My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, the estimated expenditure on cash benefits for long-term sick and disabled people in 1981–82 is £2,781 million. This represents an increase of about 6 per cent. in real terms over the 1978–79 figure.

My Lords, in congratulating my noble friend the Minister on that very encouraging reply, particularly in this difficult time and especially in regard to the substantial improvement in the mobility allowance, I ask for his assurance that improvement in the benefits for disabled people will still be a priority with the Government.

My Lords, although the numbers of people who are in receipt of benefit have increased, the amount of benefit paid has increased out of proportion to that, and mobility allowance has in fact gone up by 65 per cent. since this Government came into office. We are committed to a coherent system of benefits for disabled people. Our success in this will of course depend on the success we have with the economy as a whole.

My Lords, before the Minister gets too complacent about that situation, may I ask him how much of this total increase is due to the fact that there are more people applying for benefits and therefore the per capita increase is not related to the figure he has given? I should also like to ask him how much of the increase is due to benefits which were introduced by the previous Government. Secondly, does the noble Lord not agree with the Minister in another place who on 27th July honestly admitted that the invalidity pension for single persons and married couples had fallen by 4 per cent. since 1979 due to the abatement of the 1980 uprating? What compensation are this Government giving to those people who have suffered a decrease?

My Lords, I hesitate to give an answer as long as the question, particularly as in fact it is not possible to state the number of beneficiaries in receipt of benefit because many individuals receive two or more benefits. I have here a table of the numbers of benefits broken down under the different benefits paid, and I will have that placed in the record. In fact, I acknowledged in my original Answer that the number of beneficiaries has gone up and that the increase in benefit is not pro rata, but the increase in the money is proportionately greater than the increase in the number of beneficiaries.

My Lords, may I ask my noble friend the Minister to state whether the Government are satisfied with the present level of take-up of benefits by disabled people?

My Lords, it is not easy to tell how many people are not taking up benefit, but there has been a steady increase in the numbers taking up benefit, and we did at the outset of the IYDP last year publish a pamphlet, Help for the Handicapped, which has been widely taken up itself, and I think this contributes to the increase in take-up.

My Lords, I apologise for asking another question, but I did not hear the noble Lord answer my question about what the Government are proposing to do about the admitted fall of 4 per cent. in pensions for single and married people getting invalidity pensions. Are the Government going to make up that shortfall or not?

My Lords, I cannot say when the abatements will be made up. I can say that the Government stand by their undertaking on the 2 per cent. with which your Lordships are familiar. Reverting to the noble Baroness's earlier question, the increase in expenditure over the period since we came to power is in fact 6·4 per cent. more than the general movement of prices between July 1978 and November 1981. That quantifies my previous answer.

My Lords, are the Government ready to make adjustments in future so that there is more emphasis on benefits and services made available to severely disabled people who are able to live in their own homes rather than in hospitals or institutions, since this is more cost effective and also much better for them since most of them want to be as independent as they can be?

My Lords, your Lordships will know that attendance allowance and invalidity care allowance are already covered by our undertaking on benefits for long-term sick and disabled people. I shall certainly bear my noble friend's remarks in mind at any time when this is reviewed.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, an agreement was announced on 18th January for the sale of the National Freight Company Limited to the National Freight Consortium public limited company, for £53·5 million. This consortium company has been set up expressly for the purpose of enabling the managers and employees to buy the Government's shares in the National Freight Company. It has arranged finance from its bankers for the acquisition, subject to the consortium raising a minimum of £4,125,000 from employees and pensioners of the National Freight Company. The consortium expect to complete the purchase during February.

My Lords, while thanking my noble friend for that reply, may I ask him whether the response in taking up the shares has been as enthusiastic as we hoped it would be, and does he think the scheme will go ahead the moment it starts?

My Lords, we have every hope the scheme will indeed go ahead. In fact, to answer my noble friend, the scheme was published only a few days ago and as yet we cannot monitor the response.

My Lords, as the management of the new corporation will be precisely the same as the management of the National Freight Corporation, may I ask the noble Earl to say what is to be gained by the transfer, except possibly to carry out the doctrinaire policy of the Government? What will be the net result to the Treasury, after making allowance for the payment of British Rail pensions?

My Lords, as the noble Lord will anticipate, this is of course a privatisation exercise of which we are very proud. The net result will be £6 million.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, the Government do not maintain estimates of their own but believe that those compiled by the Association for Business Sponsorship of the Arts to be reliable. Their figures are: 1975–76, £½ million; 1977–78, £3 million; 1980–81, £6 million; and the Association's estimate for 1982–83, £7 million. In addition, many other companies donate considerable sums to the arts through a variety of means, but unfortunately no figures are available.

My Lords, I am most grateful to the noble Earl for that reply, and I am glad to see that the relatively small amount which business contributes to the arts in this country is gradually increasing. May I ask the Government also to encourage local authority support for the arts in every way they can? In particular, will they consider offering to match local authority subsidy by an equal grant from Government funds?

My Lords, I am grateful to the noble Lord for his encouragement and will indeed take his view on broad.

My Lords, do the figures which the Minister gave include Scotland?

Yes, my Lords, they are for the whole of the United Kingdom.

My Lords, while the subsidised arts are entitled to some sort of special consideration such as the noble Lord, Lord Jenkins, suggested, may I ask my noble friend also to remember that the private sector, the privately-owned theatres, have grave problems today and that some examination of the VAT level would be very helpful in keeping alive an important part of this country's industry?

My Lords, I am sure my noble friend is aware that the Government take particular pride in the amount of money they are giving to the arts, and will continue to do so.

My Lords, is the noble Earl aware that the BBC is still somewhat reluctant to give credit in cases of arts sponsorship, and would he not agree that that is not always encouraging to obtaining further business support for the arts? Could something be done in this field?

My Lords, what the noble Lord suggests is novel, but I shall certainly look into it.

My Lords, is the Minister able to say what proportion of the figures he gave went to visual artists?

No, my Lords, we have no break-down of that sort of denomination.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, this Bill gives powers to introduce private capital into the oil-producing business of BNOC. It enables the corporation to establish a subsidiary, to be named Britoil, and to transfer all its oil-producing business to it if the Secretary of State approves. Subject to the progress of the Bill through Parliament, the Government hope to establish Britoil as an operating concern in the autumn. Initially 51 per cent. of the shares will be offered for sale as soon as market conditions allow, which we hope will be before the end of the year. BNOC itself will continue in being, trading primarily in participation oil. Your Lordships will be aware that the Bill received its Second Reading in another place last week. Due to the great interest of your Lordships in this subject, I have, unusually, seen that notes on clauses are already available in the Printed Paper Office.

My Lords, while thanking my noble friend for that reply, may I ask whether he is aware that the Government will have the support of the majority of taxpayers and electors in this country for making the public sector somewhat smaller and the private sector somewhat larger as a result of this measure? Is it not a great advantage of these proposals that Britoil will not henceforward come under the restrictions of the public sector borrowing requirement and therefore may be able to advance its progress—with exploration, in development and in the production of North Sea oil—rather more quickly?

