Skip to main content

Commons Chamber

Volume 49: debated on Tuesday 22 November 1983

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Commons

Tuesday 22 November 1983

The House met at half-past Two o'clock

Prayers

[MR. SPEAKER in the Chair]

Oral Answers To Questions

Education And Science

Lancashire

1.

asked the Secretary of State for Education and Science when he now expects to announce his decisions in respect of sixth form reorganisation in Lancashire.

My right hon. Friend hopes to announce his decision in the near future.

Will the Minister and the Secretary of State take into account when they make their decision the fact that while, understandably, some parents have anxieties about any changes, this reorganisation proposal, as it affects sixth forms in Blackburn, enjoys wide support? Will they bear in mind that it was moved in the county council by the leader of the Conservative group, Mrs. Pat Case and given support by the majority Labour group?

I am aware that there is bi-partisan support for the proposals for Blackburn in the Lancashire county council. I know, too, that the Lancashire county council is keen for an early decision and that it is incumbent upon us to ensure that the proposals are examined as fully as they can be.

When making any proposals, will the Secretary of State be mindful of the fact that in Lancaster there is tremendous support for all our secondary schools — our boys' grammar schools, our girls' grammar schools, our Church schools and our ordinary secondary schools — and that the people of Lancaster would rather leave things as they are?

We have no proposals before us for Lancaster, but I am sure that my hon. Friend will make her views known to us at the right time.

When my right hon. Friend the Secretary of State considers this reorganisation, will he also include consideration of the curricula of sixth form colleges, particularly with reference to the so-called peace studies being introduced in Labour-controlled Lancashire, as such a subject appears to be unnecessary in already overcrowded curricula?

We are concerned about peace studies everywhere where they are abused. All proposals for sixth form colleges are given deep consideration by the Secretary of State.

Records Of Achievement

2.

asked the Secretary of State for Education and Science when he expects records of achievement to be introduced for all school leavers; and if he will make a statement.

It is too early to say when records of achievement will be generally available. To speed progress I am proposing a programme of pilot schemes with support from central funds. A draft statement of policy will be published within a few days and copies will placed in the Library.

I welcome the progress by my right hon. Friend in this important matter, but will he asssure the House that these records of achievement will be an objective assessment of the child's performance and will be supplementary to, and not a replacement of, examinations?

May we be assured that the Secretary of State's system of records of achievement will not be such as to make any child think that he or she is not achieving? We accept that the aim of the teaching profession and of the vast majority of people connected with education is to prove to every child that a good education means a good achievement, and that is a noble aim.

For once I agree with the hon. Gentleman. The idea behind records of achievement is to give an opportunity for a child's successes to be shown. I hope that the hon. Member will read the consultative document that I shall publish next week.

My right hon. Friend's concern for standards is well known. To what extent does he feel that records of achievement will help to improve them?

I hope that records of achievement, as they come in, will apply to children of all abilities, recording their achievements, both non-academic and academic, and that they will turn out to be particularly encouraging to those who leave school with apparently few achievements to their credit because there is no way of recording such achievements as they have.

Is it not true that most youngsters today are more worried about getting a job when they leave school? Many of them are asking, "What is the use of five O-levels, two or three A-levels, CSE examinations or records of achievement?" When they know that more than half of them will not obtain work and others will finish up on slave labour schemes — [HON. MEMBERS: "Oh."] That is what the youth training scheme is. The Government should turn their attention to providing work for those youngsters and to giving them some motivation.

The hon. Gentleman has not studied the subject enough to formulate an effective question about it. The idea is for records of achievement to record achievements that are not academic, including features of character and of quality, which will greatly benefit those who seek jobs. Employers naturally wish to know about a youngster's character and ability, as well as about his academic achievements. The hon. Gentleman has got it precisely wrong.

Dyslexic Children

3.

asked the Secretary of State for Education and Science if he will make a statement on the teaching of dyslexic children within the state sector.

Most children with specific learning difficulties are given specialised remedial teaching in reading in their ordinary schools. In addition, the majority of education authorities maintain remedial education centres for the few children who need to be withdrawn from their ordinary schools for remedial sessions.

Will my hon. Friend admit that there is a special problem with dyslexic children, and is it not disappointing that more progress has not been made by local education authorities in the training of teachers specifically to teach dyslexic children?

There are differing views about dyslexia, as my hon. Friend knows, but provision in individual cases is the responsibility of the local education authority for the area in which the child is reported.

Is the Minister satisfied, in relation to the Government's overtures on the Warnock committee report, that the teaching of deaf children in schools and elsewhere has been satisfactorily catered for?

This question relates to dyslexic children. However, there are a variety of opportunities for deaf children and provisions vary between authorities.

Has my right hon. Friend the Secretary of State responded to the representations that he will have received from Billericay magistrates concerning a parent who came before them for not sending his dyslexic child to school because he did not believe that there were suitable opportunities for teaching the child in Essex?

The magistrates' court in Billericay has deferred sentence in a particular case to await the outcome of an appeal to the Secretary of State. In the light of that, it would be wrong for me to comment.

Secondary Schools

4.

asked the Secretary of State for Education and Science how many proposed closures of secondary schools he has declined to approve since 1982.

Between 1 January 1982 and 30 September 1983 my right hon. Friend rejected 16 proposals which would have entailed the closure of 32 secondary schools. Some of those schools have been the subject of further proposals.

Is my hon. Friend aware of the great disappointment caused by his decision to support the closure of Beaufort school, which is one of the most popular and over-subscribed schools in my constituency? How does he reconcile that decision with the Secretary of State's often repeated and justified support for the principle of parental choice?

I am aware of the case to which my hon. Friend refers. However, we must review secondary school provision in the light of falling rolls, and some schools must close if our objective is to be met.

School Governors

5.

asked the Secretary of State for Education and Science why it is not possible to implement the appointment of school governors by 1 September 1984.

As I said in my reply to my hon. Friend's question on 4 November, the Government have been clear from the outset that the reconstitution of all schools' governmental arrangements under the Education Act 1980 would take some time to accomplish. Given the substantial task of administration, recruitment and training, good progress has been made with implementation to date. It would be unrealistic, though, to aim for completion by September 1984.

Why is it that the Government expect the privatisation of British Telecom within two years, or can mount an invasion of the Falklands within a few months, yet take five years to appoint a few school governors? As parental influence is at the heart of the Government's economic policy, does this not represent a surrender to the administrative convenience of the officers of his Department?

I share my hon. Friend's concern about the abuses that occur in some local authorities. However, there is nothing to stop a local education authority requiring the creation of new governing bodies well before September 1985. The House should not underestimate the size of the task.

Is not the Minister underrating the problems of large cities? Although it may be practical for four schools in a small village to have the same governors, in a city such as Manchester, which has 250 schools, the task would require a great deal of administration and could cost up to £40,000 a year. Will the Minister repay that money, or does he expect the ratepayers to find it?

No hon. Member can accept the provision of one governing body for a wide range of schools. The practice in Manchester can be suffered for only so long, but then the authority must take action under the requirements laid down by my right hon. Friend the Secretary of State.

Will my hon. Friend confirm the great value of having parent governors on school boards, and will he go flat out to ensure that they are appointed to school governing bodies as soon as possible and in advance of the date mentioned?

I have explained that there is nothing to stop a local education authority from embarking upon that course. From my experience I know that parent governors have a vital, positive and determined role to play in the running of a school.

Grammar Schools

6.

asked the Secretary of State for Education and Science what recent proposals he has received to establish grammar schools.

The last statutory proposals to establish a new grammar school were published by Hereford and Worcester education authority on 29 January 1982.

Does my right hon. Friend agree that grammar schools are a valuable bridge between the private and public sectors of education, and that their destruction has polarised education in Britain? Will he do all that he can to protect existing grammar schools and to encourage the setting up of new grammar schools in the public or the private sector?

The grammar school has played, and is still playing, a distinguished part in the development of our schools system. Many people, including Opposition Members, were completely wrong to kick away the ladders that had benefited them before others could benefit from them also.

Did my right hon. Friend see the results of the poll in The Guardian last week that compared the public perception of the achievements of grammar schools with those of comprehensive schools? In view of the obvious importance that the public appear to attach to the education provided by grammar schools, does it not suggest that if their perception of grammar schools is so high, while their perception of comprehensive schools is so low, there is a case for an independent inquiry into the lack of success of the comprehensive system?

I understand my hon. Friend's view, but under the law the initiative for change lies with local education authorities. I can well imagine circumstances in which an education authority might consider that selection, and grammar schools as part of it, would benefit all children by enabling teachers to concentrate on stretching each broad band of ability separately. Although the initiative is with local education authorities, the holder of my office must decide the merits of each proposal, taking into account its effect on all concerned.

Does the Secretary of State agree that the major problem in secondary schools is that the bottom 40 per cent. of 16-year-olds feel like failures in those schools? He has already drawn attention to that problem. Will not the move to corral those children into failure schools entrench the problem even more deeply? Does he agree that that is a regressive step, and that the way forward is to develop a schools system that gives all our children a sense of achievement?

As the hon. Lady knows, I agree with much of what she has said. However, the task of teaching a complete spectrum of ability in one class requires great skills on the part of the teachers, and it is just conceivable — I say no more — that the pupils to which the hon. Lady referred, in whom I am especially interested, might benefit from teaching that was stretched across a slightly narrower range of ability. The initiative is with the local education authorities. My duty is to consider each proposal on its merits.

Does the Secretary of State realise that, according to the same Gallup poll, a clear majority are against a return to selection? As we have seen at Solihull, and now at Richmond, there is little support, even among Conservative parents, for setting up new grammar schools. Will the Secretary of State tell his junior Minister to stop making weekend speeches to the party faithful knocking comprehensives, and to spend more time on what should be his ministerial duties — in the words of my hon. Friend the Member for Birmingham, Ladywood (Ms. Short)—in improving the quality of education for all our children?

I shall say no such thing to my hon. Friend the Under-Secretary. I hope that the hon. Gentleman, who has an important potential for influencing public opinion, will concentrate, as the hon. Member for Birmingham, Ladywood (Ms. Short) did, on the success of the delivery of education in all schools and keep an open mind on which type of school is best for which children. The holder of my office has that invidious job in the face of proposals and objections to those proposals.

Teachers

7.

asked the Secretary of State for Education and Science if he will outline his plans for improving the quality of teachers; and how he intends to measure their performance.

My right hon. Friend's policies were outlined in the White Paper "Teaching Quality", Cmnd. 8836. It commends to those responsible for managing the teacher force a range of management options and strategies, including the systematic assessment of every teacher's performance.

I thank my hon. Friend for his informative reply. Does he agree that a further way to improve the overall standard of teachers when the school population is falling is to urge local education authorities to weed out from our education system the less desirable and less proficient teachers who are bringing it into disrepute?

We expect local education authorities to meet the challenge of falling school rolls by adopting positive policies that maintain the inflow of able recruits to teaching and ensure that teachers are deployed where they can best serve the pupils. Most teachers do a good job. I hope that LEAs will act resolutely to deal with the minority who do not.

Is it not a fact that throughout the population there are doctors and engineers who are not as good as we would expect — [HON. MEMBERS: "What about MPs?"] Everyone knows about MPs. Therefore, is not this question an attack on a profession that is striving to the best of its ability to educate our children? Does it not come from a source that seems to rejoice in ignorance and fails to understand that a large number of young people in secondary education——

May I finish my sentence, Mr. Speaker? A large number have attained high qualifications in the comprehensive schools but the University Grants Committee is not granting them sufficient money to enable them to go to university, even though they are entitled to do so?

In my experience, the people who are most concerned about poor quality teachers are teachers themselves.

Does my hon. Friend accept that the quality and development of teachers depends considerably on effective leadership from head teachers, and that effective leadership is undermined by political interference by some local education authorities? Will my hon. Friend condemn such practices?

Coventry (Lanchester) Polytechnic

9.

asked the Secretary of State for Education and Science what representations he has received about the proposed closure of the urban and regional planning department of Coventry (Lanchester) polytechnic; and if he will make a statement.

My right hon. Friend and I have received several representations about the urban and regional planning department of Coventry (Lanchester) polytechnic. The committee of the National Advisory Body has been meeting over the last four days and will not be recommending to my right hon. Friend the closure of any course in this Department.

Will the Under-Secretary confirm that Coventry (Lanchester) polytechnic's urban and regional planning department has been saved at the expense of the planning departments at Leeds, Liverpool and Trent polytechnics, which appeared in the last three places of a ranking system of nine and have closed? Will he further confirm that urban and regional planning departments are being closed because his hon. Friends are cutting the money to local councils for housing projects? As no public housing is being built, the Government have decided that public planners are not needed.

That is a long question, so I am afraid that my answer will be slightly long. I cannot confirm the hon. Gentleman's suggestion. The committee of the National Advisory Body will be recommending the closure of town and country planning courses at Trent and Liverpool polytechnics and the Gloucester college of art and technology.

The National Advisory Body has been looking into the provision for 1984–85 for all subject areas in the local authority sector of higher education. However, in a number of vocational subjects such as town and country planning for which costs are above average there is evidence of an over-supply of qualified manpower. The National Advisory Body decided, therefore, to carry out a special study into this area of provision.

Is my hon. Friend aware that his decision about the Coventry (Lanchester) polytechnic will be widely welcomed throughout the midlands? Those of us who live there are aware of the good done by that college. I thank my hon. Friend for his helpful announcement.

Recently, I had the pleasure of visiting the Coventry (Lanchester) polytechnic. I am delighted to accept my hon. Friend's words.

Does the Under-Secretary accept that there is considerable concern that the Government are about to inflict on the local authority higher education sector the same sorts of cuts as were inflicted on the universities? Will he make a clear statement about all the proposals so that all the colleges that fear that their courses will be cut will have their fears put at rest now and not have to wait for information to come in dribs and drabs?

Order. The Minister may answer the hon. Gentleman's supplementary question, but the original question refers to Coventry.

The National Advisory Body has concluded its recommendations on course provision. Those institutions that are particularly affected and the press have already been informed. Communication of the other details will follow shortly.

University Grants Committee

10.

asked the Secretary of State for Education and Science what subjects he expects to discuss at his next meeting with the chairman of the University Grants Committee.

My right hon. Friend and I have frequent meetings with the chairman of the UGC, but no future meeting is arranged at present.

Will the Under-Secretary discuss the detrimental effect on higher education of the miserable 4 per cent. increase in student grants and the 50 per cent. cut in the minimum student grant when even the committee of vice-chancellors and principals urged a 22 per cent. increase as being necessary to keep pace with rising costs? Does he realise that those harsh decisions will cause a great deal of hardship to many students and, in some cases, may even make it difficult for students to continue their courses?

The 4 per cent. student grant increase is approximately in line with inflation. The number of students in the higher education system is the highest ever, which seems to march against what the hon. Gentleman said.

As it seems inevitable that resources available from public funds for the higher education sector will be reduced in the years ahead, what steps are the Government taking to encourage the flow of private resources into higher education?

We want greater diversity in higher education and we should like institutions to become less dependent on the public purse. We are considering ways to encourage that and I hope that the dialogue will continue.

Given the 32 per cent. reduction in the number of Commonwealth students in our universities since 1979, will the Minister discuss with the chairman of the UGC how to attract more Commonwealth students to our universities and colleges? Will he give special attention to the problems of medical students from poorer countries, many of whom cannot afford to pay fees of more than £7,000 per year for possibly five years?

The hon. Gentleman will be delighted to know that according to UCCA there are 27 per cent. more applications from overseas students this year than at the same stage last year.

Will my right hon. Friend take the opportunity of his next meeting with the UGC to confirm that in the Government's view research and undergraduate teaching are not separate functions of universities but different sides of the same coin? Will he deny current speculation that the Government are considering proposals to divorce research from undergraduate teaching?

If my hon. Friend will allow me to add the word "scholarship" to his question, I can confirm that the chairman of the UGC shares his views.

Unemployed Persons

11.

asked the Secretary of State for Education and Science what recent discussions he has had with the chairman of the Manpower Services Commission in relation to proposals that the education service should create a new programme to help the unemployed, and if he will make a statement.

I have myself had no such discussions, but the educational and training needs of the adult unemployed have been a subject of consultation between the Department and officials of the Manpower Services Commission.

If the education service were to create a new scheme to help the unemployed, would not that mean extra responsibilities for colleges of further education and thus a need for more in-service training for staff? Will my right hon. Friend confirm that if local education authorities started spending on such a project the expenditure would be disregarded in calculating whether they were in a penalty zone?

The answer to the first part of my hon. Friend's question is that we are seeking various ways to encourage educational provision for the unemployed. We provided a further £2 million of taxpayers' money for adult education for that purpose in the recent announcements. On the second part of the question, I cannot predict what would happen in relation to hold-back in future years, for which rate support grant arrangements have not been adumbrated.

As children from working-class homes are least likely to remain at school and most likely to end up on YTS schemes in dead-end jobs—slave labour, as my hon. Friend the Member for Bolsover (Mr. Skinner) describes it — would it not make more sense to give young people the same amount of money to stay at school as is given to those on YTS schemes?

I do not think that the hon. Gentleman has taken into account all the complexities of increased public spending on the scale that he postulates. Even the Labour Front Bench, in suggesting such a scheme, was careful to ensure that the cost would be deducted from the fathers' and mothers' taxable income. I do not know whether the hon. Gentleman has taken that into account. I remind him, too, that a large number of young people feel that it is in their own interests to stay at school although by so doing they forgo the money available through YTS.

Will the Secretary of State remove the potential conflict between education authorities and the Manpower Services Commission by encouraging the commission to allow more flexibility in schemes for the unemployed by giving more support to the voluntary sector?

Conservatives are naturally sympathetic to the voluntary sector, but the hon. Gentleman's question is more a matter for my right hon. Friend the Secretary of State for Employment than for me.

Does the Secretary of State agree that everything emanating from the MSC, such as its recent NEDC memorandum, "Training Skills and Tomorrow's Need", implies devastating criticism of his Department's lack of action in providing education and training for the unemployed, especially the long-term unemployed?

Both parties must share responsibility for the fact that, as we all acknowledge, training in this country has not been nearly so successful as we should all like.

Ethnic Minority Pupils

12.

asked the Secretary of State for Education and Science what is the policy of Her Majesty's Government towards teaching ethnic minority pupils in their mother tongue.

Most teaching must inevitably be through the medium of Engish, but it is a view that for some children the use and study of their mother tongue can form a valuable part of a school's approach.

I am grateful to my hon. Friend for that reply. Is he not concerned that the Inner London education authority spends far too much time and energy concentrating on mother tongue teaching rather than on teaching English?

The important principle that must be in every education authority's mind is that all children must leave school speaking and writing English fluently.

Will the Minister take this opportunity to express his support for the report published last week on community languages at 16-plus and make it clear that there is a role for a multilingual and multicultural approach in the British education system?

I certainly undertake to read that report. I know the hon. Gentleman's interest in these matters.

May I press my hon. Friend a little further? Does he agree that the style of positive discrimination often practised in ILEA schools is arguably racist in character and extremely harmful?

I am willing to be pressed at any time on this matter. I do not believe that the state should wholly take over the role of minority communities in maintaining the mother tongue and culture. Many parents prefer their children to receive instruction in their religion, language and other aspects of culture within their own community, and that is their right.

Universities (Funding)

14.

asked the Secretary of State for Education and Science what consideration the Government have given to the level of funding for the universities in the next five years; and if he will make a statement.

My right hon. Friend's written answer to my hon. Friend the Member for Norwich, North (Mr. Thompson) on 17 November said that recurrent grant to the universities on the UGC list for the academic year 1984–85 would be £1,265 million. My right hon. Friend will give a provisional indication of the level of funding for later years as soon as possible.

Does the Government's request to the universities to take additional students mean that the cut in student places was a mistake, due to which thousands of school leavers with university qualifications are on the dole, on YTS or taking jobs that should be available to young people without those qualifications?

The UGC has asked universities whether they are prepared to admit additional students within existing resources during the period of peak demand. I am sure that with good will a great deal can be achieved. The reduction in student numbers planned by the UGC has given some protection to the "unit of resource".

In assessing funding for individual universities in the coming year, will my hon. Friend make clear to the UGC the importance of the guarantee of free speech in our universities, in view of the ineffectual reactions of Birmingham and Manchester universities to evidence of lack of free speech in the recent past?

Responsibility for student discipline lies with the institution concerned. In universities, the procedures are prescribed in statutes and in ordinances. For polytechnics and colleges in the maintained sector they are contained in the articles of government. In addition, of course, students are subject to the law.

May I press the Minister to make clear when the long-term funding of the universities will be made known? Will he accept that it is impossible for universities to budget on a year-to-year basis as his Department is insisting?

I note the merit of the right hon. Gentleman's question. The information will be given as soon as possible.

Does the Minister's statement make it clear that the Government are going back to supporting the Robbins' principle that all pupils who achieve two A-levels should be entitled to higher education? Will he support the views expressed by the Prime Minister when she was Secretary of State for Education and Science that 22 per cent. of the age group should benefit from higher education?

Given greater efficiency and economy, the Government's present expenditure should enable demand for higher and further education to be met at the lower boundary of the Department's projections.

Lincolnshire

15.

asked the Secretary of State for Education and Science what grant was made available to Lincolnshire county council for educational purposes in the last yearly funding period.

Lincolnshire received £6 million of grant in support of expenditure on mandatory student awards, and £36,000 urban programme grant, in respect of recurrent expenditure on education in 1982–83. On the basis of an estimated budget of £173 million, the authority's entitlement to block grant in support of expenditure on all services in 1982–83 was nearly £96 million.

Is my hon. Friend aware of the severe problems faced by Lincolnshire county council and others which include constituencies such as mine where the school population is spread over 170 villages and 700 sq miles? Will he improve funding to Lincolnshire county council, and other county councils that are similarly placed, to overcome the sparsity factor and save village schools, which are vital to rural life?

My hon. Friend made a similar point in a recent Adjournment debate. Grant-related expenditure calculataions make allowance for higher relative costs in sparsely populated rural areas by means of a calculation relating observed patterns of school size and expenditure on school transport to a measure of relative sparsity of population.

Teachers (Child Development Training)

16.

asked the Secretary of State for Education and Science if he will intensify the training and experience in child development within the teacher training course in order to overcome learning disabilities in children.

The coverage within initial teacher training of the different ways in which children develop and learn and of methods of identifying children with special educational needs will be taken into account by my right hon. Friend in his current consideration of the content of initial training courses and the criteria against which they should in future be assessed.

I am grateful for that reply, but the Minister has made my point. He has said that training in child development is not available within the teacher training system. Is he aware that the work of Professor Schonell and Mia Kellmer-Pringle, who were pioneers in that area, is largely ignored within the teacher training colleges and that children with learning difficulties and disabilities, such as dyslexia, are not recognised early enough and given the help that they need?

I am grateful to the hon. Lady for her comments. I recognise the importance of identifying learning disabilities early so that children may be helped to overcome them. Initial and in-service training, as well as teaching experience, all have their part to play in helping teachers to respond to that particular and important need.

Does my hon. Friend agree that there are some physical disabilities in children, such as rheumatoid arthritis and related illnesses, which may restrict the physical abilities of the child but in no way curtail or inflict themselves upon the child's mental ability, and that all too often teachers and schools do not take that fact into account?

My hon. Friend is absolutely right in his interpretation. Much more needs to be done, and much more will be done.

West Midlands College Of Higher Education

18.

asked the Secretary of State for Education and Science if he will make a statement on the future of the West Midlands college of higher education.

The committee of the National Advisory Body has been meeting over the last four days and will be recommending to my right hon. Friend the closure of courses other than teacher training for 1984–85 intakes at West Midlands college of higher education.

Is the Minister aware that that answer will be received with dismay in the west midlands? Is he further aware that there is the strongest and most determined opposition to the proposals, which could well lead to the closure of the college? Did not the all-party deputation which met the Minister convince him of the strength of feeling held by all on the local scene—in Walsall, Sandwell and within the black country—who believe that the recommendation is wholly wrong and can cause great injury both to higher education in the west midlands and to the area itself?

I recognise that any such decision, if confirmed in due course by my right hon. Friend, must represent a blow to the morale of those concerned locally. The objective of the National Advisory Body's exercise has been to protect and sustain provision, in the west midlands as elsewhere, which is likely to contribute most to the scientific, technological and industrial future of the country. It is difficult to argue that on that criterion greater priority should have been accorded to the preservation of the non-teacher training courses at the West Midlands college.

Is my hon. Friend aware that what is causing most concern in the west midlands is the fact that if these courses are closed the whole college will cease to have a real purpose? Will he ensure that the future of the college as a whole is considered and that no closures take place until a proper assessment has been made of all the facilities of the college?

The question raised by my hon. Friend is potentially an important issue, and any answer about the ITT allocation at this time would necessarily be speculative.

Prime Minister

Engagements

Q1.

asked the Prime Minister if she will list her official engagements for Tuesday 22 November.

I have been asked to reply.

My right hon. Friend is attending the Commonwealth Heads of Government meeting in New Delhi.

I welcome my right hon. Friend to the Dispatch Box. Does he agree that the pressures for public expenditure to increase are now so great that the burden on the taxpayer and the public cannot be borne without considerable strife? Will he therefore undertake to initiate a wide-ranging and open debate to ascertain how we can afford all the many services which the public now demand?

I thank my hon. Friend for his initial comment. He is right. There are always strong pressures to increase public expenditure. Since the early 1960s, under successive Governments, public expenditure has risen from 33 per cent. of the GDP to nearly 43 per cent. today. This issue is now the subject of a public debate. I very much welcome that and hope that it will stimulate serious contributions from many quarters — from the academic and business world as well as from Parliament.

On the question of burdens, will the right hon. Gentleman tell the House whether the cuts to be made in benefits to young people living at home are part of the Government's family policy?

It is not, but it clearly is a subject that can be much more profitably debated at length tomorrow.

Can the right hon. Gentleman, from his position of great responsibility and authority, say whether those cuts are intended to encourage young people to work, or not to work, or to stay at home, or not to slay at home, bearing in mind that the cut can be as much as £13·10 a week in the income of a family and a young person, which income is already very small?

I appreciate the point that the right hon. Gentleman makes. This argument can be much more sensibly deployed in the context of the full debate tomorrow.

Will my right hon. Friend accept that there is a general feeling of nausea over the latest appalling massacre in Armagh? Will he please emphasise to his right hon. Friend the Prime Minister and to the Secretary of State for Northern Ireland the absolute necessity of reinforcing security measures in the Province?

I am sure that my hon. Friend speaks for the whole House when he talks of a feeling of revulsion at the shootings on Sunday. Meanwhile, as he will be aware, my right hon. Friend the Secretary of State for Northern Ireland is at this moment in the Province and is doubtless consulting the appropriate authorities about how best to deal with the security situation.

To what extent was Government business distorted on Friday morning? How many Ministers cancelled or curtailed their engagements? Does the right hon. Gentleman know about the briefing note, which I have in my possession, which was circulated to Conservative Members telling them how to respond at the end of the debate on the Chronically Sick and Disabled Persons (Amendment) Bill?

Does the right hon. Gentleman agree that if he did not know of that note he is incompetent, and that if he did know he deceived the House? In either case, he should resign.

Order. I think that the hon. Gentleman would wish to rephrase his comment that the Leader of the House knowingly decived the House.

In what way have I offended the House, Mr. Speaker? May I suggest that the Leader of the House misled the House?

The events of Friday clearly excited a great deal of concern and emotion, which was understandable. It is not the first time that such matters have been debated on a Friday and Governments have subsequently been accused of employing a payroll vote.

I stand by what I said on Thursday. I am sure that the House would find it extraordinary if Government Members were not advised about the contents of a Bill to which the responsible Minister had expressed Government opposition. That is a long-standing practice, transcending both parties and Parliaments.

Q2.

asked the Prime Minister if she will list her official engagements for 22 November.

I have been asked to reply.

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

When the Select Committee on Procedure is established, will the right hon. Gentleman consider introducing a pre-legislative stage, similar to the Special Standing Committees, so that hon. Members will have an opportunity, for a limited period, to seek advice and question witnesses?

We already have something approximating to that procedure for certain legislation. I cannot designate the matters that might be referred to the proposed Select Committee. The House must make such decisions.

Reverting to the events of Friday, will my right hon. Friend ignore the synthetic indignation and histrionics of Opposition Members and recognise that their eagerness to turn up and vote for measures that are wasteful and unworkable simply increases the determination of Conservative Members to vote against them?

There is no doubt that any move to introduce contentious legislation, albeit in private Members' time, will provoke considerable opposition.

Is it the practice of chief constables in the United Kingdom to refuse to meet elected representatives of the people, or is that a custom that has grown up latterly in Northern Ireland?

I take note of the hon. Gentleman's comments. I shall refer his point to my right hon. Friend the Prime Minister. Given the sensitive position in the Province, I must confine my remarks to that assurance.

Q3.

asked the Prime Minister if she will list her official engagements for Tuesday 22 November.

I have been asked to reply.

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

Now that the House has, for a second time, agreed to a timetable motion for the Telecommunications Bill, is not the case for a review of Standing Committee procedures beyond doubt? I accept that the House must decide what matters should be referred to the proposed Select Committee on Procedure, but will my right hon. Friend use his undoubted influence to ensure that such an important matter is bought to its attention?

There is clearly a wide feeling in the House that that matter might be considered by the proposed Select Committee. However, as I have already said, that must be a matter for the House to decide.

Will the right hon. Gentleman comment on material which emanated from the Department of Employment yesterday, which showed that had inflation since April 1978 been taken into account in raising the allowances of those on the youth training scheme they would now be receiving £33·90, and that had the value of average earnings been taken into account they would now be receiving £37·60? Taken with the question from my right hon. Friend the Leader of the Opposition, does that not show that there is a deliberate Government campaign to cheapen the value of labour of young people, both unemployed and in work?

That question touches upon all the wider and interrelated issues that will be debated tomorrow. Without being struck down with undue humility, I do not think that it is a topic with which I can deal adequately.

Q4.

asked the Prime Minister if she will list her official engagements for Tuesday 22 November.

I have been asked to reply.

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

Has my right hon. Friend seen reports in the press that certain National Health Service officials have taken early retirement, pocketed the money and then been re-hired? Does he agree that that is reprehensible and must be stopped, and shows that the Government are right to look closely at the way in which the NHS is spending its money?

I would not immediately assume that the press reports are accurate. However, there are many areas in which we could secure better value for money within an operation on so grand a scale as the NHS. We deceive ourselves if we think that that is not so.

When the Prime Minister returns, will the right hon. Gentleman draw to her attention—as a former Secretary of State for Education and Science—the matter raised by my hon. Friend the Member for Walsall, North (Mr. Winnick), supported by the hon. Member for Staffordshire, South (Mr. Cormack), and to which I have received a written reply, about the closure of the West Midlands college of higher education? Will he specifically ask the right hon. Lady to study the alternatives for the students who rely on that college? She will find that there are no alternatives. What are those students supposed to do?

Q8.

asked the Prime Minister if she will list her official engagements for 22 November.

I have been asked to reply.

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

In thanking the Leader of the House for that helpful reply, may I take this opportunity to draw his attention to the unemployment rate in parts of central Liverpool, where more than 45 per cent. of the people are out of work, and to the fact that throughout the whole of the city of Liverpool one in five people are unemployed? What will the Government do about that?

Government aid to the Merseyside area stands at more than £250 million, which is a demonstration of our commitment to that area. The other central factor that can assist the regeneration of Merseyside is a recovery of the economy generally. That recovery is now in its initial stages. If we persist with our policy, it will come to fruition.

Did my right hon. Friend read with pleasure and partisan delight today's announcement that Mr. Tony Benn will be throwing his hat into the ring for the Labour nomination at Chesterfield?

As my answers have been somewhat elliptical up to now, I must tell my hon. Friend that there is no ministerial responsibility for that matter.

Q9.

asked the Prime Minister if she will list her official engagements for Tuesday 22 November.

I have been asked to reply.

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

When the right hon. Gentleman next sees the Prime Minister, will he ask her to consider, with the Secretary of State for Energy, whether, in view of the traumatic period through which it is passing, the British coal mining industry should be subsidised to the same level as British agriculture?

The hon. Gentleman is right to infer that there is a considerable Government investment programme in the coal industry, which is testimony to our commitment to coal as part of the range of fuels available to our national economy.

Further to the earlier exchange, will my right hon. Friend also discuss with the Secretary of State for Northern Ireland the tragically negative move by the Official Unionist party in leaving the Assembly? However horrific the incident may have been, it would be wrong for the Official Unionists to undermine the Assembly by staying away. Are they thinking again, and is it possible that they will return?

Whatever one's views about the membership of the Assembly for which the Government and the House voted, in view of the current circumstances of the Province and the immediate reaction to the deaths on Sunday, there is as much of a role for reticence as there is for offering advice to the Official Unionist party.

Tourism

3.33 pm

With permission, Mr. Speaker, I should like to make a statement about the Government's review of tourism policy, instituted in July last year by the then Under-Secretary of State for Trade. I am grateful to all those who contributed, including right hon. and hon. Members.

Tourism is undoubtedly one of our most important industries. In 1982 its turnover, at some £8·5 billion, almost matched that of the motor industry and it employed around 1 million people. The Government recognise the great economic and employment potential of tourism and are determined to encourage the industry's development.

The review, which was concerned primarily with the activities of the British tourist authority and the English tourist board, and with the relationships among all the tourist boards, produced many proposals for improving tourism generally. Details of some, and of how they will be pursued, are in a paper which I have placed in the Vote Office. They include improving hotel standards, new training initiatives, proposals for computerised reservations systems, signposting policy, revitalising the traditional resorts and dealing with the tourism needs of London. The review has also pointed to other tourism issues which are the responsibility of other Departments. I intend to invite them to consider further action.

The Government's main instrument for encouraging tourism is the statutory tourist boards. In recognition of the widely accepted view that the boards need to improve their own co-ordination, the Government have decided that new organisational arrangements are required. I am therefore inviting the British tourist authority to transfer wherever possible its remaining United Kingdom activities to the national boards, so that it may concentrate on its prime responsibility: to promote Britain overseas. I am asking the BTA and the ETB to seek shared accommodation, to merge certain common services, and in consultation with the Scottish tourist board and the Wales tourist board to eliminate duplication in their publication programmes. The review has shown that a revised approach is also needed to planning the BTA's overseas promotions so that full account is taken of the requirements of England, Scotland and Wales in the main marketing programme. My right hon. Friend the Secretary of State for Wales has announced separately improvements agreed with the BTA for the promotion of Wales overseas. None of those important changes requires legislation. However, the Minister of State, Scottish Office, last week introduced in another place a Bill containing proposals for limited overseas promotion by the STB, which will require some amendment to the 1969 Development of Tourism Act.

Sir Henry Marking, the present BTA chairman, has agreed to leave his post at the end of March 1984, some five months before the end of his appointment, to permit a new chairman to begin carrying through the changes at the BTA as soon as possible. I should like to record the Government's sincere appreciation of Sir Henry's tireless and valuable work as a promoter of tourism. As the successor to Sir Henry at the BTA, my right hon. Friend is appointing Mr. Duncan Bluck, currently chairman of Cathay Pacific Airways and of the Hong Kong tourist association, with effect from April next for a period of three years.

The Government believe that rationalisation of the BTA and ETB activities could best occur under a single chairman. My right hon. Friend therefore intends to ask Mr. Bluck to serve also as chairman of the ETB when Mr. Michael Montague finishes his current term there. Mr. Bluck will examine possibilities for further collaboration and the possibility of a merger of the two bodies. Mr. Montague, who has also done much valuable work at the ETB, will play an important role for the rest of his term in helping to bring the two boards closer together. I have asked him additionally to report to me urgently on how the non-statutory regional tourist boards might take on additional responsibilities, particularly in marketing. The important role of the regional boards in English tourism has been emphasised by this review.

I place great importance on attracting private finance to tourism and I am therefore pleased to be able to inform the House that the English tourist board has been instrumental in setting up a new equity fund for tourism, financed by the private sector but with access to advice from the boards. Full details will be announced at a later date. In the meantime, however, I plan to maintain grants for section 4 expenditure in England at about the current level over the four years to 1986–87, giving a total of some £35 million for the period.

These moves towards closer co-ordination, clearer objectives and better use of resources by the boards should benefit tourism, but the review confirmed that the main task of realising tourism's potential for growth must rest with the industry itself.

I welcome the fact that this statement has been made. Many of us had feared that, with the departure from the Government of Mr. Iain Sproat, the review which he initiated might have been quietly buried in the Department. However, we believe that the statement misses much that really matters to the tourist industry. We welcome the hon. Gentleman's support for the principle of continued public spending, but there is little point in spending directly on tourism when, at the same time, public spending on the services that are crucial to tourism—railways, roads and other forms of communication, for example—is being cut back. Will the hon. Gentleman speak to his friends in the Treasury about this point?

Last year, for the first time in 16 or 17 years, far from earning foreign exchange through tourism we fell into deficit on it. That was certainly the result of an over-valued exchange rate. The over-valued pound that damaged manufacturing industry has also hurt the tourist industry.

Is the hon. Gentleman aware that that is the central finding of the programmes analysis review conducted by his own civil servants some years ago? Is the hon. Gentleman aware of that review, and does he intend to publish its findings?

The hon. Gentleman has announced measures for rationalisation. We welcome anything which will save money and make the services more efficient, but can the hon. Gentleman explain the precise relationaship between the British tourist authority and the Scottish and Wales tourist boards? Will not those boards be left out in the cold with an ill-defined role, particularly in terms of promoting British tourism overseas? Can the hon. Gentleman elaborate on the precise relationship that they will enjoy with the newly merged BTA and ETB?

Will the hon. Gentleman assure the House, with reference to the paper in the Vote Office, that it is not the purpose of the rationalisation to centre tourist resources in London? He should bear in mind that in the interests of London's hard-pressed facilities and of the economic needs of the regions, it remains vital to spread our tourist effort throughout the country.

We welcome the news that private equity finance is to be made available, but when is the detail of the scheme likely to be made public? In view of the importance of the tourist industry, do the Government have any plans for an early debate?

I agree entirely with the hon. Gentleman that exchange rates have a profound influence on tourist flows. That is precisely why we should be sceptical about the effect of public spending on tourism—I agree with the hon. Gentleman.

The hon. Gentleman is also right to say that Government activities in many Departments influence tourism. That is one of the points brought out in the paper that I have placed in the Library. He can take it that I, as sponsor of the industry, make representations all the time to other Departments in Whitehall about the effect of Government policy on tourism.

As regards the relationship between the BTA and the Wales tourist board and the Scottish tourist board, the Minister of State, Welsh Office, announced some changes in staff at the BTA and at the Wales tourist board to create better liaison in the marketing of Wales, and the same applies to Scotland.

In addition, as the hon. Gentleman knows, those tourist authorities will do a limited promotion. The hon. Gentleman said that we should not place too much emphasis on London. He must recognise that a large proportion of the tourists who come to this country come to London, and a large number of tourists who go to other parts of the United Kingdom come to London first.

On the hon. Gentleman's last point, the details of the equity fund are for the fund to announce. I expect that there might be an announcement in January. A debate is a matter for my right hon. Friend the Leader of the House.

Is the Minister aware that Mr. Duncan Bluck, in addition to having a broad and successful business background, played a large part in building up one of the world's most successful airlines? We are extremely lucky to obtain his services.

I am grateful to my hon. Friend. I have no doubt that in Mr. Bluck we have a first class business man who will make an excellent sponsor for the tourist industry.

Will not the promotion of tourism for Scotland be a dog's breakfast? Is it not amazing that the Government are introducing a Bill to give limited powers to the Scottish tourist board—I think that the Minister described them as "very limited powers" — for promotion overseas? Would it not be better to give the Scottish tourist board complete autonomy to promote tourism to Scotland overseas?

It would not be a good idea to have complete freedom in that sense. It is important that the promotion of tourism overseas to this country should be co-ordinated. It makes no sense for the different parts of the country to be in competition with each other, wasting large sums of public money. The function of the British tourist authority is to co-ordinate the marketing of the distinctive parts of the United Kingdom.

Leaving the ethnic arguments aside for the moment, may I congratulate my hon. Friend on this welcome and wide initiative? Is he aware that these plans will greatly increase the opportunities for training schemes for young people in an excellent and growing industry where the future is very encouraging?

I am grateful to my hon. Friend. One of the most important points about the tourist industry is not just that it has a great capacity for growth but that it also has a great capacity for growth in employment. It is extremely important that there should be improvements in training to encourage young people to enter the tourist and leisure industries. I welcome the fact that the English tourist board will be publishing a booklet for young people detailing some of the opportunities that exist. The English tourist board calculates that about 250,000 extra jobs could be created in tourism up to 1990.

While I welcome the publication of this review, does the Minister recognise that some of us are a little confused about what he is trying to do? He is giving some autonomy to the various regional boards, but there is a similarity of facility and there will be one chairman for the BTA and the ETB. Does the Minister not agree that this may cause some conflict of interest?

In the light of the importance that the Minister rightly places upon the tourist industry within the British economy, does he not recognise that there is a need for some parity of access to the fiscal legislation as between the tourist industry and British industry in general? In relation to the specific proposals that the Minister has placed in the Vote Office——

—do they recognise the importance of the small hotel and guest house? Will some Government assistance be provided towards, for instance, rate relief and the provision of low interest loans for the small hotels and guest houses which needs Government legislation?

Almost everyone who has looked at the relationship between the different boards has agreed that there is a great overlap between the BTA and the ETB, Different people have different ideas of what the functions ought to be. We believe that having a common chairman will remove much of that overlap. I have said today that we think that the BTA should be confined to the external promotion of this country and the ETB confined to marketing England in England. The hon. Gentleman mentioned the fiscal equality of treatment between manufacturing and service industries. It is a principle to which I subscribe. It arises in the review of regional policy, but the cost of ensuring complete equality of treatment is large and it has to borne by the Exchequer. The English tourist board well understands the needs of small hotels. It is part of its function in its marketing effort. It is within the power of district authorities to make available special loans for complying with Government regulations, such as fire regulations. I cannot promise rate relief for the hotel industry. It would impose enormous burdens on other ratepayers.

May I draw my hon. Friend's attention to a substantial and important point in relation to tourism in my constituency? The tourist board has calculated that it has an income of about £12 million a year, which is a substantial contribution to the economy of the constituency. There has been substantial private and public investment in tourist facilities in the constituency.

One section of the review deals with signposting. As part of the constituency lies within the national park, we are plainly interested to see that any advertising on trunk and country roads should be artistic and tasteful.

Is the Minister aware that I have been able to get no sense from the Government Departments responsible for planning decisions? There are several Government Departments and public bodies involved, including the Department of Transport, the police, the Department of Trade and Industry, the tourist board and the planning authority. It is important to bring them together to reach a cohesive decision. Could my hon. Friend——

Order. I am very sorry to stop the hon. Member there, but that is long enough.

I shall certainly take up the point mentioned by my hon. Friend with my right hon. Friend the Secretary of State for Transport. Signposting for tourist facilities is a matter of long-standing grievance and controversy. My hon. Friend may know—it is in the paper in the Vote Office — that there is to be an experiment in the signposting of tourist attractions in two local authority areas — Kent and Nottingham. I shall certainly pursue the points he mentions.

Will the Minister accept that there will be a warm welcome for his assurance that the regional tourist boards in England will be strengthened? These boards, especially in Yorkshire, have done excellent work on limited budgets. If the Government are to take the regional promotion of tourism seriously, would it not be sensible to drop this silly idea of building a new London airport at Stansted and devote these resources to the development of the regional airports?

I shall certainly consider what the hon. Gentleman said about the proposed airport. Regional boards have an important role to play. Who else can market individual parts of the country if not the regional boards? I agree that the Yorkshire tourist board is one of the very best.

