks will give him time to reflect and to come closer back to his senses.

The hon. Gentleman raised the matter of communications from my right hon. Friend the Foreign Secretary in Washington to his colleagues in London. As I told the hon. Gentleman only last night, a thorough investigation of the records confirms that an outline of the American-Peruvian framework proposals was first communicated to London in a telegram dispatched from Washington at 22.15 GMT on 2 May, over three hours after the attack on the Belgrano. I can tell the hon. Gentleman further that in another telegram, 15 minutes later, our ambassador in Washington specifically stated that my right hon. Friend had not consulted London about the proposals. Of course, the ambassador sent that telegram because my right hon. Friend was on his way from Washington to New York. It is there, and it is clear that there was no telephonic consultation, and I must ask the hon. Gentleman why he thinks there should have been, given the circumstances as they actually were, and not as he imagines they might have been.

Why does anyone suppose that my right hon. Friend should have felt impelled to leap to the telephone to tell his colleagues in London about a roughm. scheme of ideas, by no means fully elaborated or fleshed out that Mr. Haig had outlined to him, as if it represented the one and only opportunity for peace in the south Atlantic, especially when, as my hon. Friend the Member for Sutton emphasised, the Argentine junta had consistently shown itself intransigent throughout all the negotiations during the preceding weeks?

the answer to that question is clear. There may be no reason why the Foreign Secretary should have leapt to the telephone, but before such a drastic action was taken there was every reason in the world why someone of great seniority in London should leap to his telephone to consult the Foreign Secretary—the political head of the Foreign Office — who was conducting the negotiation. It is astonishing not that the Foreign Secretary did not feel impelled to get on the telephone but that, before giving the order to the submarine, no one decided to consult the Foreign Secretary.

That is the hon. Gentleman's opinion and we are fairly familiar with it. We do not have to agree with it simply because he goes on repeating it, any more than we have to accept the terms on which he sets his argument out. When he pretends that peace was there for the asking, that there was an interim agreement ready for signature, the fact of the matter is that as the proposal had not been endorsed by the Secretary of State, let alone formally conveyed to London for consideration, there could have been no such thing as an interim agreement. That is self-evident.

Had time permitted I would have liked to make a point last night about the statement that President Belaunde made subsequently and to which I have never heard the hon. Gentleman refer. I disagree with what my hon. Friend the Member for Sutton said was President Belaunde's motivation in this matter. I think that he had a high-minded desire to secure peace and we should recognise the President of Peru as an international statesman who deserves our gratitude and respect for trying to achieve a peaceful solution.

In an interview that was printed in an Argentine magazine earlier this year President Belaunde said that the British negotiating position after the sinking of the Belgrano had been receptive and open. He also made it clear that negotiations continued for at least two weeks thereafter, that both Argentina and Britain participated in the process with significant progress being made and that it was Argentina who finally took the matter out of his hands. The hon. Gentleman's attempts somehow to telescope these events to suggest that the Argentines walked out finally and completely when the Belgrano was sunk is a distortion and I think that he knows that.

The construction that the hon. Gentleman attempts to put on one particular quotation in the New Statesman article by Paul Foot is tortured and tortuous. It is one that he quoted last night and has quoted again today. I think that he will be astonished to see how much of his speech last night he has duplicated today. I wonder whether he recalls some of what he said last night at all. I am referring to the passage about the impromptu press conference when my right hon. Friend the Foreign Secretary said that

"No further military action is envisaged at the moment, except to keep the exclusion zone secure."

The hon. Gentleman knows, and I reminded him last night, of the message that we conveyed through the Swiss to the Argentine Government on 23 April about the consequences of any approach by Argentine warships. There was a clear warning that appropriate action would be taken. That was common knowledge. It was known to the Argentines and to my right hon. Friend, and it is in no way inconsistent with what was said about keeping the exclusion zone secure. That was the warning which, for some peculiar reason of their own, the Argentine elected to ignore when they sent the Belgrano into the area where it was sunk.