My Lords, I very much agree with my noble friend in the first part of that supplementary question. While in the public sector BNOC's financial requirements, which will not always remain within the size of its internally generated resources, must compete with other claims on the public purse, thus stunting the spirit of enterprise, privatisation will allow Britoil to finance its operations free of the public sector.

My Lords, would the noble Lord not agree that BNOC has a very fine record and is it not important that Britain should retain some stake in the North Sea?

I would agree that BNOC has a very fine record, my Lords, but I would not agree that there is any necessity at all for the public sector in Britain to be concerned with the vast capital requirements of North Sea Oil operations. I should point out to the House that of the total North Sea operation only 7 per cent. is in BNOC's hands.

My Lords, is the Minister aware that he has given one reason that is often given for selling off assets that belong to British taxpayers, whatever one's politics may be? As we are here dealing with something which is of paramount importance to all the British people—to our security, strategy and everything else—may I ask the noble Lord whether the Government have studied in depth what the realities are of shedding this real asset that the British people possess?

Yes, of course, my Lords, the Government have studied this in depth, and we have come to the conclusion that we do not agree with many of the remarks that the noble Lord has just made. As I said earlier, BNOC is responsible for only 7 per cent. of current North Sea production, with over 90 per cent. of the remainder efficiently in the hands of the private sector. Our oil and gas resources—which I think is the point that the noble Lord is getting at—are vested in the nation by virtue of the Petroleum Production Act 1934 and the Continental Shelf Act 1964. Oil companies, whether in the public or the private sector, act as licensees of Government in developing these resources. There is no loss of a national asset, and I shall not he accused of the rape of Britain.

My Lords, will the noble Lord ensure that, as with British Aerospace, enough shares will be made available for purchase by the employees and that they will be encouraged to buy shares in their own firm?

My Lords, I am very grateful to my noble friend. Naturally, we shall keep very firmly in mind the interests of the employees of Britoil, but it is too early to say what will be the result of current discussions on this subject.

My Lords, would not the noble Lord agree that BNOC not only has a future in regard to the British economy, but perhaps even more vitally, particularly in these dangerous days in which we live, it has a role, and can have an increasing role, à propos the defence of our nation in relation to the three armed services? Therefore is it not vital that British oil should remain in British hands?

My Lords, through the participation agreements, up to 51 per cent. will continue to be offered for sale to BNOC, and I think that this is the defensive role that the Government ought rightly to require BNOC to play.

My Lords, is the Minister aware that many members of the general public view as obnoxious the selling off of the assets of nationalised industries to private enterprise, while leaving the uneconomic sections of nationalised industries to be carried by the taxpayer? That is real robbery, my Lords.

My Lords, I cannot see the purchase and sale of assets by a private individual or a nation as being at all improper. The nation raised the capital to put into the nationalised industries. Why on earth, when the circumstances are right, should it not free this capital for other uses?

My Lords, can the Minister say whether there will be any restriction on foreigners buying the 51 per cent. of the shares?

Yes, my Lords; naturally we do not want any single company to gain control of Britoil. A scheme is currently being worked out through the articles of association, and this will be presented to Parliament when it has been worked out. I would hope that this will take place during the passage of the Bill through one or other of the two Houses.

My Lords, will the Government still be able to maintain control of our depletion policy?

Yes, my Lords, certainly. We have a depletion policy which affects equally the private sector and the public sector. It is going to make not one scrap of difference.

My Lords, with your Lordships' permission, I shall take the opportunity to bring the House up to date on the discussions on the 30th May Mandate, which have been continuing in informal meetings of Foreign Ministers in fulfilment of the request of the last European Council. I shall also make a Statement on the Foreign Affairs Council which took place in Brussels on 25th and 26th January.

On 25th January, the Foreign Ministers had a lengthy discussion on the four key issues in the negotiations over the mandate which were remitted to them by the European Council. This was the third such discussion, and I regret to say that it was not possible to reach agreement. The main issue preventing agreement was the view of a number of other member states that the refunds to the United Kingdom should be arbitrarily and automatically reduced over time, regardless of the scale of the problem. I made it clear that we could not accept this. In the longer term, we hope that the development of Community policies, including the reform of the common agricultural policy, will lead to a reduction in the size of our budget problem, and we fully accept that, as this happens, our refunds should be reduced. What we cannot accept is a reduction totally unrelated to the underlying cause of our budgetary imbalance.

That was not the only difficulty. In addition, one or more of our partners had reserves on other aspects of the matters under discussion. For example, there was disagreement as to whether the duration of our budget refunds should be four or five years, with a review. There are also problems on agriculture, where the formula proposed for controlling the milk surplus was very weak, and a number of countries, but not the United Kingdom, have reservations about the proposal that agricultural spending should grow less rapidly than own resources.

It is disappointing that after so many rounds of negotiations we have still not been able to reach agreement on the four key issues identified by the European Council, and therefore on the guidelines which were discussed there. But these are complex questions in which major national interests are involved, and we never thought it would be easy to find solutions that would enable each country to feel that it had a reasonable deal.

I welcome the intentions of the President of the Council and the President of the Commission to try to find solutions to these problems, and we hope that they will be able to do so quickly.

To turn to the Foreign Affairs Council, I would say that it was decided not to make further sales of food to Poland at specially subsidised prices and to use the funds originally earmarked for such sales for humanitarian aid, including food through non-governmental organisations. There was a wide measure of support in the Council for the proposal that the USSR should be upgraded from the "intermediate" to the "relatively rich" category in the OECD export credit consensus. The matter is to be considered further by the Committee of Permanent Representatives tomorrow, when I hope it will be agreed that the Community should propose such an upgrading to its OECD partners. The Council also instructed Permanent Representatives, in conjunction with the Commission, to study the trade policy measures which the Community might take against Soviet exports to the Community, and to study the implications of the undertaking of 4th January of the Ten not to undermine measures taken by the United States.

The Council considered the problem which has arisen over the adoption of the 1982 budget. In the view of member states, the European Parliament had not acted correctly over classification of expenditure and the maximum rate of increase. No final decisions were taken, but it appears to be the view of most member states that, as well as opening a dialogue with the European Parliament with a view to resolving the problem by mutual agreement, they should, as a precautionary measure, take legal action to ensure that the problem is resolved.

I am glad to say that the Council agreed that the storage levy and refund scheme applicable to ACP sugar should be suspended for three years, to the benefit of the cane refining industry. In those circumstances I was able to agree to a revised Commission negotiating mandate on the price to be paid for ACP sugar for 1981–82. This will, I hope, enable the present disagreement between the Community and the ACP to be resolved.

My honourable and learned friend the Minister for Trade represented the United Kingdom for discussion by the Council of policy on imports of low-cost textiles. It was agreed that in order to allow time for work to be completed on calculating the global ceilings, decisions on the various outstanding issues, including the terms for Community participation in the new Multi-Fibre Agreement, should be held over until 11th February, when there will be a further special meeting of the Council.

My Lords, the House will wish to thank the noble Lord for the Statement that he has just made. I should like, with respect, to point out to him that we on this side of the House received a copy of the Statement only five minutes before he rose to his feet, which has not given us very much time to study it. I willingly acquit the noble Lord of any responsibility in this regard, but I hope that he will make arrangements through his own usual channels to make quite sure that this does not occur again.