Order. I have to protect the business of the House. We have an important Bill to discuss after the statement. I shall call the hon. Members who have been standing in their places, but will they please ask brief questions?

On what basis will funds be allocated between statutory regional boards, such as those for Scotland and Wales, and non-statutory ones such as the south-west tourist board which tends to get far less resources than the population and unemployment in the area justify?

I have not proposed any changes to the funding of non-statutory boards. That is a matter for the ETB. That issue will be considered in the review of non-statutory boards to which I have referred. I note what my hon. Friend says about the imbalance between non-statutory boards and, for example, the Welsh or Scottish boards. Strictly speaking, however, the latter should be compared with the English tourist board rather than with the regional boards.

Why does the Minister, like many of his colleagues, insist on putting such weight on encouraging tourism in London? Does he not understand that the capital city generates its own enthusiasm among tourists? Does he agree that the £8·5 billion turnover is enormous and that it would be much better to encourage tourism in areas such as Northumbria? Is he aware that the Northumbria tourist authority badly needs money to encourage tourists to visit that wonderful area where we have magnificent rivers, hills, mountains and lakes and the finest beaches in the country?

I sympathise with and understand the hon. Gentleman. I do not intend to put all the resources into London. However, the industry told us that many of the tourists who come to Britain come to London. If we undersell London we undersell the rest of the country as a tourist attraction.

I welcome the attention that my hon. Friend is giving this important area of policy. May I have his assurance that his announcement today represents a re-evaluation by the Government and a recognition of the major contribution that tourism makes to our economy? May I have his fuller explanation as to how the arrangements that he has proposed will lead to what is desperately needed —improved co-ordination between the various authorities and relevant public bodies and more effective promotion of Britain abroad as a tourist attraction?

I hoped that I had made it clear that we intend that the BTA should withdraw from its activities in domestic tourism and transfer them to the national boards. That is a clear dividing line between the national boards and the BTA. It is easy to say that, but implementing it involves overlap. There will be argument about what the overlap should be. Because of that argument, we have decided that the best way to resolve the problem is to have a chairman who is common to the ETB and the BTA. I confirm that we recognise the fundamental importance of tourism to our economy, especially in terms of employment.

May we have an assurance that, with his colleagues in the Scottish Office and the Treasury, the Minister will reflect on the mounting demands being put on the overstretched resources of the Historic Buildings Council in England and Scotland? If much of our tourist heritage is to be preserved, ought not that matter to be considered in some depth with the understanding that, for every £100,000 that is given to those bodies, a great deal of employment is potentially created? Could that matter be considered seriously?

I am grateful to the hon. Gentleman for that suggestion. I shall discuss it with the Department of the Environment.

Does my hon. Friend agree that there is great substance in what the hon. Member for Linlithgow (Mr. Dalyell) said? Will he tell the Chancellor that, if tourism is to flourish into the 21st century, he should consider removing VAT from repairs to buildings? Will my hon. Friend be more adventurous about signposts? Does he agree that the illustrative signposts on French motorways are helpful without being offensive?

I have considerable sympathy with my hon. Friend's point about signposts. Many interests are involved in that long-running argument. At least we have an experiment going. It is not intended that the experiment should be the end of the matter. I note what my hon. Friend said about VAT on repairs on historic buildings. He knows that that is a matter for the Chancellor. I shall take it up with my right hon. Friend.

Is the Minister aware that we have considerable sympathy with him in his dilemma, which seems to be how to attract people to the United Kingdom via London and then to get them out of London into other areas? If we are to do that, will the Minister have regard to the facilities that are available in regional airports such as Prestwick? Should we not make it more convenient for people coming across the Atlantic to land at Prestwick? Although the Scots might argue, as an ethnic minority, that we should have complete autonomy, is the Minister aware that his proposed structure does not even provide constructive conflict? Does he agree that it gives an authority to the ETB through the joint chairmanship of that body and the BTA which completely submerges the rights of Scotland and Wales? Does he agree that there are real dangers in that approach?

We are giving Scotland much more than it has been given by previous Governments. I should have thought that the hon. Gentleman would have acknowledged that I, as the Minister responsible for the English tourist board, can be regarded as generous to the Scottish tourist board——

—as we have conceded it some ability to promote Scotland as a separate and distinctive entity. It has not had that before. I made only a passing reference to London in my statement because it is mentioned in the paper which is in the Vote Office. We cannot get away from London's importance as a gateway to other tourist destinations.

Is my hon. Friend aware of the important part that town halls have played in the development of tourism in Britain? Does he understand the anxieties that are felt in my constituency about the fact that, with Government support, a new conference centre is being built in Birmingham at a cost of £90 million, yet Bournemouth faces the possibility of penalty for building its own centre which costs less than one fifth of that in Birmingham? Will my hon. Friend join me in making representations in support of Bournemouth's application?

Does my hon. Friend recognise the importance of holiday flatlets to British tourism? Is he aware of the great anxiety about the current taxation treatment of proprietors of such flats? Does he agree that they should be treated under case 1 of schedule D and not under case 6 as is being proposed by the Inland Revenue?

I am well aware of my hon. Friend's point about the taxation of income from holiday flatlets. That matter is under review. It has been discussed with the Treasury and many representations from the tourist industry about it have been received. I am pleased to acknowledge that Bournemouth is an extremely important tourist centre. I note my hon. Friend's point about competition for business tourism. It is an extremely important part of the tourist industry. Subsidised competition will have to be watched.

Will the Minister assure us that money allocated to each board, whether it represents a nation, a region or an area, will be closely related to the size of the tourist industry in the area it serves?

When reviewing facilities for tourists in London and the rest of England, will my hon. Friend bear in mind the English tourist board's anxiety about the British pub and the legislation that affects that worthy institution? Will he press his right hon. and learned Friend the Home Secretary to undertake a reform of the licensing laws after fresh consultations with leaders of the licensed trades and bearing in mind the recommendations of the Errol committee which sat some 12 years ago?

I shall certainly bear that point in mind. One of the consistent themes throughout the review of tourism was the sense of limitation imposed by the licensing laws. Several proposals for gradual or partial change have been made, such as flexible licensing hours, allowing children to go into places where alcohol is sold and allowing alcohol to be sold with food. We intend to consider such changes.

Is the Minister aware that there will be considerable concern in Scotland that the joining of the English tourist board and the British tourist authority into one organisation will mean that abroad they will be treated as synonymous? Is it not essential that the Secretary of State for Scotland makes a statement as soon as possible, preferably this afternoon, on the structure and financing of the Scottish tourist board, and whether it will be an autonomous body?

Yes, but those Bills normally come here eventually. The hon. Gentleman will have a chance to be on the Committee on that Bill. The British tourist authority and the English tourist board are not being merged, but that matter should be studied.

Will my hon. Friend accept that tourism and hospitality are our most successful and labour-intensive industry at present, and that on the education side there are two jobs for every graduate in catering management? Will my hon. Friend do all he can to assist the growth of places in education in the catering world?

I wholeheartedly agree with my hon. Friend. The industry offers good employment prospects. It is extremely important that the training in our colleges should be on the scale and of the type required by the industry. The Department of Education and Science acknowledges that. That has been communicated to the National Advisory Body. The NAB has acknowledged it, although it has yet to make its decision on funding, and recommendations to Ministers. My hon. Friend is absolutely right.

In attempting to concentrate the Minister's mind on the regions, I make particular reference to the Greater Manchester metropolitan authority, which is trying to finish attractions such as the new aerospace museum. It is believed that there will be 200,000 visitors in the first year of opening. The development of the central Manchester station, which covers about 26 acres is now at an advanced stage. Millions of pounds are being spent on the development, but there is a grave shortage of hotel and bedroom accommodation. We are told that two applications for two large hotel developments are awaiting approval by the Department of the Environment. Will the Minister use all his good offices to encourage an early decision on those much-needed hotels?

I welcome my hon. Friend's much-needed reforms, but I remind him that the Yorkshire and Humberside area receives fewer tourist funds from Government sources than Wales, although the population and the potential are greater. There will be great disappointment that my hon. Friend's changes do not appear to correct that imbalance. Will my hon. Friend consider that matter again?

My hon. Friend's constituency and area of the country benefit from the efforts of the English tourist board, and those of the regional tourist board. I was near my hon. Friend's constituency last week at a function organised by the Yorkshire and Humberside development association. I know that it is a flourishing body, promoting many good projects. It is unique in the support received from the tourist trade. That is a good way in which to finance such regional bodies.

Does the Minister agree that it is delightfully ironic that hosts of Tory Members representing seaside resorts in Britain are worried about the state of tourism in their constituencies, and elsewhere, when, given half a chance, most of them spend their holidays in the Common Market? Will the Minister also tell us—he has failed to do so up to now—exactly when this quango, or series of quangoes, will be placed into the jigsaw that he has described? Will that increase or decrease public expenditure?

We are not expecting an increase in public expenditure on tourism. I gave details of the amounts under section 4 assistance—£35 million over the four years. I expect total support for the boards not to be altered as a result of the statement. I do not know where the hon. Gentleman gets his information about where my hon. Friends take their holidays. He does not tell us where he takes his. Perhaps it is outide the EC, in the Caribbean.

Is my hon. Friend aware that not only the House but the tourist industry will welcome the appointment of Mr. Duncan Bluck? Besides leading Cathay Pacific to another record trading result in extremely difficult times for civil aviation, he has been an extremely successful chairman of the Hong Kong tourist association. If he can do for our tourist industry what he has done for the Hong Kong tourist industry, he will have been an inspired choice.

I welcome my hon. Friend's statement, but the BTA will now concentrate its efforts on overseas promotion. Does my hon. Friend accept that Wales has had far from a fair share of that promotion in the past, much less than Scotland, let alone England? Will he give a more detailed assurance that we will now be given a very real chance of increasing our lamentably low 3 per cent. share of the overseas visitors market? Last week's appointment of one lonely overseas marketing director to work with the Wales tourist board is far from enough.

The Wales tourist board is the responsibility of my right hon. Friend the Secretary of State for Wales. He will be able to give my hon. Friend more details about it. With regard to the BTA's efforts for Wales, I am satisfied that the changes in staff and organisation that were announced by the Minister of State, Welsh Office, will lead to an improvement for Wales.

Does the Minister appreciate that those of us north of the border will view with great suspicion the amalgamation of the English tourist board and the British tourist authority, as the Arts Council of Great Britain is essentially the Arts Council of England? Will my hon. Friend take an example from Scotland and use the funds available to promote the injection of private funds into tourism, of which the recently privatised Gleneagles hotel is a magnificent example? If my hon. Friend has any difficulties in England about the licensing laws, all that he need do is introduce the licensing laws of Scotland.

That might be a good development. At this stage the BTA and the ETB are not being amalgamated. My hon. and learned Friend referred to the need to get more private capital into tourism. That is precisely what the ETB has been trying to do. It has been trying to use the limited Government money that has been made available to get more money from the private sector. The equity fund to which I referred shows that it has been successful in that.

Is my hon. Friend aware that people in Wales will be satisfied that the Wales tourist board is not to be abolished, as originally rumoured? None the less, it badly needs strengthening. Is my hon. Friend further aware that there is general support throughout the House for spreading more evenly between the manufacturing and service industries, including tourism, the benefits of favourable tax treatment?

I note what my hon. Friend says. He will have heard my reply to a previous question on that matter.

As chairman of the Conservative Back Bench tourist committee, I welcome my hon. Friend's statement. May I thank my hon. Friend particularly for the restructuring of the boards, the intended unification of the chair and the importance that he places on the take-up of employment within that most important industry? Will my hon. Friend therefore see that the employment figures, in all their breadth, come from one unified source? My hon. Friend referred to the importance of commercial tourism, and my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) referred to an important initiative in the Birmingham area, near my constituency. Will my hon. Friend stress that importance by issuing at least six-monthly figures of the increased numbers employed, the increased turnover and the increase in conference and commercial tourism?

My hon. Friend has asked before about calculating the numbers employed in tourism. It is a difficult subject because it is difficult to define the tourist industry as such, but I shall discuss with Ministers in the Department of Employment whether we can do something to satisfy my hon. Friend.

My hon. Friend also asked about business tourism. Many of the matters that are referred to in the paper that I have placed in the Vote Office, such as computerised reservation systems and hotel standards, are relevant to business tourism, which is an important part of this expanding market.

Is my hon. Friend aware that his decision to streamline the work of the two principal tourism structures under a common chairman will be greatly welcomed by those involved in the tourist industry? Can he elaborate a little on what he sees the future role on the non-statutory regional boards to be? Those involved with the implementation of tourism throughout the country deal most with regional boards' personnel.

We believe that a common chairman for the two organisations will remove the overlap and will result in more effective promotion. With regard to the non-statutory boards, I have asked the ETB to consider this. I have it in mind that they should play a bigger part in the marketing effort and in the marketing of individual regions of the United Kingdom and perhaps do some of the work that is presently done by the ETB. That would mean that the ETB might have to support them. I have asked the chairman of the ETB to report to me urgently on this matter.

I do not feel a need to do any special pleading on behalf of north-east Kent, which has been attracting foreign tourists since the time of Boadicea, and the best is still the best. I welcome my hon. Friend's statement about the provision of section 4 grants, but may I ask him yet again to ensure that these grants are used as a pump-priming exercise for the provision of new facilities, not for the topping up of a shortfall of capital?

Yes, that is extremely important. The money should be used where private sector finance is not available. It should be used for projects that are thought to be unusual or those that improve the product. There is no point in the taxpayer financing tourist developments that could perfectly easily he financed by the banks or the markets. I wholly agree with my hon. Friend.

Despite all that has been said, I do not completely understand what will happen about the responsibility for overseas promotion. I understood my hon. Friend to say that the Scottish tourist board and the Wales tourist board would have responsibility for overseas promotion but that henceforth the English tourist board would not have responsibility for overseas promotion. Does this mean that the British tourist authority will confine its promotional activities to the English tourist industry; does it mean that some duplication will continue; or does it mean that the English tourist industry will be in the hands of a relatively poor relation?

The English tourist board has never done promotion overseas. The overlap has been that the BTA has to some extent become involved in domestic tourism. The BTA is being asked to withdraw from that and to concentrate exclusively on the external promotion of the United Kingdom. The BTA is in a position different from the arrangements announced for Scotland because my right hon. Friend the Secretary of State for Scotland has said that, in accordance with the Scottish Conservative manifesto, there would be some promotion independently for Scotland. I can assure my hon. Friend, however, that that is a limited effort and will be done in collaboration with the BTA. That independent promotion in Scotland, limited though it is, cannot take place without the BTA being involved and without my right hon. Friend the Secretary of State for Scotland giving his approval.

There is not complete symmetry between the ETB and the Scottish tourist board. The overlap that we have sought to remove was between the BTA and the ETB, with the BTA getting back into England. It is like a discussion on the Trinity—it is so complicated. Whatever the degree of overlap, the answer is to have a common chairman for the BTA and the ETB, whatever the differing views about the role of those two organisations.

In view of the growth in foreign currency earnings from overseas visitors in my part of York, the north-east and nationally which amounts to about £500 million a year from taxation, will my hon. Friend consider ways to maintain Britain's tourism appeal through reinvestment in amenities, conservation and resort development? Will he discuss with my right hon. Friend the Chancellor of the Exchequer the question of the continued tax discrimination against the hotel industry in comparison with manufacturing industry?

I have said in response to earlier questions that I shall discuss that with my right hon. Friend the Chancellor of the Exchequer. The other points that my hon. Friend has made about improving the product are extremely important and a number of them are covered in the paper in the Vote Office. The English tourist board will be seeking to take those points further.

I welcome my hon. Friend's emphasis on private finance, but will he try to ensure that the tourist industry gets a larger slice of the European regional development fund infrastructure grants, particularly in regions such as the south-west, which depend on tourism?

Yes, of course I will do that, but we can only get access to the ERDF for tourism in assisted areas. In that sense it is different from the way in which we spend our own Government money on the promotion of tourism.

Is my hon. Friend aware that the popularity with overseas tourists of the changing of the guard ceremony at Buckingham palace is so great that my constituency's schoolchildren cannot get to see it although some of them have been trying to do so for about 10 years? This is not helped by the fact that in some weeks the ceremony takes place only two or three times. Will he try to do something to ensure that the ceremony takes place every day, with proper access for our own people as well as for overseas visitors?

I knew that my responsibilities extended far and wide, not only to British Leyland and the British Steel Corporation but to the changing of the guard. I shall certainly follow up my hon. Friend's question.

Order. I shall call the hon. Member for Warley, East (Mr. Faulds), but I did say that I would call only those hon. Members who had been attempting to catch my eye.

I am grateful to you, Mr. Speaker. Will the hon. Gentleman ensure that in the reorganisation that he has announced greater appreciation is made of the value to British tourism of the great range of industrial and archaeological heritage throughout Britain, which would bring benefit to an area such as the west midlands which is not normally thought of as a tourist area?

The hon. Gentleman is absolutely right. The success of tourist attractions such as the iron bridge near Telford shows that. There is enormous scope in some of our old industrial areas for redeveloping factories and industrial sites as tourist attractions. It is happening to a considerable extent in certain areas of the country but there is much more scope for it.

Does the Minister realise that it is not good enough to restrict the Scottish tourist board to what he has described as a small and limited role? If that is all the Tourism (Overseas Promotion) (Scotland) Bill amounts to, it will be a sad anti-climax. The Minister has been careful to stress that limited role. Will he give an example of what exactly the Scottish tourist board will be allowed to do? Will he explain what is wrong with competition between the Scottish tourist board and those in other parts of the United Kingdom. After all, there will be competition within the British tourist authority for resources for overseas promotion. I cannot see what is wrong — I ask the Minister to tell me—with a determined Scottish effort with an adequate Scottish budget to establish a Scottish presence in the overseas tourism market.

I should have thought the hon. Gentleman would think that I had been generous in acknowledging that there is scope for an independent Scottish effort, and that Scotland is a different country with a different tourist product. He should direct his question about the independent effort of the Scottish tourist board to my right hon. Friend the Secretary of State for Scotland. I agree that there is scope for competition, but we must be careful not to have too much duplication and waste, because we have had that in the past. Moreover, the hon. Gentleman should not forget that the whole question of different tourist boards was looked at by consultants, who reached the conclusion that there was a considerable overlap and that some money was not being wisely spent.

Statutory Instruments, &C

By leave of the House, I shall put together the questions on the three motions relating to statutory instruments.

Ordered,

That the draft Farm Structure (Payments to Outgoers) (Extension of Duration) Scheme 1983 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Eligibility for Release on Licence Order 1983 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Consumer Credit (Increase of Monetary Limits) Order 1983 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Donald Thompson.]

Electoral Finance (Miscellaneous Provisions)

4.20 pm

I beg to move,

That leave be given to bring in a Bill to establish limits on the total expenditure by political parties during the period of a general election; to establish the right of shareholders of public companies to contract out of political donations made by public companies; to make provision for elections in political party organisations to certain senior offices concerned with administering political expenditure; and for connected purposes.
The first part of the Bill seeks to limit the amount that can be spent by political parties nationally during a general election campaign. Of course, candidates are strictly limited on what can be spent on their behalf—there is no controversy about that—but what sense is there in controlling that expenditure, when a party can spend nationally as much as it choses? For instance, in the last election, the Conservative party had about £15 million to £20 million available to spend—and quite likely spent a great deal of that amount. Against that, the Labour party had, at most, £2·5 million.

If the argument is to be that it is simply sour grapes on the part of members of the Labour party, surely the same argument could be used by rich candidates who could argue, "Why can't we spend as much as we wish?" We know the answer to that. No candidate, however rich, can spend more, or have more spent on his behalf, during a general election campaign than a poor candidate. So, in my view, the change that I am proposing is necessary and desirable.

The second point of my proposed Bill is to give shareholders the same rights as trade unionists have to contract out of political donations. Although that right exists for trade unionists, no such right applies to shareholders. It sometimes is said that a shareholder can always sell his shares if he is unhappy about political donations, but he may not wish to do so. He may take the view on commercial grounds that he is quite happy with his shareholdings but he is unhappy about the political donations, whether to the Conservative party or to any of the front organisations with which the Tory party is connected. I should like shareholders to be given that right.

It is interesting to note that in a recent Fabian Society pamphlet, the author, Dr. Keith Ewing, who lectures at Trinity hall, Cambridge, says:
"not only are political donations made without shareholder consultation, they are almost certainly unlawful in many cases."
He says:
"Most companies do not have any express power to make political payments."
That is an interesting point, and one that I imagine the Government would be concerned about. I say that somewhat ironically. More than £2 million a year is donated to the Tory party from companies, and the idea that the Conservative party only gathers in the money from bazaars and at constituency level is false. Certainly, it gathers some money there—no one would dispute that — but it gathers in a very substantial amount from companies and front organisations. It is perhaps notable that the chairmen of the six biggest donors to the Tory party all received peerages in 1982, although I am sure that that is simply a coincidence.

The last part of my proposed Bill deals with providing for the election in political party organisations to certain senior offices concerned with administering political expenditure. I would much rather that the Conservative party put its own house in order, without the need for legislation. I am sure that all my right hon. and hon. Friends share that sentiment. However, the absence of basic democracy at national level in the Conservative party is surely something that we cannot ignore. It has been said that the chairmanship of the Conservative party is an appointment. He holds a very influential position. He is not elected, he is simply appointed. Not only the chairman of the Conservative party, but the deputy chairman, four vice-chairmen and two treasures are all appointed by one person. As some would say, one person, all the votes. The sheer impertinence of the Government lecturing trade unions about democracy when there is such an absence of democracy inside the Tory party is surely evident. No trade union would conduct its internal affairs in the same anti-democratic manner as the Conservative party. Each year on television we see the Conservative party conference, and that conference is completely stage managed from start to finish——

Order. The hon. Gentleman must not use arguments that he might use if he got leave to introduce his Bill.

I appreciate that, Mr. Speaker, but I am trying to show the need for such a Bill. However, I take on board what you say.

We have to bring the Conservative party into a basic democratic framework, and try to remove it from what I would describe as its eastern European habits. We must also try to make it recognise that in a democracy it should carry out its functions in a proper manner. After all, it took the Conservative party 150 years after the trade unions started their democratic affairs to elect its leader. Before 1965, even the leader of the party was not elected.

Order. I am sorry to stop the hon. Gentleman, but we are now straying. We have an important debate to follow.

The three points that I have made are my reasons — real reasons — why such a Bill is necessary. I believe that it is necessary for such reforms to take place. Certainly, in the internal affairs of the Conservative party my sympathies are entirely with the Tory reform group. What I advocate is not, I think, particularly controversial and seems not to be opposed. If the Bill is passed on the nod, and it is unanimous with the House, I hope that the Leader of the House will persuade his Cabinet colleagues to find Government time so that my modest proposals may make progress.

On a point of order. Mr. Speaker. On two occasions you drew attention to the fact that my hon. Friend the Member for Walsall, North (Mr. Winnick) was using arguments on his ten-minute Bill, that he would use if he got leave to introduce the Bill. I know that there are differences that apply to Standing Order No. 10, whereby an hon. Member must stick to the precise reasons why he wants the Bill to be introduced, but I believe that when an hon. Member introduces a ten-minute Bill, anything that appertains to that Bill can be raised. This is the first time that I have heard an hon. Member being questioned in that manner. I wonder, therefore, whether you will look at the precise points on which you intervened to make sure that you were absolutely correct on those two occasions.

I must tell the hon. Member for Bolsover (Mr. Skinner) and the House that the application under Standing Order No. 10 is to seek the leave of the House to bring in the Bill. An hon. Member must not adduce arguments in those 10 minutes that he would adduce if he had leave to bring in his Bill.

Further to that point of order, Mr. Speaker. Again, you have said that this is a Standing Order No. 10. I am trying to demonstrate that this is not a Standing Order No. 10 application. This is a ten-minute Bill. My hon. Friend has been to the Public Bill Office and gained the opportunity to put it to the House. I suggest that my hon. Friend has been putting forward the arguments in a proper manner, and should be allowed to do so.

I shall have to withdraw unreservedly. Two 10s have confused me. I mentioned Standing Order No. 10, and of course it is a ten-minute Bill.

Question put and agreed to.

Clearly, this Bill has been given a unanimous first Reading, and I therefore hope that the Leader of the House will provide Government time for my Bill, as is only right and proper.

Mr. Joseph Ashton, Mr. Norman Atkinson, Mr. Dennis Canavan, Mr. Bob Edwards, Mr. Doug Hoyle, Mr. James Lamond, Mr. Ted Leadbitter, Mr. Max Madden, Mr. Bill Michie, and my hon. Friend the Member for Bolsover (Mr. Skinner), in view of his interesting and helpful intervention. Perhaps I can put forward his name, if he has no objection.

Bill ordered to be brought in by Mr. David Winnick, Mr. Joseph Ashton, Mr. Norman Atkinson, Mr. Dennis Canavan, Mr. Bob Edwards, Mr. Doug Hoyle, Mr. James Lamond, Mr. Ted Leadbitter, Mr. Max Madden, Mr. Bill Michie and Mr. Dennis Skinner.

Electoral Finance (Miscellaneous Provisions)

Mr. David Winnick accordingly presented a Bill to establish limits on the total expenditure by political parties during the period of a general election; to establish the right of shareholders of public companies to contract out of political donations made by public companies; to make provision for elections in political party organisations to certain senior offices concerned with administering political expenditure; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 9th December and to be printed. [Bill 59.]

Orders Of The Day

Restrictive Trades Practices (Stock Exchange) Bill

Order for Second Reading read.

4.30 pm

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

The Bill is short, it is concise, it is straightforward and I shall briefly explain the detail of its provisions later in my speech.

I have to say, however, that although we are starting a little late, my speech will be a little longer than I would want because I want to go back through the history of this matter. In order not to lengthen it unduly, I hope that the House will excuse me if I am not quite so free as I sometimes am in giving way to hon. Members.

First, I want to deal with the principle behind the Bill and explain why it is not merely desirable, but well-nigh essential, that it should be enacted. The importance and the value to our economy of the City is well known and well understood. The stock exchange is a vital part of the complex of activities included in that portmanteau word "City". Too much attention is given to the froth of activity of the stock exchange, to the solely speculative activity that is sometimes engendered, often by over-reaction to news, whether good or bad, or sometimes indifferent, about the national and world economies, or the performance and prospects of particular firms or sectors, but no one should believe that that froth is all there is to the stock exchange. It would be just as bad to confuse what is said from the rostrum or, indeed, the platform of the Labour party conference with the thoughts and ideas of quite normal people who support that party at the polls.

A principal role of the stock exchange is to raise finance for commerce and industry. Because of its history, its ability and its enterprise, United Kingdom companies can look to the stock exchange for a greater proportion of their financing needs than those in other European Community countries. To the continuing satisfaction of successive Chancellors, it provides a large liquid market for gilts.

Perhaps nowhere else in the world has a more effective system for the funding of Government borrowing than we have in our stock exchange, and while I admire and support the determination of my right hon. Friend the Chancellor not to put too large a bucket too often in that pool of liquidity, I suspect that he will make an occasional haul for a year or two to come. Because it is a liquid market, there are both willing buyers and willing sellers, and the stock exchange provides the mechanism for investors, not least the institutions, notably the pension funds, to satisfy the needs of their members to turn cash savings into other forms of assets.

The stability, the competence, the size and the integrity of our stock exchange all have attractions for overseas clients, which has made it a substantial foreign exchange earner. All this underlines the need to ensure that the stock exchange works effectively and in the interests of the buyers and sellers who use it as a market, and I suppose this is where an element of worthwhile and serious controversy creeps in.

To function effectively as a self-regulating body, the stock exchange must have rules. Those rules are bound to affect competition amongst the dealers acting within the exchange and, quite clearly, unless an exception is made those rules must fall within the provisions of the Restrictive Trade Practices Act 1976.

Despite the offer of the stock exchange to undertake a review of its rules, in which the then Mr., now Sir Nicholas, Goodison said that
"The Government and the Bank of England would have more certain control of the outcome",
the then Minister of State for Prices and Consumer Protection decided in February 1979 to refuse the request of the stock exchange that it should be removed from the scope of the legislation.

As a result, the stock exchange agreement—its rule book — which had been registered with the Director General of Fair Trading in October 1977, was, in the exercise of the Director General's statutory duty, referred to the Restrictive Practices Court. Even then, one danger inherent in that line of action through the court became apparent. It was that the court would be obliged to consider each alleged restrictive practice created by the stock exchange agreement—the rule book—and, if it saw fit, to strike it down. But there was no obligation on the court or the Office of Fair Trading to construct a new rule book to ensure the continued effective working of the stock exchange. As the House knows, proceedings were initiated, to the joy of the critics of the City, and, by the look of the legal costs, I suspect amid scenes of rejoicing in the legal profession.

A great deal has been made of the cost and justification for the deal, but is it true that the cost to the taxpayer would not have exceeded £500,000?

I am not sure what the cost would have been. We have not had the case and it is difficult to know how long it would have gone on and what the cost would have been, but I am told that it is estimated that the Bill will result in a saving of public expenditure, primarily on legal costs, of about £500,000.

After the 1979 election the stock exchange hoped that the incoming Secretary of State for Trade would reconsider the case that had been put to his predecessor. However, Sir John Nott, as he now is, was not persuaded that he should take the case out of court and he made known his decision on 23 October 1979 at columns 229–31. The date is important. It is over four years ago, and it was only eight months after the decision by the hon. Member for Norwood (Mr. Fraser), the previous Minister.

My right hon. Friend expressed his recognition of the value of self-regulation, but said:
"We must not assume that the … Court is not as capable as other bodies of making a sensible finding in the public interest".
In reply to my hon. Friend the Member for Harrow, East (Mr. Dykes) he said:
"However, clearly I am always prepared to receive representations about exemption orders, and if some dramatic situation arises I shall be willing to see my hon. Friend at any time". —[Official Report, 23 October 1979; Vol. 972, c. 230–31.]
It is fair to say that nothing dramatic happened in the four years between my right hon. Friend's decision and that of my right hon. Friend the Member for Hertsmere (Mr. Parkinson). However, more to the point, nothing has happened, and that is dramatic in itself. One can concede that by 1979 the stock exchange was in need of change in order to continue to carry on its business and discharge its responsibilities to investors. One can concede that in a swiftly changing world there were some signs that the stock exchange rule book might itself become ossified. But, as a consequence of the reference to the court, it has become petrified, not in the sense of being afraid, but of being set into stone, unable to change to meet the challenges of a changing world.

Let me express this not in my words, but in those of Mr. Hamish McRae of The Guardian. I do not know Mr. McRae. I doubt whether he is a member of Militant Tendency or of the Conservative party either, so let us excuse him on this occasion at least from any suspicion of partisan bias. On 19 July he wrote:
"There are a number of perfectly sensible reasons why the Office of Fair Trading's action against the Stock Exchange should indeed be stopped. You can argue, as the Exchange has, that a court of law is not the best place to determine how a complex organism like a securities market should be run.
By its nature a court is a place of conflict, and even the OFT would presumably accept that the chances of nailing the optimal solution there were pretty small.
The worry is that if the Exchange does not voluntarily end not only its rules on commissions, but also modify radically its jobber/broker split, it will find itself missing any major part in the next great boom in finance: international securities trading.
For the last three or so years, the whole thrust of the Exchange has been defensive.
Little loopholes in its regulations have been permitted, but every loophole has had to pass a test of whether it will weaken the Exchange's case with the OFT."
He went on to point out that the stock exchange, and therefore the United Kingdom, was losing business to other institutions abroad because of lack of change.

I am not saying that I would necessarily agree with Mr. McRae on all the changes that he might think right, not least because I am sure that many people more expert than I, or even Mr. McRae, might have differing and even changing views, but I am sure that he is right on the main issue. Indeed, the Royal Commission on the City, chaired by Lord Wilson, expressed similar fears in chapter 8, paragraph 366, of its report.

The fact is that the stock exchange agreements have been petrified—turned into tablets of stone—at a time when change is needed because the stock exchange has been unwilling to prejudice its case in court. In short, in the four years since Sir John Nott's decision, it has become clear, first, that the doubts whether the court is the right place to resolve these issues have become stronger rather than weaker and, secondly, that instead of facilitating change, the action has become a serious and chronic barrier to change.

When my right hon. Friend made his statement in July there were some misgivings over the likely adequacy of the response from the stock exchange. There are now many people who express concern lest the pace of change since my right hon. Friend broke the legal logjam may become too swift.

I remind the House what has happened. My right hon. Friend the Member for Hertsmere recognised that the balance of argument had decisively changed. That was why he concluded that he should seek an early resolution out of court if, but only if, the stock exchange would make changes to meet the main concerns of the Director General of Fair Trading and some other critics.

The reaction to my right hon. Friend's statement of 27 July was predictable, but had the critics of my right hon. Friend considered matters more coolly they would have recollected that there was nothing unprecedented in seeking to reach an accommodation with the stock exchange to see whether there was a basis on which it could be exempted from the Restrictive Trade Practices Act. Successive Governments have recognised that there are some types of agreement for which the procedures in the Act are inappropriate.

To the satisfaction of the custodians of the vested interests of trade unions, for example, agreements in the sphere of industrial relations between trade unions and employers are outside the scope of the Act. Need I remind the lawyers and accountants on both sides of the House that, by and large, the learned professions are excluded?

Indeed, and when this measure is enacted it will he a statute which exempts the stock exchange, and I regret that the hon. Member for Blyth Valley (Mr. Ryman) has not understood that. Therefore, it is in line with the way in which we have treated others that we should consider whether the stock exchange should be treated in that way, provided that we obtain the necessary changes.

Does the right hon. Gentleman agree that there is a great distinction to be drawn between the stock exchange, which is supposed to be a market—and we have a Government who say they believe in competition — and the legal profession and the other bodies that he mentioned?

The hon. Gentleman may think that there is no comparison between the legal profession and the exemption that is given to trade unions and employers who make industrial bargains. Merely because the two are not alike does not make the case that they should not each be exempted. I am surprised that the hon. Gentleman should fall for a legal fallacy of that kind.

Does my right hon. Friend think that there is any distinction between making an exemption in the original Act and exempting persons who are the subject of proceedings while those proceedings are in process?

There is a difference between the two, and my hon. Friend knows that full well. I am saying, first, that it is justified to exempt the stock exchange, on any criteria. Secondly, I am saying that the fact that the action has been going on in the courts for a considerable time means that we have had four years during which the stock exchange has been unable to change. It is clear to most unbiased observers that the court is the least likely place now in which to get a satisfactory resolution of these matters. That makes the case also for ending the action in the court. The two matters are separate, but they are both equally valid.

I may have an even better example for my right hon. Friend. I have with me a leaflet entitled "Package Tours" bearing an attractive drawing of a girl in a bikini on holiday, and at the top in the righthand corner are the words, "The Office of Fair Trading". This was a deal which the Office of Fair Trading did with the travel industry to exempt that industry from going to court. The rules that were applied by the travel trade were effective and had it gone to court the result might have proved harmful to the business and the consumer. That example is on all fours with what my right hon. Friend is suggesting today.

My hon. Friend underlines the point, and I am grateful to him for doing so. We required necessary changes to be made as part of the bargain under which the action was to be ended and the stock exchange was to be exempted. Let us consider what has been done.

The right hon. Gentleman has skilfully conveyed the impression that the rebuttal of the stock exchange request for exemption dates back four years, to the time of Sir John Nott, as he now is. However, he has skated over the fact that repeated requests were made on the issue and that repeatedly successive Secretaries of State refused it, until very recently.

The hon. Gentleman must also understand that time has been passing and that the arguments that I have adduced have become stronger. He must also understand that life does not stand still, ossified in the way in which he would ossify the stock exchange agreements.

For the first time, lay members will be appointed to the council of the stock exchange. They will account for up to 25 per cent. of the council and will be appointed by that council, with the approval of the Governor of the Bank of England. At least five lay members are to join the council by the end of next month.

Secondly, a new membership appeals body, entirely independent of the stock exchange members of the council, is being established. If the council objects to an applicant for membership, the appeals body will be able to review the decision, and if the applicant meets the requirements it will be able to overrule the council's decision. The appeals body can include lay council members, but stock exchange members are themselves ineligible. Thirdly, on the exchange's existing appeals committee on disciplinary matters, people who are not stock exchange members of the council will constitute a majority.

These changes will allow the influence of stock exchange users to be felt at the centre of policy making in the exchange. They will also ensure that refusal of, or admission to, membership of the exchange is seen to be objective.

A further change — the details of which will, I understand, be announced in a day or two—is being made, and I mention it because even expectation of it is already having its effect, making it easier for member firms of the exchange to attract outside capital. It will be possible for non-members of the exchange to serve as non-executive directors of limited corporate members of the exchange, provided that there is a majority of directors who are stock exchange members.

This provision further liberalises existing rules which allow any single non-member to own up to 29·9 per cent. of the capital of limited corporate members, provided that the executive directors remain members of the stock exchange. However, the part of the agreement reached by the stock exchange that has attracted the most attention —and deservedly so—is the undertaking to dismantle the rules that prescribe for minimum scales of commission.

The council has already announced its decision to abolish minimum commissions for overseas securities, and the relevant rule changes will take effect at the beginning of April 1984. It is considering various options for the other steps that it will need to take before 31 December 1986—the date by which it has undertaken to dismantle minimum commissions completely.

In July my right hon. Friend the Member for Hertsmere and most others envisaged a staged and gradual dismantling. It may well be that all the remaining scales will be removed together once the groundwork has been completed. That is the so-called big bang approach, and it was the manner in which it was done on the New York stock exchange some years ago.

The effects of breaking the logjam have already been remarkable. The impetus for change seems to be growing, as an unprecedented open debate has been sparked off by the decision to ask Parliament to take this case from the court. I welcome that debate.

Before my right hon. Friend leaves this section of his speech, can he say whether the provisions to which he has just referred, whereby the maximum stake that an outside member can take in a stockbroking firm is 29·9 per cent., will be built into statute and made part of the law, because, if not, the pressures to extend that will become irresistible and will have the ultimate effect of transferring control of many stock exchange firms into the hands of America, Germany and Japan? That is my chief concern about these proposals and their long-term effect.

I expect that the statute will be closely aligned with the Bill. The Bill cannot make such a provision and such a legislative provision would not be likely to be in the best interests of the stock exchange. That will be for the stock exchange and its rules will be watched by the Bank of England and others.

It is not only, or indeed primarily, for the Government to take the decisions about the long-term future of the securities industry in this country. I have no wish for the Secretary of State to plan and regulate the market. It is a task for those more expert in setting up the securities market and for those who wish to trade in it. I am sure that my hon. Friend the Member for East Lindsey (Mr. Tapsell) will play his part in that as a member of the exchange. My interest is threefold. I wish, first, to ensure that the stock exchange continues as an effective market in which industry and commerce can seek finance, the Government can issue gilts, and, from time to time, liberate state industries into ownership by the public; secondly, to see the investor properly served and properly protected, and, thirdly, to foster the London market as a contribution to our invisible exports.

To return to the point made by my hon. Friend the Member for East Lindsey (Mr. Tapsell), are we to understand that the Government would stand by, indifferent to whether the great power of the City of London was transferred to the Japanese or the Germans? Are we reaching the stage where, for the sake of competition, we are willing to sell out control of the City?

My hon. Friend must understand that the Government do not own the firms that might be bought or might offer themselves for sale. My hon. Friend may be saying that he believes a number of his colleagues in the exchange will want to sell out, but it will be difficult to stop them doing so. I shall say only that the Government will continue, alongside the Bank, to keep a close eye on what goes on and will judge reactions in the circumstances of the day.

Some of the most important and intense debates since the Government's intentions were announced have centred on the future of single capacity. Both inside and outside the exchange, many believe that single capacity cannot long survive the introduction of negotiated commission. Single capacity has been a clear and well-understood way of protecting investors against unfair trading practices. However, if the stock exchange and its users decide that separation of capacity must go, it is not for me to stand in their way. My interest is not in the ending or preservation of single capacity, but in safeguards for investors. I should want adequate safeguards to be in place before any change from the single capacity system was made.

Clearly, investors will demand adequate safeguards, and if they do not exist on the London exchange they will take their custom elsewhere. I have no doubt that the stock exchange is well aware of the need to be ready whichever way the market develops.

It has been said that the agreement reached with the stock exchange will benefit only the big institutional investor, leaving the private client at a disadvantage, but the big institutions often act for the small man—notably the pension contributors and unit trust holders.

The hon. Member for Yeovil (Mr. Ashdown) laughs at this. He seems to think that it is funny to contemplate that there are small people concerned with pension funds, but there are. He may think that he is too big to cast himself in that role, but I suspect that he is a member of a pension fund.

I also suspect that the likely changes in the security markets may lead to the establishment of far more extensive retail outlets, which would benefit the private client. This could do much to promote wider share ownership and to reverse the continuing distancing of the small investor from the share market, which was confirmed by the latest stock exchange survey of share ownership. After the experience of the past four months, I should hesitate to predict the extent of these and other changes which we should expect to see.

Does my right hon. Friend agree that the contrary conclusion might be feasible and acceptable, that the eventual demise of single capacity and the move to dual capacity could be accompanied by the strengthening of the total investor protection framework, provided that there were suitable elements in the security industries statute, say in 1985 or 1986, and appropriate amendments to the Prevention of Fraud (Investments) Act?

My hon. Friend is right, and the matter goes beyond that. As I said earlier, we would want to be satisfied that adequate safeguards were there. It is not for me to say what they should be, but if necessary the stock exchange could design them if it wished to change from the present single capacity system. It is essential that if single capacity goes it is replaced by other protections, and probably the maximum openness and transparency—if that is the current word—in dealings would essentially be among them.

I have said that I am determined to see international financial activity in London continue to make its contribution to the economy. Some have pointed to the interest generated in foreign financial institutions by changes in the stock exchange laws, and, like some of my hon. Friends, have implied that we have let loose a foreign invasion. However, there are already a number of United Kingdom institutions making overtures to stock exchange member firms. I suspect that my hon. Friends would wish to restrain me if I were to give undertakings that I would not allow foreign companies to buy other British assets. If I were to go too far down that road, my hon. Friends might begin to think that I was developing a siege mentality.

In any case, the foreign institutions bring some advantages for us. We might remember that the very names of many a notable firm on the British exchange have an un-English ring to them, reminding us of the benefits of allowing open access. By tapping the financial strength of foreign institutions we can enhance our existing preeminence, which is based on both history and skill. It is simply not true that by reaching an agreement with the Stock Exchange the Government have sold out the interests of the investor or the country to the interests of the City.

The substantial details of the Bill are all contained in clause 1. Subsection (1) describes the agreements that are to be exempted from the restrictive trade practices legislation. Subsection (1)(a) effectively exempts rules and regulations of the stock exchange which, for the purposes of the Restrictive Trade Practices Act, constitute an agreement between members of the exchange. Subsection (3) makes it explicit that this exemption includes the deed of settlement of the stock exchange and its rules, regulations and usages, as well as the recommendations made to members of the council.

Subsection 1(b) covers agreements involving the Government or the Bank of England. That arises because it is possible that the stock exchange might enter into an arrangement with the Government or the Bank during the monitoring arrangements that I mentioned, and that that arrangement might be registrable under the Restrictive Trade Practices Act. It would be inappropriate if such an arrangement should become registrable solely because the Government or the Bank were a party to it. Subsection (2) will require that the Director General of Fair Trading removes the present agreement of the stock exchange from the register of restrictive trade agreements and formally terminates proceedings that have already started in respect of that agreement. I have already referred to subsection (3).