The heading of the Belgrano seems to be a matter of fairly minimal importance. The real question and the one that the hon. Gentleman has never asked — it is extraordinary that he has managed to overlook its importance—is why the Belgrano was there at all, and why she had been sent to sea. This was not some routine passage. It was not a training exercise or a pleasure cruise. This was a warship, armed, equipped, manned and sent to sea for a warlike purpose. Unless the hon. Gentleman has some evidence to the contrary about which he has not told us—

It would be helpful if we could have put in the Library of the House or if we could be informed of her course over the previous 48 hours.

That is not the point. The point is why she was there, what she was doing there and whether she was there to impose a threat to our task force. If the Argentines are trying to say that she was not meant to be a threat, they must be pretty naive to suppose that she would not be seen as a threat given that she was in the position where she was; and she paid the inevitable price.

What is the difficulty about giving this information?

I am not giving way again to the hon. Gentleman. As I told him earlier, if he wants to ask questions about the minutiae of naval matters, he must address himself to my colleagues in the Ministry of Defence, and I hope that he will.

I come finally to what in my view is an important question. It concerns the quality of the hon. Gentleman's arguments and the quality of his motives. He gave himself a good chit today when he said, "If I am shown that I am wrong, I will admit it." He may not recall that last night I reminded him of the smear on the Gurkhas from "Los Chicos de la Guerra" which he took such pains to read into the Official Report on 15 April at c. 1067–8, and where I gave him a denial which he said last night that he did not accept and that he did not intend to retract or express any regret for what he had done.

The facts are pretty welt known. The allegations are serious if they are true. They are outrageous if they are untrue. They are outrageous., and everyone knows it. If the hon. Gentleman had taken pains to establish whether there was truth in them at the time that the book first came out, he would not have needed to come to the House months later and use this grubby device to keep his unsavoury campaign going by reading it into the columns of the Official Report.

I am not aware that the hon. Gentleman has made any attempt to contact Ministers in the Ministry of Defence who could have told him in terms that there was no contact between the Gurkhas and Argentine forces during the fighting on the Falkland Islands. My hon. Friend the Member for Sutton might interject, "Not for want of trying," which is true, but there was no contact. The only Gurkha casualty which was suffered was an unfortunate soldier who fell victim to an Argentine booby trap in the post-fighting phase.

The Falkland Islands were not exactly denuded of journalists during the fighting. It seems to me that if any such occurrence as is reported in this nasty little book had actually transpired, some journalist would have heard about it and reported it. If there had been substance in it, even the Argentine officers, who were not particularly careful about the welfare of their men, might have been moved to lodge an official complaint on the grounds of a breach of the Geneva convention. None of these has happened. It has always been common knowledge, first, that the Argentines were very scared of the Gurkhas. That we know. But, secondly, the events as described in this book did not occur, and the hon. Gentleman should not give them currency.

Let me be candid about this. I asked the question, and I might not have hesitated so long had I not had a disturbing letter from Brunei, in reply to which I sent back various quotations. On receipt of an answer, which may take some time, I shall have to make a judgment. Those of us who know something of the Gurkhas are not so sure that the information is inaccurate. Are the Government saying that there was no contact whatsoever in the fighting between Argentine forces and the Gurkhas? If so, that is a new factor.

It is not. I do not believe that the hon. Gentleman is quite as green as he is cabbage-looking on the subject. I suggest he asks some more questions. He will then find that I am not misleading him.

I do not intend to dignify the hon. Gentleman's delusions by detaining the House any further. He has been given the facts. He may not like them, but they remain the facts. My right hon. Friend the Prime Minister stated the position when she said:

"The hon. Gentleman's allegations are utterly ridiculous. The Belgrano was sunk for military reasons and the threat was real. News of the Peruvian proposals did not reach London until after the attack." — [Official Report, 12 May 1983, Vol. 42, c. 922.]

And that is that.