We on this side of the House should like initially to say, in response to the noble Lord's Statement, that we of course support the very considerable efforts he has made in the Council in order to obtain a more equitable contribution by the United Kingdom to the budget of the Community. This has been a running sore for many years, and your Lordships may recall that I have myself repeatedly raised the matter in the House over the last four years.

The Statement mystifies me a little because, although the noble Lord has indicated that he regrets to say it was not possible to reach an agreement, and that he could not accept the proposals that were put forward, he does not go anywhere as far as he apparently intended to go prior to the Council meeting itself. He was quoted in the Financial Times of 26th January—and I quote from the Financial Times report, which has been widely, I will not say copied but versions of which appeared in other parts of the press, too—as saying:

"At the end of a fruitless day-long negotiating session Lord Carrington, the British Foreign Secretary, said that Britain would prevent any agreement on the annual price increases for Community farmers envisaged for the end of March until it had secured a satisfactory budget deal. Without a budget statement, he said, ' the guidelines for the Community reform already agreed were frozen and as a result farm price rises could not yet be concluded '".

My Lords, as the Statement that the noble Lord has made today does not go half as far as that, I want to ask: What is the position of Her Majesty's Government on the matter? Is it now the position that not only has the noble Lord refused to accept the proposals put forward in regard to the budget but, also, that he has declined to agree to any increases in farm prices until a satisfactory agreement has been reached? I should be very glad if he would confirm that.

In another part of his Statement the noble Lord refers to the position of the European Parliament over the Community budget. The construction of the appropriate budget articles in the Treaty of Rome are subject to some ambiguity, but from my reading of what has transpired in Strasbourg and elsewhere I feel that the differences expressed in terms of money between the Council of Ministers and the Parliament are very small. All they in fact cover is a definition of compulsory and non-compulsory expenditure, and also the amount of the maximum increase which is permissible in the terms of the treaty.

I ask the noble Lord this question: Is it wise, even as a precautionary measure, to take the Parliament before the European Court? Would it not be far better to see whether an agreement could be arrived at between the Council and the Parliament? Because, my Lords, many of us feel that in the progress that has been made in Europe over the last six years the Parliament has in fact shown a far greater trend towards progress than has so far been visible from the Council.

As I say, we received this Statement only some five minutes before the noble Lord rose to his feet. There are other questions that will undoubtedly arise, and would have arisen if we had had more time to study the noble Lord's Statement in detail, but it would help if, in the meantime, he could answer the questions that have been put to him.

My Lords, we, too, should like to thank the Foreign Secretary for making this important Statement, but on these Benches, at any rate, we would regard the outcome of the meeting of the Council of Ministers as, on the whole, with certain exceptions to which I might make a reference, pretty lamentable. I would ask: Is no proposal for limiting our contribution to the budget (including, perhaps, some extension of the present system, which, after all, has not worked out so unfavourably from our point of view, as I understand it) acceptable before total agreement on the reform of the CAP? What happens if, in the long run, our partners just do not agree? What happens then? Does the Community just break up, or what is the result anticipated?

Anyhow, must we really break with them on the question of the duration of the agreement? Would not four years be acceptable? I do not quite understand this enormous distinction between five years and four years. On the face of it, I would have thought that four years would be something that we could accept, anyhow as part of a compromise deal.

More generally, may I ask: Were we in a minority of one in contesting the various proposals put forward by the Commission or by our colleagues? In which cases were we not in a minority of one? If we were in a minority of one, is it possible that we may be able to arrive at some compromise in order to get agreement in the general interest? As regards the Parliament and the budget aspect, I must say that I agree with the noble Lord, Lord Bruce of Donington. What he said was sensible, and I hope that on reflection the Government will agree. On Poland, as regards food exports, may I ask whether we can be assured that humanitarian aid (food aid, presumably) is in fact likely to get through to those who are chiefly affected—namely, the suffering Polish people—and, if so, why we are so confident?

Finally, I am glad to see that there was agreement on a tougher policy as regards credit in respect of trade with the Soviet Union. I think that is a very good thing. But I noticed in the press, either yesterday or today, I think, some suggestion that the French, having agreed there, might not agree in the event to any such policy.

My Lords, I must apologise if the noble Lord opposite did not get the Statement early. It was actually handed in to the Opposition Whips' Office 20 minutes before; but I think we shall have to see why the noble Lord did not get it. If, perhaps, 20 minutes is not enough, or something went wrong—I think the noble Lord, Lord Gladwyn, got it—then perhaps we shall look at it. But I do apologise if the noble Lord did not get it. I apologise if it is my fault, or my side's fault: if it is his fault, that will be different.

On the two subjects that both he and the noble Lord, Lord Gladwyn, have raised, perhaps I could take the parliamentary budget first. No final decision has been reached about taking the European Parliament to the European Court, but the general feeling in the Council yesterday, I think, was that that might be a wise thing to do because, although it is the intention of the Council to talk to the Parliament and try to get an agreement which is satisfactory to both, there is rather an important issue of principle here. Even though the sums of money are small, it is an important issue of principle and I think there is something to be said for getting it cleared up so that it does not happen again. But I, of course, will certainly take into account what the noble Lord opposite and the noble Lord, Lord Gladwyn, have said.

On the specific question which Lord Bruce asked me, the position is that at the beginning of this exercise all ten members of the Community linked the three chapters which we were discussing—which were, if the noble Lord will recall, regional and other Community policies, agricultural policy and the budget—and it was agreed by all of us that progress on all three of these chapters had to proceed at the same time. Consequently, I cannot myself see either that the regional policies or that the agricultural policy, on which the prices depend, can go forward independently; all these things must be done together.

The noble Lord, Lord Gladwyn, asked me about food for Poland. Before that he asked whether the Community was going to break up. There have been a good many of these setbacks before. I think it would be very premature to say that the Community is going to break up. When we all get down to it, we usually find a solution. The difficulty with the Community is that whereas most people decide at the 59th minute of the 11th hour, the Community is in the habit of deciding about three o'clock the next morning. This makes it a very lengthy and tedious business, but nobody with the noble Lord's outlook on the Community, I know, will be more patient or try harder to support the search for a solution than he himself.

With regard to food aid to Poland, there are, as of now, over 35 million ECUs—and I think that there are 60 ECUs to the pound—which were to be used for a 15 per cent. discount on food to be sold to Poland. The decision taken yesterday means that that 35 million Ecus will be available to give humanitarian food to the Poles but given through non-governmental organisations such as Caritas which we can monitor and see that the food gets to the people we wish it to reach. There is a limit to the amount of food that can be sent in this way. We must see how we get on.

With regard to credit policies, the noble Lord is right. The French put a reservation on this yesterday but I hope very much that at the COREPA meeting tomorrow they will lift it.

My Lords, by a minority of one!

My Lords, not on everything. There were a number of issues on the guidelines which were not agreed. For example, the growth of the agricultural budget in relation to the rest of the budget. There were reservations about how our refunds were going to be financed. There were other things than degressivity which were not agreed; but, from the point of view of the Government, it is not possible for us to agree to a scheme in which we get less and less money every year regardless of whether our problem is solved.