This short Bill removes the rules and usages of the stock exchange from the scope of the Restrictive Trade Practices Act. This does not shield the exchange from the need for change, but frees it to respond to that need. Change, under the spur of international competition and the needs of users, is inevitable. As recently as July there was a fear that the change would be too slow. Now our critics fear that the change is too swift. The purpose of the Bill is to expedite that change to ensure that it is governed by the needs of the market, and to ensure the continued preeminence of the London stock exchange in the interests of investors and those seeking to raise finance and, above all, those of the country.

As I commend the Bill to the House, it would be appropriate to do so in the words of the leading article in The Times today:
"A Government and Party that believes in the virtues of a free market economy and in wider share ownership as a barrier to corporatism should have no doubt that the right course is the one set by Mr. Parkinson on July 27."

5.2 pm

The House has awaited with some expectation the Second Reading of the Bill, and especially the Secretary of State's speech. The Bill relates to the exemption of a network of restrictive trade practices from the purview of the Restrictive Trade Practices Act, and, in place of an independent court examination and judgment, to substitute a deal, whether or not made in smoke-filled rooms, struck between the chairman of the stock exchange council and the former Secretary of State.

A special irony and relish is added to the debate with the arrival, since the initial decision, of the present Secretary of State, whose reputation is substantially founded upon his bitter enmity of the doctrine of self-regulation. We asked ourselves how the sworn foe of the closed shop and of the demarcation agreement — the apostle of a free market in labour—would react to those terrible practices when undertaken not by industrial or white-collar trade unionists but by the gentlemen in pinstriped suits who trade on the stock exchange. We know now. There is a new style for the new job, and a new policy for the new Department. The hawk of the Department of Employment has become the dove of the Department of Trade and Industry. The right hon. Gentleman—tiger turned pussy cat—has tamely accepted the decision of his predecessor, and we must now face this truly astonishing Bill.

The right hon. Gentleman and I have longer memories than he tries to pretend. He will remember that the motto of the stock exchange is

"My word is my bond."
He will also remember that the solemn and binding agreements that he and his colleagues made with the trade union movement were torn up and thrown back at them as the unions spat in his face during the winter of discontent.

That is an interesting, although surprising, affirmation of the right hon. Gentleman's faith in voluntary arrangements and agreements. We note it, and we hope that he will not have reason before long to regret the trust that he offers so freely to the stock exchange.

The Secretary of State must know that he is intervening in the due process of his own legislation and is trying to withdraw from the examination of the Restrictive Practices Court a range of admittedly restrictive agreements which it is the court's statutory duty to decide, after receiving written and oral evidence, hearing cross-examination and after its own deliberations, are or are not in the public interest.

No one could argue that this is not important. The scale of the stock exchange's activities, and the serious issues raised by changes in those activities, made this the most important case that the court has been asked to consider. Yet, after four years of preparation, with hearings due to commence at the beginning of next year, the Secretary of State and his immediate predecessor thought fit to abort the proceedings, to expunge the reference and, through an Act of Parliament, retroactively to validate their arbitrary interventions.

I can find no precedent for such an exercise of ministerial power. On many occasions Ministers have disagreed with court decisions and have sought changes in the law or, where they have had the necessary power, to delay enforcement. However, one can search deep in the annals of parliamentary history—there are none to be found in the records of the restrictive practices court—before one finds a case where Ministers have intervened so flagrantly to frustrate a judicial procedure once the process has started. On that account alone, this intervention is a scandal. Its effects will be far-reaching, and it will undermine whatever standing the Office of Fair Trading still has. It will devalue the court and the law itself. It will provide a precedent and an encouragement to every organised interest group to seek exemption from legislative scrutiny. It will damage, probably irreparably, the remaining credibility of the Government's competition policies.

The Government's astonishing action is even more astonishing because it proclaims a complete reversal of Government policy. The Secretary of State set out the history, and I shall retrace some of the ground. The original reference was made by a Labour Secretary of State in early 1979. The new Conservative Government later that year, whose Ministers were inundated with stock exchange and City memoranda urging withdrawal or exemption, considered the matter carefully, frequently and at length, and decided to proceed. On Second Reading of the Competition Bill on 23 October 1979, Sir John Nott, as he now is, the then Secretary of State for Trade said in reply to a question from one of his hon. Friends:
"Several months ago the Stock Exchange requested that its agreement should be removed from the scope of the legislation on the ground that the Restrictive Practices Court is not an appropriate body to investigate its activities. There has been a considerable amount of correspondence between Ministers and the Stock Exchange and a great weight of evidence has been passed between us."
However, having read the considerable correspondence and evidence, the Secretary of State stated:
"I regret to tell the House that I cannot meet the request of the Stock Exchange." — [Official Report, 23 October 1979; Vol. 972, c. 230.]
He then asserted his confidence in the competence of the restrictive practices court in the terms quoted earlier by the Secretary of State.

That does not tie in with the picture of an inexperienced and worried Secretary of State inheriting the policies of his Labour predecessor, not having enough time to weigh properly the issues involved and therefore making a rash and mistaken judgment. The decision was considered carefully after representations and was adhered to.

However, having further declined the invitation to lay an exemption order, and obviously conscious of stock exchange representations and of the complexity of the reference, the then Secretary of State conceded amendments to the Competition Bill that were designed to meet the special problems of the stock exchange. Those amendments to new clauses 18 and 19 were moved and carried in Committee on 13 December 1979. The then Under-Secretary of State, the right hon. Member for Gloucester (Mrs. Oppenheim), stated:
"The amendments are designed to minimise the chances of … disruption …. New clause 19 is designed to allow the court, at the request of the parties concerned, to suspend its declaration, that a restriction operates against the public interest, beyond the automatic period set out in new clause 18. This further suspension may last for no more than six months, subject to an additional suspension of no more than three months. That provides a possibility for nine months in all." — [Official Report, Standing Committee B; 13 December 1979; c. 676–7.]
These clauses were tailor made to meet the principal stock exchange objection that an adverse court ruling, with immediate effect, would prove disruptive. The Government not only wrote into the new clauses the major extensions of time—up to nine months—before any court decision need come into effect, but specifically envisaged a process of resubmission of the amended agreements which could have extended the initial nine months' delay period almost indefinitely to allow for resubmission and for phased and managed change. The decision to proceed with the court reference was not made just by the then Secretary of State, but was upheld by the two previous Secretaries of State for Trade—the present Leader of the House and Lord Cockfield, who is now the Chancellor of the Duchy of Lancaster.

Is this history relevant? Is not my right hon. Friend's decision vindicated by the fact that in the four-year period that the right hon. Gentleman is describing nothing has happened, whereas during the past three months many changes—some have said too many—have occurred?

The joke and the irony is that the changes that have been taking place during the past three months were those which the opening statement of the previous Secretary of State was designed to prevent.

To claim the credit for the unintended consequences of a rash and bad decision is the feeblest part of the Secretary of State's defence today.

No fewer than four Secretaries of State thought that this was the correct way to proceed. We were informed not long ago in one of our Sunday newspapers that the Prime Minister wrote to the Wilson committee upholding and confirming the decision by Mr. John Nott, as he then was, to refer this case to the Restrictive Practices Court. As we recall,
"the lady is not for turning."
No fewer than three Conservative Secretaries of State and their able predecessor received endless complaints and submissions for stock exchange exemption and withdrawal and decided that examination by the court was the correct policy to pursue.

After the 1983 general election everything changed. We had the brief incumbency of the Secretary of State for Trade and Industry, the right hon. Member for Hertsmere (Mr. Parkinson). To those aware of the background, his statement of 27 July was a bombshell. Apparently, all his predecessors had got it wrong. The court's examination had suddenly become
"a completely unnecessary and expensive action, from which only the lawyers would in the end have benefited".—[Official Report, 27 July 1983; Vol. 46, c. 1196.]
The right policy was, therefore, to withdraw the action forthwith and to legislate to accomplish it. The Bill makes it plain that the withdrawal of the stock exchange from the purview of the Restrictive Trade Practices Act and of the court is complete and immediate, and the possibility of all further references is to be debarred by the Bill. In its place, there was an agreement between the Secretary of State and the stock exchange chairman under which certain changes were to take the place of the court's examination.

Why did the Secretary of State undertake this extraordinary U-turn? Wicked journalists, like those who write editorials in The Guardian, have offered three explanations. First, the Government's thumping majority of 9 June and the new arrogance of Ministers with large majorities had emboldened them to make this volte-face. Secondly, the Secretary of State, who was then also chairman of the Conservative party, had a special empathy and rapport with the City and the stock exchange not unconnected with their continued and total support for the Conservative Government; and thirdly, the old Tory habit of settling difficult matters over port at Brooks's had reemerged. These unworthy thoughts were echoed in the editorial in The Times today which states that the
"agreement with the chairman of The Stock Exchange would smell in some nostrils as Tory tribute for the City of London's massive financial support for Mrs. Thatcher's election campaign."

I am coming to the point where I shall willingly give way. No doubt the reasons were complex. It is clear that we can search the statement of 27 July without finding even a clue as to the satisfactory reason for the change. We have only the assertions:

"While these proceedings are pending, it is difficult for the Stock Exchange to make changes to enable its members to compete for business worldwide. There is also a danger that the legal proceedings within the framework of the Act may damage the effective operation of the Stock Exchange". — [Official Report, 27 July 1983; Vol. 46, c. 1194.]
The Secretary of State gave a slight elaboration when he referred to the doctrine of the frozen and immobile stock exchange so frightened to make any move in its practices that the real world and its needs were passing it by. That is nonsense. Any serious body, including a well and expensively advised body facing such a protracted action, is not frozen into immobility. On the contrary, it is encouraged by the process of reference to the Restrictive Practices Court to make adjustments in its practices not merely to disarm the obvious and major criticisms that such a court may make, but to re-examine its practices and, where change is needed, to bring them into a new formulation. That is what the stock exchange has done.

Has the right hon. Gentleman seen any explanation from Sir Nicholas Goodison, the chairman of the stock exchange, that he did not recommend that there should be some change in the rule book after the proceedings had started?

Will the right hon. Gentleman withdraw his accusation that one of the underlying reasons for the Bill is that there is massive support for the Conservative party by the City? Does he agree that of every pound spent by the Conservative party 80p comes from the doorstep and only 20p from large donations, whereas for the Labour Party, 85p comes from the unions and only 15p from the doorstep?

If the hon. Gentleman had been in his place a little earlier before this debate began, he would have heard my hon. Friend the Member for Walsall, North (Mr. Winnick) say, in introducing his ten-minute Bill, that over £2 million a year of company donations finds its way to the coffers of the Conservative party. Those are direct, not indirect, funds for the Conservative party, so the hon. Gentleman does not have a good point.

I did not know that the Labour party was so keen on always going to law. Unless the right hon. Gentleman is equipped only with the views of leader writers, will he explain the advantage of going to law when an agreement can be reached now rather than in four years' time and which would probably allow more than the Restrictive Practices Court would have? Is it not better to have this matter dealt with now and quickly while change is taking place rather than waiting for years and spending millions of pounds on lawyers' fees?

I am not satisfied — nor were four Secretaries of State previously responsible for this matter—that changes of the kind that have emerged will be satisfactory or even whether it is proper to proceed in that way without a thorough and searching examination of the restrictive practices and the general practices of the stock exchange registered with the Office of Fair Trading. That seems a perfectly reasonable answer to that.

In his statement of 27 July, the then Secretary of State alluded to his discussions—agreeable and constructive with Sir Nicholas Goodison and negative and disagreeable with Sir Gordon Borrie — and outlined the proposals approved with the chairman of the stock exchange. They included the dismantling by stages of the rules prescribing minimum commission scales, continuation of the rules prescribing separation of the capacities of brokers and jobbers, the amendment of rules to permit non-members to serve as non-executive directors of limited corporate members of the stock exchange, to which I gather a small addition has been made, the introduction of lay members to the stock exchange council and the establishment of a new appeal body independent of the stock exchange as the final arbiter in disputes over membership.

The statement left unanswered the obvious question. If the amended rules and procedures of the stock exchange were such a notable improvement, why could not the revised rules be submitted to and examined by the Restrictive Practices Court? I see no reason — the Secretary of State has certainly given none today—why that procedure should not have been followed.

Why was there such a U-turn in July 1983? That question must also be asked of the stock exchange. Apart from some pretty minor changes, as I believe they will properly be judged, Sir Nicholas Goodison agreed to the removal of a central pillar of present stock exchange arrangements — the minimum scale of brokers' commissions, which is to be abolished by the beginning of 1987. What makes his agreement so puzzling is that the stock exchange's own written evidence to the court, published in March 1981, takes the view that
"the single capacity system is supported by and is dependent for its continuation upon a minimum commission structure for brokers' agency business. In the absence of such a minimum commission structure the maintenance of the main elements in the single capacity system, whereby the jobbers agree not to deal with non-members nor act as agents, and brokers agree not to act as jobbers and to bring all their agency business to the market, would become unworkable."
Brokers who have traditionally acted as agents for those who wish to buy and sell securities and do not operate in the market on their own account would, in the absence of fixed commissions, be driven to act as principals themselves. Competition would reduce their numbers and substantially scale down the range of services that they were able to offer clients. Further, once they became themselves principals problems of conflict of interest between their roles as principals and their traditional role as agents would inevitably arise. For their part, jobbers would be forced to deal not only with brokers, as they do today, but with clients outside the stock exchange. Once that happened, the whole system of stock exchange regulation would break down. The special role of jobbers in making a market would be only inadequately performed. Furthermore, the results would be seriously disadvantageous to investors. Apart from the point about conflict of interest, there would be the danger of "
collusion and the creation of false markets"
and the small investor, as opposed to the large institution, would be particularly disadvantaged.

Interestingly enough, the report of the Wilson committee to review the financial institutions, published in June 1980, substantially supported that part of the stock exchange case. It stated:
"the single capacity dealing system provides greater safeguards against dealing abuses than the systems adopted in other countries. Some of the conflicts of interest which are possible in circumstances where dealers are able to act as principals as well as agents and advisers are avoided and the competitive dealing system makes market rigging or collusion easier to detect."

I declare an interest as a member of the London stock exchange. The right hon. Gentleman's quotations from the stock exchange submission and the Wilson report are incontrovertibly correct. Those who for many years have sustained a campaign to abolish minimum commissions seem not to realise the extent to which they have put the future of our greatest national asset—the City—at risk. My question to the right hon. Gentleman, however, is this. Does he accept the thrust of the Wilson committee's arguments or not?

I will willingly and frankly reply to the hon. Gentleman's question. I have considered the Wilson committee's statement of case. I have also seen other statements, less fully worked out. Therefore, I cannot myself reach a firm conclusion, but that is the very essence of the debate. That is precisely why the whole matter was referred to an expert body with a considerable cross section of opinion and a large amount of evidence available to it. The whole purpose was to enable the public, the stock exchange, the City and the House to reach a rational judgment as to the best way for the stock exchange to conduct its affairs. What else does the hon. Gentleman think that the inquiry is about?

Is the right hon. Gentleman basing his case on the fact that the court is an expert body in relation to the stock exchange? If so, he is skating on rather thin ice.

I shall come to the importance, if any, attached by the Secretary of State to the workings of the Act of which he is now the custodian and the Restrictive Practices Court for which he has a special responsibility. He has already rubbished the court by withdrawing this reference from its purview. He has now rubbished it still further in his intervention.

What are the likely effects of the proposed changes? What does the Secretary of State expect to be the consequences of the abolition of brokers' minimum commission? Does he believe that the new arrangements negotiated by his predecessor will hold and that, contrary to the stock exchange's own evidence, abolition can be combined with the maintenance of the single capacity system? We need answers to those important questions. Much as we admire the vast experience and commanding intelligence of Ministers currently at the Department of Trade and Industry, we do not believe that they know the answers or that they have more than a hazy idea of the likely effects. The reference to the court was originally made so that the effects could be soberly and seriously considered.

I shall try to shed such light as I can on these murky matters, drawing in part of the experience of the New York stock exchange. That exchange had a fixed commission system as recently as 1975. Sufficient time has elapsed since abolition to form a clear view of the consequences as they affected brokers, although that is a different structure. I deliberately and consciously make the distinction as to how they affected brokers.

We know that the average commission paid on institutional deals was more than halved by 1981, while those recorded for private business fell by about one quarter. This massive reduction in margins and brokers' incomes led, as one might expect, to a sharp curtailment in the advice and research services previously provided to investors by brokerage groups. The number of brokerage firms was massively reduced by liquidations and mergers. As the income of the brokerage firms in their stock exchange dealings fell, they diversified into other non-exchange business while large financial institutions invested heavily in the remaining brokerage firms.

Whether on balance these changes have proved beneficial to the total operations of the New York stock exchange or to investors, I do not know. I am not aware that any serious study has been made of the net effects. It is, prima facie, reasonable to expect something similar to occur in the brokerage end of our stock exchange.

The only serious examination that I have seen—this is an important part of my speech — of the possible consequences of the Government's deal with the stock exchange, entered into by the right hon. Member for Hertsmere is the paper published earlier this month by, in my view, that very authoritative body, the city capital markets committee. It made four major points about which the Minister has a clear duty to comment.

First, it presents convincingly the major difficulties that would be faced in any attempt gradually to phase out the fixed commission system. Its conclusion is that it will have to happen on an appointed day. That is what it describes, and which the Secretary of State referred to, as the "big bang". All it can advise is that clients and brokers should, in the meantime, work like beavers to construct whatever is the stock exchange equivalent of air raid shelters. That idea was clearly not in the mind of the Secretary of State's predecessor or in the mind of the chairman of the stock exchange when they made their transitional postponing agreement three or four months ago that the whole matter would have to collapse within a short period and be wound up on a single day.

It is rather bizarre for us to contemplate the right hon. Gentleman defending the idea of fixed charges which are inherently a restrictive practice, even if they have good effects. Will he confirm, from the exigencies of the American experience, that moving to negotiated commissions did not intrinsically harm investors in any way?

The commissions most certainly fell. If that is the limited measure of success, it can be claimed to be successful. We are considering the future of the single capacity system, which is a much larger issue. Such a system is not just to be thrown away without proper scrutiny. How on earth can the House carry out such scutiny when only last year it insisted on introducing single capacity into Lloyd's because it considered as intolerable the position of people who acted both as underwriters and agents.

The second major point that the City capital markets committee addressed itself to was the issue of whether the abolition of minimum commission for brokers will entail the collapse of the jobbing system — the separate capacity agreement. Its conclusion is that under the new system of negotiated commission
"brokers may well come under compelling competitive pressures to preserve their business and make up for their reduced margins by trading as principals."
Once brokers start trading as principals with their clients, jobbers will be prevented from transacting all the business of the centralised market.

In short, it concludes:
"we do not think it would be possible to preserve the present system of single capacity effectively by legislation against the background of these commercial pressures without an elaborate statutory structure."
They are certainly not in favour of that.

It can hardly be said that this matter was anticipated in the July statement. We wish to know the Secretary of State's view about the advantages or disadvantages of this matter — or will he insist upon the neutrality of his earlier remarks that it is for the stock exchange to work it all out for itself?

Thirdly—this is one of its most formidable points—the City capital markets committee referred to the phasing out of fixed commissions by the end of 1986. The retention of single capacity presents a major danger of substantial takeover by American and other foreign financial institutions. I wish to quote what they said about this matter, for it is an important description of what is happening:
"in the interval between the introduction of negotiated commissions and the end of the present single capacity system, these investment houses, the most heavily capitalised of which are foreign, would probably obtain a large part of the business available, and it would then be difficult, and maybe impossible for Stock Exchange brokers and jobbers to regain business once it has been lost in this way. This has very important implications for invisible exports as well as the proper working of a central market. For this reason we consider that urgent consideration needs to be focused on the question whether it is really wise to introduce negotiated commissions while trying to maintain the present form of single capacity".
This matter should be of considerable concern to the Secretary of State who must be worried about earnings and the possible adverse effect on our invisibles.

The fourth point argued by the Committee is that if the stock exchange is to continue to operate effectively as a central market for Government and company securities, major changes will, in the light of the collapse of the present system, need to be carried through. It suggests that the changes should include the abolition, or at least the reduction to the EC average, of stamp duty which today yields about £335 million to the Exchequer. They also include new ways of seeking to protect the investor from unfair trading practices and from what it describes as malfeasance, negligence or inadequate information. It argues that once the jobbing and single capacity system is removed, the bargains, with size and price, would have to be published immediately they were entered into, that that would require the introduction of a stock exchange tape, and that brokers would henceforth have to make plain to their clients at the time of dealing whether they were dealing as a principal or as an agent.

Some of these matters were touched on in the questions that followed the former Secretary of State's statement on 27 July and several of these points are in the minds of hon. Members on both sides of the House because of the interventions that have already been made.

I wish to refer to the problem about the takeover of jobbing and broking interests by overseas bodies. I shall read again from the article in The Times today:
"There is a fear, not to be dismissed lightly, that if membership were available to all suitable banks, merchant banks and other investment houses, the Stock Exchange would soon be dominated by the investment giants of Wall Street and Tokyo. The fear is not confined to timid stockbrokers: it is an acute concern of the Bank of England, which, again as a result of Mr. Parkinson's initiative, is exercising a new, close supervision over the Stock Exchange."
I am not so sure about that. The Government's attitude is still remarkably difficult to follow. I saw reference to a speech by the Under-Secretary of State, who said, when dealing with this question, that it was not a question of the City being taken over, but of the City selling out to foreign interests. That does not seem to me to be a clear distinction.

The right hon. Gentleman has dwelt twice upon the first leader in The Times today, but, curiously, he cannot bring himself to get to the last paragraph, which comes down firmly and unequivocally in support of what the Government are doing. I think that the hon. Gentleman has now summed up his speech. He wants to pick out the bits from considered opinions that suit him and never come to the conclusions that disagree with him.

That is irrelevant. The Times raised serious points about what is happening in the stock exchange and our financial institutions. I do not quote judgments of newspapers—I quote from the points that they make. I do not seek to base my case on economic issues by quoting from page 20 of The Guardian the judgments of Hamish McRae. I hope to argue more strongly than that.

In the real world of finance, rapid and major changes are in train. Big money is moving into the stock exchange. As the House knows, Mercury Securities, the parent of one of London's leading banks—S. G. Warburg—has now obtained the 29·9 per cent. stake in Akroyd and Smithers, which is one of our two top stock jobbers. Exco International has moved in on Wood Mackenzie. Earlier this month the American giant City Corp took a similar stake in Vickers Da Costa, and 80 per cent. in its overseas business. Hoare Govett has similarly acquired an American banking partner. Other major institutions both foreign and British—including Merrill Lynch Partners—are sniffing around the remaining handful of jobbing firms and the rather larger number of substantial stock brokers.

All that is evidence of the folly, dereliction and worse of the Government's decision on 27 July. There has never been a time when serious and impartial study of the operations of the stock exchange was more necessary. The assertions and counter assertions about the merits of the traditional system could have been expertly considered and the results, together with supporting evidence, made known not only to the stock exchange and the City but to Government and Parliament. The July statement and this Bill will deny us that knowledge.

At the same time, the Government — rejecting the judgment of four previous Secretaries of State — have ridden roughshod over the considered advice of the Office of Fair Trading, without even consulting the Council for the Securities Industry whose chairman and vice-chairman are appointed by the Governor of the Bank of England, and whose functions include
"to keep under constant review the evolution of the securities industry, market practice and related codes of conduct and to scrutinise the effectiveness of existing forms of regulation and the machinery of their administration"
and further
"to consider the need for changes in legislation affecting the activities of the security industry and to examine any proposals for such legislation."
The Government have put together a botched-up private deal with the stock exchange council, which the weight of informed opinion has judged to be both inadequate and incapable of survival. Indeed, the agreement has triggered those major changes that it was designed either to postpone or to avoid.

The need for a new approach is now urgent. Commenting on the new developments, the Financial Times in its editorial on 15 November properly reminded us:
"this is not the first time in recent memory that boundaries have begun to break down between different parts of the financial system."
The newspaper was referring to the unhappy events of the crash and disaster of 1974.

The approaching demise of the existing stock exchange system, the impact of new technology—of which Ariel is an outstanding example — the massive change in the relative importance of the institutional as opposed to the private investor, all point to the need for a new regulatory system.

It really will not do to leave all that to the stock exchange council and to the monitoring arrangements' involving the Department of Trade and Industry and the Bank of England, the establishment of which was announced on 27 July.

That is why we urge the rejection of what The Daily Telegraph today described as an "unsavoury Bill". That is why we believe that the searching inquiry of the Restrictive Practices Court should be allowed to proceed. That is why, if the Bill is given its Second Reading, we shall press for its immediate reference to a Select Committee to undertake the task of establishing where the public interest lies and what form of new regulation can best protect it — which the Government, by their arbitrary and disgraceful decision, have sought to frustrate.

5.44 pm

I listened with great interest to the right hon. Member for Bethnal Green and Stepney (Mr. Shore). His remarks were notable for the complete difference between his reaction and the reaction of the right hon. and learned Member for Warley, West (Mr. Archer) who spoke for the Opposition when I made my statement. At that time, my proposals were heralded as minor window dressing — a way of skating around problems while leaving the City to carry on as usual. The right hon. and learned Member for Warley, West described it as a deal cooked together in a smoke-filled room. That was the most accurate of his statements, and neither Sir Nicholas nor I smoke. The remainder of his statement was even less accurate than that imaginative description. The right hon. Gentleman and his right hon. and learned Friend have not considered the matters properly—but the Government have.

The right hon. Gentleman has made a superficial contribution to the debate, and one of little value. When faced with an agreement that made profound changes to the basis of the stock exchange he tried, in a grudging manner, to pretend, first, that they were minor changes and, secondly, that the Government were moving one of the main pillars that supported the stock exchange—the minimum commission.

The right hon. Gentleman outlined what he saw as four of the major problems that would emerge. I must tell him that in every instance the Office of Fair Trading is arguing that the Government should go further and make the very dangers about which he is concerned more real. The Government's intervention has made less likely the dangers about which the right hon. Gentleman is so concerned. The Director General of Fair Trading was arguing for more radical changes that would have made the dangers inevitable. The four points which caused the right hon. Gentleman such concern would have been the inevitable consequences had the Office of Fair Trading won its case before the Restrictive Practices Court.

In the judgment of the well-informed council, those four consequences will happen in any event—in spite, or largely because, of the interim agreement that the right hon. Gentleman struck with Sir Nicholas Goodison.

That may be the right hon. Gentleman's reading of the matter, but is he suggesting that the Restrictive Practices Court, in its findings., would have agreed to make far smaller changes to the stock exchange than the changes agreed between myself and Sir Nicholas? If he is, he is denying the major part of his speech—that it is a comfortable deal cooked up between Sir Nicholas and myself.

If the Office of Fair Trading won its case, and if the Restrictive Practices Court made greater changes, the dangers referred to by the right hon. Gentleman — of which we were aware some time ago, even if the Opposition were not — will become larger and not smaller.

I am glad to have the rather grudging admission from the right hon. Gentleman—although he seemed muddled about it — that the changes are not superficial and meaningless, but that the agreement reached between Sir Nicholas and myself, which I reported to the House, which we are debating today and on which Parliament will take a decision, involves some fundamental changes. Perhaps Sir Nicholas and I gave the matter a great deal more thought than did the right hon. Gentleman.

I shall now explain some of the features of the agreement which are designed specifically to prevent the problems described by the right hon. Gentleman.

Before he leaves the smoke-filled rooms, will the right hon. Gentleman, from his unique position, tell the House what contributions were made to the Conservative party by members of the stock exchange? There is a great deal of anxiety, both here and outside the House, about the way in which the deal was reached. By answering that question, the right hon. Gentleman could knock on the head the argument that the deal was improperly reached. If he published the figures, there would be no more argument.

The right hon. Gentleman may be surprised to hear that I do not have the faintest idea. That was never one of my considerations in dealing with the problem. I do not know, and I did not care. I judged the case on its merits, and in my view it stands for itself.

Why was the matter not referred to the court? First, the right hon. Gentleman argued that the Restrictive Practices Court had a huge volume of knowledge and experience. He was arguing, in effect, that a court which had never considered such a case before — the case is unique — should listen to the representatives of professions which themselves have entrenched single capacity arguing the case against single capacity, yet he has tremendous confidence that the court would have got the answer absolutely right.

A huge sum of money would have been spent, masses of time would have been consumed and the future of the stock exchange would have been uncertain for a prolonged period. Yet the stock exchange was prepared to make major concessions which not only effectively dealt with the major points raised by the Director General of Fair Trading but included some of the safeguards which he suggested would be necessary if his four main anxieties were not to be realised.

I saw the Director General first and said that I had it in mind to open discussions with the chairman of the stock exchange to try to arrive at an agreement which would make the case unnecessary. I examined the case of the Office of Fair Trading extremely carefully, and found three major points which were the core of that case.

The first point was that minimum commissions must go. The Office of Fair Trading considered that that was absolutely vital. We were able to reach agreement that minimum commission should go. We stipulated 1986 as the latest possible date, for the simple reason that, although it may be news to the right hon. Gentleman that the changes we proposed would promote fundamental further changes, it was no surprise to us. We felt that time was needed if the experience of the New York stock exchange was to be avoided and small firms were not to be bankrupted by changes that were too sudden. The stock exchange recognised that a number of other changes would flow from the abolition of minimum commission, and that it would need to make arrangements to deal with them. That is why we allowed time. We did not say that nothing should be done until 31 December 1986. We said that a way must be found to ensure that the changes were made without destroying and bankrupting small firms. Unlike the right hon. Gentleman and his friends, we are trying to encourage the small shareholder and to increase the numbers of small shareholders, and we know that it is the small firms which are particularly interested in dealing with small shareholders.

The problems were not new to me. In 1978 I spent a month in America examining the work of the SEC and in 1979, when I was in the Department of Trade, I was involved in the discussions. I knew that adjustments would need to be made. We therefore gave the stock exchange time to study the problems that would arise and make the necessary arrangements to deal with them.

We have listened with interest to the Government's view. We have heard how the right hon. Gentleman drew the Director General of Fair Trading into his discussions. Will the right hon. Gentleman tell the House what was the Director General's view of the Government's proposals?

The Director General obviously wanted to prosecute the case, but I informed him before I contacted Sir Nicholas Goodison that I intended to have discussions with Sir Nicholas, and that if we reached an agreement that, in my view, met the fundamental points in the case of the Office of Fair Trading, I would be minded to come to Parliament and make proposals such as my right hon. Friend is making today.

The right hon. Gentleman has told the House that he "informed" the Director General of his discussions with Sir Nicholas Goodison. Did he at any time, however, consult the Director General about what he proposed to do?

I had two discussions with the Director General before I made any contact with Sir Nicholas Goodison. I told the Director General, because it was both proper and polite to do so, that I wanted to see whether it was possible to reach an agreement that dealt with the Director General's main anxieties about the stock exchange rule book. I also saw him after the talks and told him of the agreement, before I told the House. I kept Sir Gordon fully informed. Of course, he disagreed; he wanted to prosecute the case. I told him, however, that we had dealt with the fundamental matter of minimum commission in a satisfactory way which would allow the stock exchange time to deal with the ensuing problems, with which the right hon. Gentleman seems to have become slightly familiar in the past day or two.

Secondly, we discussed relaxing the rules of entry—another matter which Sir Gordon considered to be of fundamental importance. He does not think that the agreement goes far enough. However, if we had gone further, the takeovers of British firms by foreign companies which trouble the right hon. Gentleman so much would have been much easier and more inevitable. There are some very strong British financial institutions as well as strong American and Japanese institutions. The changes in the rules of entry make it possible for institutions to take shareholdings of 29·9 per cent. and to have non-executive directors on the board. Those non-executive directors would be very influential people. There is to be an appeals committee on admissions. The changes are fundamental, but we have included safeguards because we do not want firms to be taken over wholesale.

No, it is not. There is a limit of 29·9 per cent., which leaves 70·1 per cent. It is not true that the matter was not carefully thought out. Again, the changes in the rules of entry were designed to give some protection — as much as my hon. Friend would wish, I suspect, but more than the Director General of Fair Trading would have had if he had won his argument before the court.

Finally, there is the question of single capacity. I agree with the right hon. Gentleman that single capacity gives investment protection. That was why I said in my statement that the system of single capacity should be retained for the time being. [Interruption.] Hon. Members should read the statement. I know exactly what I said. I also recognised, however, that the retention of such a system might be incompatible with the abolition of the system of fixed commissions. There is no certainty that it will be. What is certain is that if we are to get rid of a system of single capacity we must have a suitable system of investor protection ready to put in its place. That is precisely what my right hon. Friend said today.

The Office of Fair Trading has three fundamental aims. We have met two of them. We did not meet the third, because we believed that the system of single capacity should be retained. If it were shown to be incompatible with the abolition of fixed commissions, it should be replaced by a system of investor protection, which it would take a little time to put in place should the stock exchange council come to the conclusion that single capacity and the abolition of minimum commissions were incompatible.

The Government considered carefully, before they came to their decision, the points which the right hon. Member for Bethnal Green and Stepney seems to have started to consider, and partly understand, two or three days ago. His reaction, like that of his right hon. and learned Friend the Member for Warley, East to my statement to the House, is utterly muddled: did the Government make fundamental changes as a result of which the stock exchange will never be the same place as it was before, or did they just tinker in a way that got the Government off the hook and the case out of court? We set in train fundamental changes. We built into our proposals safeguards of the kind that the right hon. Member for Bethnal Green and Stepney now realises are necessary.

I believe that the Bill is sensible. It saves the taxpayer money. The Government have set in train a major process of change without the delay that the Restrictive Practices Court would have imposed. I back the Bill wholeheartedly. In passing it, the House will be doing a most sensible thing.

6.1 pm

When a tale is told, the whole tale should be told. Part of the picture has begun to emerge from the speech of the right hon. Member for Hertsmere (Mr. Parkinson). A great deal did not emerge in the speech that introduced the Bill. I have taken the trouble to ask stockbrokers what they think about this matter and to compare the London exchange with the New York exchange. They tell me that if one takes away minimum commissions, in the end one effectively takes away single capacity because one props the other up.

The deal reached—if I can put it that way on two of the three items which the Director General of Fair Trading sought to look at—will effectively bring a breath of new wind into the stock exchange. That might be no bad thing.

A point made earlier this afternoon should be developed a little further, because we were given a hint of what is behind the Bill. It was said that there was a worry that if minimum commission went overnight, some of the small broking firms would find the financial pressures such that they could not survive. That is exactly what would happen here. It happened in New York. Why does not someone openly and honestly say, "Look, the effect of this deal has been to give the small brokers on the exchange time to capitalise."? That was not said by the Government. I concede that it was said by the right hon. Member for Hertsmere. It needs to be said openly that that is precisely what the Bill is about. It is to protect a number of small brokers on the exchange. Let us be honest. There is no harm in honesty.

Will the hon. Gentleman explain to those of us who would be terribly excited at this thought, how people who are likely to go bust if something happens, can capitalise if everybody knows that it will happen? Where is the logic in that argument?

It is simple. If one gives people time to build up capital within the firm before minimum commission goes, they are in a stronger position when it does go. It is straight common sense. It is only because I believe that the Bill is not the right way to achieve integrity that I attack it. I can see the logic of what it is sought to do. It is to retain the status quo for a period. It is not going to the heart of the problem.

I thought that the criticism of the Restrictive Practices Court was unfair and improper, because when any legislation comes out of this place, it will be tested in some court at some stage. People say that the Restrictive Practices Court is not the right forum because it is dealing with cases arising from that legislation with which it has never dealt before. No one would dream of saying that in respect of any other matters. Why should it be argued that the Restrictive Practices Court is not the place to test stock exchange agreements? Is the reality that most people could foresee the effect and result of the Restrictive Practices Court?

I do not believe that many people would argue that the Restrictive Practices Court would find against minimum commission, single capacity and the failure to admit lay members. If that was to be the ultimate outcome, it would be far more just and honest to come before the House with legislation which took into account the fact that minimum commission was to go, that lay members were to be admitted and that, ultimately, single capacity was to go. If one foresees that that will happen, the correct approach is to say, "Right, how do we protect the investor?"

It is a load of rubbish for anyone to tell me that with the abolition of minimum commission the little investor will be protected. It will cost him more. It will cost the large institutional investor less. It will cost the small investor—I am talking about the small shareholder, the person who buys 400 shares or units or £400-worth of shares. That has been the effect in New York and elsewhere. It will be the effect in this country. Let us not fool people by saying anything else. Let us be honest if we are to reform the stock exchange system. It needs it. Let us make no bones about it. The stock market needs capital put into it because it creates wealth through invisible earnings.

That may seem strange coming from a Socialist, but I am a realist. My argument is about who should control the stockbroking firms that make the money, and about where the profits should go. I recognise that the stock exchange is a means of making money internationally. I recognise that London has a unique position simply, if nothing else, through its time zoning. One can work a normal day in London and still be ready for the opening of the New York market. If we are to protect this country's invisible earnings, we have to reform the way our institutions work.

If we are to reform, let us do the job properly. Let us not mess about. The Bill messes about. It merely moves a little way. It does not go far enough. It abolishes minimum commission, which in turn, so we understand and are told on the best available advice, will lead to the abolition of single capacity. [Interruption.] It will. We have the experience of New York to go on. The outcome in two or three years will be—depending on when the commission goes — that we shall be faced with the problem of how to protect the small investor.

If one is to approach this matter logically, the protection and safeguards should be studied now. This is the time to do it. The deal struck to avoid the Restrictive Practices Court was not the right one, because it did not take all the features into account. We knew what would happen. Why did we not recognise that and find out what system we could build which would protect everybody? For the reasons that I have given, the Bill is bad. It merely protects the status quo. It does not cure the real problem. I hope that the House votes against it.

6.9 pm

It was a salutary experience to listen to the hon. Member for St. Helens, South (Mr. Bermingham) extolling some of the City's virtues and being more pragmatic than some of his colleagues have been. Unlike him, I warmly welcome the Bill. However, I should like to express some reservations about some of its implications.

The stock exchange has a turnover of more than £200 billion a year. It has 4,000 individual members and raises more than £15 billion a year for the Government and British companies. It is also a significant contributor to our balance of payments and our invisible income. As my right hon. Friend the Member for Hertsmere (Mr. Parkinson) said in his statement of 27 July, the effective operation of the stock exchange remains central to the working of our economy. He adduced two reasons for settling out of court. First, court proceedings under the Restrictive Trade Practices Act 1976 might not be the best way to pursue matters that are raised by the Director General. I believe that adversarial proceedings were quite the wrong way to examine stock exchange rules. Secondly, the proceedings might have damaged the working of the stock exchange and prevented it from making the necessary changes to enable its members to compete for business worldwide.

The Government's courageous decision stunned the House and will be vindicated by events. The Government have saved the taxpayer £500,000 in legal fees. That is not an inconsiderable sum. They have also resolved a damaging uncertainty for the future. The stock exchange has conceded the main objections which gave rise to the reference to the court in the first place.

I must ask the right hon. Member for Bethnal Green and Stepney (Mr. Shore), what are the further points that he wanted the court to decide on by allowing the judgment to come to fruition? The Government have probably got a better deal by settling out of court and earlier than if the case had run its course. Much of the opposition to the Bill is motivated not by a desire for legal processes to run their course but by a vindictiveness towards the stock exchange and the type of market process that it exemplifies. Some people wanted the court to rebuke, humiliate and vilify the stock exhange. In the long run, that could only have undermined public confidence in its operations.

Section 28 of the Restrictive Trade Practices Act 1976 exempts agreements described in schedule 3. That includes those expressly authorised by enactment. That is the rationale of the Bill. The criteria for an exemption order under section 29 include the provision that exemption is, on balance, expedient and in the national interest. It is in this case. Under section 29, the Secretary of State must take into account the effects of an agreement on people who are not party to that agreement as users of the services. That is a vital consideration. The interests of shareholders must be paramount. Under present structures, they are not adequately protected.

Three years have been given for the dismantling of minimum commissions, but they should be removed all at once. My right hon. Friend the Secretary of State shares that view, as does the City capital markets committee, the repute and judgment of which I respect. It considers that commercial pressures will permit nothing other than the so-called big bang or the disappearance of minimum commission in one go. The new commission rate will have implications for the research departments of stockbrokers.

Much has been made of what happened in the United States. The American experience should not worry us unduly. We are not in the business of trying to preserve the existing structure of research departments of some stockbrokers. Much wider considerations about investor protection are at stake. The American experience has often shown that the merchant banks or investment banks that take over acquire that research staff or even expand their own investment research capabilities.

I am more relaxed than many of my hon. Friends about the possibility of dual capacity coming into operation. It can be argued that we already have some dual capacity in the stock exchange. The first example is the Ariel system, which is a computer means of matching principals. That cuts through the market and the brokerage and jobbing system. The second example, as anyone who has worked in merchant banks or other investment houses will know, is the growing dealership between institutional principles who agree outside the market price the placement or transaction of a major parcel of shares and will then get on to a broker to put it through the books and issue contracts.

The analogy which the right hon. Member for Bethnal Green and Stepney drew must be answered. He gave the example of Lloyd's. I agree that, on the face of it, there appears to be an inconsistency between the House arguing for single capacity in Lloyd's but being prepared to countenance dual capacity in the stock exchange. The two are fundamentally different because with Lloyd's there is an underwriter who is largely a principal. He is the supplier of funds and, by staking his money against an insurance risk, has a continuing liability and commitment. He must hold those funds as surety. In that regard, he is rather like a principal in the investment market who owns the shares. In the investment market there are brokers and jobbers, none of whom are the principals to the deal. They are agents in the market, or the process of transmission of sales or purchases of shares between principals. In the insurance market there are principals who want to insure their risk, and other principals who put up risk capital. That is a fundamental difference.

The main burden of my speech concerns one aspect of the matter which has not been dealt with so far. I refer to lay membership of the stock exchange council, some of the firms and the proposed appeals committee. I support the admission of lay members to the boards of stockbroking companies, especially to the stock exchange council. I have argued for that for some time.

The primary purpose of supervisory bodies such as the stock exchange council should be the protection of the investor. Too often such bodies believe that they exist to provide an orderly market, to promote competition and profitability, to fix levels of commission and to act as a trade association or spokesman for the industry. Too often they are concerned with establishing working arrangements between their firms which avoid criticism, fraud or pecuniary loss. Those objectives might be legitimate but they are all secondary to the fundamental objective, which is the protection of the investor. If it were not for the protection of the investor there would be no reason for their existence.

I have taken a modest interest in these matters recently. I have visited nearly every regulatory body in the investment market and asked each one, "What do you consider to be your main purpose?" Not one of the chairmen or executives said that their purpose was the protection of the investor. I do not believe that they meant to imply that they were not interested in protecting the investor, but they gave a whole host of different answers. We must proclaim that their main function is the protection of the investor.

A supervisory body composed entirely, or largely, of the business interests that are to be regulated cannot effectively represent the interests of the public and investors. More importantly, even if it could do that, the public would have less than full confidence in its motives, because of the apparent conflict of interest.

The worst stock exchange practices of recent years, such as dawn raids, insider dealing and complicity in the building up of covert shareholdings in public companies, were not condemned immediately and outright by the self-regulatory bodies, including the stock exchange council. Rather, a light tap on the knuckles was administered, and a belated tightening of the rules requested.

It was left to Parliament to pass the Companies Act 1980, which was ably introduced by my right hon. Friend the Member for Hertsmere when he was Secretary of State for Trade and Industry. It was up to hon. Members to demand stiffer regulations, to ensure a free and fair market that protected the interests of small shareholders. The stock exchange council has 46 members, all of whom are elected by stock exchange members. None of them, I understand, are lay members.

I have always had a much higher regard for the Wilson report than many of my colleagues, including the leading lights of the Conservative party. I regret that large parts of the report were shelved. There was a great deal of wisdom in that report, much of which will be applicable during the next two years, as we consider the results of the Gower report.