My Lords, I have two questions on the CAP. Can the noble Lord say what would be the size of our deficit in three or four years' time if the refund was phased out—as we are trying to avoid? Is it still of the same order of magnitude as when the trouble started? Would it not be possible to cast these differences between ourselves and the others less in terms of " Britain versus the Rest " and more in terms of the difficulties which are bound to be suffered by whichever member state has the smallest and most efficient agricultural sector—and if it is not us, it will be somebody else—and to point out to the world that that is the structural defect which always penalises that country?

On Poland and the Soviet Union, although the Statement was not very exciting, I think it was right. Would the Foreign Secretary agree that there is not much point in penalising the Soviet Union for not intervening with military force, and not much point in penalising the Polish military régime for not retreating when, in its words, it has nowhere to retreat to? Lastly, on the question of taking the Parliament to court, I should like to join those noble Lords who ask that the Council of Ministers should think once, twice—

My Lords, this is a speech.

once, thrice and nine times before doing that.

My Lords, I thought that this was question time, and not a time for making speeches. I ask the noble Baroness the Leader of the House to intervene.

My Lords, it is a Statement.

My Lords, we have had a Statement and the noble Lord, Lord Kennet, is putting a series of questions. Perhaps he will make this his final question on the Statement.

My Lords, I am grateful to the noble Baroness the Leader of the House. My last question was about the Council taking Parliament to court within the first two years of its directly-elected life. It would be worth going a long way to avoid that if it can be avoided.

My Lords, I think that our unadjusted net contribution is speculative in some sense because of the world price of food, which has an enormous effect on our contribution for the reasons which noble Lords have stated. I think our estimate would be that the situation would be rather worse if we had no adjusted contribution than it was at the time when we were having our negotiations in 1979–80. This makes it very important that we should get an adequate refund. What we have been doing is exactly what the noble Lord has suggested. It is because agriculture is a small part of our economy that the imbalance in the budget exists. The fear we have is that the guidelines which have been produced by the Council—which have not been agreed; but which are agreed except, generally speaking, for us—are very weak in that they will not mean that less money will be spent on agriculture and more money on other things. Consequently, if that is so and we are right, it means that the underlying British problem will not be solved—which makes degressivity all the more unacceptable.

With regard to what the noble Lord said about Russia and Poland, there are three things which the Polish Government could do: they could do away with martial law; release the detainees; and, talk to Solidarity and the Church.

My Lords, is my noble friend aware that people who have studied the actual mechanics of the Community will support his view that, on the question of contributions and agriculture, it means a long-term solution rather than a piecemeal and temporary one? Otherwise the general unity of the spirit of the Community will suffer from time to time when it is considered. Is my noble friend aware that the agricultural policy, the contribution and the regions are agreements that should run together and that to try to separate them would only bring confusion—such as we are suffering in this country at the moment where we have two agreements which are apparently in conflict and which have brought the railways to a standstill? Is my noble friend aware that the people who have studied it agree that those decisions must be taken together and that, although it may take another week or two weeks to get agreement, it is worthwhile hanging on to get it?

My Lords, I agree entirely with my noble friend that these things hang together. The guidelines on agriculture are of absolutely vital importance if we are to get an adequate solution to our problem. The noble Lord, Lord Gladwyn, asked what was so special about five years compared with four years. The more often you have this dispute, then the worse it is for the Community and for the cohesion of the Community; and incidentally, the worse it is for all of us who have to negotiate this over God knows how many hours and days. I think that if we can get a solution which will last as long as possible it would be sensible for everybody.

My Lords, will the noble Lord not agree that what he has said means that the agricultural community will have to wait for the settlement of the whole of the problem before they know what the prices will be for the produce in the next year? May I ask whether the very sensible Commission plan for a super-levy on surplus milk has now been dropped, or whether there is any possibility of success?

My Lords, the agricultural prices, by and large, never get settled until April and I hope we shall get this out of the way before April. We have all got to do the best we can. The super-levy (which in my judgment is an excellent way of reducing the surplus on milk) is one of the issues on which we are in a 9 to 1 minority.

My Lords, will the noble Lord not agree that, in so far as the CAP covers 60 per cent. to 70 per cent. of the EEC budget, this is vital and that incidents of the kind that he has reported this afternoon have been going on ever since we joined the EEC; and moreover that it is almost a classic example of a self-inflicted wound? Is he not aware that, notwithstanding that hitherto we seem to have put up very little resistance, his stance on this occasion would receive the congratulations of every sane person in the country who is interested in British agriculture? Will he not continue to do so in the knowledge that people who are now criticising this matter regarded those of us who made these criticisms in the past as treating the matter with some form of lèse majesté? Will the noble Lord the Foreign Secretary stick to his guns and make sure that there is no surrender, as has happened in the past, since this might bring in a new era for Great Britain as regards the EEC?

My Lords, there were so many parts to that question, to some of which the answer was, Yes, and to some of which the answer was, No, that perhaps the noble Lord will accept from me the answer that we intend to get a good result.

My Lords, regarding the arrangements made at the Foreign Affairs Council about food aid to Poland, is it possible to say whether the net effect of those changes will be to increase or decrease the amount of help going to the people in that unfortunate country? Will the Foreign Secretary agree that, when one considers any kind of sanctions in this context, it is sometimes difficult to say what wisdom or effectiveness there can be? There can be no doubt at all about the wisdom and need for assisting food aid to Polish people.

My Lords, perhaps I may explain—it is a little complicated—the question of food aid to Poland. What was happening before 13th December was that the Community was selling food at a discount of 15 per cent. to Poland, and the other 85 per cent. was a matter for the country concerned which was selling the food. As the Poles did not have any foreign exchange, it was in fact an 85 per cent. credit from the country concerned. Therefore, if we as a country had gone on as we were before 13th December last year we would actually have been giving the food free to Poland—15 per cent. Community money and 85 per cent. British taxpayers' money. What we have decided to do is to use the money which the Community has set aside—35 million ECU—for humanitarian aid; that is, aid in the form of food to the non-government agencies in Poland, where we know it will get to the right people. But we do not intend to give credit for food at the moment to the Polish Government at the expense of the British taxpayer.

My Lords, will the noble Lord the Foreign Secretary be kind enough to clarify the reply that he gave to the noble Lord, Lord Mackie of Benshie, about the annual agricultural price proposals? He said that a settlement takes place about April. As he well knows, the proposals are made just about now and will be conveyed to Her Majesty's Government and specifically to the Ministry of Agriculture now. Later they will be considered by them and by this House, among others. Can he say whether there is likely to be a delay in the proposals, not in the final settlement?

My Lords, the Commission will produce the proposals in the normal time scale. They will be discussed in the normal way by the Agricultural Council. I have no evidence of it but I imagine that the Commission will base their proposals on much of the guidelines on agriculture as has so far been agreed.

My Lords, before we leave the Statement, with the leave of the House may I ask the noble Lord the Chief Whip whether he could consider reviewing the procedure by which Front Bench spokesmen get Statements of this kind? With great respect to the noble Lord the Foreign Secretary, the difficulty is always particularly serious with the Foreign Office. As those Statements are of great importance and are usually complicated, even 20 minutes is not enough time to consider them properly. I think that I am right in saying that the Liberal Front Bench received the Statement only 10 minutes before it was made to the House. I know how difficult these matters are, but may I ask the noble Lord to reconsider the situation? It would be helpful to the House—and indeed the Government—if there could be a considered response to Statements.

My Lords, may I answer that question in some of my old capacities as well as my present one? I am sorry if the Foreign Office is at fault. These Statements, as the noble Baroness knows, are prepared at very short notice in a considerable hurry. As we know, they have to be looked at and passed by all those concerned. Sometimes it is impossible to get them to noble Lords in time for noble Lords to have a long period to look at them. It is a courtesy to send them. However, what we ought to do is to give as much notice as we possibly can—and I have in the past been in the same position myself—and we will look to see what we can do.

My Lords, I am most grateful to the noble Lord for saying that. Perhaps we could have an indication on a subject like this whether it is on the whole of the two-day summit, a review of the summit, or is confined to specific aspects only.

rose to call attention to the question of the United Kingdom joining the European monetary system; and to move for Papers.

My Lords, I am sure the House is grateful to the noble Lord for giving us an opportunity—alas! all too rare—to debate Europe other than on a degraded level of fighting over whether the halfpenny in the pound of our national income which we contribute to the European budget is being adequately returned to us. There are very much larger issues involved, and this is one of them.

There are two central purposes of the European monetary system, one of which the noble Lord has emphasised—that is, to regulate in a more stable manner than would otherwise be the case, the relations between European currencies. But I shall not deal at any length with that, because, although that is a valuable role, it is a limited one. The crucial role, in my opinion, of the European monetary system is that the stabilisation process and the machinery involved in the EMS is a necessary step in producing that relationship with the dollar and the yen—the United States and Japan—which will start to restore order to the world monetary system, which is at present in a dangerous state of near anarchy; a state which, if it gets worse, will very soon prove to be gestating the worst financial crisis of this century, including the one which some of us experienced in 1933.

A second reason for my regarding the crucial role of the EMS as being a step in world co-operation in relation to the monetary system is that, unless you move on with the EMS into a stage of world co-opera- tion, the EMS will have the greatest difficulty in surviving in an isolated state. It was rather disappointing to hear a strong pro-EEC man, like the former Prime Minister, Mr. Edward Heath, talking about having a ring fence around Europe. That is not the purpose of the European Community. It is not the purpose, certainly, of the European monetary system. The purpose of the Community and of the monetary system, in particular, is to link us effectively together sufficiently to produce a coherent negotiating force, not in any hostile sense but in a co-operative sense with the rest of the trading world.

Can the EMS take this step without Britain? Quite frankly, a European monetary system that does not have Great Britain in it is a little like Hamlet without the Prince, because we are still the biggest monetary centre in Europe. Therefore, as long as we stay out, or are half-hearted, shadowy members, the EMS is likely to remain linked to its narrower purpose, which is marginally useful, of stabilising the currencies among themselves.

I have said that there is a dangerous state of near anarchy. Parity relations at the present time between the great currencies are in an incredible state of volatility, which, so far as I can recall, is unique in my life-time. The Club of 30, which is a leading group of bankers and economists of very considerable standing—and I endorse every word they said—reported in the following words. They said that changes of parity of 10 per cent. in a week and 40 to 50 per cent. in a year have become the order of the day for our great currencies. Changes of that kind not only cannot reflect economic fundamentals; they must dislocate and disrupt them, because parity changes affect not only the trading relationships between nations—being brutally disruptive of trade—but also investment.

When this Government—and I see the noble Lord, Lord Cockfield, in his place—rejected the notion of some kind of parity policy, the noble Lord said in this House in June, 1980, that we were helpless. The Government certainly proved themselves to be helpless, but they did not have to be helpless when the pound soared to 2·42 dollars. That change not only disrupted our competitiveness at home against imports and our competitiveness abroad against exports; it also encouraged a vast flow of export capital, because, of course, at those rates it became immensely attractive to invest in other countries.

Worse still, such a situation affects politics, too. You cannot have political and strategic co-operation in the western world on the one hand, and the rat-race in economics and finance on the other. The two will not last long together. So we have to end these yo-yo currencies and restore European-US-Japanese co-operation, to bring about some kind of stable relationship between the European currencies as a group and these other currencies—particularly the dollar.

I ask your Lordships to look at what the present situation leads to. If, as is very possible and as is predicted by many influential American bankers, the American dollar rate of interest once again jumps to 20 per cent., this will impose upon our Government and upon every European Government, even if they are all united in the European monetary system, an intolerable dilemma. They will either have to watch their currencies depreciate if they maintain their interest rates at their present level against a 20 per cent. dollar rate, as billions flow rapidly out towards America—in which case they will suffer a sharp blow to their anti-inflation policies, as their currencies proceed to depreciate rapidly to accommodate the vast outflow that will occur—or, in order to avoid the outflow, they can move to match the American interest rates, in which case they will knock on the head, quite irrelevantly to their own needs and interest rates, the potential recovery of western Europe.

In a small way, that is exactly what the Government have done, because when they abandoned their nonsensical, indefensible and intellectually reprehensible position that they had no parity policy—they had no parity policy until the pound collapsed against the dollar and then they found one—they, very largely, halted the downward trend of our interest rates and dealt quite a sharp blow to our economic recovery. That dilemma can be solved only if Europe as a group, with its credit and with its purpose, arranges swap arrangements with the United States which do not bring about this irrelevant dilemma for the Europeans.

If the Europeans know that under the system they have a swap arrangement with the Federal Reserve, which is sufficiently large to recycle the outflow of funds that will occur if they hold their interest rates below the United States rate, and if they know that that money will be recycled by arrangement with the Federal Reserve—and, to some extent, by using their own reserve— then they will be able to continue with rates of interest which are apt for their own economic needs and will not have them irrelevantly imposed from outside.

After all, we managed to recycle the OPEC money. People tell me that it is impossible to get this kind of agreement, but we recycled 60 billion of OPEC money to Brazil, 26 or 28 billion dollars to Poland, a similar amount to Yugoslavia and so on. It seems very odd that we cannot have these intelligent recycling arrangements to maintain target zones for our European currencies against the dollar and the yen—particularly the dollar. Without these arrangements, we are committed to the highest common denominator of interest rates or the lowest common denominator of economic progress.

The truth is that floating rates are quite incompatible with a prosperous interdependent world or, indeed, with political co-operation in the world. They have been sold to the world on a bogus prospectus. Because of the shortness of time, I shall recite very briefly a catalogue of false promises made by the floaters. It is said that they reduce speculation, but they have increased it to an all-time record size in world history. In that speculation, they have turned the major currencies from stable trading media into gambling counters. Seventy-five billion dollars a day are traded every market day on the spot markets of the world, and probably two or three times as much on the futures market. The spot market trade alone is some 15 to 20 times the amount which is required to finance the movements for trade and investment. Floating was supposed to reduce Government intervention. Government intervention, in this false floating, has been higher than it ever was in the period under Bretton Woods. They were supposed to produce parity changes which smoothly reflected fundamental economic factors. I have recited the figures on that. Speculation is supposed to smooth the changes. If ever it went too badly, speculators would come in and correct it, said all these pundits—I must say, pundits whose knowledge of the market was so limited that it is doubtful whether their wives would have trusted them with the Saturday morning shopping. To a large extent the western world has trusted them with their economic and financial destinies. These gentlemen, who know very little about the practices of the market, believed that the speculator would move in to counter the trend, whereas the normal reaction of the speculator is to move in behind the trend and create a kind of stampede.