The Wilson committee recommended that the composition of the stock exchange council should be widened, under the supervision of the Council for the Securities Industry, by bringing in suitable outsiders. Such outsiders, as in the case of the Council for the Securities Industry, are often from other parts of the same industry, rather than genuine outsiders, and diviners of the public interest.

The stock exchange council, like the CSI, argues that its authority with its members would be undermined if membership of the council were extended to non-stockbrokers. Such attitudes go to the heart of what is wrong with the City. The days when the City and its financial markets could say, "Tell us the rules of the game, and let us play on without intervention," are over. That is partly because such trust has been abused in the past, but mainly because more private interests, such as pensions, trade unions or insurance policies, are at stake than ever before. The Government are the largest customer in the bond market, and there is legitimate public interest in ensuring that the City moves with the times.

Fortunately, the stock exchange, under the astute and enlightened chairmanship of Sir Nicholas Goodison, has undertaken to expand the lay membership of firms' boards, the council and the appeals body. Those moves are essential. If it fails to heed outside representation, it will hasten the day when the full statutory paraphernalia of a securities exchange commission is introduced.

My preferred solution for the structure of supervision lies halfway between self-regulation and Government regulation. In my submission to Professor Gower's committee last year, I argued the case for statutory recognition and responsibility of the Council for the Securities Industry, but self-regulation for the various councils and associations that comprise the CSI That would provide a halfway house between state control and self-interested regulation.

A securities Bill is needed to amend the many unsatisfactory provisions of the Prevention of Fraud (Investment) Act 1958, and to recognise in law the CSI. Such a bill would make the CSI responsible for co-ordinating the activities of the self-regulatory authorities under it. The chairman of the CSI would be appointed by the Secretary of State for Trade and Industry, not by the governor of the Bank of England. It would be an offence to carry on business in securities unless one were registered with a self-regulatory authority represented on the CSI.

We must see what emerges from Professor Gower's report, and any ensuing securities Bill. I hope that my right hon. Friend will always be mindful of the need to represent strongly the individual shareholder, as well as the wider public interest.

I have some reservations about the presumed authority of the Bank of England over the appointment of lay members of the stock exchange council. Despite the confidence of the new governor in the bank's ability and its appropriateness to take on such a role, will the Council for the Securities Industry have such confidence? It has been snubbed by the Bank of England, which determines not only the rules for such appointments, but the sort of people who should be appointed. We shall have seriously to consider that matter after the Gower report. The problem is that we are faced with the Bill now and it will be too late then to consider the efficacy and appropriateness of the bank and its governor in determining the outcome of the changes in the rules, with the resulting change in the nature of the stock market.

I am more relaxed than some of my hon. Friends and many Opposition Members about the prospect of the merging and acquisition of brokers by major financial interests. The big investment banks, such as Salomon Brothers International, Nomura Securities, Goldman Sachs and Daiwa Securities, dominate the international bond markets, the equity syndication markets and the profitable arbitrage trade. For all its excellence, the British stock market has been superseded by those moguls. If London is to remain the principal financial centre, we must facilitate foreign investment and the financial muscle power that will enable us to compete with the integrated investment banks in America and Japan.

However, for the time being we are concerned with the Bill, which is eminently sensible and progressive. To exempt the stock exchange from the restrictive practices legislation is a privilege, but a responsibility, for that body. The responsibility is to preserve a free and fair market in the interests of investors. The danger at the moment is that there is too fine a dividing line between investors' protection and restrictive practices. What is needed is for self-regulatory agencies to reorientate their objectives and policies more overtly towards the interests of investors, whom the market is there to serve.

6.26 pm

My party is a little angry about what we regard as an example of the Government's double standards. We have seen enough of them. We see them in the Trade Union Bill, which limits the amount of union finance passing to the Labour party. There is no institution of parallel legislation to control the funding of the Conservative party through company funds. This Bill is a new departure in such double standards.

There is an element of breathtaking hypocrisy about it. The Government have frequently lectured us on the importance of the free market and competition. During the debate on the Competition Bill on 22 January 1980 the Minister for Consumer Affairs said:
"Competition is an essential ingredient for a dynamic economy. It is the cornerstone of consumer sovereignty. It maintains and increases choice, lowers prices and raises standards."—[Official Report, 22 January 1980; Vol. 977, c. 353.]
It seems that in pursuit of that competition policy the Government are prepared to bring it into effect where it affects the National Health Service and British Telecom, and even to threaten people's jobs in so doing. However, when it comes to trying to ensure that that competition policy is applied fairly, evenly and openly in the stock market, the Government move in an opposite direction. Instead, far from opening up the stock exchange to the free market, they are protecting the stock exchange against the free market, and in the preservation of the single capacity and of the limit of 29·9 per cent. of ownership, they are preserving the stock exchange's monopoly, which we find thoroughly offensive.

There is also an element of double standards in the application of the Government's concept of restrictive practices. The Government are legislating against restrictive practices in the trade unions, yet in the Bill they are preserving restrictive practices among their friends and, some would say, their paymasters in the stock exchange.

First, is the hon. Gentleman speaking purely for himself or is he enunciating his party's policy? Secondly, did we hear him right? Does he want open and absolutely free competition with no restriction on entry to the stock exchange, with anyone free to come and trade, or is he arguing only about the nature of the restrictions?

What I have been saying is the policy of my party and myself—we coincide.

It is not unusual. The right hon. Gentleman should know that.

On the second issue, I am not prepared to say at this stage whether the operation of a free market is a good or bad thing — [HON. MEMBERS: "Why not?"] — but I am prepared to say—it is a point to which I shall move in a moment—that the decision about where the restrictive practices element should lie is not for the Government to make once they have instituted the legislative process but for the courts to make. This is a matter of a wholly different calibre. The Government have intervened in the middle of a court action, in the middle of a case as a decision is about to be taken by the court. They set exemptions not before the case or in the drawing up of the legislation, but in the middle of the case. They intervened on one side of the debate against the expressed interests —the right hon. Member for Hertsmere (Mr. Parkinson) made this clear—of the other party in that legislation.

I say to Conservative Members and to the Minister that such intervention in the legislative process on a matter of principle is a profoundly bad thing for the Government to do, is a profoundly bad thing for the law of our country and is a profoundly bad thing for the institutions that the Government have set up. That element of the Government's intervention at this time and in this manner to protect the restrictive rights and practices of the stock exchange in a way which they have sought to abolish for the trade union movement is thoroughly bad. When the Bill receives its Second Reading tonight, as we all know it will, the stock exchange will be given restrictive rights of which Arthur Scargill would not dream. We regard that as double standards.

I should like to pass from double standards and hypocrisy to incompetence. It is insufficiently recognised, and it has been unsaid in the debate so far, that although the legislation may well remove the stock exchange from the Restrictive Trade Practices Act 1976, it will not remove it from the effect of EC regulations. Articles 85 and 86 of the treaty of Rome provide a mechanism for bringing the stock exchange and any restrictive practices that may be operating there to account, to be tested against that precedent and principle. If Sir Gordon Borrie decides that what is happening in the stock exchange and the changes that are being made are not in the public interest, he is perfectly entitled to jump on a plane to Brussels to test that concept there. That is what we would advise him to do.

I move now to the contents of the Bill, although I shall not go into anything like as much detail as other hon. Members have. One point that concerns us is that there is talk now of the abolition of the compensation fund. When the Minister comes to reply, I hope that he will give a clear undertaking that the Government will resist any intended moves towards the abolition of the compensation fund.

As other hon. Members have said during the debate—the hon. Member for Chichester (Mr. Nelson), who is leaving the Chamber made a particularly effective contribution on this score — there will in the end be a need for an overall regulatory mechanism. We await with interest the report of Professor Gower, but we believe that an overall regulatory mechanism, whether statutory or voluntary or a combination of both, will be required in the long term to control the securities exchange.

Meanwhile, on the grounds that this is a cynical manipulation, full of hypocrisy, cant and double standards, we shall oppose the Bill tonight. Above all, the Bill, which seeks to stem the flow of security exchange reform by sticking its finger in the dyke and vainly hoping to preserve an unfair monopoly practice for one of the Government's friends, is a bad spectacle and practice and one that we would wish to see voted down tonight.

6.35 pm

I am grateful to you, Mr. Speaker, for calling me to speak in the debate, to which I wish to make a contribution from the standpoint of a provincial Member of the House who has observed the stock exchange from Yorkshire, a distance of about 200 miles, and of a solicitor engaged in commercial practice.

The stock exchange has always had a paranoia about being subjected to the laws of the land. It has argued that its rules and regulations are either too complicated or too subtle to be the subject of legal scrutiny. The stock exchange has always told us that it can regulate itself. It has trumpeted on about the maintenance of standards and the protection of the investor, but it has always resisted the appointment of any external authority or watchdog to carry out either of those functions.

The Restrictive Trade Practices Act 1976 is a complicated piece of legislation. It provides for the registration and judicial investigation of restrictive agreements relating to goods and services. Any restrictive practices are prima facie void and so unenforceable unless they are registered under the Act and can be justified by those who seek to adopt them as being in the public interest.

The stock exchange sought in 1976 to register its own rules under the Act and the Director General of Fair Trading in due course cited no fewer than 173 apparent restrictive practices in those rules, which he required the stock exchange either to justify before the court as being in the public interest or to abandon. It is extraordinary to me that a Conservative Government who purport to be protagonists of competition and the scourge of monopolists should have sought to intervene in this judicial procedure.

I doubt whether there is an industrialist of any size in the land who has not at some time cursed the provisions of the restrictive practices legislation which have often prevented him from entering into what he regards as perfectly legitimate commercial arrangements for the benefit of his business. Yet industrialists are not to be the beneficiaries of the Bill that we are debating today. They must remain subject to the full rigours of the legislation.

The Government propose today that the stock exchange, of all institutions, should be exempted from that legislation and that the existing judicial investigation should be suspended. For five years the Director General of Fair Trading has, at no small cost to the taxpayer, been preparing his case for the Restrictive Practices Court. The stock exchange itself, with its presumably unlimited resources, has also been preparing its case. Yet it is now apparent that the stock exchange was so unsure of its arguments that its practices were in the public interest that it has sought to exert pressure on Her Majesty's Government to make it a special case, to exempt it from the legislation and to save it from the judgment of the court.

The comments of Sir Nicholas Goodison, made at the press conference he gave immediately following the announcement of the adjournment of the stock exchange case, demonstrated in no uncertain way that the stock exchange would not have been able to justify its restrictive practices as being for the benefit of the public. Inter alia, Sir Nicholas said:
"The stock exchange had been ready to settle its case from the outset in 1976, but no one would talk to it … Possible changes in the conduct of the stock market might have taken place, but it had not been possible even to discuss these with the users of the market, for fear of prejudicing the stock exchange's case … If the case stops, the stock exchange would, thankfully, be able to return to its policy of consultation … The case had stifled some of the initiative for change over recent years.''
We have heard a good deal during the debate about ossification and petrification of the stock exchange but I cannot understand why it was not possible for the stock exchange, given the advice that it must have been getting that its case was extremely weak, to alter its rules three or four years ago and to talk to the Office of Fair Trading, the Government, the Council for the Securities Industry and other interested bodies, about making changes.

I think my hon. Friend was here during my speech, but he seems to have missed the part where I explained that some four or five years ago Mr. Nicholas Goodison—as he then was—made exactly that offer.

I am not privy to the reply to that offer —nor, indeed, to the offer. I can only say, as a simple lawyer, that when clients come to me with a weak case I tell them to get it settled. One talks to one's adversary, or whoever else is involved, and I see no reason why talks should not have taken place during the past four or five years.

Is it not true that if the stock exchange were to change its practices in any respect, those practices, as changed, would have to be resubmitted to the Restrictive Practices Court, and considered by the court at considerable length — as in the case of the practices that it is already investigating?

That may be true, but it is no reason for being unwilling to change the rules. If the rules were not in the public interest — as, clearly, many of them were not—they would have to be changed anyway, and the sooner the consultation process started the better.

I have great sympathy with what my hon. Friend is saying, but does he not agree that there would be great difficulty in Sir Nicholas Goodison's position? Unlike my hon. Friend, dealing with his one client, Sir Nicholas had to deal with the whole stock exchange, and it would be difficult for him to change the rules and deal with them when proceedings were under way.

That was Sir Nicholas's problem. Nevertheless, it had to be faced. The speed of the change since the July announcement shows what can be done.

Sir Nicholas argues, on behalf of the stock exchange, that the restrictive practices legislation is quite inappropriate for studying the complexity of the stock exchange's regulations; yet according to him, those regulations are simply there to provide protection for investors and to avoid conflict of interests. If there were any substance in that statement, the Restrictive Practices Court could have approved those regulations in due course as being in the public interest, and the stock exchange would have had nothing to fear. As has been argued by Conservative Members on many occasions, not least in the recent debate on the Police and Criminal Evidence Bill, the innocent man has nothing to fear from an investigation of his activities. Indeed, if those activities are obscure, he should welcome such an investigation as an opportunity to justify them. Unfortunately, I am bound to conclude from what has happened that the restrictive practices that are the subject of the stock exchange case before the court are principally for the benefit not of the public but of the members of the stock exchange.

Recent history has shown that the stock exchange has always been willing to abandon its principles when faced with a threat to the monopoly of its market. Until the late 1970s, the stock exchange used to argue that it was vital to its integrity and to the integrity of the stock exchange's market place that markets should not be made in the shares of small companies, because if they were, there would be a serious risk—it said—of undermining the high quality of the listing requirements imposed by the exchange's regulations. However, when the profitable new issue business nearly dried up, and others, particularly those who operate the over-the-counter markets, started to take all the new business that was available, the stock exchange reversed all those arguments and created the unlisted securities market, which now has such low listing requirements as to constitute a serious danger to investors—as some have already found, to their cost. However, Sir Nicholas Goodison now refers to the USM as a shining example of the stock exchange's ability to change with the times and of not being an old-fashioned institution resistant to change, as some have alleged it to be.

Is my hon. Friend not in a bit of a muddle again? First, he castigates the stock exchange for indulging in excessive restrictive practices, then he criticises it for being flexible enough to create a second market with particular characteristics which makes things easier and more liberal as between new quoted companies and investors' interests in them. Is it not particularly disturbing for him to talk in those terms, when his own profession of solicitors is exempt from those proceedings anyway and from any scrutiny by the Restrictive Practices Court? If, for example, customers have the temerity to complain about solicitors' charges — such as for conveyancing — they are confronted with the Law Society itself examining the case — judge and jury as one—and a medieval procedure called the certificate of taxation, which is incomprehensible to the outside customer.

My hon. Friend has raised two matters. I thought I had put my argument clearly, and I apologise if I did not do so. I was saying that the unlisted securities market was forced on the stock exchange to recover the loss of the new issue business that it was losing to others.

On the subject of single capacity, the stock exchange has always defended the overmanning arrangements on the ground of investor protection. The system means that two individuals — a stockbroker and a jobber — do one job, and both get paid for it. The over-the-counter markets have demonstrated beyond doubt, however, that with modern aids such as the telephone and the video screen, one person can adequately make a market between dealers, without reference to a central market.

No, I shall not give way to my hon. Friend.

The stock exchange arguments about the vital functions —as it sees them—of jobbers might have more weight if those individuals were subject to proper controls or rules of disclosure, yet the stock exchange in London is the only one in the world where jobbers, or their equivalents, do not have to provide information about their activities, including the volume of trading, the prices at which transactions are carried out, and whether transactions are purchases or sales from their own holdings or merely matched bargains with buyers and sellers. Furthermore, there are no controls on jobbers over the amount by which prices of shares can be moved up or down, which is often done without any transactions being made in the shares of the company that is involved.

This situation, coupled with the fact that jobbers often do not pay stamp duty, provides them with a quite extraordinary advantage in making markets in shares, as witnessed by the remuneration paid to partners in jobbing firms. It is well known, too, that jobbers collaborate to agree the spreads of prices that they quote for shares, and in the majority of cases those shares are jobbed by only one firm. In other words, in the jobbing world there is no competition at present.

The stock exchange recently argued that it could not abandon minimum commission without at the same time undermining the separation of jobbers and brokers, thus impairing the degree of investor protection which it claimed that that system afforded. However, under the agreement that the stock exchange has now provisionally reached with the Secretary of State, the stock exchange has abandoned minimum commissions, apparently without difficulty, although it still argues that the distinction between jobbers and brokers should remain.

On the subject of self-regulation, many arguments support the proposition that the stock exchange should no longer be allowed this luxury. These arguments are supported by the long-running saga of the takeover panel, which time and again alters its rules about takeovers after the latest devised raid on shares of a target company has once again circumvented all its existing regulations but breached the spirit of them. Similarly, the rules relating to the financial surveillance of member firms and disciplinary procedures seem only ever to be tightened up after particularly bad cases have hit the headlines.

I do not dispute that the stock exchange is essential to the economy, that it is a valuable national asset and that the regulatory authorities — the practitioners in the market and the users of it — have an acute interest in ensuring the evolution and development of the stock exchange as an efficient, competitive and suitably regulated central market which affords proper protection for investors.

However, at present the Office of Fair Trading and the restrictive practices legislation provide the only effective outside surveillance of the activities of the stock exchange. If their rules and regulations really are in the public interest, then the stock exchange has nothing to fear if the case proceeds to be heard.

It hurts me to say so, but the fact that the Government should seek to exempt the stock exchange from the statutory requirement that it must justify its practices as being in the public interest, and should do so in the midst of a judicial investigation, has a nasty smell about it. To suggest, as my right hon. Friend the Secretary of State suggested, that these matters are best left to a private arrangement between the Bank of England, the Government and the stock exchange is not good enough. It is not the business of Government to involve themselves in these matters. The business of Government is to legislate and the business of the subjects of Government — who include the members of the stock exchange, whether they like it or not — is to comply with that legislation.

It may be argued that the Office of Fair Trading and the Restrictive Practices Court are not the ideal forums for compelling the stock exchange to come to terms with the latter half of the 20th century. However, they are there and are staffed, in my experience, by competent, commercially-minded, sensible and experienced people. They were set up by this House expressly for the purpose of examining restrictive practices and eradicating them where they could not be justified in the public interest.

It is no part of the overwhelming mandate which the Government obtained at the last election to do private deals with monopolists. I urge hon. Members on both sides of the House to vote against the Bill.

6.53 pm

I congratulate the hon. Member for Dewsbury (Mr. Whitfield) on his independent-minded speech and on demonstrating that the unease that is felt about the Bill extends to hon. Members in all parts of the House. The hon. Member for Chichester (Mr. Nelson) demonstrated that too. In a different way he also pointed to some of the inadequacies of the present situation and referred in particular to the supervision of the stock exchange after the Bill came into operation.

The hon. Member for Dewsbury stated clearly some of the objections to the Bill. He spoke in particular of the fundamental principle that is being breached by interfering in an action before a court. That surprises and worries not only hon. Members, but others outside. Some of the Government's supporters in the press, not least the Daily Telegraph this morning, have expressed their concern over this precedent. I see that some Conservative Members agree with what I am saying. I hope that at least some of them will demonstrate the strength of their views by voting against the Government on this issue because a wholly bad precedent is being set, and one that will inevitably give rise to further accusations of the sort that we have heard already.

This whole business stinks, and it stinks because of the matter that I raised earlier, which Conservative Members have not refuted. There is a bigger point at stake than just one party accusing another. Public interest is at stake here. If we as politicians and as parties wish to be respected, we should be seen to act with some degree of principle. For the chairman of the Conservative party to take decisions of this sort and remove them from the area of public debate, and to take the unprecedented step of removing the whole business from the courts, is inevitably to give rise to suspicions about the true motives of the Government.

I might extend that suspicion to other incidents, because the Secretary of State has to arbitrate on other commercial deals that involve substantial amounts of money. He has to take decisions about references to the Monopolies and Mergers Commission. If the chairman of the Conservative party — as he then was — is in a position to take decisions of this sort, inevitably in the public mind there will be the suspicion that he has a dual responsibility, a dual feeling of influence, a dual conflicting interest.

That sort of allegation would be offensive and odious from anybody, but particularly so from a man who stood for election in 1974, having been financed by the trades unions because of his undertaking to pay them off by repealing the 1971 Act. Having been elected, he took fright at the fact that the Labour party would lose the next election and reneged and did not have the guts to face the electorate in a by-election.

The Secretary of State tries hard with the hoary old chestnut that has been raised here before. As the right hon. Gentleman clearly does not know, I did not rely, as other Members of the Labour party did in those days, on trade union funds.

No, I have heard the right hon. Gentleman's point. What we are talking about is a substantial issue of principle, and many of us stood on principle when we decided to do what we did. The fact is — and it makes little difference that the right hon. Gentleman happened to hold that position, because others are in a similar position — that this issue could easily have been cleared up if the whole matter had been allowed to go before the public and be debated in the Restrictive Practices Court. Had that happened, these accusations would never have arisen. Nor would they have arisen if the full facts were known about the political contributions that have been made.

If it is right for a Minister to have to divest himself of his personal interest or shares in or remuneration from, companies about which he is making decisions when he is in office, it is also the case that he should have no political interest, as the chairman of the Conservative party clearly had, when he is taking decisions of this sort. Inevitably — and this extends way beyond just the Labour party, the Social Democratic party, the Liberal party—suspicions about motives will arise if this sort of thing continues.

It is important that we should have in this country a competitive and successful stock exchange. I was delighted that at least one Labour Member made that point this evening. I have taken that view throughout my time in this House and, indeed, when I worked in the City before I came here and knew a little of its affairs.

It is vital not only for British industry but for our overseas earnings and for a whole range of economic and industrial reasons that we have a dynamic and successful stock exchange, and I agree with some of the remarks of the hon. Member for Chichester. He, like others in the City, wants to see the stock exchange progressing with the times, opening the doors to change and seeking to grow, advance and develop.

One way in which the stock exchange could have ensured that its situation did not come before the court was to move in the way that some people in the City had suggested. After all, there is no single opinion on this issue in the City. It is a misinterpretation to suggest that everybody in the City supports what the stock exchange council has been doing, either latterly or previously. There are a variety of views in the City held by individual brokers and beyond the brokers into other institutions.

The stock exchange should have moved with the times and seen what was happening in New York and other international markets. Many instituations in the City have done that and, as a result, have created markets in Eurobonds and other areas, so bringing to the City of London business that is extremely welcome, and they are to be congratulated on their efforts. The stock exchange, on the other hand, has tended to be a stick in the mud and has not responded to those developments. It therefore brought itself into the position in which it found itself before the Secretary of State took his decision to reach the agreement that led to the Bill.

I question the reasons why the stock exchange moved in the way that it did. For the Secretary of State to try to describe what the Government have done as a great releasing exercise is an absolute farce. I have no doubt, in the light of events following the former Secretary of State's announcement, why the stock exchange moved in the way that it did. I believe that the chairman might have been prepared to move more quickly than some of his members; I have much respect for him because he is one of the more advanced members of the stock exchange.

The deal was done and there was that movement not because of farsightedness on the part of the Government or the chairman of the stock exchange, but because there was a gun at the head of the stock exchange and the Government, with intensive lobbying—of which I was aware before the general election—to have the action stopped. Successive Ministers had refused to allow it to be stopped, and eventually the Secretary of State made his announcement to the House after the election. But for the fact that the action was before the court, we should probably not be debating the matter today, nor would the progress that has occurred have taken place.

It is being suggested that it would have cost a substantial sum to continue the case, and of course it would. But we must ask what it has already cost in terms of raising Government debt over the years as a result of the situation that has existed on the stock exchange. There is a view—it is a pity that this cannot be examined in a better forum—that over the years the Government have paid much more for their debt-raising activities than they need have paid.

It is suggested that if we had a more competitive and efficient stock exchange which succeeded in selling gilts at a saving of one tenth of 1 per cent. of that currently being paid there would be a saving of £10 million a year. Considering what has resulted from the New York changes, there is evidence that the Government could save a substantial sum as a result of the changes that will come about. Even so, some people are putting their heads in the sand, believing that change will not come about.

As the chairman of the stock exchange has said—and as hon. Members have pointed out in the debate—it seems impossible for single capacity to be retained now that the minimum commission has gone. There is now an increasing view that single capacity will not remain, that it will go with a big bang, as has been forecast, and that we shall get the worst of both worlds because it may happen in a disorderly way because of the compromise that has been reached.

There is a similar situation with ownership limitation. The value of stockbrokers seems to have gone through the roof in recent months and I find it impossible to believe that the one third restriction on ownership will remain as it is for long. I should have thought that the purchases that overseas and other institutions are making now are options to move much further in the direction of the control of stockbrokers than just that one third interest. Indeed, it may be that the one third restriction is encouraging overseas buyers and restricting home buyers from entering the market.

It could be that because of the conflicting interests which the institutions — in particular, banking institutions in Britain—would have in buying a share in a stockbroking firm, they will hesitate to do so if they are able to obtain only one third of the control of that firm. On the other hand, for some overseas institutions that conflict of interest with other clients does not exist; they may be prepared to buy that one third interest and sit with it until such time, as I believe will happen, as that rule goes and they can take control of the firm.

I do not share the fears of some about the impact that overseas ownership will have. I do not want to see the whole of the stock exchange dominated by overseas able buyers, and I do not believe that will happen. There will probably be a number of overseas buyers, but we have some big financial institutions in the City that will move in the same direction and provide them with competition.

The way in which brokers have developed — in the United States, but also in other countries — and the innovations and competition that they are providing will bring a breath of fresh air—indeed, provide a new wind —to business in the City that will help it as a great financial centre. It is peculiar that in Hong Kong and America, which are regarded as the great bastions of free enterprise and the market approach, there should be much greater regulation by the Governments of their stock exchanges than we apply in Britain.

Like the hon. Member for Chichester, I should like to see better control of the stock exchange than is envisaged at the moment. The role of the Bank of England in the City, I have felt for a long time, is worrying. It is in a curious position as the central bank with an arm's length relationship with the Government. It should be more distant. I should prefer the American or the German model. At the same time, it sees itself as the voice and the friend of the City. It is neither poacher nor gamekeeper, fish nor fowl. I hope that we can move towards a position such as that described by the hon. Member for Chichester.

I should like to see statutory Government involvement in such a body. I do not want to see a replica of the Securities and Exchange Commission in the United States coming here, but some public participation, some statutory Government involvement in that body is needed. Supervising the stock exchange is a necessary factor if investors are to be protected in a way that all hon. Members wish to see.

I end by repeating what I said earlier. We want to see a thriving, successful and expanding stock exchange, in which competition takes place to a much greater extent than in the past. On that point I disagree with the hon. Member for Dewsbury. The development of the unlisted securities market recently has been remarkable and was long overdue. It allows new firms to come into the market, and investors know exactly what they are going in for if they invest in a firm in that market. We have lacked a market in which people realise that they are taking risks, in which there is competition and in which the small investor looks for investments and makes his own judgment on them. If we go further down that road in the next few months and years, that will benefit not only the City of London and the economy generally, but British industry.

7.11 pm

There were moments of lucidity in the speech of the hon. Member for Stockton, South (Mr. Wrigglesworth), but I remain disappointed by the majority of his comments. I am tempted to agree with his last point, which was related to the earlier point that I made to my hon. Friend the Member for Dewsbury (Mr. Whitfield) when he allowed me to intervene. It seems curious for the hon. Gentleman to criticise the stock exchange by saying that it is inflexible and rigid, and then to criticise the creation of a market that would dispel such conditions.

My point was not that the unlisted securities market was not a desirable thing in itself, but the way that the USM was created.

I accept that point and I am grateful for my hon. Friend's clarification.

I declare an interest as a member of the stock exchange and I emphasise, because it is easily misunderstood, that any comments that I make are entirely personal. I am also associated with a firm that is connected at a senior level with the stock exchange council. Anything that I say tonight will be the thoughts of someone who has, over the years, been able to become to some extent a more detached outside observer while remaining part of the industry, if that is not a contradiction in terms.

I am entitled to complain about the obscurity of the speeches from the Opposition Benches in this debate. Hon. Members seemed to be trying to get the best of both worlds. First, they castigated the Government for doing a sensible and practical thing to avoid all the complications of excessive time, the freezing of decisions and the vast expense already incurred, let alone that which is to flow afterwards. Doing all those things and taking a pragmatic and sensible decision, as has been borne out by my right hon. Friend the Secretary of State, will lead to a considerable opening up and liberation of an industry in which the rules and regulations have been too great in certain aspects, while at the same time protecting the outside investor, particularly the small investor — the man or woman in the street. That must remain a priority for anybody concerned with running, reforming and modernising this industry in the future, and that includes the Government.

There are other aspects, as would become clear in any examination, including that by the Department of Trade and Industry, that have, over the years, ceased to be useful in changing circumstances. The previous Secretary of State for Trade and Industry, my right hon. Friend the Member for Hertsmere (Mr. Parkinson), who has contributed to the debate, got it right in his announcement on 27 July. He spoke of the changes, and highlighted the most important, the dismantling of fixed minimum scales for commission. He then said:
"I believe that these changes are to be welcomed, and would enable the Stock Exchange to continue to adapt in an evolutionary manner to changing circumstances while maintaining proper regard for the needs and protection of investors. The next step will be for the membership to approve the necessary changes to the Stock Exchange deed of settlement."—[Official Report, 27 July 1983; Vol. 46, c. 1195.]
That process has already occured.

Anxieties of one kind or another have been expressed from both sides of the House from hon. Members representing all parts of the country and many different views. The chairman, in his circular to members of the stock exchange dated 30 September, referred particularly to the anxieties of members. I quote this circular as well because it is relevant in this context to the changes which, as another hon. Member has already pointed out, are accelerating in an interesting and constructive fashion. He said:
"Most of the worries have, as expected, centred around the effects of the dismantling of minimum commissions. I told you in my first letter"—
also to members of the stock exchange—
"that I had made it clear to the Government that there are substantial risks to the structure of the securities industry which this change might provoke. Members are rightly concerned about the possible effects on the single capacity trading system, on the Compensation Fund and on other measures which we enforce in order to ensure the continuous liquidity of the market and the protection of investors. Members appear to be concerned, and rightly so, that the Council should maintain control over the speed and direction of change and are also inevitably concerned that the Council have been unable to publish details of their intentions before the E.G.M."
Those changes, with further clarification and elucidation at the meeting of members, were overwhelmingly approved, although a very small proportion voted against. Naturally there are still anxieties, because by definition the future is unascertainable and nobody knows how these things will develop precisely.

I am convinced that these changes, subject to all the complicated details that will flow, the main one being the dismantling of the minimum commissions, will be good for investors, good for the public, good for the stock exchange and the security industry as a whole, with the new elements coming into it, and will, on balance, be a major step of reform in this country. The changes are constructive and modern and show that this financial industry — we are proud of our financial sector in general, in the City and elsewhere—can internationalise itself and defend itself, the public and investors, while being competitive and showing that it is a developing world organism and not just an internal organism.

We shall be interested to look back on this period and on the sagacity of the Government's decision to intervene, which was not a light decision but one taken after extremely careful thought, and which has interrupted a process that had all the makings of a cumbersome, extremely expensive process that was unsuitable for the business of examining this particular and fairly esoteric industry. We could not at this stage or even then have anticipated the results of such an examination. Who knows but that the Restrictive Practices Court may have decided that the main elements in the stock exchange rules were justifiable and in the public interest.

It is a general opinion, in all parts of our society and transcending political parties, that the industry needs to modernise itself and that the dismantling of fixed minimum commission would be on balance a good thing for the public, subject to all the necessary protection and framework of protection for the investors and so on.

Solicitors should be careful about condemning future developments since they are unwilling to subject themselves and their activities to a similar process. Despite the initial anxiety, there is growing enthusiasm among members of the stock exchange, stockbrokers and representatives of member firms when they see the potential of those developments to serve the public interest more realistically.

The other part of the great debate is connected with fixed commissions. The right hon. Member for Bethnal Green and Stepney (Mr. Shore) asked what will happen to single capacity. The Government have opened up sweeping changes, but they say that the stock exchange was right to allow time for the process to be carried out so that profound thought could be given to each stage. Although we do not know what will be the future of single or double capacity, it seems that the Government, the securities industry and other observers of the scene have reached the conclusion that single capacity will also end.

I would welcome the ending of the single capacity system, for the reasons specified by my hon. Friend the Member for Chichester (Mr. Nelson), who said that we must open up those activities and bring in the firms involved in the securities market that are not yet formal members of the stock exchange, provided that the small investor does not suffer from such a development. The entire process will give the public a better service—I am talking not only about the giant institutions but about ordinary investors—and it will help, notwithstanding the complexities of any future EC directives, to create the essential development of a Community securities industry and a Community stock exchange. It is crazy in 1983 to consider that the stock exchanges of the member states are completely separate, endowed only with their own traditions and nothing else, and that there can be no modernisation or agreements made between them for the good of the European investing public, because with the end of exchange control we can now invest in other European countries.

A complicated terrain is unfolding for the future of the stock exchange, and we should dwell on that with some open-ended enthusiasm, although we may not be sure of its detailed future structure. In 10 years time, the stock exchange will be very different from what it is now.

Many people will welcome the fact that in future jobbers and brokers will develop joint firms, and the House should also look forward with interest and enthusiasm to the fact that foreign interests may come in. The more people who enter the industry from outside, even if they come from abroad, to take stakes in member firms —with essential protections always being maintained—the better and stronger the industry will be. As my right hon. Friend the Member for Hertsmere said, the idea that all the banks and great corporations in the United States and in Japan are giants, but that all British financial corporations are puny and cannot have the same interest in this area, is absurd.

I welcome wholeheartedly the Government's bold and significant step to open this area to an era of modern, 1990-style competition which will serve the public well and which will show once and for all that we could have saved the millions of pounds that have already been spent on the Restrictive Practices Court exercise, which included much Government money — I doubt whether the £500,000 that we have heard about will be the full amount of Government money saved — and the vast amount of money spent every day by the stock exchange. We have saved part of the enormous sums that would have been wasted had the absurd exercise with the Restrictive Practices Court gone ahead. Now we can begin an exciting new era of competition, liberation and justice for the investor.

7.24 pm

It may be helpful now to answer some of the questions posed by right hon. and hon. Members, and not to repeat points that have been made, however eloquently or sincerely.

The crux of the matter is this: are the Government right or wrong to interfere with a judicial process on the ground of expediency, and, as they say, in the interests of the investing public? I have a strong distaste for the Executive interfering with the judiciary, and I cannot remember a case in recent years where the Executive have so blatantly interfered with the judiciary, with a complete lack of regard for the judicial process. The Government argue that they are right to do so because it is in the public interest to modernise the stock exchange and to liberate the process from its hitherto acknowledged secrecy.

The Government also argue that while this case is pending the stock exchange cannot initiate sensible and practical reforms. The Wilson committee considered in detail whether the court was the best body to investigate stock exchange practices, or whether there was a better way. Paragraph 365 of its report stated:
"Doubts have been expressed about the suitability of the Restrictive Practices Court for evaluating the advantages of the present system of dealing against the practices necessary to support it. Experience in other countries suggests that some system of market-making is desirable in the public interest, and that such a system may need to be buttressed by restrictive agreements. The criteria or 'gateways' which the Restrictive Practices Court is allowed to use in assessing the public interest have, however, been alleged to be too narrow, particularly since the Court presumes an agreement to be restrictive unless it can pass through them. To some extent these criticisms may have been answered by changes made to one of the gateways, in the Competition Act 1980 to ensure that the Court can take account of benefits which accrue to the public through the buying and selling of property other than goods. The Act also enables the Court to postpone the effect of a declaration that an agreement is contrary to the public interest, to allow those concerned time to come up with alternative arrangements for their approval."
The Wilson committee stated — this is part of the evidence that I invite the House to consider — that although it had reservations about it, the Restrictive Practices Court was a satisfactory tribunal to investigate such practices. However, the Government say, "That may be so, but the process is expensive and tortuous and in the meantime it discourages the stock exchange from modernising itself." That argument is unrealistic, because if the stock exchange wishes to modernise itself and to abandon some practices, and if a case is pending before the court, there is nothing in law or in fact to prevent members of the stock exchange from changing those practices and modernising themselves, provided that they register the new agreements with the court.

That is my response to the Secretary of State and other Conservative Members who said, without knowing the law, that while the case is pending the stock exchange cannot modernise itself. However the stock exchange is welcome to modernise itself — I commend its efforts since the summer of this year—and provided that the new agreements are registered, they are part and parcel of the case before the court. The Secretary of State and many Conservative Members have made a completely bogus point.

The matter does not end there, because, from the tone of the speeches of Conservative Members, some of which were eloquent and knowledgeable, it would appear that they do not understand the scope of the Bill or the working of the court. More than once the Secretary of State said that he could not anticipate the court's verdict. He had no confidence in the expertise of a High Court judge and assessors with vast commercial experience. He did not seem to understand that, prima facie, an agreement registered with the court is contrary to the public interest and the onus of proof is on the plaintiff to prove, on the balance of probabilities, that he is acting in the public interest. I gathered from the tone of the Secretary of State's speech that he did not understand that simple point.

I make known not only my distaste for interference by the Executive in the actions of the judiciary, but my distaste and abhorrence for retrospective legislation, which I am sure is shared by all hon. Members. This legislation is retrospective.

indicated dissent

the Under-Secretary shakes his head. He does not understand clause 1(2). He should do me the courtesy of studying that clause. He says that it is not retrospective legislation, but the clause states:

"The Director General of Fair Trading shall remove from the register maintained by him under the said Act of 1976 any particulars".
That is retrospective. Anyone with the most elementary knowledge of the interpretation of statutes would appreciate that that is retrospective. The word is "shall", not "may". It imposes a mandatory duty on the Director General to remove something that has been done.

The hon. Gentleman will be aware that the effective date of the action in clause 1(2) is the date of Royal Assent. On that date the agreements are removed from the register. That is not retrospective.

I have not sufficiently understood the Under-Secretary's intervention. On reflection, and after considering further advice from his officials, he might come to the conclusion—I should have thought that this was plain as a pikestaff — that clause 1(2) contains a retrospective measure. I abhor retrospective legislation as, I believe, do most hon. Members. When Governments of any political colour, Tory or Labour, have attempted to introduce retrospective legislation — for example, in connection with the Burmah Oil case—they have been universally and correctly condemned by both sides of the House.

This legislation would be retrospective if it stated that proceedings which had been commenced many years ago were void ab initio or that the writs that had been filed on the register were to be removed ab initio. No matter how much one may like or dislike the legislation, it does not say that. I do not believe that, under proper construction, clause 1(2) is retrospective.

I have great respect for the hon. Gentleman's professional opinion, but I disagree with his submission. A common-sense construction of the subsection is that it is retrospective. If one looks at the realities and not the technicalities of the subsection, that is its substantial effect.

The House may consider the relationship between the Secretary of State for Trade and Industry and the Director General of Fair Trading to be more important than its distaste for retrospective legislation and its abhorrence for interference in the judical process by the Executive. The Bill demonstrates that the Secretary of State has treated the office of the Director General of Fair Trading with contempt. The previous Secretary of State said that he had not consulted him but had spoken to him once before speaking on the other side.

This goes right to the root of the relationship between the Secretary of State for Trade and Industry and the Director General of Fair Trading. I do not believe that the present Secretary of State understands his relationship with the Director General. He seemed to be confusing his relationship vis-à-vis the Monopolies and Mergers Commission and the Restrictive Practices Court. This is a different relationship. The Secretary of State can accept or reject the advice and recommendations that he receives from the Monopolies and Mergers Commission. The Director General of Fair Trading has replaced the Registrar of the Restrictive Practices Court and is in effect the official appointed by statute who deals with that court in. his own right and not as the agent of the Secretary of State. He does not make recommendations to the Secretary of State. That is a fundamental difference.

In riding roughshod over the Director General of Fair Trading, the Secretary of State has attempted to interfere in the relationship between the Director General and the Restrictive Practices Court. There has been no agreement between the parties. The plaintiff in the action is not the Secretary of State for Trade and Industry, but the Director General of Fair Trading. The defendant in the action is the stock exchange and the Secretary of State has no locus standi in the litigation. The Secretary of State has ordered someone over whom he has no ministerial responsibility to stop acting in a particular manner. The proceedings have in effect been stayed on his instructions. This is a monstrous proposition. By analogy, it is as though the Attorney-General had interfered with a prosecution after the Director of Public Prosecutions had begun proceedings. That would be wholly unsatisfactory and never occurs.

Reference has been made to the European repercussions of the Government's action. The European Commission is very interested in restrictive practices. If the Bill is passed, it may take the view that the practices involved do not comply with European Community regulations. The Commission may therefore seek to intervene. I suggest that, pending the hearing of this case before the Restrictive Practices Court, the Commission has stood by to await events. The hon. Member for Harrow, East (Mr. Dykes) has a perfectly plausible and sensible vision of a European stock exchange, but has he considered the consequences of the Bill in relation to the Commission? The Commission may well take the view that this legislation contravenes not one but many regulations.

The test is how the public interest is best served. In this case the public interest is the interest of members of the public who wish to buy and sell stocks and shares on the stock exchange. How are their interests best protected? The Government say that those people's interests are best protected by certain changes which can be introduced more rapidly if the Bill is passed. The Opposition believe that those interests are best protected by allowing the due process of law to continue and letting the court decide what is or is not constrary to the public interest.

In this context, does the hon. Gentleman accept that the Bill has a very limited purpose and that his speculations will have to await the much wider securities legislation which will come in a few years' time, including any European Community proposals?

I do not believe that it is a limited Bill. It is a short Bill with far-reaching consequences. That is why the Opposition take it so seriously.

I do not wish to make cheap party political points, but it is somewhat infra dig for the Government to interfere with the judicial process to protect a part of the community which the public believe, rightly or wrongly, to contain a large number of Tory supporters. I pay tribute to members of the stock exchange. I know many stockbrokers. I pay tribute to their work and I in no way disparage them. Nevertheless, it is a serious error of judgment for the Government to help their friends in such a blatant way immediately after a general election victory.

In relation to European legislation and the present procedures of the stock exchange, does the hon. Gentleman agree that under articles 85 and 86 of the treaty the European Court is at liberty to take action tomorrow without waiting for further legislation? Does he agree also that even if exemption from the 1976 Act became law today the European Court could take action tomorrow?

I cannot express an immediate opinion on that, but it certainly seems likely. Perhaps the Minister will deal with that when he winds up the debate. As the hon. Gentleman has shown, by passing this legislation the Government are exposing themselves to action by the Commission. Perhaps the Minister will take instructions from his officials on that, if he has not already done so, and give us his views. It is a real problem and the Government should deal with it.

As I have said, the test is the public interest. I feel strongly that the public interest will not be served by this legislation. I do not believe the Government's claim that the stock exchange cannot reform within the framework of the action before the Restrictive Practices Court. Nor do I believe that the Government are sincere when they say that they have obtained concessions from the stock exchange which would have taken years to obtain through the court. The concessions which the Government have obtained with regard to minimum commission, the single capacity system and the various barriers to entry into stockbroking firms cover but a fraction of the more than 160 practices registered with the court by the Director General of Fair Trading. The Government falsely claim to have achieved concessions without litigation, when the Minister well knows, even if he has not the courage to say so, that only a fraction of the matters involved have been dealt with.

They are by far the most significant matters brought before the court by the Director General. No one would dispute that, except perhaps the hon. Gentleman.

The Minister cannot have been listening carefully. I did not say that the concessions were not important. I said that they covered only a fraction of what the Director General had asked for. I have taken advice on this very recently and I understand that the Director General registered more than 160 agreements. I do not dispute the importance of the stock exchange concessions, but the Minister makes a thoroughly false point in his intervention, because the concessions cover only a fraction of the 160 or more registered agreements.