If you compare the disastrous volatilities of parities and interest rates, you have got the highest real interest rates in the great countries ever recorded in world history—not nominal rates; the real interest rates are the highest ever recorded in world history and there is the greatest volatility in currencies. This is the achievement of the floating system. Bretton Woods was much criticised because, like all human systems, it was not perfection. But it begins to look like near perfection compared with this anarchic, dangerous situation of deformed parities which we have brought about under floating rates. No anti-inflation policy can work in any country for long if the unit of currency is jumping about like a yo-yo. That should have been obvious to bankers, of all people. No concerted world recovery is possible with these fluctuating parities and with these fluctuating interest rates.

I want to say a final word about the position of the Labour Party. It will have become apparent to the House that I find myself at some variance with the concepts on these matters of the leaders of the Labour Party. That causes me great unhappiness, though not so great an unhappiness as I should feel if I agreed with their views. I understand that the leader of the Labour Party and Mr. Eric Heffer are to go on a ceremonial visit to the leaders of the Socialists in the European Community. I wonder what they will have to say to each other. I wonder whether Mr. Foot and Mr. Heffer are going to be able to announce—

My Lords, I wonder whether the noble Lord would refrain from referring to Members of another place by name.

I wonder, my Lords, what these two gentlemen will have to say to their Socialist comrades about the shameful repudiation of the great and honourable tradition in the Labour Party of internationalism which is involved in their position on the European Community. I wonder whether their Socialist comrades will draw their attention to the moral shabbiness of making large claims for international co-operation while combining them with hostility to every concrete opportunity in that area. It seems that they are able without any intellectual distress to combine the rhetoric of internationalism and interdependence with the actual practice and support of policies which in this area are nothing better than the dangerous national chauvinism which has brought the world to its present great difficulties.

I conclude by saying that floating rates do not work and that fixed rates did work. Under them the world enjoyed a prosperity unique in world history—fixed but adjustable rates. We have got to get back to some flexible, orderly, co-operative system. I am hoping that we can treat the reaction to international co-operation of the Labour leadership at the present time as being a momentary spasm of a dangerous and negative kind which will he corrected in due course and that they will join the view which I have expressed; namely, that the world must move back to enhanced co-operation unless we are to suffer deep economic crisis, deep financial crisis and a great social danger to the systems of the world.

My Lords, I should like to begin by thanking the noble Lord, Lord O'Hagan, for raising this important subject this afternoon, and also to thank him for the way in which he did so. I fully support the plea which he made that the United Kingdom should become a full member of the European monetary system. I am glad that the noble Lord, Lord Lever of Manchester, who speaks to us with such knowledge and authority on these matters, should have supported that plea as strongly as he did.

When we discussed this subject on 28th November 1978, just over three years ago, I said then that we on these Benches were committed to the concept of an economic and monetary union in the European Economic Community. I confirm that commitment today. But of course that may be dismissed as unrealistic aspiration, remote from the practical problems which we now have to face. I believe, however, that such a judgment would be short-sighted, because what we are saying is that the European Community will not realise its full potential, economic or political, until there is one economy instead of 10 or 12, as there may soon be, within the European Community.

On present evidence—and we had some of that just before we began our debate this afternoon—it will be a very long time before that stage is reached, but I think it is important to know where we want to go. Direction is vital. Of course, an economic and monetary union would have to be complemented by a political union. That, too, will take time. But, if you have these aims of economic, monetary and political union, then you do welcome any steps which are taken, however small, on the road towards them. That is one reason why we on these Benches at the present time welcome, for example, the initiative on European union of the German Foreign Minister, Herr Genscher. This is the reason why we welcomed the establishment of the European monetary system in March 1979.

We see the establishment of this system as a separate issue from the question as to whether the currencies of the world should be fixed, floating or crawling. That is a vitally important question, there can be no doubt, and it has been emphasised to us this afternoon by the noble Lord, Lord Lever of Manchester. When Mr. Roy Jenkins put economic and monetary union back on the European agenda during his presidency of the Commission, he envisaged large areas of stability, of which Europe would be one, linked by floating exchange rates. Perhaps the noble Lord, Lord Lever of Man- chester, would not see it in quite that way, but certainly he has this afternoon argued, as the noble Lord, Lord O'Hagan, argued and as I argue, that we want within Europe to have the system of monetary co-operation that is incorporated in the European monetary system and to see Britain as a member of it.

When this matter was discussed in this House in November 1978, the European monetary system was planned to proceed but it seemed likely that Britain would not join it. In initiating that debate, the noble Lord, Lord Soames, whom we are looking forward to hearing later this afternoon, attacked the Government for having, " such a moth-eaten and weak-kneed attitude on so vital a matter ". " What a sad commentary ", he said, " on the affairs of this country ". The noble Lord, Lord Cockfield, who is to reply to this debate, said it was perfectly true that membership of the European monetary system would entail severe financial disciplines, but these are just the sort of disciplines that we need here at home if we are to beat inflation. Much to our regret on these Benches, the Labour Government decided not to join the currency link, while taking part in some of the other aspects of the system. To our continuing regret, when a Government including both the noble Lord, Lord Soames, and the noble Lord, Lord Cockfield, came into office in May 1979, that Government did not join either, and so things have continued until today.

In the Green Paper on the European monetary system which the Labour Government issued in November 1978, at the time when the question was being argued as to whether Britain should join, they set out eight characteristics which, in their view, the system should embody. Among these was a requirement that it should be durable and effective. I think we can say after three years that it is durable and effective. Also, it should be truly European and be capable of containing all the members. Again, I think we can say after three years that it is so. Another requirement was that it should provide a basis for improved growth and higher employment. If there has been precious little improved growth and if there has been lower employment, I do not believe that the European monetary system can be blamed for that. Also, there should be provision for realignments. There have been four realignments, but on the other hand I do not believe it can be argued that there have been too many. And so one could go on through the whole eight points.

I do not believe that the operation of the European monetary system has militated against the Labour Government's conditions in any way. It is true that that Government did not like the parity grid system proposed as much as the basket of currency system, and they had good reasons for their preference, but surely that is insufficient reason for not joining then, and I imagine that it is not questions about the mechanism which prevents the British Government from joining now. Is it perhaps, as it has been suggested earlier in the debate, concern as to whether, because of our oil and our inflation, the pound is too highly valued in relation to the other European countries? It has, of course, fallen hack a bit now in relation to them. Would a small devaluation on joining be such a bad thing? And had we been in the European monetary system, might not our manufacturing industry have escaped the loss of competitiveness on the scale which has taken place?

May I say in conclusion that, if the Government could now see their way clear to join the European monetary system, I am sure that the political bonus for Britain would be considerable, and this would be a great advantage for us at a time when the delicate negotiations of which we were hearing earlier this afternoon, about the contribution to the budget, are taking place. If Britain joins, I am sure that it would be taken as a welcome indication of Britain's commitment to wholehearted support of the Community.

My Lords, now that we are discussing the European monetary system, I must first say how glad I am that my noble friend Lord O'Hagan has chosen this subject. As the noble Lord, Lord Lever of Manchester, said, we should look at this not only in parochial Community terms, but also in the widest international terms. We joined the Community, not just in the hope that we would enrich ourselves by so doing by being in a larger market but also because, off a European base, we could have a greater influence in the world than we could off a purely national base. The same argument holds with the European monetary system.

The main reason leading us to join the system would be that of a wider international character to which the noble Lord, Lord Lever of Manchester, referred. It is worthwhile at this time, some two or two and a half years after the European monetary system was set up, during which period we have seen enormous swings of parties, to consider how the monetary system has worked and how it has succeeded in the prime task that it had in its early days, which was to ensure that it was to some extent at least an island of stability in what was in a monetary sense a very unstable world.

I do not know whether your Lordships have looked at the figures recently and seen what has happened in the last two years. Taking 1st January 1979 as my base line, I looked at the parities then compared with 1st January 1982. I took the Deutschemark as the pivotal currency and I looked at the changes of parity during those two years, of the Deutschemark with other currencies within the EMS, and of the Deutschemark with the dollar and the yen outside it. I found that the difference today compared with two years ago between the Deutschemark and other currencies within the EMS varied between one half per cent. with the Dutch florin to a maximum of 13 per cent. with the Italian lire, the most volatile of the EMS currencies. Indeed, if one were to put to one side for the sake of argument the Italian lire and the Belgian franc, both of which have suffered particular difficulties during the last year or so, all parity movement among all the other EMS currencies have been within single percentage figures. But when one comes to look at what has happened between the Deutschemark and the major currencies outside the EMS, the dollar and the yen, one sees a very different picture.

With the dollar, compared with two years ago, the difference in the Deutschemark parity is 36 per cent. and with the yen it is 40 per cent. Let me put it to your Lordships another way. If one looks at the worst picture of the volatility of currencies during this two-year period, what does one find? If one takes the high and the low points of the currencies within the EMS one finds that the worst it ever was (between the Deutschemark and the lire, which is the most volatile of the EMS currency currencies) was 16 per cent. But if one takes the high and low points between the Deutschemark with the dollar and the yen one finds it was 51 per cent. against the dollar and 54 per cent. against the yen.

Now, if one departs from the simple premise that money is there to encourage the exchange of goods and services, what do we think we are doing allowing the parities to move around like this, to this sort of order of 40 and 50 per cent., over a two-year period? For this makes a mockery of forward planning by industrialists or traders. Also enormous profits or losses are made just by luck due to how the currencies of seller and buyer happen to move between the contract and sale. What has this done for employment? It has created a lot of extra unemployment.

I must agree that if you take my argument to a conclusion, one would expect to see a far greater degree of trade within the EMS countries than you would between them and the outside world, because their movements of parities have been much less. We have seen a change, but it is not all that phenomenal. If you take a base figure of 100 for 1975, the exports from the Nine among themselves has gone from 100 to 212 between 1975 and 1980, and with the outside world from 100 to 185. But an element we must bear in mind here is that the growth within the countries of the European currencies has been far less in these two years than has the growth in the dollar zone, and particularly the yen zone. So I believe the wide parity movements have had a significant effect on our trade, have had their effect upon our industries, and have had their effect, therefore, upon the levels of unemployment in western Europe.

Of course, I realise that there are difficulties in our joining the EMS. As my noble friend Lord O'Hagan said, there were those who were against it. I remember hearing certain individuals telling me that the pound was much too high at 2·40 dollars; then they said it was much too low at 1·70. Here it is at 1·80 to 2·00, somewhere in that area. I do not know quite where they want it to be. I do not want to take the Labour Party's arguments. To begin with, I do not understand them; but, secondly, the noble Lord, Lord Bruce of Donington, will tell us why he does not want to join the EMS. I suspect that anything that might be said from that Dispatch Box opposite will be related to the fact of the Labour Party's enormous capacity to wish to commit economic suicide by leaving the Community. This will have something at least to do with their desire not to join the EMS. So I ignore that argument.

Turning to our own real problems, the fact that we are a petro-currency of course makes a difference. Of course it does not make it easier for us to join. On the other hand, we have been through the two big oil hikes of the 1970s and they have had their effect. If we look to the future I do not think we can be expecting the kind of very rapid movement of oil prices which had the impact upon sterling that we saw in the 1970s when there was a conjunction of circumstances where two big rises in oil prices coincided with North Sea oil coming on stream. I should have thought that was a once-or twice-for-all phenomenon which is unlikely to be repeated, although of course there will be some movements in oil prices. But I do not think that that is sufficient to outweigh the advantages which I see in our joining the EMS.

Then of course one must face the fact that sterling is uncomfortably high in relation to the Deutschmark today. This, I agree, must be put into the balance as well, but I do not think that either of these points detracts from what I would call the tactical economic advantages of joining the EMS.

I move to the strategic arguments, the ones that were set out so ably by Lord Lever, and there I think one makes a very decisive case. The kind of movements of parities that I have described—30, 40, 50 per cent. over two years—everyone dislikes; there is not any country in the world that would not sooner get that put right, or at least get it dampened down. I do not believe that we could aspire to go back to fixed, although not immutable, currencies. But at least, if the will was there, there could be agreement between the zone of the European currencies, the zone of the dollar and the zone of the yen to build in a certain discipline with the combined objective which we all contribute towards reducing these wild parity swings. It could be done, but it must be done through zones. I do not believe that it could be done by individual European countries, and I do not believe that the United Kingdom could play its part in that unless we were in the EMS.

Although sterling does not carry anything like the international weight it did 20 years ago, nevertheless there is still a fund of knowledge in this country, in the City of London in particular, and in the Treasury, of international money markets which I think would be of enormous value when the EMS come to discuss these matters with the United States. I believe the United States is ready for it. If there was benign neglect in days gone by, it is not there today. It seems to me that we should at least try it, and we are not going to be able to play an effective part if we remain outside the EMS. Though I must tell your Lordships that this is not a matter, certainly on the tactical side, that I would go to the stake over—though I have been deprived of my stake and I have not got a stake to go to any longer—but, if I would not go to the stake for the tactical reasons, I think the strategic ones lead us into stake country. Because this is one of the few areas where all the Governments concerned would be seeking the same objective of reducing exchange rate movements.

The noble Lord, Lord Banks, was kind enough to quote a passage from a speech of mine in November 1978. That tempts me to quote another one which I was intending to quote anyway. He has given me a good peg to hang it on. I said:

"So I do not believe it is possible to exaggerate the need for a degree of international co-operation in the management of exchange rate movements if trade is to grow rather than diminish, with all that means in terms of employment and prosperity within the free world".

I think it was true in 1978 and how agreeable to be able to say so again in 1982.