I shall not detain the House any longer as I know that many hon. Members are anxious to speak. [Interruption.] Despite the rude noises from the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), who never bothers to stand up when he intervenes, but who, I understand, has an interest in these matters, I conclude by sincerely urging the House to consider whether the public interest is best served by this legislation. Having reflected on the matter for some time, I am convinced that the Bill will not serve the public interest. That is why the Opposition will vote against it.

7.47 pm

It is interesting that whenever anyone else's interests are discussed—as is well known, I am a broker, but one with only a small percentage since I joined the House—the longest speeches are made by lawyers. Whenever we debate other people's interests, the people whose entire income derives from the folly of ill-written laws emanating from this Chamber — Queen's counsel whose clients have to pay huge fees to cover unnecessary juniors and the rest — make the longest speeches. Some lawyers specialise in conveyancing, others in taxation and company law. The first to speak out against the practices of the stock exchange are lawyers who specialise in taxation and company law. It ill behoves the profession which sits most on the back of this country through its charges to lecture others about what is necessary for the stock exchange. If I did not have so many friends who were lawyers, I would have made some unpalatable remarks.

We must deal further with Restrictive Practices Court. Would not the stock exchange have been better served had it allowed the case to proceed, and not come to an agreement with the Secretary of State? We all know how slowly lawyers work, and when they receive £1,000 per day they work very slowly. It would have been better for the individual stock exchange members had it taken about four years for the Restrictive Practices Court to arrive at a judgment. Had the court found against the rules, it would have had the power not to change them, only to say that they were wrong. That would have meant that the rules would have had to be rewritten and brought back again to the court, and the matter would have proceeded ad infinitum. We would have been talking about a process that might have lasted another 10 or 12 years.

The Gordian knot of the problem has been cut. The stock exchange has come to an agreement which I believe will be costly as to the number of firms. When this matter was raised by the previous Secretary of State in July, I said, when discussing the matter with the hon. Member for Ashfield (Mr. Haynes), that within 10 years there would be half the present number of stockbrokers and financial institutions. In view of what has happened in the past three months, I believe that there will be fewer than half the present number of stock exchange institutions within the next three to five years.

We must bear in mind that the stock exchange is not trying to get round the problem as if it has been given some great gift. The financial world is changing at a fast pace. I do not say that that is bad. Great overseas interests—the Japanese. Americans and Germans—are coming into the City and are causing some distortion and much change. If the stock exchange is unable to change quickly enough, not just individual brokers or bankers but the whole City, which means the country, will lose. The balance of invisible trade for Britain in financial services involves a vast sum of money which could find its way into other hands.

The chairman of the stock exchange had a most onerous task in deciding to recommend the move to his members, and he is taking a considerable gamble with its future. I believe that in the end he will have taken the right decision. Had he been narrow-minded, he would have continued with the court case and that would have meant another 10 years passing before the introduction of a new set of rules.

One of the arguments that the previous Secretary of State put forward was that if the rules changed that would enable members to "compete for business worldwide." Does my hon. Friend think that the rulebook, as it existed before 27 July, was an inhibition getting business worldwide?

One of the inhibitions that I foresee is that the member firms of the stock exchange are basically under-capitalised. If one is to compete with the great worldwide institutions, there is a need for much more capital. It is customary to make jokes about jobbers, but I believe that they perform a valuable service and need a great deal of capital. The changes in the rulebook, which the stock exchange has made voluntarily, have helped outside capital to come in.

It is customary to say that all competition is good, that the law of the jungle means the survival of the fittest and that those who give the best service survive. With the prospective changes which will occur—be they bids for insurance companies or potential bids for banks or firms of stockbrokers — Britain's problem will be that the institutions from Japan, Germany and America, which have different capital gains and taxation structures, make many of our largest institutions look very small.

The time will come, whether it be on the advice of the Bank of England or on the urgings of the House, when we may well have to lay down some criteria as to how much of our banking, insurance and stockbroking businesses may be controlled by foreign interests.

One of the great strengths of the City of London is that it is a great British multicellular institution which has enormous power and influence for the good of this country. Anybody who thinks that it is mardi gras time, that, with competition, anything goes, and that that will be helpful to our country, is wildly wrong. Such a state of affairs would be extremely damaging. I believe that the great majority of City interests should be under British control. I think that that is the only way by which we can ensure our future, should we ever hit difficult times again, be it under the present Government or any other Government. Once our institutions are controlled by foreign interests, they can withdraw their huge assets and ensure that the British end of their assets, not the parent company, suffers.

I hope that the House and the Government will take on board the fact that we should have competition and that more people should be taking an interest and ensure that we compete in the world, but we must bear in mind that once we have sole control of the City of London, matters will be worse for us.

The Secretary of State said that no one can force people to sell. I do not believe that that is a sensible argument. In the end, an individual will take what is in that individual's financial best interest, but an individual's financial best interest is not always the country's financial best interest. I believe that we should always consider that matter.

Is not that the crux of the matter? The trouble with the Tory Government is that the interests of the City of London are not the interests of the country.

I do not consider that that follows from what I have said. The Government must consider what is in the best interest of the country. I do not think that it is the country's best interest for the City or other institutions, be they industrial, insurance or broking, to be so tied that no one can ever compete with them. If we got to the stage of one of our big five national banks being taken over by a foreign interest, we would have to establish a permanent and hard guideline as to what we expected the future of the banking system to be.

Does the hon. Gentleman consider that it is in the interest of the country as a whole to have a Government who are prepared to intervene in a court action which is in progress on behalf of one side and with a specific disagreement towards the other party? Does the hon. Gentleman consider that to be in the best interests of the country, the Government, law or our institutions?

Lawyers ars so concerned with the law that they do not consider the interests of anyone else. The arguments are often between lawyers. The Government, on proper advice, are saying that the stock exchange must change with the changing financial world. Having a rule book before the Restrictive Practices Court, which does not understand the financial world— it is a specialised world in the same way that law is a specialised world — would ossify one of the most important fund raising parts of the City of London. Individuals will find themselves facing more fierce competition. The Bill will not protect brokers from competition, but will make that competition all the more fierce, and much sooner than expected.

I intend to support the Bill. Looking back, I believe that the stock exchange would have done better to fight on, which would have given another 10 years of fixed commissions. However, in the interests of the City and the country, the Bill is right.

8 pm

I apologise for not having been present for most of the debate. That is not because I have only recently developed an interest in the subject, but because I have been sitting in Committee on the Housing and Building Control Bill. I want to contribute to the debate because I was concerned with the stock exchange when I was a Minister.

The financial memorandum to the Bill claims that its passage will save £500,000 in public expenditure. Presumably, that relates to the fees and expenses that would have been incurred had the case gone to court. But the true measure of how much public expenditure can be lost or saved would have depended on the outcome of the court proceedings. If the Government thought that the Director General of Fair Trading would be successful in the proceedings, and that under the Restrictive Trade Practices Act the stock exchange dealer settlements and articles were likely to be struck down, the whole of the costs of the Director General—those already incurred and those that would be incurred in future action—which may be as high as £1 million, let alone £500,000—would have to be paid by the stock exchange. The Government must give a judgment whether the case would have been won or lost.

It is not unusual to ask for that. When actions are proceeding against a company, it is usual for an estimate to be given in the annual report of whether proceedings will be won or lost, and the consequences in both damages and costs.

Although it is the invariable result of unsuccessful litigation between individuals that the loser pays the costs of both sides, had the proceedings against the stock exchange continued it is likely that the court would have ordered that each side should bear its costs.

My understanding of past cases is that if someone is unable to show that the agreement complies with the law, he would be liable to pay the costs. The ABTA agreement was a similar case involving restrictive trade practices. Can the Minister tell the House who paid the costs of the proceedings in that case, when the agreement was largely struck down by the Restrictive Practices Court? It is important, for the accuracy of the financial memorandum, to have an estimate of what the costs would have been, based on experience, if the Office of Fair Trading had won.

Following the Restrictive Trade Practices Act 1976, stock exchange arrangements were clearly registrable and, provided that they were registered in due time, would remain valid until they were judged by the Restrictive Practices Court to be either for or against the public interest. Hundreds of agreements have been registered, but few have come to court. Many were discovered to have been operated by the banks. Some were registered, but others were not. On the whole, the financial institutions did not think it worthwhile to pursue the matter. Only one or two institutions thought it necessary to refer the matter to the Restrictive Practices Court, one of which was the stock exchange.

Right from the very beginning, the stock exchange—with the assistance of the Bank of England—has been anxious for an exemption. Soon after I became Minister for Consumer Affairs, I received a delegation from the stock exchange—which, to the best of my recollection, was accompanied by representatives from the Bank of England—asking for an exemption from the action. A section of the 1976 Act enables the Secretary of State to grant an exemption if an agreement is reached that is in the public interest.

The Treasury's arm was twisted. Do not let us think that the stock exchange, the Bank of England, the City and its financial institutions are above twisting the arm of Government. Hints were thrown out that there might be problems with the selling of gilts; that the Government relied heavily on the Government broker; that the stock exchange was essential to the funding of Government debts — all with a view to obtaining an agreement, sanctioned by the Secretary of State, which would not involve going to court. A certain amount of pressure was put on Treasury Ministers as well as Ministers in the Department of Prices and Consumer Protection.

We concluded that the law should apply universally and without exemption. The rich, powerful and influential should not be treated in one way while everyone else was treated in a different way. The rule that applied to ABTA, the banks and most of industry should apply equally to the stock exchange.

Would the hon. Gentleman and his colleagues have taken the same view had the stock exchange said, "We now agree to a substantial measure of reform that will do many of the things that many people —possibly even the Labour Cabinet—would like us to do?"

That is a hypothetical question, but I shall answer it. I would not have been party to a hole-and-corner deal where the public had no say in the way in which such an agreement came about. That was not merely my decision. Shirley Williams was involved and, later, my hon. Friend the Member for Birmingham, Sparkbrook(Mr. Hattersley). We decided that the right way to deal with the matter was to have the issue of restrictive practices tested before the courts, in the same way as every other institution must have its practices tested.

When the Labour Government left office in 1979, the stock exchange and its friends at the Bank of England thought, "There is a new chance now because there is a new Secretary of State" — the right hon. Member for Shropshire, North (Mr. Biffen), now the Leader of the House, who was assisted by the right hon. Member for Gloucester (Mrs. Oppenheim). We do not have access to Cabinet minutes, but the right hon. Member for Shropshire, North and the right hon. Member for Gloucester were obviously approached by the stock exchange, which said, "Now that you lot are in, now that our friends are running the Government, may we have an exemption?" It is clear that the right hon. Member for Shropshire, North and the right hon. Member for Gloucester, and then Sir John Nott, as he now is, thought about it carefully and reached the same conclusion as we had reached — that it would be wrong to give an exemption to the stock exchange.

But the Government then introduced what I call the stock exchange amendment to the Competition Act 1980. they added a new clause in Committee which provided, quite sensibly, that if the stock exchange lost its action there could be a stay of execution for a considerable period after the judgment. The reason for such an amendment to the law to suit the stock exchange was to enable it to put up a new scheme that could be discussed in public and debated with the Director General of Fair Trading and the Department of Trade. Discussion of that new scheme would have taken place in the light of the evidence available to every financial commentator and every member of the public, and the putting together of that scheme would have had the benefit of the judgment of the judges in the Restrictive Practices Court, even assuming that the stock exchange lost the case. Provision was made in the Competition Act 1980 for a compromise. It answered the question put by one Government Member about the possibility of a new kind of agreement.

It is like musical chairs at the Department of Trade. Hardly has a Minister got into the driving seat than he or she is off. I worked with Mrs. Shirley Williams and with my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley). Then there was the right hon. Member for Shropshire, North, Mr. John Nott and Lord Cockfield. Lord Cockfield has a few contacts in the City and no doubt they had a crack at him. They will have said, "We did not make much progress with Shirley Williams, Mr. Hattersley, Mr. Biffen or Mr. Nott but can you Lord Cockfield, do something about the stock exchange?" Clearly, however, Lord Cockfield, too, came to the conclusion that there was to be no exemption and that the matter should proceed to the Restrictive Practices Court.

There the matter stood until Sir Nicholas Goodison and the governor of the Bank of England were able to talk to the chairman of the Conservative party after the 1983 election. That is when there was a change. They talked to the Secretary of State for Trade and Industry, and they did a deal with him. In my view, it was a shady and behind-stairs deal. All the others had said no, but in the right hon. Member for Hertsmere (Mr. Parkinson), the chairman of the Conservative party, they had the one man who was capable of saying yes. The right hon. Gentleman promptly said yes and came to the House with the proposals for the Bill and the terms of the compromise. Every previous Minister for Trade or Consumer Affairs had refused the deal. Only the right hon. Member for Hertsmere agreed to this hole-and-corner deal.

My allegation against the right hon. Gentleman and against the Government is that they have given the stock exchange a special privilege because it is rich and powerful. I do not underestimate the importance of acting responsibly towards that institution, but it should have been done properly. The matter should have been publicly discussed and debated between the Director General and the chairman of the stock exchange before the Restrictive Practices Court. That is the obvious way of proceeding, and that is how every other case has been treated.

If that procedure was not satisfactory, the law could have been changed so that the judgment was made not by the Restrictive Practices Court but by the Monopolies and Mergers Commission. That body, instead, could have been invested with the power to make a judgment about whether the stock exchange arrangements were efficacious and in the public interest.

The commission could have had the benefit of all the documents and the information put together in the course of the case, and could have reached a judgment on the case. Furthermore, it could have had a much wider area of discretion than the Restrictive Practices Court. When the commission had published its report the Minister could have exercised the discretion that he has exercised in some Monopolies and Mergers Commission cases and rejected the advice of the commission outright. I do not know what the Minister is whispering. He rejected the advice of the commission over credit cards. The commission said that certain credit cards transactions were againt the public interest, but the Minister rejected its advice, just as his hon. Friend rejected its advice in relation to a Scottish takeover.

There was, therefore, the possibility of a debate. It would still be possible for these arrangements to be debated by a Select Committee. If a Labour Government tried to make a special exemption — if we laid a Bill before the House by which we intended to nationalise one company or to give an exemption to a single institution —the ranks of Conservative Members would be up in arms, led, no doubt, by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). They would behave as they behaved in the case of Bristol Channel Shiprepairers. However, they behave differently when the Tory Government give an exemption to the stock exchange. If the matter went before a Select Committee, there could still be a public debate, but the Government have chosen not to allow that. They have abdicated any further responsibility for the evolution of these arrangements. Evolution is the key word used by the Secretary of State. He said that the stock exchange should be allowed to evolve. I do not know how much effect the previous Secretary of State expected to have on evolution, but any chance that this Secretary of State might have of effecting evolution has been thrown away. If the stock exchange is removed from the register, there will be no futher control. It is a complete abdication of his responsibilities and a kick in the teeth for the Director General of Fair Trading who at least could have been given a monitoring role on future developments. It is by no means unusual for the Director General to be allowed to monitor restrictive arrangements to see what progress is made. However, in this case there is only an abdication of responsibility and the dismissal of dues of the Director General of Fair Trading. The whole thing is shabby and sordid. For these reasons, in order to preserve the integrity of the Director General and the courts, and in order to have these matters openly debated, I shall vote against the Bill tonight.

8.16 pm

I shall make only two short points. The first is about the deal, if I may call it that. I hope that when he replies to the debate my hon. Friend will give us a fuller explanation of the two arguments put forward by my right hon. Friend the Member for Hertsmere (Mr. Parkinson) on 27 July. The deal is open to misunderstanding, and it is not only Opposition Members who feel uneasy about it. Although we may feel uneasy, we can understand that there may be circumstances in which it would be right to exempt a body from the operation of the law, even after proceedings have started. However, the reasons put forward by the Government today and on 27 July have been very short and not very substantial.

The reasons put forward on 27 July were, first, that while the proceedings were pending it was difficult for the stock exchange to make changes to enable its members to compete for business worldwide. I understand that while proceedings are pending it is difficult, in the words of my hon. Friend the Member for Dewsbury (Mr. Whitfield), for the chairman of the stock exchange to say to his clients, "You are on a loser—settle." Anyone who has had the difficulty of trying to settle a case with a reluctant client knows that it is often difficult to get one client to settle. If one has a thousand clients, it must be very difficult indeed to get them to settle. I understand that it was difficult for Sir Nicholas Goodison to suggest any form of settlement while proceedings were pending.

The first argument continues that the changes would enable stock exchange members to compete for business worldwide. In 1974–75, when the stock exchange was on the floor and there was a serious risk of long-term damage to the stock exchange, the quick resuscitation of the stock exchange would have been plainly in the national interest. I have not heard any argument, however, to the effect that the rules at present obtaining are any inhibition on worldwide business.

On 27 July my right hon. Friend the Member for Taunton (Mr. du Cann), who knows a great deal about the practical workings of the stock exchange, said in discussing the deal that the main inhibition on the holding of stocks and shares was stamp duty. I have no vast experience of the City or contacts with it. I can only say that those to whom I speak say that stamp duty is the principal inhibition on business worldwide. I find myself as yet unpersuaded by the first argument put forward.

The second argument that was put forward by my right hon. Friend the Member for Hertsmere on 27 July is one that he has put forward again today. He said that in his opinion the court was not competent to rule upon the restrictive practices operated by the stock exchange. That is an extraordinary argument. If the court is not competent to rule on the restrictive practices of the stock exchange, whose restrictive practices is it competent to rule upon? For instance, will it be open to cement makers, who may have entered into a restrictive practice, to go to the court and say to the judges, "Let me look at your hands. Have you ever turned a cement mixer? Have you ever entered into an arrangement with another cement mixer? I will be judged only by a cement maker." When we come to legislate on the trade unions, will we say, "Show your union cards or you may not vote on this matter"?

Surely, and seriously, our society depends upon the proposition that moderately competent people can understand evidence about other walks of life and, with a little effort and an attempt to evaluate the arguments, are capable of some form of objective analysis and, if necessary, can lay down rules for that group of society to which they do not belong. I do not understand the arguments that my right hon. Friend put forward. If they are right, they are a fundamental attack on the basis of what I regard as our still cohesive society.

The deal was on the basis that it was possible to abolish minimum commissions, but that the abolition would not have the effect of doing anything to single capacity. The then Secretary of State said:
"With regard to single capacity — the broker-jobber relationship—we believe that there is a strong case, in the interest of investor protection, for maintaining single capacity."—[Official Report, 27 July 1983; Vol. 46, c. 1201.]
The then Secretary of State plainly envisaged that single capacity would remain for the foreseeable future.

My right hon. Friend thought that it would exist for the time being. He then advocated a form of modified self-regulation. This where I come to my point about the future. It has been plain since 27 July that single capacity has gone with the abolition of minimum commission.

The more one thinks about it, the more obvious it is that the stock exchange will force it for this crude reason: it is plain from the American experience that many stockbroking firms will lose a great deal of income with the abolition of minimum commissions. However, it is plain that with a dual or multiple capacity, a stockbroking firm has a capital asset to sell which is much more valuable than it was before 27 July. It will wish to compensate for its loss of income by selling a capital asset. I see that I have some support from right hon. and hon. Gentlemen.

There are some advantages in a small society of people from, on the whole, much the same background. They know each other. They know each other's strengths and weaknesses, and they have, perhaps even from their school days, a knowledge of who is to be trusted. That is a useful village atmosphere for self-regulation. It has worked well in the self-regulation of a body of about 1,000 people. It is significant that we are debating the affairs of the stock exchange in a much happier atmosphere — there is a certain amount of strife between the parties—than we debated the affairs of Lloyd's, because at present there is no suspicion of major scandals within the stock exchange. In this small group, mainly of partners, there is no great suspicion of irregularity, which shows that their self-regulation works. The question is whether even modified self-regulation will work in the future.

I take it as self-evident that single capacity has gone. As my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said, there is said to be a shortage of capital. Big money will come into the stockbroking firms. Then the outdated, old-boy village atmosphere of self-regulation, with all its faults and strengths, will go. Those who are partners, jointly and severally liable, will become employees of big and, in many instances, foreign money. I suggest that that atmosphere is unsuited to self-regulation.

It is plain, is it not, that since 27 July there has been a vastly increasing role for the Bank of England? Is that right? The Bank of England still trades upon its old, pre-1945 independence, but it is now no more than a well-paid arm of the Treasury. It seems rather odd when I hear from some of my friends, whose names I shall not reveal, that the figure of 90 per cent. of those who voted for the deal in the stock exchange would have been a great deal less but for the activities of the Bank of England. I exalt the role of the Whip in the House, but I cannot help wondering whether the Bank of England is properly employed as the Whip and the judge in the City.

I was somewhat disturbed by the way in which my right hon. Friend the Secretary of State said that the system of partial self-regulation, which was thought up in the deal, would continue indefinitely. If I carry the House with me when I say that we are now in for the multiple financial institution, it will agree that it would appear that we must have a stock exchange Act for everyone's good. I say that because the then Secretary of State was right to say that single capacity was important to protect the investor. If single capacity has gone, the investor must be protected. Moreover, I believe that the members of the stock exchange ought not to be subject to the arbitary whims of an arm of the Government. Furthermore, there will be great pressure on the Bank of England in its supervisory role when foreign money wants to enter the country.

My hon. Friend the Member for Selly Oak said that stockbrokers were under-capitalised. I do not know whether that is true, but I shall accept the proposition for the sake of my argument. Along comes a large Japanese institution that wants to buy up 30 per cent. of a large stockbroker firm. It is quite wrong that there should be no clear rules or statutes to decide whether such outside money should come into the City. It is also wrong that such a decision should depend on, for example, whether there is a row at that time about the number of cars that the Japanese are exporting to us and whether they are reducing the flow of cars or some other goods.

The supervision of the Bank of England, combined with modified self-regulation, is wholly inadequate. If we recognise that tonight, we are witnessing the end of minimum commissions and single capacity and the emergence of a quite different form of broking and jobbing institution. We must contemplate a stockbrokers Act which will give regularity and certainty instead of the arbitary intervention of the Bank of England or the Government.

8.31 pm

I am sorry that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) is not here, as I want to refer to his speech. He adopted the customary tactic—if someone has turned a spotlight on an interest and one does not like it, one creates a diversion. The hon. Gentleman launched into a tirade against the legal profession. The odd thing about that argument was that it was one closed shop having a go at another.

I am struck by the Government's attitude towards the stock exchange as compared to their attitude towards the trade unions. With the trade unions, the Government make no bones about legislating against them. If anyone dares to suggest that it is reasonable to support the closed shop in the trade unions they are condemned to the nether darkness. In this Bill, however, they are adopting a much more tender attitude. It can be taken as a guide, or possibly as a warning, about the Government's attitude to other professional organisations, the practices of which have caused anxiety in the Office of Fair Trading. We are not likely to hear of any strictures being imposed on the closed shop operated by the legal profession or the medical profession, yet they are every bit as much of a closed shop as some factories. There is no need to comment on that.

The Bill and the agreement which the right hon. Member for Hertsmere (Mr. Parkinson) struck allow what are acknowledged to be restrictive practices. They are being allowed to continue. For the minimum commission, that practice will be allowed to continue until 1987. For the others it will be allowed to continue indefinitely.

By exempting the stock exchange from the Act, any statutory control and pressure on the stock exchange will be lost. It was only the existence of the legislation that produced the few concessions that have been made. Previous Ministers of both parties resisted pressure from the stock exchange, but the present Government appreciated that the courts were taking the lid off a can of worms. They wanted to put that lid on smartly to allow the worms to continue to intertwine comfortably in the darkness of the tin so that nobody could see what was going on.

I echo the remarks of my hon. Friend the Member for Blyth Valley (Mr. Ryman), that the Bill puts an end to litigation currently before the courts. He knew of no precedent. I do not know of one, although I am not a member of the legal profession. However, I have made inquiries and cannot find a precedent. The Government, and more particularly the Bank of England, have succumbed to City pressure. They need the jobbing system to sell gilts to fund the borrowing requirement and to sell the shares in enterprises that are to be privatised. It is all part of the jigsaw under the Government.

The changes that the Bill is intended to delay or prevent will be needed if the City's financial institutions are to be strong and broad based enough to withstand the undoubted international competition that is already there and will become greater. Paradoxically, the Bill will fail in its objective of delaying and impeding change. It is generally agreed that the restrictive practices depend on one another. There is a domino effect. If one goes down, the others follow. Most people expect that, far from producing an orderly transition, the voluntary agreement with the stock exchange to phase out the minimum commission will produce a rush for change. The Government have no intention of controlling that rush. In that melee there will be opportunities for American and Japanese financial interests to sieze control of chunks of the City's operations.

From my experience in other parts of industry, I know that in bad times a multinational operation is taken back to where the parent company is, and the "branch lines" are chopped off. I wonder what would be said if we found that the financial control was no longer centred on this country buy 3,000, 4,000 or 5,000 miles away.

In other countries, statutory control is normal because it is needed to prevent a conflict of interests once the single capacity has gone. It is recognised as desirable in many parts of the City. We have heard comments to that effect today.

Therefore, the Bill is but one more example of the Government doing what, in their eyes, they were elected to do, which is to look after their people. As that is not in the national interest, we should not subscribe to it.

8.40 pm

I shall be extremely brief in view of the lateness of the hour. I welcome the Bill because I see it as part of a much more positive attitude by the Government to the financial institutions of the country. That is very much overdue. I cannot resist the opportunity to welcome the announcement about the implementation of the Cork committee's report and also the announcement that a final report from Professor Gower about investor protection is expected at the end of this year. I suppose that the securities Bill that will follow will deal, as my hon. Friend the Member for Chichester (Mr. Nelson) said, with many of the affairs of the stock exchange, which will then be under indirect parliamentary control.

Reference has been made to the importance of the stock exchange to the country. Its contribution to invisible earnings was £44 million in 1982. I am told that 18,000 people work on the stock exchange. Nothing has been said during the debate about those people and it is to them that we have an obligation to try to ensure that the reform on which we are engaged provides a lasting framework.

I wish to refer briefly to the issue of the deal and the agreement to compromise the action. I see nothing wrong in pressure for exemption having been put on various Secretaries of State, although Opposition Members suggested that there was something improper about that. I see nothing improper in that, nor do I see anything wrong in arranging a fair compromise of the litigation, which, after all, is done regularly. It is not agreed that any of the 160 or 170 positions taken by the Office of Fair Trading in the litigation were either good or bad. There are good grounds for compromise of the litigation and for exempting the stock exchange from the Restrictive Trade Practices Act 1976, although I accept that what is taking place is not precisely and purely one or the other. That is why some lawyer Members have expressed concern about it.

The hon. Gentleman has twice used the phrase "compromise of the litigation". Surely he is aware that this is not a case of agreement between the parties to the litigation. This is a case of litigation being stopped by statute. I should be interested to know whether the hon. Gentleman can think of any precedent for that.

I cannot think of a precedent for it, but it is being compromised because, in effect, the Office of Fair Trading is the instrument of Parliament through legislation, not the instrument of Government. I accept that; that is why I think that what is happening cannot precisely be brought within the terms of either compromise of the litigation or exemption. But there are grounds of public interest for what is taking place.

The Restrictive Trade Practices Act applies to the provision of goods and services which are sold or supplied, and it is designed to deal with the practices of the stock exchange, and with whether the agreements are restrictive or not. As my right hon. Friend the Secretary of State made clear, the agreement that has been arrived at does not relate to one or two of the stock exchange's practices but relates fundamentally to the whole basis on which the stock exchange works. It is right that we should be concerned with the establishment and the supervision of the market, the qualifications of those who practice, as well as with the stocks and shares that are bought or sold in the market.

We are engaged in a reform of the stock exchange and the Restrictive Practices Court is not designed to set about a reform of the institutions. It is designed, at considerable length and cost, to comment and adjudicate upon certain practices that are carried on in trading organisations. The examination of the public interest suggests that the future conduct of the stock exchange, within a self-regulatory framework, should be undertaken by Parliament, rather than by the Office of Fair Trading. As my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) said, a stock exchange Act may eventually be required, but I very much hope that that will not be necessary. However, it is right that the power and the decision about what action should be taken to regulate the stock exchange should come from Parliament, not from the Office of Fair Trading.

In this long and interesting debate we have not adequately considered what would happen if the Bill were defeated. The stock exchange would be engaged in court in long adversarial proceedings, continuing probably for many years. There is no guaranteed timetable with the courts. If the Bill is not enacted, the case probably could not start until 1985. What I said in an earlier intervention about changes in stock exchange practice has been insufficiently appreciated — if I may say so. Any changes in procedure in the stock exchange would have to go back to the court, and that would be a long and highly disruptive process. When we are considering the public interest and, in particular, investor protection, that is not something that we should contemplate. Parliament is the forum in which we should discuss the framework that we wish to impose.

Self-regulation is the way to control the financial system. The dangers of the Securities and Exchange Commission in the United States have been ignored in our debate this evening. They would involve a considerable increase in bureaucracy, which most hon. Members would find it difficult to justify. The reforms at Lloyd's have been mentioned this evening. They are taking place now in a self-regulatory system that we in Parliament imposed, and they show how tough and effective a self-regulatory system can be. I see no reason why a self-regulatory system cannot provide sufficient investor protection.

My second and final point concerns my belief in the share-owning democracy. I hope that my right hon. Friend will watch the future development and reforms of the stock exchange carefully to ensure that investment protection is recognised, as my hon. Friend the Member for Chichester said. That will be the test of whether the reforms that we are undertaking in the Bill—not just a compromise of legal proceedings, but fundamental reforms—will work. I want a flexible system, within a self-regulatory framework, which will be a further spur to the share-owning democracy that many of us want.

8.48 pm

The agreement that was reached in July this year between my right hon. Friend the Member for Hertsmere (Mr. Parkinson), the former Secretary of State for Trade and Industry, and Sir Nicholas Goodison, the chairman of the stock exchange, should be judged against two overriding criteria.

The first of these is whether the agreement on which the Bill is based will lead to a more efficient and more competitive capital market in London. By that I mean a market that facilitates the raising of new capital for industry and commerce, that is capable of meeting the Government's funding requirements and that can compete, against overseas markets and secure substantial invisible earnings for the United Kingdom.

Although the stock exchange is a substantial invisible earner, as my hon. Friend the Member for Dorset, North (Mr. Baker) said, the restrictive agreements that have hedged about the arrangements of the stock exchange in the last years have inhibited its growth. Stockbrokers are under-capitalised because it is not possible for people to take more than a 30 per cent. stake in them. It is true that stamp duty is an inhibition and I shall say something about that. More particularly, high minimum commissions have acted as an inhibition because they have rendered the market uncompetitive.

The breaking down of these restrictions will mean that in future the market will be more competitive. Although no doubt one of the main pressures on the exchange to make changes has been the impending restrictive trade practices case, there have also been strong competitive presures in the last few years. The market for financial services is changing so rapidly that changes were bound to come about.

The way in which one needs to assess this agreement is to look at developments during the last three months and compare them with the total lack of activity in the last three, four and five years. That is the acid test that demonstrates that my right hon. Friend the Secretary of State was entirely right to reach the agreement that he has reached.

There is another important criterion by which any such deal will be judged. Will it secure a reasonable degree of investor protection? By investor protection I mean not protection against bad investment decisions but protection from fraud, negligence and inadequate information. There it is a little harder to say because there is no doubt that existing single capacity arrangements protect the investor. It is hard to see the way forward. It is clearly essential that, whatever developments take place, we have adequate investor protection.

From the history of the present arrangements, single capacity was not introduced in the first place to establish investor protection. From a note supplied by the Library, it appears that it was introduced in 1908 and it was apparently thought necessary for the market in foreign securities. When it was established, it was apparent only a few years later that any system of single capacity necessitated fixed commissions. That is why I think that the consequence for single capacity of negotiated commissions must be clear—that is, that single capacity will disappear very rapidly. That is the conclusion of the paper to which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) referred in his speech, the paper produced by the City capital markets committee, which offers one of the best assessments of the likely way forward. As for negotiated commissions, the committee says that it doubts whether commercial pressure will permit anything other than what has come to be known as the "big bang". I think the committee is right in saying that, if that is going to happen, there needs to be some delay before that comes in so that the market can make suitable arrangements.

The paper also points to the dangers of continuing with the present system and prohibiting dual capacity until the need for it becomes evident as the result of activities of investment houses outside the stock exchange. That is a very important point.

The history of financial markets is and always has been one of the regulatory authorities, whether the Government or other authorities, trying to keep pace with developments or else inhibiting them and I believe that the previous arrangements have inhibited arrangements in the stock exchange. Either way, the history has been that the authorities have tried to keep pace.

The case against the stock exchange under the Act has hung over it like a black cloud, it has stultified development, as my right hon. Friend said in introducing the Bill, and it has enabled competing markets overseas to get ahead of London.

The retention of single capacity for any length of time could have precisely the same effect and the paper I referred to reaches that conclusion. It is therefore my belief that we will have a more efficient and more competitive capital market if fixed commissions and single capacity disappear together.

In those circumstances the critical question is how we are to secure investor protection. I believe that we can secure it in other ways, and that is what the stock exchange must work towards. The most important aspect of that will undoubtedly be the immediate publication of information for investors. Bargains, with the size of the bargain and price, will have to be published instantaneously and there will have to be a stock exchange tape as there is in New York. In that way users of the market will have confidence that the prices at which their business is transacted are the actual prices in the market at the time of dealing. It will also be important for the broker to declare whether he is dealing as a principal or as an agent. The full disclosure of information is a powerful weapon in the hands of the investor.

The Bill must be considered in a wider context. For example, there is, more generally, the Gower report on investor protection. As I said, the market in financial services is developing rapidly and it is difficult for the regulators to keep pace with developments. There is no doubt that Gower will have something to say about the position of the stock exchange and may recommend that there should be a statutory framework for it.

There is also the fast growing over-the-counter market, over which there is virtually no regulation, and the expanding sphere of investment advisers. I am glad to say that the National Association of Security Dealers and Investment Managers, to which I am the parliamentary consultant, is near to recognition as a fully self-regulatory body. In my view, that is the way forward and I should like to see the development of self-regulation against a statutory background.

There is urgent need to encourage the small investor, as has been mentioned during the debate. There is no evidence that negotiated commissions will be of any use to the small investor. Indeed, the reverse may be the case. Why is it that funds invested in a life policy attract 15 per cent. tax relief while funds directed to the stock exchange attract 2 per cent. stamp duty?

It is, and I shall be interested to hear my hon. Friend's answer later. Stamp duty should be abolished or at least halved, because it has inhibited the growth of the market; the special privileges that the jobbers now have in connection with stamp duty should be extended to all who are market makers.

The outside ownership of firms is to be limited to 29·9 per cent. per owner. Why? If we are to have a really effective British securities industry we should have no qualms about people acquiring larger proportions. Only if they have control will they be likely to inject the capital that will be required. I believe that it will be necessary for outsiders to be able to control member firms and that the rule will eventually go, along with fixed commissions and single capacity.

I support the agreement that has been reached between the Government and the stock exchange. I support the Bill, and it is a tribute to my right hon. Friend the Member for Hertsmere that it has been vindicated by events since 27 July.

9 pm

In view of the lateness of the hour I shall be brief, but I shall be mindful of the injunction of the hon. Member for Blyth Valley (Mr. Ryman) not to repeat that which has been said before, which is difficult. I am conscious of the fact that many of the arguments that I should have deployed have been effectively made by my hon. Friends the Members for Wolverhampton, South-West (Mr. Budgen) and for Dewsbury (Mr. Whitfield). I share the concern that judicial proceedings in progress are being stopped by extraordinary legislation. The very nature of that proceeding makes us pause and ask whether this decision to introduce legislation calls into question the present arrangements for reaching conclusions on restrictive practices, as it must do.

We must then ask ourselves whether we have a coherent competition strategy or just a series of ad hoc judgments made by the Secretary of State or the Bank of England. Do we have an overall view of what competition is or should be, or is it merely a continual series of special circumstances? There is this problem with the stock exchange, as there is with the Lloyd's Act. It begs the question raised by my right hon. Friend for Taunton (Mr. du Cann) on 27 July whether the Government should restate their competition policy. What are, or what should be, the constitutional arrangements for overseeing competition and overseeing restrictive practices?

As my hon. Friend the Member for Wolverhampton, South-West said, the role of the Bank of England has been increasing, and the relationship between the Bank of England and the Government is close. We are not necessarily looking at independent judgments backed by a coherent framework of law which we can hold to be demonstrable. We are therefore stepping into the murky waters of ad hoc arrangements to suit particular cases. The experience of the City, particularly of Lloyd's and perhaps of the stock exchange, leads one to believe that there should be a strong and independent regulatory framework. Self-regulation is, alas, a thing of the past, for the reasons set out by my hon. Friend the Member for Wolverhampton, South-West. They are reasons well understood in the outside world.

One can see the degree to which the United States tries to protect the consumer, the purchaser and the user of services. It may be said that in the United States, it is litigious that there is a defence or a protection in the recourse to law. However, if we are to take independent, ad hoc judgments every time, we are dependent upon the view of an individual Secretary of State, who carries with him a Cabinet. That makes us an uncertain country in which to ensure the administration of great industries, great professions or great sections of security interest.

We have heard the Government's arguments, and this is a fait accompli which I bitterly regret, but I say as a mild protest that I should have liked to see discussions in the House on whether the office of the Director General of Fair Trading is an appropriate way to view certain arrangements. As has been pointed out many times this evening, there was an opportunity to interrupt this process. In the original outline of the Bill the stock exchange could have sought and been granted the protection that was available. Those who went before us took the view as legislators, that this was not an appropriate body to give protection of that nature. It should be open to obvious and open scrutiny and should be able to argue, if its practices are in the proper interest, before a public body. That is an important principle.

I ask my hon. Friend when he comes to wind up the debate to go some way towards looking for a coherent competition policy and a framework within which we and society can work towards making a more effective and efficient society. Deals such as this impede progress. It seems to be a fact that the stock exchange has only moved to where it is because of this impending case. It was difficult for it to get there, for the reasons set out by my hon. Friend the Member for Wolverhampton, South-West. It has to deal with a large number of people who are frightened of losing the restrictive practices that guarantee them an income.

I pay tribute to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), by way of a declaration of interest, as I have used the services of his firm, to which I owe so much. The experience has been a refreshing and interesting one, but has nevertheless made me conscious that when we come to judge these issues there must be a clear independent framework, so that society can move within the clearly defined limits of that framework.

9.4 pm

We have had an interesting debate on a short Bill. It has been interesting not least because of the strength, number and persuasiveness of the dissenting voices in the Conservative party. One of the most effective, and briefest, contributions was that of the hon. Member for Aldridge-Brownhills (Mr. Shepherd).

The Bill is short and could, on its face, be considered inoffensive, yet there is a mystery at the heart of the Bill. The mystery, which has not been properly explained today, is why, after seven years of preparation, beginning with legislation from which the stock exchange could have been exempted, followed by registrations and reference to the court, the preparation of litigation and repeated representations to successive Ministers, the Government suddenly decided to cave in, to reach a voluntary agreement with the stock exchange and to introduce this Bill. What changed in July of this year?

The Bill is not simply technical matter. Its avowed bipartisan objective is to outlaw restrictive practices that are against the public interest, and it raises a genuine question of public policy—the exemption of the stock exchange from the provisions of the Restrictive Trade Practices Act 1976. It is probably the most important case ever considered by the Director General, who, since 1977, and especially since 1979 when the case was referred to the court, has expended much time, effort and money to bring the case to fruition.

Successive Ministers resisted representations by the stock exchange, beginning with my hon. Friend the Member for Norwood (Mr. Fraser) and followed by Sir John Nott, by the present Leader of the House, by Lord Cockfield and by countless other Ministers. We have also heard that the Prime Minister may have told the Wilson committee that she, too, took a tough line on this matter. On each occasion the stock exchange was rebuffed, and successive Ministers made it clear that the Restrictive Practices Court was the best forum to resolve these difficult questions.

As my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said, not only was there a series of ministerial pronouncements in response to the representations, but the Government took legislative steps to make the Restrictive Practices Court an even more appropriate body to deal with some of the objections that might have been raised to referring this case to the court. In the Competition Act 1980 the criteria for deciding whether a restrictive practice was in the public interest were widened and the court was given the power to defer the effect of an order that it might make.

Against that history of consistent bipartisan practice, when the case had begun and was due to be heard in January of next year, and when the parties had stated their cases, why did the former Secretary of State, the right hon. Member for Hertsmere (Mr. Parkinson)—who was then chairman of the Conservative party—change his mind? That question has not been answered, which is extraordinary, because, as he conceded in response to my earlier intervention, although he informed the Director General of the proposals, and then told him after he had reached his decision, at no stage did he consult the Director General or bring him into the conversations.

The present Secretary of State suggested, at least by implication, an argument that has been heard elsewhere, which is that an adversarial court proceeding is not the right way to resolve such a complex matter. It is difficult to accept that argument, for a number of reasons. It is not an argument that might have occurred to the Minister in the past few moments. It was implicit from the moment the stock exchange was brought within the ambit of the Restrictive Trade Practices Act 1976. It is, too, an extraordinary slur on the Restricive Practices Court and the whole judicial process to argue that that court is somehow incompetent to deal with these issues. Where will that argument stop? Are we to say that the courts should not — as they currently do — deal with immensely complicated cases of tax, fraud, trusts and so on? Of course not. We must accept that the Restrictive Practice Court is competent to deal with questions of restrictive practice.

If we felt that the court was not an appropriate instrument, the option would be to change the Act in some way to produce an effective instrument.

We ought to be clear about what the Restrictive Practices Court was asked to decide. It had to decide whether admittedly restrictive practices were in the public interest. The fact that the Government and the stock exchange have acted in this extraordinary way to remove the case from the court suggests that they had little confidence in being able to satisfy anyone that these practices were in the public interest.

Perhaps the only substantial point in the speech of the Secretary of State was that it was necessary to bring an end to the litigation because in some mysterious way that litigation made it impossible for the stock exchange to bring about changes on its own account. Nothing supports that argument. There is no reason why members of the stock exchange—unilaterally if necessary—should not have adapted their rules and re-registered them, confident that the stock exchange would thus improve its chances of success before the Restrictive Practices Court.

Does the hon. Gentleman agree that a large number of stockbrokers believed that single capacity and minimum commissions stood together and, therefore, that if the Secretary of State had tried to settle before the deal it is doubtful whether he would have been able to gain the support of the majority of members of the stock exchange?

I understand the point made by the hon. Gentleman earlier in the debate. I shall consider in a moment the best way of proceeding to avoid some of these problems.

It was not the Act or the prospect of litigation that made it difficult for the stock exchange to make voluntary changes in its regulations. The Secretary of State used the word "petrified" to describe its state of mind. He took care to explain that he was using the word in its literal rather than its more usual sense, but the stock exchange was indeed frightened by the litigation and it was this fear which produced the minimum agreement for change. The stock exchange did not concede in its voluntary agreement everything that the Restrictive Practices Court would have required of it. It is accepted on all sides that the court would have put an end to the minimum commission system because it was against the public interest.

Does the hon. Gentleman accept that the main fear is of uncertainty, which is most damaging of all?

The hon. Gentleman's question takes me further into my speech than I care to go at this stage, but I shall certainly deal with it in due course.

I believe that it is generally accepted in the City and elsewhere that the court would certainly have struck out the minimum commission system. Recognising that certainty, the stock exchange has conceded the point, albeit with a three-year delay. On the other restrictive practices—the single capacity system and the limit on outside ownership—there was a very good chance that the court would have rejected them as well.

Therefore, it cannot be argued that the then Secretary of State achieved through voluntary agreement what might have been achieved by pursuing the case in court. The right hon. Member for Hertsmere in his contribution constantly hopped between what was actually in his mind and actually intended by the agreement and what is now conceded to be the almost inevitable consequences of the agreement. One was a limited system of change. the other is an unpredictable series of changes.

The consequences of the voluntary agreement and the Bill are that the clear policy of successive Governments against restrictive practices, backed up by statutory provision, has been abandoned exceptionally in the case of the stock exchange. Well over 100 acknowledged restrictive practices will remain in force—until 1987 in the case of the rules for minimum commissions and indefinitely in the case of others.

The position of the Director General has been gravely weakened. He has been treated with less than full respect. His hard work on his most important case has been set at naught. He was not even consulted.

The hon. Gentleman keeps returning to the claim that the Director General was not consulted. The Director General was consulted — I discussed the matter with him twice—but he was advised by his own lawyers that he was under a statutory obligation to pursue the case and therefore was not in a position to make any agreement with me. The hon. Gentleman asks why I did not try to persuade the Director General. The answer is that the Director General was not persuadable because he was advised that his legal duty was to carry on with the case. That is why there was no question of my obtaining his consent to the agreement. He was legally bound to pursue the court action.

The right hon. Gentleman's comments may well explain why the Director General was not consulted, but the fact remains that he was not consulted.

The Director General had a right to expect that he would be taken into the confidence of the Secretary of State about the right hon. Gentleman's conversations with the chairman of the stock exchange.

The Bill not only ends the litigation but requires the Director General to expunge from his records the restrictive practices already registered. Furthermore, for the future it exempts the stock exchange from the provisions of the Restrictive Trade Practices Act.

We are therefore left with an unenforceable voluntary agreement with no opportunity to reimpose the systems of control in respect of restrictive trade practices which successive Parliaments and Governments have thought necessary. It took seven years of pressure, backed up by legislation, to produce this meagre result and we are now left with no instrument or weapon whatever to ensure that further unpredictable changes will be brought within the ambit of that legislation.

We are entitled to ask the present Secretary of State what is left of the Government's competition policy. Some Conservative Members have already asked this question. Are we left merely with a system of ad hoc decisions with no discernible consistency of practice? If that is so, the whole competition policy on which the Government allegedly place such emphasis and reliance is shot through with inconsistencies and can command no confidence whatever.

No, the stock exchange is merely being put in a position not greatly different from that of the trade unions, the legal professions and various other bodies in relation to the legislation.

The right hon. Gentleman tempts me. What is happening to the stock exchange raises two questions. First, what will be the right hon. Gentleman's attitude to the restrictive practices—about which some of his hon. Friends have been waxing eloquent — of other groups of professional men? Such practices have already attracted the attention of the Director General of Fair Trading.

Secondly, we must contrast the right hon. Gentleman's approach to the stock exchange and the tenderness that he has shown to its interests with the eagerness with which he has ventured into the legislative sphere to intervene in the operations of trade unions.

The right hon. Gentleman is extremely impatient of any argument that any trade union practices, especially the closed shop, could conceivably be in the public interest. He dare not submit that question in respect of the stock exchange to the mechanism of his own legislation.

The Government, in their anxiety to help their friends in the City——

In their anxiety to help their friends in the City, the Government have broken new ground. A small dispute occured earlier about whether the Bill was retrospective in any technical sense. I accept that, technically speaking, it is not retrospective, but I think that anybody who understands the purpose and the effect of the Bill would accept its retrospective effect. More importantly, the Bill interferes with the judicial process while a case is before the court. I believe that that aspect of the Bill has caused widespread concern not just to the Opposition but to Conservative Members, to the City and to informed opinion.

When the Minister replies, will he suggest any precedent for legislation which, against the will of one of the parties—especially when the party is a Government servant — puts an end to current litigation? I shall be interested to know if he can find such an example.

What is the Government's true motivation? Setting aside any imputation of unworthy motives in what was done by the right hon. Member for Hertsmere in the absence of any convincing explanation the Opposition are entitled to speculate. The ghost at the feast is the Bank of England, which put pressure on the Government and led to their late change of heart.

The bank, through the Government broker, is extremely keen on the present arrangement. It has a nice cosy relationship with the major jobbers and has come to rely on them to fund the enormous Government borrowing requirement and to undertake the sale of billions of pounds of gilts. The Government are extremely anxious to have a reliable mechanism available to them for the sale of the shares of enterprises that the Government intend to privatise. In other words, the Government are, as a client, part of the cosy restrictive arrangement. Far from being a policemen, the Government are accomplices, and that is why the Bill is before the House.

As hon. Members on both sides of the House have said, and this is the paradox, the change that the Government have tried to impede and delay with this legislation is vital if the City of London is to maintain itself as a viable and competitive international market. We know that the number of jobbers has fallen to a dangerously low level. It is now difficult to talk of a properly organised market. The liquidity of the market leaves something to be desired. We know that many City firms and institutions are too small and under-financed and do not have a sufficiently broad base.

We need what so many people describe as one-stop shops — financial institutions able to offer a range of financial services. Almost everyone accepts that such a change will come. When it does, the problems that arise can be dealt with only with the aid of some statutory backing. I am, of course, referring to conflict of interests. We must establish the principles that now apply in the New York stock exchange, of openness and transparency in transactions.

There is a further paradox. The Government's efforts to prevent such changes, in their own interest, are almost certain to produce a more rapid, more far-reaching and less predictable change than would conceivably have emerged if the court case had continued. The court would have provided a long, careful and proper analysis. It would have given careful consideration to all the arguments and reached decisions that would have had to be justified in the public view. Almost everyone — not least Conservative Members, the City capital markets committee and the stock exchange — is a greed that the present arrangements will last for only a short time.

In seeking to keep in place during the next three years the system of minimum commission and all the other restrictive practices that depend on that, the Government have produced the opposite result. The very suggestion and prospect that the minimum commission system is to be abolished has been sufficient to produce a spate of rumours, bids, changes and takeovers. We need only to pick up the financial newspapers each day to read the new reports of the frenetic changes taking place in the City.

Everybody concedes that once the prospect of the abolition of minimum commission is established, single capacity must go. The City capital markets committee and the stock exchange are directly contradicting the right hon. Member for Hertsmere. If that is the degree of expert knowledge that the right hon. Gentleman brought to bear when he reached his decision, there is little reason to be surprised that it has turned out to be inappropriate.

The hon. Gentleman is making the same point as was made by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). He is showing the split personality of the Opposition on this problem. The right hon. Member for Bethnal Green and Stepney said that if we moved too quickly various dire consequences would follow. He then said that because the Government would not move as quickly as the Director General of Fair Trading wanted, the Government were wrong.

We made the agreement because we recognised the consequences about which Opposition Members claim to be concerned. Yet they say that we did not go fast enough. They must make up their minds. They are completely confused.

The right hon. Gentleman again reveals the disparity between what he thought he had achieved with the agreement and what it is now universally agreed will happen. It is not only the City capital markets committee and the stock exchange, but the financial journalists who are saying that. For example, the Financial Times used a good metaphor to describe what the right hon. Gentleman did — that he made a small hole in the wall of a dyke. We now know that water is rushing through the hole and the wall is breaking before our eyes.

The conclusion of the City capital markets committee has been mentioned by a number of Conservative Members. It recommended that the abolition of the minimum commission, and all that will follow in its train, should be achieved by what it describes as the big bang. It does not mean a big bang that will happen overnight, but a deferred big bang that will happen on an appointed day. If we are confronted with that, and must accept that, why did we not allow the case to proceed before the court, which would have produced a similar but more orderly result?

The danger of the pell-mell rush to unpredictable change is that it will jeopardise the very things that the Government thought they were trying to preserve. One of the fears of the Government, and presumably of the Bank of England, is that if the restrictions were swept away much of the City's operations would pass into foreign hands. I agree with the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) on that point. If that happened we would lose substantial invisible earnings in foreign exchange and an essential element of control over domestic monetary policy, and in various other ways an extremely important part of our financial life would pass into foreign hands. A Labour Government would be unwilling to see that happen. It would weaken our ability to pursue an independent monetary interest rate and exchange rate policy.

If we allow this uncontrolled change which will sweep away all the rules, I believe that there is a real danger I hat, before British institutions realise what is happening, foreign firms will be in ahead of them. The most recent and striking example of a foreign firm buying into a broking firm—the Vickers Da Costa purchase—gives us a worrying example of what might happen. Foreign money is taking away a large proportion of the business of Vickers Da Costa, which will henceforth, one assumes, be run from New York. If that is the result of the Government's proposals and the Bill, we are in for a worrying time.

If we are right—and when I say "we" I do not mean only we on these Benches but the preponderance of informed opinion—in believing we are facing a free-for-all, that we are facing the unknown, that, as the hon. Member for Wolverhampton, South-West (Mr. Budgen) said, we shall see a securities market quite different from the cosy club that we have known in the past, what are we to put in the place of the cosy principles of trust and honour among friends? What will there be to protect the investor and exclude the possibility of conflicts of interest or even of fraud? No one considering the recent history of the stock exchange could feel sanguine—although in many respects it has put its house in order now — about leaving this new unregulated system in that state, particularly as we shall be in uncharted territory. Yet the right hon. Gentleman has been entirely silent on that point. All that we are offered by the voluntary agreement is regulation by the Bank of England. The Bank of England is the biggest client of the stock exchange. It has a major interest in preserving the stock exchange and identifying its interests with those of the stock exchange. It is hand in glove with the stock exchange.

That makes it entirely inappropriate to act as the regulatory agency—[Interruption] I am glad to see that the hon. Gentleman can agree with me on that point. We can have no confidence in an institution that is in league with the stock exchange taking the only important regulatory function. There are many people overseas, in the financial press and the City who see, as have so many of the hon. Members who have spoken this evening, the need for at least some statutory intervention. I want not a statute that would remove entirely that valuable element of self-regulation, but a statutory framework—I am glad to see nods of assent from the Government Benches — within which the financial institutions of the City can regulate their own affairs. These remedies are suggested not only by Opposition Members but by Professor Gower and, I am glad to say, by the Labour party in its own study of City institutions last year.

The hon. Gentleman must give the House some idea of how the Government see the future of the stock exchange in this respect. Unless they have a clear and workable plan for the future, the mess created by the Bill will be completely beyond redemption. The City needs proper regulation if it is to survive, command confidence and withstand competition. The measure is designed to serve the special interests of the Conservative party's friends in the City, to ride roughshod over the public interest, legal propriety and the Government's proclaimed competition policy, and to weaken the position of one of the most effective and successful Government offices. It failed to consult the body set up for the purpose—the Council for the Securities Industry. It weakens protection for investors, especially small investors. It would be an irony if a measure conceived in that spirit should destroy the very thing that it is intended to preserve. That would be poetic justice. It is a hypocritical and ill-thought-out measure born of a partisan wish to benefit the friends of the Conservative party. The richest irony is that it will be wholly ineffective in achieving its purpose. It will leave a mess which, sooner or later, will have to be regulated by legislation. Until we see the proposals and the shape of that legislation, we have no option but to oppose this squalid little measure.

9.35 pm

I start by agreeing with the hon. Member for Dagenham (Mr. Gould) that we have had a good and interesting debate. A number of points have been raised to which I shall try to respond. There has not been much agreement on or, judging by his speech, much understanding of the issue that we face this evening.

In opening this debate, my right hon. Friend dealt with the reasons why the Bill is before the House. I do not propose to repeat the argument which he deployed. However, when my right hon. Friend the Member for Hertsmere (Mr. Parkinson), the previous Secretary of State, made his statement about the stock exchange in July, there were those who questioned the need for this exemption, while others criticised the efficacy of arrangements made between the Government and the stock exchange.

Much has happened since then to confirm the wisdom of this action. I believe that opinion inside and outside the House now fully supports the initiative taken by my right hon. Friend the Member for Hertsmere. I am delighted that he has been in the House to expand on the background to his decision, which he has done freely and willingly. He made an important contribution to the debate.

The question has been asked why the decision was made. The answer is that at the heart of the Government's decision to make this exemption lies our robust approach to competition policy. Competition is not just something that our manufacturing industry has to face at home and abroad. Our financial institutions in the City and elsewhere and our professions—to answer the question of the hon. Member for Dagenham—must also feel the wind of change and the stimulus of competition if they are to make their full contribution to this country's economic performance.

The effect of this little Bill, which has been much criticised by the Opposition, even before today, has been to open up change and innovation among our financial institutions at a pace that matches the urgency of the competition in domestic and international markets. This is only the beginning, as my hon. Friend the Member for Harrow, East (Mr. Dykes) acknowledged from his experience of the City.

We do not know how the securities market in Great Britain will be constituted in two or three years time, let alone a decade from now. We can expect to see a dynamic and innovative stock exchange, for that is already happening. Greater use of computers and information technology will promote easier access to the services of the exchange for people all over the country.

The Government would warmly welcome the development of retail broking. We believe that it is important that the shopper in the high street from Greenock to Grantham should have easy access to share dealing, and consequently understand that his or her prosperity is inextricably linked, above all, to the performance of British industry. The Government are equally aware that the fastest growing part of the financial sector is international fund management which is currently dominated by the United States and Japan. Yet the City of London is ideally placed and has the depth of experience and talent to become a dominant force on the international scene.

I am encouraged at this early stage in these developments by the City's determination to make whatever changes are necessary to enhance London's international reputation. The stock exchange is no place for a Socialist blueprint for expansion—it is the place where market forces must and will decide the future. These are the opportunities and challenges that the Bill unlocks by exempting the stock exchange from the Act. We are recognising its unique position as the sole provider of an active open market in all types of securities and the vital part that it plays in London's role as a world financial centre.

Does the Minister agree that there is a contradiction in what he has said, in that, if he recognises the competitive nature of market forces, protecting the status quo for some two or three years does not give those competitive forces any scope? Would it not be wiser to use that time to develop a protective system for small investors?

The hon. Gentleman must know that, by releasing the stock exchange and the City to make the urgently needed changes, we have also built in a time-scale that will allow investor protection to be examined properly. I agree that it is extremely important.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) spoke for more than 40 minutes but still completely missed the point. He did not talk of the urgency of what we are discussing but chose to suggest that nine months be added to the process so that the court decision could be implemented. He even talked of a new deal—perhaps a series of new deals—being resubmitted to the court until perhaps, some day, we got the matter to his satisfaction.

I was simply describing the effect of the amendments to the Competition Act 1980 which was introduced by the hon. Gentleman's predecessor. I was simply observing that they were introduced and enacted by the Government to ease any possible transition that the stock exchange might have to make to new arrangements.

I understand the right hon. Gentleman's point, but I did not think then, and I do not think now, that he was talking about easing the transition. He was talking about the court reaching a decision at a rather leisurely pace. The hon. Member for Norwood (Mr. Fraser) went further and suggested that a Select Committee or the Monopolies and Mergers Commission should decide what type of stock exchange we should have.

Like many of his right hon. and hon. Friends, the Minister is suggesting that the right hon. Member for Hertsmere (Mr. Parkinson) got a huge concession out of the stock exchange. Does he believe that the court would have upheld the maintenance of fixed fees on commissions?

The Government have not upheld the maintenance of fixed fees on commissions. I cannot prophesy what the court would have done, but I know what my right hon. Friend did. That has had a tremendous and good impact on the City in the past few months.

The point is that the right hon. Member for Bethnal Green and Stepney missed the point. The reason for the Government's action was competition in international trading in New York and Tokyo. The right hon. Gentleman suggested that we should have the leisurely process of the cowl examining the rules of the stock exchange while our overseas competitors continued to race past us. That is the heart of the matter for the Government.

The truth of the matter is surely that the present, or old, system of stock exchange regulation is now breaking down extremely quickly. It has broken down largely and inadvertently because of arrangements made by the previous Secretary of State for Trade and Industry. The question is, what type of new regulatory system are we to introduce and on what evidence are we to base our proposals to meet the entirely uncharted seas that so many right hon. and hon. Members have spoken about today?

It is not. Professor Gower will give us a report on the regulatory system quite soon.

No we are not. I have given the answer to the wider question which the right hon. Gentleman asked.

Through the Bill we are allowing the stock exchange to move at a much faster pace than it could have done as a result of any of the suggestions that the right hon. Gentleman made about court proceedings. The right hon. Gentleman's course would have added at least four years to the solution of the problem. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said that he was probably adding 10 years. The outside world will not wait that long.

The right hon. Member for Bethnal Green and Stepney also entertained the House with some selective quotations from press cuttings in an effort to make his case for, or against, single capacity—I was not sure which. He chose to read the case for the prosecution, while omitting to mention that the defendant was found not guilty. That was the essence of his omission of the last paragraph of the leading article in today's edition of The Times.

My hon. Friend the Member for Chichester (Mr. Nelson) gave a helpful critique of the duties of lay members of self-regulated bodies. He also mentioned Gower, which will be discussed later. It opens up wider questions of investor protection.

Do the Government agree that it is likely that, because of the deal of 27 July, single capacity will go?

I agree with the suggestion that the connection between minimum commissions and single capacity appears to be close. Perhaps single capacity will go, but the Government are not laying down whether it will go. Our interest is in investor protection, whether it is single capacity or some other system.

Some hon. Members suggested that the Bill was retrospective. I am glad that the hon. Member for Dagenham agrees with me, and disagrees with his hon. Friend the Member for Blyth Valley (Mr. Ryman), about restrospection. The Bill is not retrospective. I can give an example of an amendment to the Restrictive Trade Practices Act 1976 that was retrospective, and was introduced by the Labour Government. It was the Participation Agreements Act 1978, which applied to North sea oil participation agreements. It was made retrospective because contractual rights had arisen under the agreements, which would have been voidable if not exempted ab initio. That shows the false indignation of the hon. Member for Blyth Valley.

Looking at the realities of the situation, if the effect of the Bill is retrospective, is not that tantamount to the same practical effect as retrospective legislation?

The hon. Gentleman should ask his hon. Friend the Member for Dagenham, because he agrees with me. I shall refer to some of the questions raised.

I must make some progress. The hon. Gentleman can talk to his hon. Friend afterwards about that matter. It is not for me to settle disputes between Opposition Back 'Benches and the Front Bench.

It has been asked what market structure the Government want in the City. We are concerned that the stock exchange should continue as an efficient, competitive and orderly market for securities dealing, without reducing the protection that it affords to investor. It is for the members of the exchange to determine how those objectives can be best achieved.

We have a legitimate right to be satisfied that our concerns—for investor protection, competition, and the preservation of a strong central market—will be met, but we do not seek to substitute Government decisions for the commercial judgment of the City. Stock exchange firms and other City institutions are already responding to new opportunities. The arrangements for monitoring the development of the market ensure continuous contact between the Bank of England, my Department and the stock exchange.

We are asked whether the Government want more mergers of stock exchange firms. We want to see strong financial institutions in London that can compete for business worldwide and exploit new business opportunities as they arise. However, it is a matter for the commercial judgment of the City and not for the Government how the institutions can best organise themselves to meet the future. We should be concerned if mergers threatened competition or reduced services to customers, but in present circumstances it seems more likely that they will generate greater diversity.

With regard to the Government's attitude to overseas bids for city firms, the fact that one or two of the most enterprising United States banks have taken maximum permitted holdings in London brokers is a clear sign of the continuing importance of the City as a financial centre and of the general expectation that London is the place where things will happen in the securities market.

We attach the greatest importance to the continuing role of the City as an international centre. One reason for our part in the present programme of reform is to promote the international status of London. However, as my hon. Friend the Member for Harrow, East said, the opportunities are there for British-based banks, some of which will also shortly have maximum permitted holdings in stock exchange firms. There may be further developments involving British institutions. The skills available in our financial markets are at least a match for those available elsewhere.

How long do the Government expect the rules about maximum permitted holdings by outsiders to last? Is it really the case that the Government have no view about the degree of ownership by foreign firms of City institutions?

The stock exchange rule is 29·9 per cent. outside ownership. But it is a matter for stock exchange members themselves. That has no statutory force. The Government have no statutory power to intervene in these cases other than the Fair Trading Act 1973 and a reference to the Monopolies and Mergers Commission. Those are the same powers that a Labour Government would have in those circumstances — no more and no less.

A great many hon. Members on both sides of the House referred to the wisdom of the Government's intervention. Parliament has the right to amend t4 Restrictive Trade Practices Act to exclude particular bodies from its provisions. It has done so already. The fact that court proceedings have started does not impede this right of Parliament. But in this case the stock exchange offered to make fundamental changes to its rules in advance of the court hearing, and Ministers negotiated with it. The stock exchange could not negotiate directly with the Director General of Fair Trading without prejudicing its case and causing even further delay.

It is not nonsense. The basic disagreement between the Director General and, as it turns out, the Government, was on single capacity. It was Ministers' view, as my right hon. Friend said, that, at least for the time being, single capacity should remain. That was what my right hon. Friend the Member for Hertsmere said in his statement in July. The Government recognised that there had to be some period in the interests of investor protection before the fixing of commission should be abolished. On that basis negotiations took place between Ministers and the Stock Exchange. What happened was, in effect, an out-of-court settlement and one which today is allowing the City and the Stock Exchange to begin to catch up with international competition.

The hon. Member for Norwood asked about the Association of British Travel Agents' case. It is not finally settled, but almost certainly each party will bear its own costs. Under section 22 of the Restrictive Trade Practices Act, the Restrictive Practices Court does not have powers to order costs to be paid by the loser, except where there has been unreasonable delay or some such fault. In the Stock Exchange case the Crown would have borne the Director General's costs regardless of whether he won or lost.

The position of small investors is important to the Government. We do not believe that small investors should necessarily lose—first, because through the unit trusts and the pension funds they will get the benefit in their shares or in their policies of the reduction in commissions, and secondly because if we follow the example of the United States, where discount houses and over-the-counter markets have expanded greatly over recent years, new opportunities will be given to the small investor. That pattern may well develop in this country as a result of the decision that the Government have taken. If those changes develop significantly, economies of scale in the use of information technology could help to keep down costs for small investors.

Why have unit trust fund managers put up their commissions when the evidence that is now presented to the House on the sale of shares shows that commissions should come down? Will the Minister intervene in the commissions that are charged by unit fund managers, to give a fair deal to small investors?

Market forces will provide the competition. The Opposition complained that the Government's competition policy was not tough enough. Now, when we release market forces to work in the City and fix the commissions that are charged by brokers, we are told by the hon. Gentleman that the Government should intervene and fix commissions. That is a strange argument from someone who argued an hour or so ago that we should let the court decide the outcome of this case.

Does the Minister accept that the experience in New York has been that the small investor—the man who wants 300, 400 or 500 units on the market — pays a larger commission than the large institutional investor or the unit trust investor?

The hon. Gentleman ignores the growth of the over-the-counter market and the discount houses in the United States, which have come in to fill the gap that the traditional brokers were unable to satisfy. Something similar to that is likely to happen here.

It is in the areas of greatest concern that the Stock Exchange has responded to the Government's decision. The abolition of fixed scales of commission will help member firms to compete for institutional business and ensure that customers pay only for the services that they value — unlike now, when commissions are high, and customers buy and receive services that they do not really want from the brokers. When the competition centres round the true cost of the service, there should be a considerable improvement.

The introduction of lay members to the stock exchange council will help to ensure that the needs of users, as well as the interests of market members, are taken fully into consideration. That again is a response to the needs of the market.

The first step in the abolition of the commission scales will be in the international securities business. That, and the international dealership planned by the stock exchange, will help its members to become more competitive internationally, and attract a larger order flow than at present. It is another example of the new opportunities that will be opened to member firms.

The process of change will continue in the stock exchange, with the backing of the Government, of the wider financial community, and, I believe, of the majority of hon. Members. That process of change has been triggered off by the Government's action. I fail to understand the argument of the right hon. Member for Bethnal Green and Stepney, who suggested that we could wait longer—perhaps two, three or four more years—to reach the position that we have reached in four months. In fact, we have achieved more in four months than has been achieved in the past four years in accelerating the state of play in the market and bringing competition into effect.

That is why we believe that City opinion and opinion throughout the country welcome the changes that are taking place. They are all healthy, they are for the good of competition and for the good of the market. They will make our financial institutions stronger today than they were, even a few months ago. They will enlarge the opportunities for investment, and the institutions will benefit from them, as will the small investors. That is what the decisions taken by my right hon. Friends mean, and that is why we have been determined to pursue the matter tonight and in the future. I believe that the Opposition will be forced to admit that the action taken by the Government is a much better solution to the problem than continuing for years before the Restrictive Practices Court.

Question put, That the Bill be now read a Second time:

The House divided: Ayes 343, Noes 202.

Division No. 75]

[10 pm

AYES

Aitken, JonathanEvennett, David
Alexander, RichardEyre, Reginald
Amery, Rt Hon JulianFairbairn, Nicholas
Amess, DavidFallon, Michael
Ancram, MichaelFavell, Anthony
Arnold, TomFenner, Mrs Peggy
Ashby, DavidFinsberg, Geoffrey
Aspinwall, JackFletcher, Alexander
Atkins, Rt Hon Sir H.Fookes, Miss Janet
Atkins, Robert (South Ribble)Forman, Nigel
Atkinson, David (B'm'th E)Forsyth, Michael (Stirling)
Baker, Kenneth (Mole Valley)Forth, Eric
Baker, Nicholas (N Dorset)Fowler, Rt Hon Norman
Baldry, AnthonyFox, Marcus
Banks, Robert (Harrogate)Franks, Cecil
Batiste, SpencerFraser, Peter (Angus East)
Beaumont-Dark, AnthonyFreeman, Roger
Bendall, VivianFry, Peter
Berry, Sir AnthonyGale, Roger
Best, KeithGalley, Roy
Bevan, David GilroyGardiner, George (Reigate)
Biffen, Rt Hon JohnGardner, Sir Edward (Fylde)
Biggs-Davison, Sir JohnGarel-Jones, Tristan
Blaker, Rt Hon Sir PeterGlyn, Dr Alan
Bonsor, Sir NicholasGoodlad, Alastair
Bottomley, PeterGorst, John
Bowden, A. (Brighton K'to'n)Gow, Ian
Bowden, Gerald (Dulwich)Gower, Sir Raymond
Boyson, Dr RhodesGreenway, Harry
Braine, Sir BernardGregory, Conal
Brandon-Bravo, MartinGriffiths, E. (B'y St Edm'ds)
Bright, GrahamGriffiths, Peter (Portsm'th N)
Brinton, TimGrist, Ian
Brittan, Rt Hon LeonGround, Patrick
Brooke, Hon PeterGrylls, Michael
Brown, M. (Brigg & Cl'thpes)Hamilton, Hon A. (Epsom)
Browne, JohnHamilton, Neil (Tatton)
Bruinvels, PeterHampson, Dr Keith
Bryan, Sir PaulHanley, Jeremy
Buchanan-Smith, Rt Hon A.Hannam, John
Buck, Sir AntonyHargreaves, Kenneth
Bulmer, EsmondHarris, David
Burt, AlistairHarvey, Robert
Butcher, JohnHaselhurst, Alan
Butterfill, JohnHavers, Rt Hon Sir Michael
Carlisle, John (N Luton)Hawkins, C. (High Peak)
Carlisle, Kenneth (Lincoln)Hawkins, Sir Paul (SW N'folk)
Carttiss, MichaelHayes, J.
Chalker, Mrs LyndaHayhoe, Barney
Chapman, SydneyHayward, Robert
Chope, ChristopherHeath, Rt Hon Edward
Churchill, W. S.Heathcoat-Amory, David
Clark, Hon A. (Plym'th S'n)Heddle, John
Clark, Dr Michael (Rochford)Henderson, Barry
Clark, Sir W. (Croydon S)Heseltine, Rt Hon Michael
Clarke Kenneth (Rushcliffe)Hickmet, Richard
Clegg, Sir WalterHicks, Robert
Cockeram, EricHiggins, Rt Hon Terence L.
Colvin, MichaelHind, Kenneth
Coombs, SimonHirst, Michael
Cope, JohnHogg, Hon Douglas (Gr'th'm)
Cormack, PatrickHolland, Sir Philip (Gedling)
Couchman, JamesHolt, Richard
Critchley, JulianHooson, Tom
Crouch, DavidHordern, Peter
Currie, Mrs EdwinaHoward, Michael
Dickens, GeoffreyHowarth, Alan (Stratf'd-on-A)
Dicks, T.Howarth, Gerald (Cannock)
Dorrell, StephenHowell, Rt Hon D. (G'ldford)
Douglas-Hamilton, Lord J.Howell, Ralph (N Norfolk)
Dover, DenshoreHubbard-Miles, Peter
du Cann, Rt Hon EdwardHunt, David (Wirral)
Dunn, RobertHunt, John (Ravensbourne)
Durant, TonyHunter, Andrew
Dykes, HughHurd, Rt Hon Douglas
Edwards, Rt Hon N. (P'broke)Irving, Charles
Eggar, TimJackson, Robert
Emery, Sir PeterJenkin, Rt Hon Patrick

Jessel, TobyParkinson, Rt Hon Cecil
Johnson-Smith, Sir GeoffreyParris, Matthew
Jones, Gwilym (Cardiff N)Patten, Christopher (Bath)
Jones, Robert (W Herts)Patten, John (Oxford)
Jopling, Rt Hon MichaelPattie, Geoffrey
Joseph, Rt Hon Sir KeithPawsey, James
Kellett-Bowman, Mrs ElainePeacock, Mrs Elizabeth
Key, RobertPercival, Rt Hon Sir Ian
King, Roger (B'ham N'field)Pink, R. Bonner
Knight, Gregory (Derby N)Pollock, Alexander
Knight, Mrs Jill (Edgbaston)Porter, Barry
Knowles, MichaelPowell, William (Corby)
Knox, DavidPowley, John
Lamont, NormanPrentice, Rt Hon Reg
Lang, IanPrice, Sir David
Lawler, GeoffreyPrior, Rt Hon James
Lawrence, IvanProctor, K. Harvey
Lawson, Rt Hon NigelPym, Rt Hon Francis
Leigh, Edward (Gainsbor'gh)Raffan, Keith
Lennox-Boyd, Hon MarkRaison, Rt Hon Timothy
Lester, JimRathbone, Tim
Lewis, Sir Kenneth (Stamf'd)Rees, Rt Hon Peter (Dover)
Lightbown, DavidRenton, Tim
Lilley, PeterRhodes James, Robert
Lloyd, Ian (Havant)Ridley, Rt Hon Nicholas
Lloyd, Peter, (Fareham)Ridsdale, Sir Julian
Lord, MichaelRifkind, Malcolm
Luce, RichardRippon, Rt Hon Geoffrey
Lyell, NicholasRoberts, Wyn (Conwy)
McCrindle, RobertRobinson, Mark (N'port W)
McCurley, Mrs AnnaRoe, Mrs Marion
Macfarlane, NeilRossi, Sir Hugh
MacKay, Andrew (Berkshire)Rost, Peter
MacKay, John (Argyll & Bute)Rowe, Andrew
Maclean, David John.Rumbold, Mrs Angela
Macmillan, Rt Hon M.Ryder, Richard
McNair-Wilson, M. (N'bury)Sackville, Hon Thomas
McNair-Wilson, P. (New F'st)Sainsbury, Hon Timothy
McQuarrie, AlbertSt. John-Stevas, Rt Hon N.
Madel, DavidSayeed, Jonathan
Major, JohnScott, Nicholas
Malins, HumfreyShaw, Giles (Pudsey)
Malone, GeraldShaw, Sir Michael (Scarb')
Maples, JohnShelton, William (Streatham)
Marland, PaulShepherd, Colin (Hereford)
Marlow, AntonySilvester, Fred
Marshall, Michael (Arundel)Sims, Roger
Mates, MichaelSkeet, T. H. H.
Maude, FrancisSmith, Tim (Beaconsfield)
Mayhew, Sir PatrickSoames, Hon Nicholas
Mellor, DavidSpeed, Keith
Merchant, PiersSpeller, Tony
Meyer, Sir AnthonySpence, John
Miller, Hal (B'grove)Spencer, D.
Mills, Iain (Meriden)Spicer, Jim (W Dorset)
Mills, Sir Peter (West Devon)Spicer, Michael (S Worcs)
Miscampbell, NormanSquire, Robin
Mitchell, David (NW Hants)Stanbrook, Ivor
Moate, RogerStanley, John
Monro, Sir HectorSteen, Anthony
Montgomery, FergusStern, Michael
Moore, JohnStevens, Martin (Fulham)
Morris, M. (N'hampton, S)Stewart, Andrew (Sherwood)
Morrison, Hon C. (Devizes)Stokes, John
Moynihan, Hon C.Stradling Thomas, J.
Mudd, DavidSumberg, David
Murphy, ChristopherTapsell, Peter
Neale, GerrardTaylor, John (Solihull)
Needham, RichardTaylor, Teddy (S'end E)
Nelson, AnthonyTebbit, Rt Hon Norman
Neubert, MichaelTemple-Morris, Peter
Nicholls, PatrickTerlezki, Stefan
Normanton, TomThomas, Rt Hon Peter
Norris, StevenThompson, Donald (Calder V)
Onslow, CranleyThompson, Patrick (N'ich N)
Oppenheim, Rt Hon Mrs S.Thorne, Neil (Ilford S)
Osborn, Sir JohnThornton, Malcolm
Ottaway, RichardThurnham, Peter
Page, John (Harrow W)Townend, John (Bridlington)
Page, Richard (Herts SW)Townsend, Cyril D. (B'heath)

Tracey, RichardWatts, John
Trippier, DavidWells, Bowen (Hertford)
Trotter, NevilleWells, John (Maidstone)
Twinn, Dr IanWhitney, Raymond
Vaughan, Dr GerardWiggin, Jerry
Viggers, PeterWinterton, Mrs Ann
Waddington, DavidWinterton, Nicholas
Wakeham, Rt Hon JohnWood, Timothy
Waldegrave, Hon WilliamWoodcock, Michael
Walden, GeorgeYoung, Sir George (Acton)
Wall, Sir PatrickYounger, Rt Hon George
Waller, Gary
Walters, DennisTellers for the Ayes:
Wardle, C. (Bexhill)Mr. Carol Mather and Mr. Robert Boscawen.
Warren, Kenneth
Watson, John

NOES

Abse, LeoEastham, Ken
Adams, Allen (Paisley N)Ellis, Raymond
Anderson, DonaldEvans, loan (Cynon Valley)
Archer, Rt Hon PeterEvans, John (St. Helens N)
Ashdown, PaddyEwing, Harry
Ashley, Rt Hon JackFatchett, Derek
Ashton, JoeFaulds, Andrew
Atkinson, N. (Tottenham)Field, Frank (Birkenhead)
Bagier, Gordon A. T.Fields, T. (L'pool Broad Gn)
Banks, Tony (Newham NW)Fisher, Mark
Barnett, GuyFlannery, Martin
Barron, KevinFoot, Rt Hon Michael
Beckett, Mrs MargaretForrester, John
Beith, A. J.Foster, Derek
Bell, StuartFoulkes, George
Bennett, A. (Dent'n & Red'sh)Fraser, J. (Norwood)
Bermingham, GeraldFreeson, Rt Hon Reginald
Bidwell, SydneyFreud, Clement
Blair, AnthonyGilbert, Rt Hon Dr John
Boothroyd, Miss BettyGodman, Dr Norman
Boyes, RolandGolding, John
Bray, Dr JeremyGould, Bryan
Brown, Gordon (D'f'mline E)Hamilton, W. W. (Central Fife)
Brown, Hugh D. (Provan)Harman, Ms Harriet
Brown, N. (N'c'tle-u-Tyne E)Harrison, Rt Hon Walter
Brown, R. (N'c'tle-u-Tyne N)Hattersley, Rt Hon Roy
Brown, Ron (E'burgh, Leith)Haynes, Frank
Bruce, MalcolmHealey, Rt Hon Denis
Callaghan, Rt Hon J.Heffer, Eric S.
Campbell, IanHogg, N. (C'nauld & Kilsyth)
Canavan, DennisHolland, Stuart (Vauxhall)
Carlile, Alexander (Montg'y)Home Robertson, John
Carter-Jones, LewisHowells, Geraint
Cartwright, JohnHoyle, Douglas
Clark, Dr David (S Shields)Hughes, Mark (Durham)
Clay, RobertHughes, Robert (Aberdeen N)
Cocks, Rt Hon M. (Bristol S.)Hughes, Roy (Newport East)
Cohen, HarryHughes, Sean (Knowsley S)
Coleman, DonaldJanner, Hon Greville
Concannon, Rt Hon J. D.John, Brynmor
Conlan, BernardJones, Barry (Alyn & Deeside)
Cook, Frank (Stockton North)Kaufman, Rt Hon Gerald
Cook, Robin F. (Livingston)Kennedy, Charles
Corbett, RobinKirkwood, Archibald
Cowans, HarryLead bitter, Ted
Craigen, J. M.Leighton, Ronald
Crowther, StanLewis, Ron (Carlisle)
Cunliffe, LawrenceLewis, Terence (Worsley)
Cunningham, Dr JohnLitherland, Robert
Dalyell, TamLloyd, Tony (Stretford)
Davies, Rt Hon Denzil (L'lli)Lofthouse, Geoffrey
Davies, Ronald (Caerphilly)Loyden, Edward
Davis, Terry (B'ham, H'ge H'l)McCartney, Hugh
Deakins, EricMcDonald, Dr Oonagh
Dewar, DonaldMcKay, Allen (Penistone)
Dixon, DonaldMcKelvey, William
Dormand, JackMackenzie, Rt Hon Gregor
Douglas, DickMaclennan, Robert
Dubs, AlfredMcNamara, Kevin
Duffy, A. E. P.McTaggart, Robert
Dunwoody, Hon Mrs G.McWilliam, John
Eadie, AlexMadden, Max

Marek, Dr JohnRyman, John
Marshall, David (Shettleston)Sedgemore, Brian
Martin, MichaelSheerman, Barry
Mason, Rt Hon RoySheldon, Rt Hon R.
Maxton, JohnShepherd, Richard (Aldridge)
Maynard, Miss JoanShore, Rt Hon Peter
Meacher, MichaelShort, Ms Clare (Ladywood)
Meadowcroft, MichaelShort, Mrs R.(W'hampt'n NE)
Michie, WilliamSilkin, Rt Hon J.
Mikardo, IanSkinner, Dennis
Millan, Rt Hon BruceSmith, C.(Isl'ton S & F'bury)
Miller, Dr M. S. (E Kilbride)Smith, Rt Hon J. (M'kl'ds E)
Molyneaux, Rt Hon JamesSmyth, Rev W. M. (Belfast S)
Morris, Rt Hon A. (W'shawe)Soley, Clive
Morris, Rt Hon J. (Aberavon)Spearing, Nigel
Neliist, DavidStott, Roger
Oakes, Rt Hon GordonStraw, Jack
O'Brien, WilliamThomas, Dr R. (Carmarthen)
O'Neill, MartinThompson, J. (Wansbeck)
Orme, Rt Hon StanleyThorne, Stan (Preston)
Park, GeorgeTinn, James
Parry, RobertTorney, Tom
Patchett, TerryVarley, Rt Hon Eric G.
Pendry, TomWainwright, R.
Penhaligon, DavidWallace, James
Pike, PeterWardell, Gareth (Gower)
Powell, Rt Hon J. E. (S Down)Wareing, Robert
Powell, Raymond (Ogmore)Weetch, Ken
Prescott, JohnWelsh, Michael
Radice, GilesWhite, James
Randall, StuartWhitfield, John
Redmond, M.Wigley, Dafydd
Rees, Rt Hon M. (Leeds S)Williams, Rt Hon A.
Richardson, Ms JoWinnick, David
Roberts, Ernest (Hackney N)Woodall, Alec
Robertson, GeorgeWrigglesworth, Ian
Robinson, G. (Coventry NW)Young, David (Bolton SE)
Rogers, Allan
Rooker, J. W.Tellers for the Noes:
Ross, Ernest (Dundee W)Mr. James Hamilton and Mr. Austen Mitchell.
Ross, Wm. (Londonderry)
Rowlands, Ted

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Garel-Jones.]

Committee tomorrow.

Business Of The House

Ordered,

That, at this day's sitting, the Motion relating to New Parliamentary Building may be proceeded with, though opposed, until any hour.—[Mr. Garel-Jones.]

Parliamentary Building

10.16 pm

I beg to move,

That this House agrees with the Select Committee on House of Commons (Services), in their Third Report in the last Session of Parliament, House of Commons Paper No. 269: New Parliamentary Building (Phase 1).
Tonight's debate provides an opportunity for the House to consider the recommendations made in the third report by last Session's Services Committee regarding the development for parliamentary purposes of what is generally known as the "Bridge street site", and, more particularly, that part of the site bounded by Parliament street, Derby gate, Cannon row and Bridge street.

I am well aware that parliamentary accommodation is a matter on which many hon. Members have strong feelings. I will, therefore, briefly set out the general background to the Committee's proposals. There is a long history of abortive suggestions for developing this key area for the use of Parliament. The present unhappy state of most of the buildings on the site speaks more eloquently than I can of those delays.

However, many hon. Members will recall that in the early 1970s much time, effort and expense was expended on plans, approved by the House, for an entirely new parliamentary building on the site. When that controversial scheme was eventually abandoned for lack of funds, attention then turned to a series of more modest ad hoc expedients and adaptations. Those included the use of the Norman Shaw buildings. In 1978, however, following approval of the fifth report from the Services Committee in the 1977–78 Session, the president of the Roy al Academy, Sir Hugh Casson, and his firm, Casson Conder and Partners, were commissioned by the Department of the Environment on behalf of the House to undertake a further feasibility study of how the entire Bridge street site might be redeveloped. The objective was to retain and restore what was of quality, and to replace the rest to a coherent design. In his report Sir Hugh recommended that the most practical approach would be a phased development extending during several years. As a first stage, which has come to be known as phase he proposed the early development of the area bounded by Parliament street, Derby gate, Cannon row and Bridge street.

The report by the Services Committee, which is now before the House, builds on Sir Hugh's proposals and makes recommendations for the use to which the phase 1 accommodation might be put. In accordance with Sir Hugh's feasibility study, the report endorses the importance of generally preserving whatever is of quality in the existing buildings. Hence, the existing Parliament street facades would be retained or restored to their original design. The mid-Georgian houses 43 and 44 Parliament street, in which the 18th century Clerk's Department was accommodated, would, with their interiors, be restored and retained. Other features and rooms of value would also be renovated and adapted.

The Committee's view is that Members most require more individual offices; and that the priority should be to provide office accommodation for as many Members who want it as near to the Chamber as possible. As the House will know, less than one third of hon. Members, other than Ministers, have an office to themselves; still fewer an office within the palace of Westminster. The report accordingly proposes that the predominant use of the phase 1 site, if the House decided tonight in favour of its redevelopment for parliamentary purposes, should be as individual offices. There would be potential scope for about 180 rooms.

The recommendation is that, at least initially, these rooms might be made available mainly to Members but that in the longer term certain supporting staff now housed in the Palace of Westminster should be transferred to the new rooms. In this way perhaps between 50 and 85 more hon. Members could be found office accommodation in the Palace. If it were decided to go ahead with this scheme, I judge that the House would favour making further accommodation in the Palace available for Members, and that this should be sought as rapidly as possible.

If these buildings were converted to parliamentary use, there would need to be communication between them and ready access to the House. Both these problems are covered in the report, and hon. Members will have noted the proposal for a tunnel to the Palace to run from the rear of No. 37 Parliament street. It is also proposed that some limited library and refreshment facilities might be provided, perhaps in No. 47 Parliament street. This is the building at the junction of Parliament street and Derby gate.

The remaining main recommendation in the report concerns the development of the rest of the Bridge street site if it were decided to go ahead with phase I. It suggests that further considerationn should be given to this and the possible involvement of private capital in such development. But no proposals are before us and I suggest that in this respect the House need only note the position.

The matter for decision by the House tonight is, therefore, whether to proceed with phase 1 on the basis proposed in this report.

If we accept this motion, are we not presupposing a commercial involvement in this development?

No, not in respect of phase 1.

The constant increase in the activities of the House and its Committees, and the growing numbers of supporting staff, have placed increasing pressures on our accommodation. We have now virtually reached the end of the scope for any further ad hoc developments of our existing buildings. Furthermore, there can be no doubt that constant uncertainty has for many years caused a blight on an extremely important central site.

I accept that the scope for further ad hoc development in the House is limited. Does the Leader of the House share my surprise on discovering that there are 100 rooms within the House of Commons precinct and 44 rooms within the House of Lords precinct which are given over to residences and bedrooms? This compares with only 251 rooms used by Members in the House as a whole. Does he agree that the Lord Chancellor's Department occupies 22 rooms? While I hope that we shall all support this scheme, there is still scope to look carefully at the use of accommodation in the Palace to see whether more rooms now used as bedrooms and residences could be used as offices.

I do not suggest that if the House accepts the motion it would be prevented from considering the matters raised by the hon. Gentleman. I suggest that, for the sake of clarity during this debate, we should concentrate our consideration on the proposals for phase 1.

Finance has been one of the principal causes of the uncertainty. Major schemes have been planned and debated and have then lapsed because of lack of funds. It would therefore, I suggest, be futile for the House to consider this report without a clear understanding of the Government's intentions in this respect.

It is the Government's firm intention that, should the House decide in favour of the proposals made in the report, the necessary public funds would be made available. At today's prices, the construction costs would be just over £15 million, exclusive of VAT, spread over four financial years. In addition, there would be expenditure on furnishing the completed building and on the fees for the various consultants concerned. That is likely to raise the cost to £23 million.

In making up their minds on the proposed expenditure, hon. Members will no doubt bear in mind that this must necessarily be a question of competing priorities and that this expenditure, if agreed, would in present or any circumstances necessarily reduce public funds available for other purposes.

If the House were to approve the report, the next step would, I suggest, be the establishment, as proposed in the report, of close liaison between the Services Committee, the Department of the Environment and the architects to ensure that the views and wishes of Members about the detailed nature and use of the facilities should be properly taken into account as the work proceeds. The Services Committee estimates that it will take about five years from the time when the detailed brief is given to the architects to completion of the work.

So that people in the country will know, will my right hon. Friend make it clear that as the project will take five years to complete the cost will be spread over that period so that there will be very little public expenditure involved in each year?

My hon. Friend makes a helpful interpretation of the facts, but I am sure that the House would not wish to conceal from itself the fact that the project will cost £15 million rising to £23 million, albeit spread over five years. We may also conclude, however, that for Parliament to work effectively it needs appropriate accommodation.

Finally I should like on behalf of the House to thank Sir Hugh Casson and his partners for their original feasibility study, which has not been debated before. I should also like to thank the members of last Session's Services Committee whose report and recommendations we are invited to confirm in the context of the funds that are now available to convert the Bridge street project into a reality.

10.26 pm

I thank the Leader of the House for his clear statements about the new parliamentary building. Members of Parliament, especially my predecessors on the Services Committee, have been here before on many occasions. It took 16 years to plan and construct the building in which we now sit and it is 25 years since the Services Committee first tried seriously to tackle the question of the shortage of accommodation for Members. I congratulate the Leader of the House on having brought this proposal before the House at this time. I am sure that it will be welcomed in all parts of the House.

There are three problems. First, there is the shortage of accommodation in the Palace and its vicinity. Secondly, the site open to us — the Bridge street site — is architecturally probably one of the most sensitive sites in Europe. Thirdly, since the third report of the Select Committee last Session, the Plowden report on Members' pay and allowances and the subsequent votes in the House, it is now generally agreed that being a Member of Parliament is a full-time job and requires the necessary level of supporting facilities.

The shortage of accommodation was alluded to in the fifth report of the Services Committee in 1978. Paragraph 34 states:
"The House has virtually exhausted all major possibilities for the provision of additional accommodation within the Palace."
Those hon. Members who have been around even for as short a time as I will recognise readily the accuracy of that statement.

Paragraph 35 states:
"In general, the majority of the accommodation now being used by Members and other people who work in the Palace of Westminster is sub-standard, either because of the nature of the historic building which cannot he altered or because too many people are trying to work too closely together."
I suggest that not many grounds for dissent could be put forward about that statement.

We are dealing not just with the problem facing hon. Members but the problem of accommodation faced by the staff who perform important and detailed tasks. If the boxful of civil servants here tonight had to tolerate the same conditions, we would hear their loud cries. I make no complaint about that. I have, in the past negotiated on behalf of my civil servant colleagues on accommodation matters. It is right that we should provide a better standard for the people who serve us so well, as well as a better standard for hon. Members. The implications within phase 1 are that, initially, accommodation for hon. Members will be provided as quickly as possible. That matter arises from the Casson report. As a result of the changes taking place in the House, the staff will have access to decent accommodation. That is no bad thing.

The quality of the accommodation is not our only worry. The site is architecturally extremely sensitive. We are privileged to hold the debate in what is probably the finest Victorian building in the world—certainly the best known. The building attracts people from all parts of the world just to look at the outside. Therefore, we must be sensitive about what will be put alongside this building. Thankfully, we are in an enlightened age that does not condemn that which our forefathers built as being necessarily unacceptable. The new building must live happily with this building, which is probably the most magnificent example of Victorian architecture that any hon. Member has had the opportunity to see. I do not think that any hon. Member would willingly wish to put anything on the new site that would diminish the architectural value of this building, or of the buildings that we are seeking to replace.

I welcome the suggestion in phase 1 of the study that the facades will remain, that what has been added on and was not good will be taken down and replaced with what was originally in place, and that the building will be designed to act in harmony with the other buildings which are within the near vicinity. It may seem unimportant to some, but it is important to the many millions of people who come to see this building every year. In view of the statement on tourism made earlier today, it is also important for our balance of payments position because it attracts so many people.

There are other problems. The job of a Member of Parliament has changed even since I was elected. Decisions have been taken about new departmental Select Committees and the procedure to be adopted on finance, both of which have implications for staffing. That is reflected in the Plowden report on Members' salaries and allowances. The Select Committee report, when dealing with Members' secretaries and research assistants, states
"each of which would be shared between two MPs",
which contrast sharply with paragraph 119 of the Plowden report—which has largely been implemented already—and which states:
"We consider that increased provision should now be made to enable MPs to employ one member of staff on a full-time basis and one on a half-time basis."
We have changed the basis for the employment of staff in the House since the report was published, so the pressing problems of accommodation have been exacerbated by our own decisions. That is no bad thing, but it has implications for the number of hon. Members who can be accommodated in the new building, and also for bringing Members back to this building.

I thank the Leader of the House for his assurance that he has achieved funding from the Treasury. That is no small achievement. From reading the reports of previous debates and previous Select Committees, I suspect that previous proposals have foundered on the inability of Leaders of the House to achieve funding.

I have one or two caveats and one or two questions which I hope that the Minister will answer. Is it implicit in the funding that if we go ahead with phase 1, that includes the ability to make the changes in the present building to enable the objective of the Select Committee on House of Commons (Services) to be achieved—that being to transfer hon. Members back to this building and transfer staff out of it?

Secondly, the Committee's report refers to savings. A Mr. Coates, who I believe was the London officer for the Property Services Agency, said
"I think it is quite clear that well over half the current expenditure on the Palace of Westminster and the other Parliamentary buildings is irrevocably committed to things which are essential to the operation of the House and the House of Lords, and that of the uncommitted expenditure of about £4½ million, quite a lot is for items which there would be difficulties in deferring."
He talks about savings in this area offsetting the cost of the building. What is the implication of the idea of savings within this building? Will the Minister spell out what is at present programmed to be done, and is therefore not to be done as a result of those savings? Will he also tell us what needs to be done and will now be delayed as a result of those savings? At least £2 million will be needed whether we proceed with the proposal or not, simply to stop the existing buildings from falling on our heads. Would the Minister please give us a little more information?

There is a reference in the report to residences as well. I make no complaints about Mr. Speaker's House. It is very well used, and serves a need. I am talking about the two residences within the site of phase 1. There is an overriding need for office accommodation. Is it the Minister's intention, if it is impossible to bring some of the accommodation up to office standard, to transfer some of the sleeping accommodation inside the House to the new building, and transfer Members' accommodation to the areas now occupied by sleeping accommodation?

This is merely another aspect of what we dealt with earlier this year, when we discussed Members' pay and allowances. One of the beauties of the House and the Parliament which we serve is that it is not static: it is always developing. I pay tribute to hon. Members on both sides of the House who have changed the rules and the way in which we operate, so that we bring democracy closer to the people and improve and increase the power of the Back Bencher. When we do so, we also increase the responsibility of the Back Benchers and their need for decent accommodation and decent back-up services. We now have an opportunity at least to make a start on the problem of accommodation. It will only be a start. We shall not solve the problem of the shortage of accommodation, but we will help Members to play their part in an active and questioning democracy. I suggest that any hon. Member who has misgivings about the proposals should think about his role in the House and within our democracy. There may be some hon. Members who are not prepared to vote the necessary moneys to enable us to have the facilities to do the job which Parliament has decided that we should do. They ought to think about their role in this place. I commend the project to the House.

10.43 pm

I am happy to join the hon. Member for Blaydon (Mr. McWilliam) in expressing the hope that the House will give a very warm welcome to these proposals. They are modest, absolutely necessary and very long overdue. It seems remarkable that, in one way or another, the House has discussed five previous sets of proposals.

The history of this matter — the provision of necessary accommodation for Members of Parliament and those who assist them in their responsible tasks—is one of prevarication. It is never the right time to deal with the conditions under which Members work. However, tonight there is an opportunity for decision and I hope that that opportunity will be taken.

Like my right hon. Friend the Leader of the House and the hon. Member for Blaydon, I should like to pay my tribute to those who worked on this report. I thank my hon. Friends the Members for Norfolk, South-West (Sir P. Hawkins) and for Staffordshire, South (Mr. Cormack) who are in the Chamber, and my previous colleagues Mr. Ford, who was Chairman of the services Committee in the previous Parliament, and Sir Victor Goodhew, an old friend of many of us and one of the secretaries of the 1922 Committee.

There are others to whom tribute should be paid for bringing us to the stage that we have reached. When he was Secretary of State for the Environment, my right hon. Friend the Secretary of State for Defence did a great deal of practical pioneering work in this regard. Another old friend who worked hard and unobtrusively in this building to maintain the admirable standard of its construction—Sir Robin Cooke—deserves warm applause from us all for his work for this place, which he loves as we love it.

I hope that my right hon. Friend the Leader of the House will allow me to pay tribute to him for bringing the measure before us tonight and for giving us a clear undertaking on behalf of the Government that the funds will be available for its prosecution and completion.

It is incontrovertible that this Palace of Westminster is grossly overcrowded and sadly ill-used. Out of that comes considerable inconvenience to Members of Parliament who are elected to work here, and, by no means least, considerable security problems.

All that was put well, as the hon. Member for Blaydon said, in the fifth and ninth reports of the Select Committee on House of Commons (Services) in 1978. We need not go over all that ground again. Suffice it to say in a sentence, as my right hon. Friend did, there is almost no scope for further ad hoc improvements in accommodation in this building.

I regret much of the development of the work of Members of Parliament. Over the years we have become too much officebound, paperbound and some of us, let it be acknowledged, are in thrall to our own servants. Too many of us allow questions to be put down in our names which are a mere sop to the vanity of those who work for us as research assistants. [Interruption.] Any examination of the Order Paper will make the point.

We have not yet gone as far as the United States, where there are some 20,000 staffers on Capitol hill, nor yet as far as the Romans, whose freed men were often seen to be more important and influential than the Roman citizens who employed them. None the less, look at all that how one may, the pressure of work on Members of Parliament, and the increase in it, is a fact, though there are some of us, and I admit to being one of them, who would like to see certain aspects of it increased still further. For instance, if I could grind an old axe, I should like to see us continuing to do more work in exercising closer and more continuous control over the workings of the Executive.

However one regards any of these matters, the fact, as paragraph 16 of the report makes clear, is that Members of Parliament, to do their work properly and well, need adequate facilities in this building, and, as my right hon. Friend said, as near to the Chamber as possible.

There are other reasons for what I am about to allege, but the fact is that the intrusion of large numbers of non-parliamentarians into this building has meant that personal contacts, liaison and meetings between Members are very much more difficult than they ever were.

I endorse strongly the principle enunciated in the first paragraph of the report. We must set as an objective the need to move out of this building the proliferating staff that we have allowed to occupy it.

As the hon. Member for Blaydon said, it took Barry and those associated with him, Pugin and many others, some 16 years to create this masterpiece. The hon. Gentleman was wrong when he said that it had taken us 25 years to come to a decision on this matter. I put it longer than that. I would say 35 years. I repeat what I said at the beginning, that we have vacillated about this matter for far too long.

It is our duty to give the people of this nation, whom we are privileged to serve, the best service we possibly can. To do that we need proper facilities and accommodation. I hope that the House will warmly endorse these modest proposals.

10.49 pm.

The unanimity of the speeches that have been made so far show the depth of feeling about the physical circumstances in which we have to work. It is inevitable that some hon. Members will say that, in a time of public expenditure cuts, we should not spend such large sums of money on such a project. Their views have often been paramount in the past and they have delayed grander projects than that which we are discussing.

Some hon. Members will say, as they have in the past, that what is being proposed is much too lavish and inappropriate. They talk of a style of Member that died out many years ago. As the right hon. Member for Taunton (Mr. du Cann) said, we have a job to do and we now have to do it in wholly inappropriate circumstances. He said that it has taken 35 years to reach this decision. That is correct. As the reports before us show, complaints began not long after the building was reopened after the second world war.

It is 23 years since the then Minister of Works announced that the Bridge street site had been acquired for the use of Parliament. Since then there have been debates, reports, committees, design competitions and delays. We are now considering the plan for the first stage in a project that will use a site that was bought specifically for the use of Parliament in 1960.

This is not, and never has been, a partisan issue. If there has been a conspiracy to prevent the development, it has been an all-party conspiracy. We are all to blame and must share responsibility for the lack of guts which has left us in this magnificent but overcrowded and inappropriate building.

The Leader of the House spoke of blight in the Bridge street site. Delays have undoubtedly created blight in the heart of the most historic part of London. If people see behind the scenes, as increasingly they are doing through the BBC programme on the Palace of Westminster, they will discover what internal planning blight is hidden by skilful use of architecture and adaptations.

We must strongly welcome the plan as a crucial first step towards providing what Members need to do their job. The rest of the site remains undeveloped, however, and I cannot help wondering whether a modern and up-to-date legislature can do its work even with the facilities that the completed project will provide. Before the general election campaign I had a conversation with Mr. Ben Ford, who was then the Chairman of the Accommodation and Administration Sub-Committee, about the glaring anomaly that at 1, Victoria street, which is within a stone's throw of this building, the then Department of Trade,—now the trade section of the Department of Trade and Industry — sits in magnificent splendour within easy access of the House of Commons. At the other end of Victoria street there stands the old British Overseas Airways Corporation building, which is now empty of people and services. It lies vacant, on a market that probably does not exist.

Surely there is a possibility for transferring the Civil servants at No. 1 Victoria street to the vacant and essentially Government-owned building at Victoria, along Buckingham Palace road, and allowing the various services that at present have space in the Palace of Westminster to go to No. 1 Victoria street. It is within as easy walking distance as the Norman Shaw buildings. There is a possibility for considering whether in the longer term that is an answer to the general accommodation problem.

Each time in the past that we have chickened out on taking the decision to get proper and appropriate facilities for this one legislature in the United Kingdom, we have handicapped not just Members of Parliament but those whom we seek to serve. The continual delays have usually been the result of a fear of the costs involved and of the public hostility that it was thought would be engendered by spending on ourselves. That was a foolish reticence. We are judged much more harshly on what we do and how we do it. If we prevent ourselves from doing our best for our constituents, we shall come under much deeper and harsher criticism. I strongly support the plan.

10.56 pm

At the end of his speech, the hon. Member for Hamilton (Mr. Robertson) made an important point. Our debate comes down to deciding how we can best serve this place and our constituents. The role of a Member of Parliament has changed over the years, as my right hon. Friend the Member for Taunton (Mr. du Cann) said in an eloquent speech, which left little else to be said.

We are expected to do different things than our forebears did when this great building in which we are privileged to serve was first erected. Over the years, successive Services Committees have agonised over the problem. I have had the privilege of being on the Committee during the last Parliament, and serving again on the present one. I earnestly beg every hon. Member to support this most modest proposal. Although essentially modest, it has virtues.

I remember the debate—I initiated it, as I came out top of the ballot—on the Spence-Webster new building way back in 1971 or 1972. Many of us who felt that it was right that Members of Parliament should have better accommodation nevertheless felt that that building was totally out of scale and utterly unharmonious on this, the most sensitive site in the Commonwealth. We also felt that it provided accommodation that verged on the lavish and the grandiose.

My hon. Friend mutters "Nonsense." Perhaps it is appropriate to have sauna baths and so on. However, there was real and deep division in the Palace about that. The scheme did not proceed. There was opposition on aesthetic and many other grounds.

We now have a modest proposal. Sir Hugh Casson has done the House a great service. The symmetry and scale of this most sensitive of sites will be preserved, yet at the same time we shall have new rooms and accommodation for more Members of Parliament.

I do not believe that any Member of Parliament can effectively discharge the multitude of duties that fall upon him unless he has, at the least, a private room where he can telephone confidentially, see and talk to constituents and others. If we go along this road, accept the Casson proposals and endorse the Services Committee's report, within a parliamentary generation, most Members will enjoy that modest facility.

What is more, if we can carry through what the Services Committee urges us to carry through, we shall be able to move Members of Parliament over here, to the main building. That is important. I happen to believe that the Chamber is the key place in this Parliament. Despite the proliferation of Select Committees and other things, which I applaud, the Chamber should be the focus of every parliamentarian's attention. It will be conducive to that aim if more and more Members are able to have an office within the Palace itself.

I very much hope that the House will approve this proposal. I hope also that the Government, who have given a positive lead—it is the first time that a Leader of the House has endorsed a proposal in such unequivocal terms; my right hon. Friend deserves every praise and credit for that—will not become nervous or shy and that they will ensure that whatever is necessary will be done so that hon. Members can be moved over to this place. I know that my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), who has served with me on the Services Committee, feels particularly strongly that hon. Members should be here.

There is no aesthetic objection to the plan. I do not think that there can be any objection on cost. If our constituents write to us to complain, it should be pointed out firmly — hon. Members should not be afraid to write firm letters to their constituents—that if they want us to do the job of super welfare officers, as so many of them appear to want us to do, we must have a modicum of privacy and a degree of accommodation to perform that task. If we are to scrutinise the Executive, which is the laudable ambition of my right hon. Friend the Member for Taunton, as it should be the ambition of every Member of Parliament, we need the facilities to study and read quietly in privacy and to be able to arm ourselves with the right questions and to have the proper ammunition.

This plan will set us on that road. It is modest and sensible and incorporates buildings that are much loved in this part of London. It will not disturb the harmony of the centre of the capital. The hon. Member for Blaydon (Mr. McWilliam) talked about the residential accommodation. I do not entirely agree with him that that should be discounted. Sir Hugh Casson made a good case to the Services Committee and I believe that there is probably a strong case for giving close to Parliament a residence for Mr. Deputy Speaker and one for the Leader of the Opposition. Neither has one at the moment, and that should be considered in the future.

The series of proposals that the Services Committee has put before the House are worthy of the House's enthusiastic endorsement. I hope that without undue delay this evening we can proceed to give that endorsement and that the plan can begin because we do not want the Government to have cold feet and we do not want my right hon. Friend's enthusiasm to be dampened. On the contrary, we want his vigour to be increased, we want the building here and we want our offices now.

11.4 pm

I thank you, Mr. Speaker, for the opportunity to discuss this subject, to which I have been a witness since 1965. I was told to make my first maiden speech short and sweet, but, having been in the House for 18 years, and having listened to quite a few speeches, I hope that I shall be given a little more opportunity in my second maiden to express myself a little more fully. I hope that, with your tolerance, Mr. Speaker, I shall be permitted to go back over the years.

Some Members have spoken about 25 years with the Services Committee. Twenty-five years ago the Services Committee was not in existence. I want to pay tribute to a man, long gone, who gave us a real opportunity to get things done. I am referring to Charles Pannell, from Leeds. In December 1965 he gave us the opportunity to put things right.

In 1830 there was a character who, I believe, got the sack on the Monday morning. He was the caretaker who put the tally sticks on the boiler and set fire to the place. Barry and Pugin then got their chance to put things right, but they got it wrong, because in 1850 one of the first things to be said was that the place was overcrowded. So the problem has not existed for only 25 years: it has been here since 1850.

The Leader of the House in 1977 got a majority of 64 on a Division on this subject at a time when the Government had a majority of three. We then had the opportunity to go forward, but we have been scared. My right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin) said that we were concerned about the economy. There is never a right time. There has never been a right time to discuss our salaries, our fringe benefits, other things to which we are entitled, and our accommodation. However, it was not just that. We have not even fought for the people who work for us. We have not even had the guts to do that. That is terrible. It is worse than not fighting for ourselves.

We have talked about transferring accommodation, moving 60 here and 60 there. In 1968 my right hon. Friend the Member for Deptford, who was my Chief Whip, said to me, "Walter,"—he was the Member for Deptford at the time, and still is, and Walter was the Member for Wakefield, and still is, but only just — "we have a problem. I have just come down from the Services Committee. It is an accommodation problem, and I am putting it on your plate." I had it until 24 October of this year, so I am entitled to say a few words about it.

The first thing that I sought was some good advice—I had to seek advice in those days. I decided to go to the Serjeant at Arms office. That was no mistake. In 15 years I have had the full co-operation of that office There are good people there. Not once have they misled me. On that occasion, in 1968, I took the problem there and I was told, "Yes, Mr. Harrison. We have one Member who has a room to himself, with three sub-tenancies, squatters' rights, and there is just enough room in the trade union room as well. He gets no payment from his sub-tenants, but he has control."

So we looked down the list, and it was true. We did an exercise. We took a piece of paper and wrote, "Please contact me urgently." We put the date on, put the paper in an envelope, and addressed it to the Member, who should have been there. Fourteen days later I went back to collect the papers. It had been addressed to the wrong chap. So we were in chaos then.

I want to compliment the Services Committee and all those associated with the progress that has been made over the last 15 or 16 years. At least we sorted out that chaos. We got rid of the sub-tenancies and the squatters. We finished up with one hon. Member applying for a desk, possibly with nine others in the room, but at least everyone who wanted a desk was allocated one.

I pay tribute to people gone from this place such as Sir Robin Cooke, Ben Ford and about nine Leaders of the House of Commons. They were all in accord in that they wanted to do the job; they all wanted to get better accommodation; they all wanted to have single rooms; they all wanted to do what we are seeking to do in these proposals; but what happened? We chickened out.

When I was first on the Services Committee—and we had that majority of 64 in favour of going ahead with the proposals — the building was to cost, for 420 Members of Parliament and 420 secretaries, £11 million, but we fluffed it. In 1974, having "gone through" my third and fourth Minister, I put a question to the hon. Member for Birmingham, Hall Green (Mr. Eyre). I said, "It was £11 million when I started on this job. Now, five or six years later, how much will it be?" The Minister was not to blame, but the "boys in the Box" could not tell him. He asked, "Walter, will you be kind enough to accept the insertion in the report of the details of the meeting?" I said that I would. Five years had gone by and it cost us £53 million for hesitating, for not grasping the nettle and saying, "This is what we are entitled to have and this is what we should really have."— [Interruption.] I am being told to sit down despite my not having got to my feet in the Chamber for 18 years. It was £53 million.

We arrived at the stage of having another Leader of the House Commons—this was in 1979—but, in view of economies generally, he did not propose to get involved with this job. In about 11 years we had made marvellous progress: it was £11 million when I started, we had still not done the job and we had added a nought to the costing for it would then have cost about £100 million to carry out the full scheme that was proposed. These millions may be fictitious for me to present my case, but we just added a nought in all those years.

Gradually we progressed, infilling a bit here and there. When I think of the problems I have met in in Parliament over the years, I could tell hon. Members a few tales. I have mentioned a few already, but let me mention one more. I have had hon. Members write to me saying, "Walter, we are willing to share a room," and when I have seen them in the Tea Room they have come up to me and repeated, "We are willing to share." But after that they have come to me individually and said, "Do not believe my letter, Walter, and do not believe what I said in the Tea Room. I want a single room to myself, and I am telling you that now, in private, because I do not want to fall out with him"—"him" being the hon. Member with whom he had previously said he would be prepared to share.

If the House does not get hold of the problem tonight we shall be called "chicken" yet again. This scheme probably will not be done in my time, but let us get cracking on it. Nobody should object to making a start, and to that end I have some advice for the Whips on both sides: if any hon. Member votes against the motion, check up and find out whether he has a room. If he has, take it away from him. I do not believe in sanctions, but at times they are necessary. We must get cracking.

The Leader of the House has my support tonight. I shall keep a careful watch on any hon. Members who oppose him.

11.17 pm

How does one follow that? It is an enormous pleasure to complement the right hon. Member for Wakefield (Mr. Harrison)—deservedly right hon.—and while it would be wrong of me to say that I am sorry that the Conservatives did not win his seat at the last election, it was a great pleasure to listen to his remarkable comeback.

It is not often appreciated what a depth of knowledge the right hon. Member for Wakefield has in this place. I came to appreciate it in the last four or five years while serving on the Services Committee. His wisdom and guidance at all times have been of the first calibre, marvellously disinterested in the sense of not being partisan. I know that at the Whips level he has been as capable as any Whip, and the House is the poorer for the loss of his services as Labour Deputy Chief Whip on that Committee from 24 October last. That in no way casts aspersions on his successor; I was just sad to see him relinquish that post. Although it was a great burden to him, he discharged it marvellously.

I appreciated the clear way in which the Leader of the House set out the Government's position in accepting the Committee's proposal, a proposal that presents a great opportunity. It may not be as big as we would have liked, it may not cover as great a scope as we would have wanted, and it will cost more than the £11 million to which the right hon. Member for Wakefield referred. But it marks the first tangible step forward in breaking out of the log jam position in which we have been for so long.

When I first came to the House there was much activity in this Chamber. It may have been a hung or tight Parliament, with excitement on every division and at every speech, but I sometimes felt that it was the development of some of the ad hoc "outbuildings" that led to the desertion of this Chamber. The tensions stayed during the course of that Parliament, and it was not until the new Parliament started in 1979 that everybody decided that he could go back to their rooms and forget about the Chamber. That is why I am anxious that we should try to make it possible for people to come back to the Chamber. I back up the remarks that my hon. Friend the Member for Staffordshire, South (Mr. Cormack) made, and those made by my right hon. Friend the Member for Taunton (Mr. du Cann), in his wise and eloquent speech.

I shall use this opportunity to put out a marker on the future of the tool of the trade that we use in this place —the Library. I have the privilege to be the Chairman of the Library Sub-Committee. I find it a fascinating and challenging institution. It is taken for granted and is like a Gulag archipelago in that it spreads all over the place, with little puddles here and little puddles there, grottoes and pieces in the depths. It lives in the Norman Shaw north, and the Norman Shaw south. The report suggests that there should be a branch Library in the new development. That would mean four Library sites and about 25 little islands, a fragmented structure trying to provide us with a better service.

Every Parliament over the past six Parliaments has called upon the Library service more and more. The plateau of inquiries for the research services has started above the last Parliament each time and increased through the course of that Parliament. The Select Committees to which right hon. and hon. Members have referred have put another load on this system. The Library does a super job, and I take this opportunity to congratulate the Library staff on what it does. We are stacking the odds against its members.

I hope that the scheme will go ahead. We should expand the thinking set out in the report and the feasibility study to begin to consolidate the Library rsearch and information services into one site, in the northern section of this development. That would free space in this building and make a more effective service possible, providing the better Library research service that we asked for back in 1945 when the House first accepted the report of the Services Committee on the duty of the Library. That is the opportunity in front of us. If we take it and develop it as part of the next phase of the feasibility study, we car have the finest Library rsearch and information service of any Parliament of any Commonwealth country, and, outside Capitol hill in Washington, in the world.

The feasibility report talks in terms of a 68 month time scale. That is five years and eight months, which means that, if we say "Go" tonight, we might be in business by autumn 1989, but only if nothing goes wrong in the meantime. That is a long time. The right hon. Member for Wakefield said that it would not be in his time, although I should like to doubt that. There is a big risk that something will go wrong. We cannot afford to delay—we must progress. We must get on with the job as fast as we can and make certain that nothing is put in its way.

11.23 pm

I am in a somewhat strange position in that my political objective is to depart from this place and move myself 150 miles westwards to Cardiff, as the hon. Member for Hamilton (Mr. Robertson) wants to move to Edinburgh. However, as the time scale of a move northwards or westwards is a little longer than we thought it would be a few years ago, I join in the welcome being given to the proposals, and I shall take up some of the points that have been made.

As the first Opposition Member to speak in the debate, may I congratulate the right hon. Member for Wakefield (Mr. Harrison) on his second maiden speech, as he called it. The House should recognise that for 18 years it has lost a speaker of great wit. I thank him for all his courtesy and assistance to Members of the minority parties during his time at a Whip. He was completely fair in his handling of the minority parties, and we deeply appreciate that.

Every hon. Member who has listened to the debate so far would find it difficult to stand in the way of the proposals. The danger is that they are too modest, and that once again we have been reticent in introducing proposals that meet the requirements of modern age Members of Parliament. Being a Member of Parliament is a full-time job, whereas a generation ago, or a little less, it was not. It is also a full-time job for those who work with and for Members. In facing our responsibilities, we must not forget our responsibilities to our secretaries and research assistants.

It is high time that we got on with this proposal, but my only caveat is about the time scale. Is there no way in which the scheme can be speeded up, and will £23 million be enough? Can we be sure that, as time erodes the value of that sum, and we need a little more, it will not be used as an excuse to stop progress on the project?

The conditions of work here are appalling. In my previous job in industry, if I had expected people to work in the conditions that we experience in the Palace of Westminster, I should have been fired. There is no reason why we should be allowed to employ people to work in those conditions, when we expect people outside the Palace of Westminster not to do so. My one reservation about the report is the space standards referred to at page 48 in annex 3. Research assistants are allocated 100 sq ft each — that is 10 ft by 10 ft — and secretaries are allocated only 55 sq ft. It would appear that secretaries need less space than research assistants. Is 55 sq ft—or 8 ft by 7 ft—the standard applied to the secretaries of heads of departments in the Civil Service? Is it an acceptable standard?

Annex 3 also states that one secretary and one research assistant should be shared betweeen two Members, but we are moving towards the time, with our present workload, where we need a secretary each. We should plan the facilities of the complex, both on this side and on the other side of the road, to accommodate at least one secretary and one research assistant for each Member of Parliament.

Hon. Members spoke of the need to move those hon. Members whose offices are across the road back to the main building. I have had an office in Norman Shaw building north for the past eight years, and I have experienced no difficulty. We must balance the advantages of being near the Chamber, and being able to pop in and out, with the advantages of being close to our secretaries and being able to work with them when necessary. We need space, whichever way we allocate it, but perhaps we should consider further the way we do so. At present we need a tunnel from Norman Shaw building, and we shall certainly need one from the proposed building.

The hon. Member for Hereford (Mr. Shepherd) made an interesting point about the Library. I have some reservations about the Library moving from this building, because of the advantages of its proximity to the Chamber——

The hon. Gentleman misunderstood me. I had no intention of recommending that the main Library should move from this building, but that the research and information services should.

I take the hon. Gentleman's point. We must consider not only the development of the Library but the introduction of modern technological facilities for information transferal and retrieval not only in the Library but in hon. Members' rooms so that they can be linked to a basic information service. I foresee a time when this will be part of our infrastructure. We ought to keep that in the back of our minds when we examine the future location of services. Some hon. Members do not agree with that point.

If we are on the other side of the road, we may not be able to dash in and out of the Chamber to hear a particular hon. Member speaking because, by the time we arrive in the building, the next speaker may have been called. There must be a case for having the enunciators carry a soundtrack system so that we can pick up hon. Members' contributions. That could easily be facilitated.

As our workload increases, so does the workload in the constituencies. Perhaps, we should put down a marker for future facilities in each constituency. There should be a Members' office—not a party office—where, although the incumbents change as parties lose and win seats, there is continuity, and the constituents know where to find the Member and his base. This would be similar to the office of a mayor or a town clerk. There is a strong argument for a Member having a base in a constituency. Although that point goes beyond our discussion, we should be examining it.

We should be looking at the possibility of having more and different meeting rooms. Our meeting rooms are limited in their scope, and we should bear that in mind when we redesign.

It is important that we progress rapidly. I should like to ensure that, in making progress on this proposal, we are not closing any options for even more radical development that may be necessary between now and the turn of the century.

11.32 pm

This debate is about providing more facilities for Members of Parliament, and I welcome that step. I have been pressing all the time that I have been a Member for better facilities to help us to do our job in serving our constituents and the Chamber. I welcome the idea of extra accommodation for Members of Parliament on the other side of Bridge street and the further proposal that in time, having established a building for more people, we can make space there for staff, so that we have more room in the Palace enabling Members to be close to the Chamber and the Committee rooms.

I am one of those Members who, in the past—there are a number of such Members in the Chamber—have served on the Advisory Committee on Works of Art in the House of Commons. There has been disagreement on the work of art aspect. Distinguished names are attached to the recommendations, including advisers in the Department of the Environment and parliamentarians who have already spoken about the need to get something done quickly. There are distinguished advisers from outside Parliament, including the president of the Royal Academy, Sir Hugh Casson. I am amazed that a man who is so distinguished in the world of architecture should recommend that we keep that impossible facade on Bridge street and Parliament street. He believes that in 1983 we, the successors of those parliamentarians who appointed Barry and Pugin, should say in this enlightened age of democracy when there is greater efficiency in serving our constituents that we will accept this facade because it exists. Barry and Pugin did not accept it, nor did Parliament, its leaders or leaders in art thought over 150 years ago.

I therefore suggest not that we should stop but that we should pause to think again and say to Sir Hugh Casson and to my right hon. Friends the Secretary of State for the Environment and the Leader of the House that we must consider what we are doing. We are embarking on a small expenditure. The right hon. Member for Wakefield (Mr. Harrison) spoke eloquently and passionately about the need to do something, and I support every syllable that he said. We must not delay, but when we make advances such as this we must advance in the right direction and not stand marking time in the architectural past. I share many of the Victorian loves of Sir John Betjeman, but I do not love the facade from 47 to 31 Parliament street. The Services Committee has done a wonderful job, but the whole basis of its thinking about the preservation of that facade is wrong.

Is it not possible that Sir Hugh Casson and some of us in Parliament recognise that the history of Whitehall involves a variety of types of building, including some on a quite domestic scale such as those in Parliament street, and that if Whitehall becomes solely a collection of large public buildings it will not be true to its history and we shall not understand that history?

Of course there is great variety in Whitehall. I hope to explain in my short contribution why I am concerned about this one aspect of what we are doing.

Does my hon. Friend realise that if the House accepts his advice we shall have to go back to the drawing board and it will be the year 2000 before anything is done? We have been down this road before. I urge him please not to tempt us down it again.

My hon. Friend refers to the drawing board. I hold up for all to see the presentation prepared by Sir Hugh Casson. He is an artist and one of the best draughtsmen in the world of architecture. Nothing could be nicer than his illustrated diaries of London or of his tours around the world. They are the Edward Lears of today. The best features of the presentation now before us are Sir Hugh Casson's drawings. He can make the facade change slightly and I agree with the slight changes. He can make them look artistic, but he cannot make them look right for today.

I do not wish to hold things up until the year 2000. I simply urge my right hon. Friend the Leader of the House and others to think about this aspect. This is a responsible Chamber and there is a great deal of thought in this place. This is not just a matter of getting something done efficiently for constituents but about doing something right in the latter part of the 20th century.

The Services Committee, in the terms of reference to which it worked, seemed to accept without demur the preservation of the facade in Parliament street.

Paragraph 7 of the introduction states:
"Much of PSA's expenditure arises from the correct desire to preserve in good order and enhance a highly important part of the national architectural heritage".
That is some of the nonsense spoken these days which nobody questions. Whoever said that this was part of our national heritage? It is not the Cenotaph which, in my opinion, was Lutyens' greatest achievement.

I do not share the opinion of my hon. and learned Friend from north of the border. We are not discussing Lutyens' but Sir Hugh Casson.

We start from a premise that is not argued against. I read the report, the evidence and interrogation of my colleagues of the witnesses before the Committee, and not once did they question the early premise that we had to preserve this national architectural heritage.

Paragraph 9 states:
"One is the emphasis on conservation, so that as far as possible existing facades on all fronts but Cannon Row will remain."
The last sentence of paragraph 13 is important. It appears in bold type, and states:
"We therefore recommend acceptance of the principle of conservation and its application as set out in the evidence."
When I examined the evidence, I found that in paragraph 74 a Mr. Ramsey—and not Sir Hugh Casson, who was not well on that occasion—was questioned by my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins). Mr. Ramsey said, when dealing with these buildings which are to be preserved for ever:
"We do not think the present building deserves its present position."
Anyone stopping and staring for a moment in Whitehall can see that those buildings do not deserve their prominence or the permanance that we are about to give them.

I wish to refer to the terms of reference taken up by Sir Hugh Casson and his partners who, we readily acknowledge, are leaders in the sphere of world architecture and thought.

Paragraph 1.02(a) states:
"the need to conserve, as far as possible, the existing facades to Derby Gate, Parliament street and Bridge street,"
Paragraph 3.02 refers to the civil and historical associations of Parliament square, Whitehall, the Palace of Westminster, the Abbey and so on. It states:
"The frontage of the site facing Parliament street and Bridge street, in particular, are an essential part of this setting."
I accept that they are an important part. One cannot deny that they exist. They cannot be disinvented.

I must part company with what Sir Hugh says on pages 10 and 11 of his study. I confess that I know Sir Hugh Casson and admire him greatly, and not just for his architecture. In paragraph 3.08, Sir Hugh states:
"The site is part of a Conservation Area and all the buildings are now listed as buildings of architectural or historical interest. Those buildings facing Parliament street in particular have formed the background to great occasions of state pageantry and national history. They"—
the buildings. I emphasise "They"—
"have witnessed Cenotaph Services, Coronation processions, the Jarrow March and Victory Parades. They have, therefore, achieved a significance which exceeds their intrinsic architectural value."
I say "Amen" to that. I agree that they vastly exceed their intrinsic and architectural value. We should, as a House, remember that. They are the words of a sound man. To suggest that buildings have witnessed certain scenes and events and, therefore, should be preserved is quite exceptional. Not even Sir John Betjeman does that.

We are missing an opportunity. I do not want to pour cold water on the proposal; I am simply raising a little flag to say that in 1983 we could have done better. As the right hon. Member for Wakefield said, we could have done it properly in 1968. I voted for it then. I did not very much like the designs put forward by Sir Basil Spence. They were modern and, perhaps, not quite the right setting to face the old Treasury building. But I confess that at that time I said we should get rid of the Treasury building and have a modern London and a modern Parliament. —[Interruption.] My hon. Friends are gasping in dismay at my suggestion of living in a modern world. We should be modern Members of Parliament, as the hon. Member for Caernarfon (Mr. Wigley) said. I do not mind looking across the river. Indeed, I rather like modern buildings and what society builds in its own time—

There are some parts of me that are not entirely medieval.

I am beginning to weary my hon. Friends. For a few moments some hon. Members were listening to what I was saying. I hope that it will not be entirely forgotten.

11.46 pm

I shall be brief. It is significant that so many new Members are in the Chamber. One reason for that it is that when they come to this place they are deeply shocked by the inadequate facilities. Many of them come from occupations where they have had the benefit of full office and secretarial facilities.

The tone of the debate suggests that the whole scheme is warmly welcomed, but that is not the case. I am sorry that the Leader of the House has left the Chamber. I do not have the slightest doubt that he is genuinely concerned about facilities and is doing his best in difficult circumstances. He knows that I have asked many questions during recent years. On 28 March, in answer to a question, the right hon. Gentleman said:
"I can promise the publication of the report and, I hope, a debate shortly thereafter."—[Official Report, 28 March 1983; Vol. 40, c. 18.]
Today is 22 November.

On an earlier occasion the hon. Member for Maidstone (Mr. Wells) asked:
"Is my right hon. Friend aware that every time there is an improvement in accommodation for hon. Members attendance in the Chamber declines? … Therefore, will my right hon. Friend think long and coolly before he further discourages hon. Members from coming to the Chamber?",
and the hon. Member for Halesowen and Stourbridge (Mr. Stokes) asked:
"Despite all that we have heard, does my right hon. Friend agree that it is a great privilege to be here and that our work cannot be compared with any other occupation? Is it not therefore somewhat unseemly to have these continual complaints from the Opposition?"—[Official Report, 13 December 1982; Vol. 34, c. 18–19.]
That is a train of thought in the House.

The main reason why I rise to speak tonight is that I have a deep cynicism about what will happen with the new building. The report states on page vi:
"To return to the comparative timescales with which we began, the present Palace of Westminster took sixteen years to plan and build in the middle of the last century; we have been nearly twice as long trying to agree on suitable office accommodation in the second half of the twentieth century. It is time progress was made."
The hon. Member for Caernarfon (Mr. Wigley) made a very constructive speech. He made the point that it will be five years before the first hon. Members move into their offices in these buildings. If I were to ask the Leader of the House for an assurance that these buildings would be renovated he would not be able to give me that assurance, because other members of his Government take a far more cynical view of the matter than the right hon. Gentleman. I know that his intention is honourable. We have corresponded on the matter, and I have had several letters from him. He has explained that over the years we have operated a system of patching up. In one letter the Leader of the House spoke of 14 additions to this building. Bits are added here and there to try to meet immediate needs.

It is time that we evolved a completely different concept of what hon. Members need to serve their constituents. My right hon. Friend the Member for Wakefield (Mr. Harrison) to whom we all owe so much, has made that point. I hope that the Leader of the House will make it plain to the Chancellor of the Exchequer—and to the Prime Minister who, I am sure, will have a finger in this pie at some time—that we simply will not tolerate the abandonment of this programme. We may well get the first phase. If we do I shall be delighted, but I shall still feel somewhat cynical about the next phase. I remember that a magnificent international exhibition was held a few years ago in Westminster Hall, and an award was made, but suddenly we were told in the Chamber, "Sorry, we do not have the money."

The new Members in this Parliament will not tolerate that situation. I hope that the Leader of the House will inform the rest of the Government of my cynical attitude. We will not stand it this time. We want this building, and phases 2 and 3 as well, and we shall make other demands as well.

11.53 pm

I trust that someone who has not served on the Committee may make a brief speech. The right hon. Member for Wakefield (Mr. Harrison) has reminded us of the immense benefits of enforced silence. If the silence continues for another 18 years, I cannot imagine that a better pudding will come out of the oven. It was a masterful speech, and we all enjoyed it.

Probably the greatest works of art, the greatest thoughts and the greatest writings that Western European civilisation can display are those that were created by a monk in a cell who had silence and solitude and nothing else. When I came to the House, I was given an office in the newly glorified Norman Shaw South — beloved Scotland Yard. It had been turned from offices for the entire Metropolitan police into offices for 120 Members of Parliament and their secretaries at a higher cost per square yard than that of any newly built, fully furnished building in London of which the Royal Institute of British Architects had a record. I abominated that extravagance. I have abominated it ever since. Members of Parliament need solitude and silence. They do not need luxury at other people's expense.

My right hon. Friend the Member for Taunton (Mr. du Cann) was right. The reason why all the schemes have been delayed is that they were unnecessarily extravagant in providing what we need, which is solitude and silence without luxury. I believe that the scheme provides both the requirements and the economy, and I would like to suggest that there is no reason why it should take five years. In five years it will cost 100 times as much. Let us remember that the whole palace, fully furnished, cost £1·4 million, and let the wretched car park downstairs cost £14 million Let us remember that today, more than at any other time, time is expense. Expense will cause delay and postponement, as the hon. Member for Easington (Mr. Dormand) said. Therefore, we must be fast and economical.

I say to my hon. Friend the Member for Canterbury (Mr. Crouch) that I do not want to invoke the name of the Lord Archbishop, but God help us. As I stand and look out of the windows of the Palace of Westminster, I can see that icebox which occupies part of the glorious site of the original Venetian folly of St. Thomas' hospital, the Ministry of Defence, the Festival hall by Sir Robert Matthews, and every frightful thing that the PSA has put up, bobbing along down the Thames. I cannot believe that my hon. Friend the hon. Member for Canterbury could design a worse building than any of those, but let me be in Canterbury.

I have been a lifelong preservationist. The word "conservation" came in about 20 years after I formed the first preservation society. One of the delicacies of the scheme is that it preserves sensitive, simple, beautiful, buildings. I do not believe that they have been watching processions and marches and attending at the Cenotaph. They are lovely, human buildings. If anyone wishes to design a new one for any purpose, let him make his mirage in the desert at Brasilia, or Canterberia, if necessary.

Here we have the chance to restore the great gateway of Whitehall which was before and should be again. We would be doing two things—preserving, enhancing and recreating this country's heritage—as we are in cleaning this Palace and in restoring Westminster Abbey—and creating what we need — just the capacity for solitude and silence in which to do our work without luxury or extravagance. If we can do that fast, let us do it.

I have noticed that when a Government Department or the PSA, whose report I read this morning, involve themselves in something, it is always much more expensive and takes much longer. It amuses me that the PSA spends its time putting little lawns outside compulsive ruins so as to put notices on them saying "Do not walk on this lawn."

I hope that this matter will proceed with great dispatch; that the scheme will be continued, but not in the nervousness of phase 1 first and then, "Let us see."

I have lived through the Edinburgh opera house saga. [Laughter.] There is not one because people proceeded with such caution that the cost seemed so frightful when they were halfway through that they did not dare to continue.

Let us be brave and take decision one tonight and go on to two and three. If we do not, we never will.

11.59 pm

I shall not take long, as it appears that there is unanimity on this matter.

The hon. Member for Canterbury (Mr. Crouch) talked about facades and the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) talked about solitude and silence, but not necessarily luxury. Neither is in the same league as me, who tries to operate in a slum just around the corner. When I was first elected to Parliament I asked my right hon. Friend the Member for Wakefield (Mr. Harrison) if I could have an office. He said, "Hang on a bit lad, hang on for a month. I have to sort out Front Bench, them behind Front Bench, retreads, and then I will get down to lads like you, but you will be all right because there is an honest draw". After about a month I had got nowt, so I used a few expressions which Yorkshiremen can use to each other with understanding. I do not know how honest the draw was, but I ended up with one of the bad jobs down yonder and I do not suppose that I helped myself by using a few expletives.

My hon. Friend the Member for Easington (Mr. Dormand) says that new hon. Members are shocked. It is more than shock. What we get is an absolute disgrace. It is an insult, not to me, as I have a nice job, but to the constituents who elected me to come here to help them with some of their problems. I have had many constituents down from the north-east. The Tories should not forget that, thanks to the Government, we have the highest unemployment and the worst social problems in the country. Members of Parliament need proper facilities with which to deal with them.

I have been put in a corridor. Does one get solitude and silence down there? There are about 20 of us. Our telephones are going all the time and we can hear each other talking. There is no solitude, no silence, no nowt down there. Many hon. Members think that it is all brass down there and that my constituents will not agree to giving hon. Members such as me proper facilities. The people who come and see me at work are more than shocked. They think it is ridiculous, because the opportunity to get something clone lies not with people up there, but with us. The only reason why I do not have a proper office is that previous Members of Parliament have not voted for me to have one. I am speaking tonight because if I get back again and some young lad says, "I am down in that slum there, what did you do about it?", I want to be able to refer to after midnight on 23 November and say, "I stood up and supported the building of new and proper offices and facilities for Members."

It is impossible to work properly in those conditions. I do not know how often you go down there, Mr. Speaker, but every right hon. and hon. Member should occasionally have a look and see what it is like. They would then understand why people such as me get a bit annoyed when we have an opportunity to speak. What seems to happen here is that new Members get put in the slum. They are then promoted to one of my right hon. Friend's double offices and they forget what it is like down there. It is a public school thing—someone has to fag and suffer for five years, after which he get his reward. That is no good. The problems with which I have to deal will not wait five years. The folk I see will not wait five years. They are here this week, next week and every day that I am here. If it takes expenditure to solve those problems, we shold pay the price.

I have been lucky enough to be a Member of the European Parliament. In 1979 I went to Strasbourg. There was no office. Two years later every Member had his own office and there were cafes, restaurants, meeting rooms, the lot. I do not see why such building should take five years over here if the French can do it in two. Nobody complained about the expense over there. The French Government realised that the Members needed proper facilities. I believe that people over here realise that Members of Parliament deserve proper facilities.

I was pleased to hear what the Chairman of the Library Sub-Committee, the hon. Member for Hereford (Mr. Shepherd), said. I have been pretty angry this week about the treatment that is being given to a new research assistant whom I have just appointed to help me with all the problems with which I have to deal because of Conservative Members. I told her that I would get her an office. That was my first mistake. I wrote to the Serjeant at Arms Department. I am not complaining, because that Department cannot do any better than Members. If we do not give it the facilities to give to folk such as me, we cannot blame that Department. I asked where my assistant could have an office. The reply was, "As near as possible to you, Mr. Boyes, is down the Embankment." I think that she will get somewhere over there. That is not certain. I said, "Don't worry, Susan, because we have a Library here. You will be near me down in my little corridor, because you will be able to work in the Library." That was my second basic wrong assumption. Susan said, "I cannot use the Library at the moment. I have a temporary card." I said, "We all have to suffer for a short time. How long is 'temporary'?" She replied, "At least until the next election."

Therefore, my new research assistant is out at St. Stephen's House, and the Library that she uses is somewhere altogether different. I am in one building, her office is in another. It is not an office, but a desk. When in opposition, unless one is on the Front Bench, one does not get offices. My assistant's desk is in another place, and the Library is in yet another. When she works for me in the morning, she will spend half the time walking from one office to the other, and each of us will not know where the other is. That is ridiculous.

I agree with the Chairman of the Library Sub-Committee. I am glad that we have that Committee. Very good people work in the Library. Each one of the 650 Members presumably uses the facilities to some extent. The speed at which one gets a reply is incredible. I do not criticise any of the staff in the Library, but I criticise what we have done as Members, to have Libraries scattered over different buildings. I hope that when the Committee meets it will take seriously the fact that researchers appointed by Members cannot use the main Library.

I should like to draw the attention of the Leader of the House to one matter. I hope that none of the young students from America who get placements is working in the Library and keeping my girl out. That would be unfair. She should have access to it, as it is near my office.

I feel better now that I have said a few words, and am grateful for the opportunity to do so. [Laughter.] Tory Members may laugh, but they have their own offices. I bet a pound to a penny that the hon. Member for Staffordshire, South (Mr. Cormack), who talked about silence and solitude, has an office.

I must advise the hon. Gentleman on this matter. I share a cubicle, in a sort of suspended prefab, with my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie). The notice on the door says, "Albert and the Lion".

I might have said "a pound to a penny", but I now bet a pound to tuppence. It is better to have two folk in an office than 20 in a corridor. I bet that the hon. Member for Canterbury, who talked about facades, has an office as well. He would not be worrying about facades if he were down in my corridor. We must get our priorities right.

New Members, as well as established Members, must have proper working conditions and proper places where constituents, trade unionists and others can make representations to them. Two solicitors came to see me in the past week. I showed them around this spot. One has to keep moving. One of my constituents nearly sat on one of the Benches, and the policeman was quick to move him along. When one has shown them the Chamber and found Keir Hardie's statue, what else is there to do if one does not have an office? Constituents must stand at the side of the desk, with about 20 people shoving them out of the way.

We want proper offices where people can make proper representations, so that we can help to solve some of the social problems that have deliberately been created. We must remember that the money is not the important thing. Representing the people who sent us here and solving their problems is important, and one cannot do that in slums.

12.10 am

I have been an elected Member of this House now for nearly 10 years. It is quite incredible to think back to 1974 and recall that then we did not have Norman Shaw north or Norman Shaw south. Listening to tonight's debate and to the hon. Member for Houghton and Washington (Mr. Boyes) makes one wonder how it was that we were able then to function.

I have tried Norman Shaw north, Norman Shaw south and Deans Yard and I have come to the conclusion that there is only one place that I want to work in—here in this building. It is the greatest privilege of all to work in such a building. In my estimation, it is certainly the greatest parliamentary building in the world.

Therefore, while I welcome this extending of accommodation and the site in Parliament street, I hope that it will reduce the staff in this place, so that we can be here closer to the Chamber. Whether there is or is not a tunnel, there is still a great distance to go and the essential thing is to be here in this place.

This site is one of the most important and impressive in this country. I sometimes wonder what tourists must think as they have looked year after year at buildings that have been falling into decay, that have been neglected, that are dirty and in a shameful condition. So I support the motion because I really do think that something must be done with those buildings.

Like my hon. Friend the Member for Canterbury (Mr. Crouch), I believe that if we were really brave enough, and if we really had the courage, we should in fact demolish that site and build a new building on a scale and with the care to match the buildings that exist in Whitehall. But I am a realist and I know that that would not go through, so I will support the motion. But we are of course doing the usual British thing and compromising. We are keeping the fronts and some of the structure, and then we are going to build some new bits at the back, so that the architects who build those bits at the back will not come under any criticism because it will not be seen.

Yes, there have been mistakes. The St. Thomas' hospital site is one of the most appalling mistakes that was ever made, and there have been others, but that is not a reason for saying that we should not go on trying, that we should not have the confidence to do it. But one of these days there will be a renaissance of British architecture and we will have the capability to produce a building that is worthy of our times.

But I will make one very important plea. Let us ensure that the inside of the revamped building is modelled with the craftsmanship that we have in this country, which needs employment if we are to have any craftsmanship in this country. Let us adorn the walls with contemporary paintings. We do not need to be reminded of the history of the Houses of Parliament—we have it all here. We are enveloped in it when we are in this place. Let us encourage the hanging of modern paintings and bring in sculpture, too. I was one of the ones who supported the sculptural fountain which we have in New Palace yard. We are in the 1980s. We cannot just submerge ourselves in history.

This whole venture will of course cost more money than the estimates we have before us tonight. So let us start by saying that we are going to be grossly extravagant but that we are going to ensure that it will be done supremely well and that we are going to encourage a whole lot of new people with craftsmanship, arts and skills, to put everything they have got into that building so that at least inside it will be worthy of a site so close to this place.

12.14 am

I, like the majority of right hon. and hon. Members who have spoken tonight, favour the proposals in the report. I shall not delay the House by repeating arguments that have already been advanced. I would have more sympathy with what my hon. Friend the Member for Canterbury (Mr. Crouch) said if we were just talking about a new building behind facades, but as the feasibility study points out, a large number of important and attractive rooms at the front of the building are to be retained. We are concerned only with rebuilding at the back of the building. About half the new site will be considered to be new building, rather than a restructuring of the old.

Although these proposals are imaginative and will certainly greatly improve the external appearance of the Bridge street site, there are still considerable issues to be decided. It is important to remember that this is only a feasibility study, and that before building can start we have to decide what facilities are to be included in the building. The requirement in the terms of reference in paragraph 1.02(b) of the feasibility study says that they should
"be capable of working efficiently and harmoniously together as a single group, without the implementation of any later phases of the redevelopment of the Bridge Street site".
That will inevitably be a great handicap on the architects. They do not know whether that will be a final stage or just the first part of something that is yet to come. So what facilities are to be incorporated?

Today we had a statement about tourism, which I think most hon. Members would agree is one of our country's important industries. Most of the contributions to this debate have centred on the facilities for Members. Those facilities are, of course, vital, but we must not forget that this palace is a magnet for enormous numbers of people who come from all over the world to see this magnificent building. Pugin wanted a permanent exhibition in Westminster Hall of Parliamentary history. Clearly, that will never happen, but is it perhaps possible for us to create something on the Bridge street site so that visitors to the palace could see more than what the hon. Member for Blaydon (Mr. McWilliam) called just the exterior of this building, if they do not know a Member who can arrange for them to see the magnificent interior as well? Should that be incorporated in phase 2? It would probably be more appropriate for it to be incorporated in phase 2, but if there is to be no phase 2, perhaps it should be included in phase 1. Perhaps instead of the shops on the ground floor, we could have an exhibition site close to the stopping point for coaches and the Underground station, where people could see a depiction of the history of this palace.

Another point of principle to consider is whether the separation of phase 1 from the rest of the site by Cannon row is essential. Cannon row is just a rat run for taxis from Whitehall to Bridge street. The separation will merely create problems of security and more noise, which might be avoided. We should therefore consider at this stage whether phase 1 should be carried out in such a way that we could be linked to further stages of the Bridge street redevelopment. Unless we consider that at this stage, it will undoubtedly be too late.

It is intended that the subway under Bridge street will be solely for the use of Members of Parliament and those who serve them. I can see great attractions in this concept, but the visitor to Westminster will have difficulties crossing what must be one of the most dangerous thoroughfares in London unless consideration is given to providing a second tunnel. There is no reference to this in the documents, but I hope that road safety on that dangerous thoroughfare will not be forgotten.

These issues are to be determined, but they should not delay what is a very necessary building. I hope that my right hon. Friend the Leader of the House will do his utmost to see that hon. Members have that available as soon as possible.

12.15 am

The debate has been of exceptionally high standard, with many good speeches.

I would like to pay my own tribute to my right hon. Friend the Member for Wakefield (Mr. Harrison) for the funniest speech I have ever heard during my period in the House and for his work for the House as a whole and that of all his hon. Friends. If I may be allowed a small digression, when the history of the last Labour Government comes to be written, that extraordinary political feat of survival without any visible means of support, the role of my right hon. Friend the Member for Wakefield will loom much larger than anyone can anticipate now. [Interruption.] The favours done for minority parties should remain locked as secrets in the heart of my right hon. Friend for at least for a short while.

There is widespread agreement in the House that the need for more accommodation for hon. Members is overwhelming. My hon. Friend the Member for Easington (Mr. Dormand) pointed out that the conditions hon. Members have to put up with in the House are appalling. I know from the four years I spent in the cloisters that the conditions that new Members have to put up with are the worst of all. It is a double burden for new Members who have to find their way round to find their feet and put up with conditions that no office workers, and rightly, would ever have to put up with in any circumstances.

The scheme the House is asked to approve is not the most perfect scheme, but I believe that after all these years of discussion it should not make the best the enemy of the good.

It is all very well the hon. Member for Canterbury (Mr. Crouch) talking about what the Victorians did, but the Victorians had great confidence, which was reflected in their architecture as well as in everything else. When this building came to be rebuilt, a committee which was described as the Committee of Taste arbitrated on the competing designs. That committee was able to make speedy decisions, to come to an agreement and to impose it on the public. That is not possible today. The diffidence and uncertainty that the country faces is reflected in our architecture. It is not possible to gain agreement about architectural designs, as we saw in the great row about the design for a new building that was to replace all the buildings on this site. Although money was one of the reasons that design ran into the ground, the fact that many people felt the scheme was unacceptable on aesthetic grounds was another reason — in my judgment an understandable reason.

There is no confidence or unanimity in what should replace buildings of the character of those along Parliament street. Although they are not the finest buildings in London, they form, as the Liberal Chief Whip has pointed out, a vital part of Whitehall and of the history of the City of Westminster, of London and of the country. They ought to be retained. I believe there is agreement on that and on nothing else, and because of that we ought to go forward with this project.

When the Minister comes to reply, I ask him to deal with the serious question of the financing of the scheme. The Leader of the House said that public funds will be found for the scheme. He went on to say, however, that spending would necessarily have to be reduced in other areas.

That does not necessarily follow because, while £15 million is not a small sum, in the total of Government spending—compared with £126·4 billion, the spending target for next year — it is a decimal point of a percentage. More worrying is the question whether the expenditure on the new building will be at the expense of necessary maintenance of the existing Palace of Westminster. The suspicion that it might be is raised by paragraph 7 of the main report of the committee, where it is said that it will be necessary for the House to
"consider some restrictions on other expenditure … as a contribution to the cost of the scheme."
Does that remain Government policy, or are they willing — for example from the contingency reserve or other funds—to find new cash to fund the project? As has been pointed out, as a year-by-year sum, it is very small indeed. I hope that the Minister will clarify the position on that.

The hon. Member for Hereford (Mr. Shepherd) mentioned access through the tunnel. As I now have an office in Norman Shaw north, I know that it is not that we have separate offices that keeps hon. Members away from the Chamber, but the fact that the offices are so distant. It is a long walk and in cold weather one must put on an overcoat; one is either here or there and it is not possible to dodge from one's office to the Chamber. A small advantage of working in the cloisters is that if something interesting comes up on the monitor, one can pop into the Chamber. I hope that when arrangements are made for phase 1 of Bridge street, consideration will be given at the same time to providing covered access all the way to the Norman Shaw building.

I was grateful to the hon. Member for Hereford for raising the question of the use of phase 1 and the fact that, within the scheme, it will not be completed—although the buildings will be completed—until the staff working in the main Palace of Westminster are decanted into the Parliament street offices, so that hon. Members can then take up the vacant accommodation here. There will be competing claims for those new offices, but I hope that the committees that will deal with that matter will take into account the important claim of the Library to centralise its services.

I pay tribute—as all hon. Members do—to the high standard of work that the Library staff perform in difficult circumstances. None of us should be worried lest the staff of the Library—who, as it were, run the front of House operation—will be any more distant; they will still be in the Library but benefit will arise in that the staff who are at present distributed in Norman Shaw north, Norman Shaw south and in odd rooms in the bowels of this building, will at last be centralised, most of them near to the main Palace.

The Leader of the House touched briefly—I was glad it was briefly—on recommendation 25(ii) of the main report, where it is said:
"further and separate consideration should be given to the possibility of developing the rest of the site in association with private capital."
This is not the time or the occasion to have a discussion about the role of private capital, but the Leader of the House will take note of the view of the Opposition that we think it neither acceptable nor necessary that private capital should be used in the development of any phase of what is essentially a public building. Whatever views we may hold about the use of private capital in the development of trunk roads and railway electrification, this building, which is pre-eminently a public building for the public service of public legislation, should attract public money and public development. I have no objection to anybody considering the use of private capital, but I hope that that consideration will lead to the conclusion that this is not an acceptable way to proceed.

I raised one matter in an intervention in the speech of the Leader of the House. While I passionately believe that we should press ahead with phase 1 I also believe that we should look closely at the accommodation in the Palace that is not used for Members. It came as something of a shock to me to discover, from an answer to a parliamentary question on 16 July 1980, that there are 1,128 rooms in the Palace of Westminster, and that of those only 22 per cent. are used by Members of Parliament. Well under a quarter of the rooms in the Palace are used by Members of Parliament—about 250.

Many of the rooms are used for residences and bedrooms. I am not suggesting that it is not necessary that some of the accommodation should be used as residences and bedrooms, but it seems, looking down the list, that questions must be asked. The second office keeper has a six-room accommodation on the second floor of the House, but does he need to be accommodated, and if so, can he not be accommodated elsewhere within a quarter mile or so of the Palace? Should the manager of the Refreshment Department have a five-room flat on the third floor of a house in Old Palace yard for his occasional use? If it is for his occasional use, could not the accommodation be used for the regular use of hon. Members?

Altogether, 100 rooms are used for residences and bedrooms in the House of Commons and another 44 in the other part of the Palace. This is a substantial proportion of the available accommodation, and, roughly speaking, about 40 per cent. of the accommodation available is used by Members. The matter related to this, which I hope that the Services Committee will look at, is the use of the Palace by Departments of State. The Lord Chancellor's Department occupies 22 rooms in the other place, and if those rooms were not used by that Department they would become available for the Lords. Over time, we have used accommodation in the other place, and there may be benefits for us if consideration were given to the problem of whether some of the members of the Lord Chancellor's staff could not be better housed elsewhere, outside the House.

The provision of phase 1 is for 180 rooms altogether — about 90 rooms for Members and 90 for their secretaries. We should recognise that while this will be a popular addition to the available accommodation, even when the renovations have been completed, we shall still be a long way off decent accommodation for all hon. Members. Even when we reach the sunlit uplands of a single room for every Member of Parliament, and a facility nearby for his or her secretary, our standard of facilities will still be behind that enjoyed by legislatures in almost every other nation in the western world. Tonight, we are taking a small step towards acceptable standards of provision, and I hope that the House will give it its support.

12.33 am

I agree with the hon. Member for Blackburn (Mr. Straw) that this has been a debate of unusually high quality, from which a high degree of consensus has emerged. It is a sign of your personal interest in this matter, Mr. Speaker, that you have sat throughout the debate in your Chair. I wonder how quickly the hon. Member for Blackburn will be served tomorrow at lunch time when he takes his place in the Members' Dining Room after what he said about the Refreshment Department.

I shall deal with the points made in the debate, and I begin with those made by the hon. Member for Blaydon (Mr. McWilliam). Both he and his colleague, the hon. Member for Blackburn, asked about the funding of the project. The Lord Privy Seal explained that the total cost would be about £23 million. Of that sum, some £16 million is new money either from the Treasury or the Department of the Environment. Some million is from the Palace Vote, spread over about six years. At present the Palace Vote is about £10 million a year. The ability to respond to new demands will be fairly restricted while Bridge street is being developed, but happily there is no backlog of serious work in the Palace. Some schemes may have to be slowed down, and others postponed, but we can cope with the essential requirements of the Palace while the site is being developed.

The Select Committee report stated that the effect of the proposal would be noticeable to hon. Members. What will be noticeable to hon. Members?

I do not know at this stage. Some of the expenditure about which the hon. Gentleman was worried will be consequential expenditure when some offices have moved out. That will happen towards the end of the period, and we have taken no public expenditure decisions on it. I hope that we can cope with any demands.

Can my hon. Friend confirm that this scheme will not interfere with the necessary restoration of the Palace, because there has been some disquiet about that?

If my hon. Friend is talking about the restoration of the stone, I am determined that that programme should proceed, so far as it is within my power, at the present pace. It is a good investment of resources.

I am grateful for what my right hon. Friend the Member for Taunton (Mr. du Cann) said in support of the scheme, and for the generous tributes that he paid to all those associated with the report. I join him in those tributes. My hon. Friend the Member for Staffordshire, South (Mr. Cormack), as one would expect, put the proposals in a historic context. The right hon. Member for Wakefield (Mr. Harrison) reminded us of how much we have lost during the past 18 years because of his enforced silence. My hon. Friend the Member for Hereford (Mr. Shepherd), who does such sterling work on the Library Sub-Committee, added a Library dimension to the debate.

We heard an important note of dissent from my hon. Friend the Member for Canterbury (Mr. Crouch). There is scope for differences of taste, but the Services Committee considered the suggestion that we started from scratch and decided unanimously that we should build on what was there. When my hon. Friend has seen the buildings after they have been restored, rather than as they are now, I hope he will share my view that the Services Committee made the right decision.

Does my hon. Friend recollect from the evidence to the Select Committee that Sir Hugh Casson spoke of using a Flymo on the buildings in Parliament street? Admittedly, he was talking about the backs of the buildings, which he thought were horrible, and he wanted to use a vertical Flymo to flatten them. What a chance we have missed for a great architect, Sir Hugh Casson, to start on a virgin site, with all the buildings flattened by his Flymo, and it would have cost no more.

Sir Hugh can use his Flymo for part of the scheme, because the backs of the buildings will be demolished.

Many hon. Members introduced a note of urgency and asked us to make even greater progress than has been planned. Almost every square foot in the existing parliamentary estate that could economically be used has already been taken up, and, given the restraints of the Division Bell, additional accommodation can be found realistically only in the area between Derby gate and Bridge street. This area has been earmarked for parliamentary use for about 20 years. All the buildings on the phase 1 site are now listed and are within a conservation area. They give a human scale to Parliament street in contrast to the dominant Government buildings on the other side of the road. Those factors led Casson Conder to propose that the facades of Parliament street should be retained, with such accommodation behind them as can reasonably be adapted for modern use. Much of the ill-lit and sub-standard accommodation on the Cannon row side would be demolished and replaced by rooms designed for parliamentary use.

The hon. Member for Blaydon asked me about residences. No. 43 and No. 44 Parliament street are two small 18th century houses. Due to their structural limitations it is suggested that they be used as residences for officers of the House. This might enable existing residential space, about which the hon. Member for Blackburn spoke, in the Palace of Westminster to be converted to office use by Members. The Select Committee has asked for confirmation that No. 43 and No. 44 could not be used as offices, and a detailed structural survey will shortly be carried out so that a report can be made on this point.

The specific use of the new building will take account of views expressed in this debate. My hon. Friend the Member for Harrogate (Mr. Banks) drew attention to the need for detail on the work inside. However, the configuration of the site generally, and specific buildings in particular, will influence its use. The site would provide some 180 rooms for office accommodation, which could in turn form 90 Members' sets. My Department was advised, however, in a note from the then chairman of the Accommodation and Administration Sub-Committee last November, that the Sub-Committee's first priority was to provide the maximum possible accommodation for Members as close to the Chamber as possible. That view has been echoed during the debate.

This led the Sub-Committee to examine the position of all those, other than Members, who now occupy space in this House's part of the Palace. But the Sub-Committee did not expect to have any success in removing persons and services from the Palace unless they could be accessibly housed elsewhere. Therefore, access to Parliament street for persons, materials and data will need to be first-class.

The Sub-Committee said that my Department should not assume that all it was looking for in Parliament street was 100 sets for Members. Although it would, of course, be looking for some more Members' accommodation outside the Palace, the provision of more accommodation within the Palace was an even greater priority. The House has endorsed those views.

The next step would be the formation of a working party to translate the views of the House into a clear brief for the design team, the working party comprising representatives of the Services Committee and my Department.

This new block of buildings would be the first purpose-built accommodation for the House since Barry and Pugin designed this Palace. Bearing in mind the greatly increased pressure of parliamentary business over the last century, the increase in space that this scheme would provide is modest. Its design would provide accommodation up-to-date in its regard for Members' wishes, and the Services Committee will, no doubt, keep in touch with opinion in the House on this point.

We must put this site in the context of a crucial part of the capital city, as one or two hon. Members did. The construction of the international conference centre on the Broad Sanctuary site is bringing into good use a site that has been derelict for far too long. The reconstruction of the Richmond Yard building off Whitehall is now under way. We are refurbishing the old public offices in Whitehall. The restoration work in this Palace constitutes a significant programme of work. The additional scheme that is now proposed would go a long way towards completing improvement in this highly sensitive part of the capital.

I do not believe that hon. Members find the cost of the latest proposals excessive. We would have had to spend some money on these buildings simply to keep them upright during the next few years. Taking all these factors into account, I believe that the proposed scheme offers good value for money and meets the House's needs in the cheapest way.

The hon. Member for Hamilton (Mr. Robertson) said that we are all responsible for having done nothing for so long. I hope that we can at least take the credit for starting to do something to put the problem right.

Question put and agreed to.

Resolved,

That this House agrees with the Select Committee on House of Commons (Services), in their Third Report in the last Session of Parliament, House of Commons Paper No. 269: New Parliamentary Building (Phase 1).

Stockport Bypass

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Neubert.]

12.44 am

I am grateful for this opportunity to discuss the proposed line of route of A6(M) Stockport north-south bypass — the so-called "blue route".

I should say at once to my hon. Friend the Minister of State that I am absolutely delighted that the Government are going ahead with the construction of this road. It represents the end of a battle that has lasted for many years and has involved the efforts of a great many people. I am very grateful to my hon. Friend and her predecessor for agreeing that the road should go ahead.

There has been considerable growth in the whole Stockport area in recent years. This has been especially apparent in terms of traffic congestion in certain parts of the borough. As my hon. Friend knows, conditions in parts of my constituency and especially in the village of Hazel Grove have become intolerable in recent years. I was therefore very pleased that my hon. Friend's predecessor, now my hon. and learned Friend the Minister for Health, was able to come and see the situation for himself, as did my right hon. Friend the Member for Guildford (Mr. Howell), when he was Secretary of State for Transport. Everyone agreed that something had to be done, and I am delighted that funds have now been found to enable this expensive scheme to go ahead.

I hope that my hon. Friend the Minister of State will say something about the cost, as I am anxious to make it clear to some of my constituents that this is a very important scheme and one that the Government treat very seriously. I believe that about 18 months ago the estimated cost was about £36 million. Perhaps my hon. Friend will confirm that that remains the position today.

The cost of the project reflects the complexity of what is proposed. It is an urban motorway which will involve quite a lot of work in terms of side orders for roads and linking historic communities so that the present shape of the district is both enchanced and preserved with the minimum dislocation.

Having campaigned for the road for well over 10 years, embracing a period before I was a Member of Parliment or parliamentary candidate for Hazel Grove, I strongly believe that it will improve the quality of life on the eastern side of the borough. Whatever dislocation may be caused while it is being constructed, I believe that at the end of the day it will alleviate traffic congestion and make life a great deal more pleasant for a large number of people.

In raising the subject today I make it clear to those who have criticised the whole project that whereas they are entitled to voice their objections, I am equally entitled to say that I believe that the construction of the road should go ahead. Although there are problems for certain specific areas, with which I shall deal in a moment, I believe that the basic principle is correct and I am delighted that the long campaign has reached the point at which it has been decided that construction of the road is to go ahead.

I wish to ask my hon. Friend the Minister of State some detailed questions about what happens next. I believe that as things now stand she hopes to introduce the draft orders some time in 1984, with a view to holding a public inquiry in 1985. I understand, however, that she has also mentioned the possibility of a second public inquiry, in 1986, to deal with the compulsory purchase of land. As I am sure she will be the first to realise, while there is uncertaintly about her intentions as to the precise timetable to be followed, it is in the nature of things that rumour abounds. I should therefore be very grateful if she would take this opportunity to state specifically what her intentions are with regard to the timetable, so that my constituents will know with some certainty how matters are likely to proceed.

That is important, as a number of difficult issues have yet to be resolved. I am anxious to help constituents who will be affected by the construction of the road to meet their problems to the extent that that is possible. In this context, I thank my hon. Friend for her efforts so far to deal with all the correspondence that I have sent her. She has been wholly admirable, in terms both of fairness and of the detailed work that she has undertaken in replying to the many letters that I have sent to her on this subject. I fear that I shall have further letters to send to my hon. Friend because the construction of a road involves much work and, naturally, causes anxiety to those immediately affected.

I shall deal with one or two matters that are causing some anxiety. My hon. Friend wrote to me recently about the position of E. Simpson Ltd. in Hazel Grove. I hope that that company will avail itself of the opportunities which my hon. Friend has provided for it to enter into the widest possible consultations with officials of her Department to try to meet its specific problems.

I am delighted that my hon. Friend has revised the original proposals and come forward with a scheme for a roundabout to be situated further south than had originally been envisaged, thereby recognising that more homes would have been affected by the original scheme than will be affected by the new scheme. I understand that the roundabout has given rise to some controversy. I know that my hon. Friend must review the position yet again. I hope that she will consider that the views of my constituents who have written to me and approached her are of considerable importance in determining the outcome of the problem.

Moving further north, I wish to draw my hon. Friend's attention to the continuing uncertainty in the minds of some people about the situation in the vicinity of BeanLeach Road and the BosdeFold estate. It is important that the BosdeFold estate should continue to have proper links with Hazel Grove. Some anxiety has been registered locally about the siting of the roundabout and proper access. Will my hon. Friend give me an assurance, either now or later, that the position of my constituents, who historically regard themselves as living in Hazel Grove —albeit separated from the village by several acres of green fields—will remain unaffected and that they will be able to gain access to local shopping centres and the village.

Again moving further north, I come to the vexed issue of the north end of the road in the vicinity of Bredbury. I declare an interest in this matter, in that I live on the Stockport road in west Bredbury, not far from where the motorway will end. I have witnessed some of the problems which were, I understand, the subject of a public meeting last week attended by local councillors and officials representing the interests both of the local authority and of the Department.

I shall deal in turn with the problems of Kay avenue and Osborne street. I understand that the policy is not to allow cul-de-sacs to exceed 250 metres. The proposal is to open up Kay avenue, which is a cul-de-sac, to through traffic to provide access for emergency vehicles to that estate. I recognise fully that access of that type is essential. I hope that, in turn, my hon. Friend recognises that Kay avenue is a quiet residential street and that the local residents are anxious that it should not become a road for through traffic. I hope that it will be possible to arrive at a solution whereby additional access is available to Kay avenue, but is reserved strictly for the use of emergency vehicles, and is designed to meet the specification of a rather large footpath, which would nevertheless allow emergency vehicles to proceed along it. I hope my hon. Friend will understand the serious anxieties of local residents and accept that there is a real problem that needs to be solved.

I have some sympathy with the view of local residents that it would be a great pity to divide the community of Bredbury by closing Osborne street to through traffic. I understand that earlier plans called either for the motorway to pass over Osborne street on stilts, or for the construction of a tunnel, so that the full length of the street could be preserved intact.

Osborne street is not only residential, but provides educational and shopping facilities. I know that local residents are very anxious that the sense of community should be preserved. I hope that my hon. Friend will look again, if that is possible, at the line of route and the precise arrangements for the vicinity of Osborne street, and judge whether it is possible to keep the road open to traffic to meet the wishes of local residents.

A number of local residents have said to me, "Well, now you have a problem with the road, what will you do about it?" That question has been asked by the Bredbury Labour party, among others. I have absolutely no problem with the road. I am delighted that it is going ahead, because its construction is sorely needed. I am glad that the Government have found it possible to include the very expensive programme in the main public expenditure on roads for the latter years of the decade.

That does not mean that I do not want to do everything that I can to help those of my constituents who face problems. I am sure that my hon. Friend shares that feeling. Indeed, to judge from the sympathetic manner with which she has so far approached the problems connected with the road, I have some confidence that she will deal with them seriously.

I hope that my hon. Friend will use this opportunity tonight to state her intentions on the specific timetable and give some sign of how she intends to meet the serious problems that have arisen in deciding on the line of the route.

I thank you, Mr. Speaker, and my hon. Friend for affording me the opportunity to raise what are, for my constituents, very serious matters.

12.57 am

I am glad that my hon. Friend the Member for Hazel Grove (Mr. Arnold) has sought to raise this matter, because it provides a good opportunity to explain the current position of the scheme. It would be fair to say that it is attracting as much interest as any road proposal in the north-west. We have had a heavy postbag that has raised all sorts of questions—some of which have nothing to do with the scheme.

I fully agree with my hon. Friend about the importance of and the priority to be given to the bypass, which must be a full bypass. While my hon. Friend was speaking I took the opportunity to study the difficult engineering problems that the narrow area between the various areas of habitation presents for a proper bypass.

Because of my travels through Hazel Grove and Stockport, I am well aware of the importance of the scheme. I know about the serious congestion on the roads, especially at junctions through the main shopping area of Hazel Grove and during prime times when there is a great deal of traffic. I hope that the Government's recent White Paper conveyed the urgency with which we view the need for relief. I am delighted that my hon. Friend has given such a warm welcome to our plans, even though he rightly has questions and concerns about them. My hon. Friend knows that we did not want to suspend preparation of the scheme in 1980, but we had to do so for financial reasons. At that time people in both Hazel Grove and Stockport left us in no doubt about their view that we should restart the scheme quickly.

My hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), now the Minister for Health, was impressed by the case put forward when he visited Stockport and Hazel Grove, and in 1981 we announced in our White Paper the resumption of preparation of this road. Shortly afterwards, we appointed consulting engineers.

It is now about 38 years, or even longer, since talk of a bypass for Stockport and Hazel Grove began. I am quite sure that we must get on with it as quickly as possible. I want to make a start as soon as the main design work and the statutory procedures permit.

My hon. Friend asked me about the dates. I hope that, following further discussions over the next month or so, we will be able to work towards the publication of the draft line and side roads orders later in 1984 and to hold a public inquiry in 1985. It may then be necessary to hold a further public inquiry into the compulsory purchase orders for the land when those draft CPOs are published in 1986. We hope that construction will commence in 1987. That is the likely timetable.

We could be lucky. We always hope, for the sake of those who are to benefit from such roads, that we will not come across any impediments and that we shall be able to go through all the procedures very swiftly. However, the plans for the road involve many people. The public inquiry system should be fully used to make sure that we have the best route, and we should consider the needs of all who are affected. We seek to give the local people a full and effective bypass.

I have been asked to consider not building the southern section of the A6(M) between the A6 and the A523, because it could lead to extra traffic on the A523 through Poynton. I understand the worries of the people of Poynton. The recent White Paper announced an urgent study into what could be done to overcome their traffic problems, including a possible Poynton bypass. In my view, however, there are strong arguments for building the full road quickly. Roughly half the traffic on the A6 and Hazel Grove is travelling to or from the A523, and an A6(M) which does not link to the A523 would produce far fewer benefits and far less relief for the Hazel Grove and Stockport area.

I should explain why, after so much time, we suggested some changes to the blue route. I can understand that any potential change to the blue route, which has been protected since public consultation in 1973, will worry some people. The changes have not been suggested for change's sake. They are designed to try to take up, and give a better solution to, the natural worries expressed by people in the area. We can see clearly, if we look at a map, that the new route is slightly further away from most of the habitations which would have been affected by the original blue route.

Following public consultation, the original blue route was protected, but that protection was based only on preliminary design information. It is not unusual for adjustments to be made when more detailed design information becomes available. Furthermore, design standards change over a period and we would always hope for a better proposal — for example, a proposal that would help at the Bredbury end of the road. At Bredbury the area of land through which the road could go is very narrow. Since 1973 we have dropped altogether the Bredbury bypass at the northern end of the road, and I think that the new proposals for dealing with the northern end of the route will be far better.

Many people have said that it should not take 10 years to complete the design. Progress has been hampered to some extent because much of the design work depended on the completion of long and complicated traffic studies involving other road proposals. We were also committed to a detailed examination of the alternative route in the Offerton area, which had been suggested by the Offerton community council. We decided that the blue route would be better in that area because the environmental effect would be less damaging and the route permitted a less expensive connection back to the A6 at Stepping Hill. There was also the regrettable but unavoidable need to suspend preparation for a year.

Over the past few months we have had a good deal of reaction to suggestions for changes in the blue route. I announced on 2 August that we still considered the blue route to be right in principle, and that we would provide a link back to the A6 at Stepping Hill to ensure that the bypass gives as much relief to Hazel Grove as possible. I mentioned that we were proposing a few modifications to the 1973 alignment. I specified those at the southern end of the route where it would join the A523 in the vicinity of Hazel Grove golf course, and near the crossing of the river Goyt.

I have said in correspondence with my hon. Friend the Member for Macclesfield (Mr. Winterton) that I am prepared to consider the schemes as a whole, but I do not want to hold up the process because we want the best deal to give the A6(M) a chance to go forward in the timescale that I have already outlined.

A great deal of anxiety has been expressed about the Brookside garden centre. I understand it, and I am shortly to discuss it with my hon. Friend the Member for Macclesfield before we reach a final decision. That should not impede progress in any way.

My hon. Friend who has so rightly raised this matter in debate tonight also wrote to me about the change near Hazel Grove golf course. I know that many people in Bredbury are anxious about the impact in the Osborne street-Prestbury drive districts. I shall write to my hon. Friend in some detail about Osborne street and the link between the two sections of Bredbury.

I shall also say a word in a few moments about Kay avenue. The sooner we give the details about each of the crunch points on this scheme to the people involved, the sooner we shall start to make progress. Many matters vary from household to household. I do not want to mislead anyone by making a sweeping statement about a certain junction, because the result may not be the same for all the nearby households. I hope that my hon. Friend will understand that I would prefer to deal by letter with some of the points that he has mentioned so that we can give the best possible information to his constituents.

I shall make another announcement once we have taken a decision on the study, and we shall have plans showing the modifications which will be available for people to inspect. I would advise anyone who is anxious, for example those involved in property transactions at the moment, about the scheme, to get in touch with our northwest regional office at Sunley building, Piccadilly plaza, Manchester. That office will give as much detail as possible. It would plainly be wiser if people can wait until we have settled some of the final details.

My hon. Friend asked me about E. Simpson Limited of Buxton road, Hazel Grove. Although I have recently written to my hon. Friend about this firm, I understand and share his concern about the effect of our proposals on the business. There are environmental, cost and other problems about moving the road further from the factory. We must explore every avenue to ensure that the problems which our proposals pose for the firm are overcome. I have told my officials to give Simpsons all the help they can.

My hon. Friend mentioned the problems of Kay avenue. I understand the anxiety that is felt, because we have to make certain preparations for access from Stockport road into the housing estate to the south of Stockport road. The fear is that if we were to use Kay avenue for emergency vehicles, it might become a rat run through residential streets. That I understand.

We are not going to have a vehicular link across the motorway between Vernon road and Kingsway-Osborne street, and therefore our present proposal is that we provide an additional access for emergency use. That would need to be Kay avenue, but I see no reason why it should be more than that.

Our plans are not yet settled, but I will ensure that the second access could not be used in other than very exceptional circumstances, because that is important to the area.

I hope that my hon. Friend does not mind if I put on record the reasons for the change that has attracted the most comment and some support. It concerns the relocation of the A523 junction at the southern end. We proposed it because it would give a shorter and generally more effective route for the traffic flow and because we believed that the original junction position would make access to the Brookside garden centre difficult and possibly dangerous. The move would also take the new road further from houses in Darley road. We knew that there would be disadvantages as one extra property—North lodge — would have to be demolished, many mature trees would have to go and the road would be closer to houses in Towers road. We have not closed our minds about the junction. I wanted to comment on it because getting it right is essential to the timetabling of the route. We must act on the additional study that I have had done so that the scheme can run smoothly on our timetable.

Many people have asked about the junction south of Hazel grove. We proposed in the announcement of 2 August to move that junction north into the field and to provide new link roads back to the A6 as the original proposal for a junction with the A6, hard by the railway, would have involved a much more complex and expensive layout.

I have already mentioned the realignment near the Hazel Grove golf course. The link that we added to the A6 at Stepping hill is to ensure that our proposals provide the most effective bypass. Our objective in designing that link will be to keep the effect on property to a minimum. I assure my hon. Friend that we shall make plans available locally as soon as possible. He asked about the cost of the scheme. The White Paper gave the cost, excluding land acquisition, as nearly £26 million at November 1982 prices. It is quite a bypass. It is an important road for my hon. Friend's constituents.

There are some questions that I am not able to answer now. However, we must strike the right balance between the environmental and the economic factors. We shall take as few houses as possible, but the area needs the road. There are several dilemmas that we have yet to resolve. In trying to strike the best available balance between all the many competing demands with regard to the road, I am sure that we must get on with it for the sake of my hon. Friend's constituents.

The Question having been proposed after Ten o'clock on Tuesday evening, and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at fourteen minutes past One o'clock.