So I would make a plea to my noble friend Lord Cockfield, and it is this. I ask him to cast aside the prejudices of the past. We all know that there are certain individuals who have husbanded these prejudices for a long time. I would let somebody else have a look at it, let people with a fresh eye come to this. Of course there are arguments both ways, but let them consider them, the political, social, economic arguments. I am quite prepared to listen, but at the moment I am of the opinion that, if we were to start that ab initio, we should get the answer without peradventure that one of the great contributions this country could make to the world in general and to itself in particular would be to help to dampen down these vast swings of currency parities, and the way to do that is by our full entry into the EMS.

My Lords, I, too, am grateful to the noble Lord, Lord O'Hagan, for giving us this opportunity to discuss this very important subject, which, as we have been reminded several times in this debate, has been before your Lordships on several other occasions; the most recent one was the one that Lord Banks and Lord Soames referred to, the debate introduced by Lord Soames himself. At that time, while I was in favour of joining the EMS, I had some hesitations because of the timing. It seemed to me then that there were difficulties about our own position which made it rather risky to join just then. Since then I have become a wholehearted supporter not only of our joining but of doing it as soon as possible. All the speakers who have spoken so far have been enthusiastic supporters, and I am left with very little to say on the subject, but I will perhaps try to add a few words.

It seems to me in very broad terms that there are two reasons for joining, the political and the economic. The political reason, which I think is a very strong one, is that the EMS has a symbolic significance in connection with the general movement towards European unity. To me, the main achievement is the coming into being of what is practically a free trade area. I know that many people think that the CAP is the main achievement, but I doubt whether that is really a factor for unity. However, it is, I am sure, the case that our partners in Europe often think that we are rather uncomfortable bedfellows—all elbows and knees—and that although like everyone else we profess the need for unification, for working together, when it comes to particular cases we do not do that as much as we should.

Great importance is attached, symbolically, to our joining the EMS, because it is an area in which we shall have responsibilities to carry out as well as the benefits that we hope to receive. I feel that a lot of our negotiations in the EEC as a whole would be softened if we took opportunities like this for showing that we really do want to get together.

On the economic side, I suppose that it has been agreed for a very long time that stable currencies are very desirable in the economic world. In my active time, we enjoyed stable currencies because of the Bretton Woods system and because of the general agreement under GATT to reduce tariffs. There was a long period of growing world trade from Bretton Woods to 1971 under the influence of those two factors. As we know, the currency system broke down in 1971 and the reason was twofold. The main reason was that the problem of inflation hit different countries at different speeds so that prices became out of control and the preservation of the parity rates put too much of a strain on especially those countries whose costs were going up too fast. That led to great speculative movements which accentuated the difficulties.

As regards what has happened since then, I do not think that I need go any further into the chaos into which we are moving. However, it is clear that there was very little call for the sigh of relief that many people felt when we went over to floating currencies. The noble Lord, Lord Lever of Manchester, and the noble Lord, Lord Soames, both in their different ways have stressed the horrors of the present exchange rate system. I do not think that one can underemphasise the dangers into which we are now drifting—the breakup of the economic unity that we had been developing in the early years. There is a tremendous amount of movement back towards protectionism of one kind or another. We certainly are not getting together at the moment to try to overcome the recession. In my time that was the first step that Governments took when there was a concerted recession.

I was against joining this system at the time of our last debate, which was just after the new system had come into being, because I thought that our currency was then too weak and I remembered that we joined the first experiment in this connection, which was the old "snake", and had to leave almost at once. I thought that it would be unfortunate to join this system and then to have the same experience. Economic forecasters often have red faces and this was a wonderful example of that. I was afraid of joining because I thought that our currency was too weak to stand, but in a very short time we were propping up at, I think, £2.42 against the dollar. So instead of having to deflate like anything, because otherwise we could not have stayed in the system, if we had been a member of it then we would have had to inflate or sell the currency to bring it down—or both—or have a new parity.

But the European monetary system has, to some extent, become something of an island with a very stable position in a very shifting world. Our own rate has come down. Of course we are in a dilemma about our rate, because the oil surpluses suggest that we ought to have a higher rate than the exports which we have to depend on in the long run. The rate is perhaps a hit high, but it is not such a bad rate as it was, and our exports are holding up very well. So I think that now is a good time and that it really is incumbent on us, for the reasons already given, to join as soon as possible. I do not know, but from looking at the figures it looks as though the Bank of England is now trying to stabilise the currency, and it might even be—perhaps the noble Lord, Lord Cockfield, can tell us—that the Government are moving a bit more towards having an exchange rate objective rather than one of the very uncertain ones like M3. Anyway, I think that now is a good time.

There is one further reason which has already been referred to, and that is that the three years which we have had of the European monetary system have shown that the possibilities for changing the rate if it gets too much of a strain are much easier than they used to be in the days when it caused a great disturbance. I remember vividly the horrors of 1949 and, to a lesser extent, 1967. But changes have now been made inside the EMS. The French have made a change. It was quite a smooth and easy one. Therefore, we cannot in the long run, until we get the business of inflation going at the same rate, expect always to keep the same parities. But we want to get them stable for as long as we can and have not too much disturbance when we have to make the change. I think that that is offered to us now.

So I join the very eloquent pleas which have already been made, especially by the distinguished speeches of the noble Lord, Lord Lever, and the noble Lord, Lord Soames, and I hope that the Government—although I agree they cannot tell us today—are thinking much more kindly about this matter than they seem to have done.

My Lords, I am in agreement with the arguments of my noble friend Lord Lever of Manchester, but noble Lords on the Benches opposite must not assume from that that this is a common view in the Labour Party. Indeed, I think that when, later on, they hear my noble friend Lord Balogh on the subject they will discover that he is verily a doubting Thomas. I have no doubt that my noble friend Lord Bruce of Donington when he comes to wind up this debate will show a very restrained enthusiasm for the EMS.

Once again we are indebted to the noble Lord, Lord O'Hagan, for giving us the opportunity to debate a subject which is both important and topical. It is topical because the desirability of Britain entering fully into the EMS and participating in the exchange rate mechanism is now, so we are told, being seriously discussed in the corridors of decision. I myself hope that the Bank, the Treasury and the Foreign Office will at last find it possible to agree that full membership is in Britain's long-term interest, and that they will be able to convince the Prime Minister of that fact. I hope, too, they will agree that it is not against Britain's immediate interest to do so and that, therefore, the time is ripe for full membership. Of course, it is possible that the Government are waiting for our major problems in the Community to be resolved; I mean the problems of fishing and of our budgetry contribution. I should like to express sympathies with the noble Lord the Foreign Secretary in the struggle that he had in Brussels on Monday. However, I think that the Government might consider whether a European gesture as significant as our becoming full members of the EMS, might inspire a solution of those intractible problems.

The right honourable Member for Bexley and Sidcup spoke at the weekend of the difficult phase through which the Community is going. The last two years have been years of economic turbulence. For the second time the world has been shocked by the ineluctable demands of the oil producers, and the subsequent recession has produced cruel and unacceptable levels of unemployment. The members of the Community have no common economic policy. The dreams of Vice-President Ortoli of a co-ordinated, concerted attempt at expansion, have not been realised and it has been agreed that for the present each member state should seek its own solution—a kind of despairing recourse to sauve qui pent.

Until about 10 years ago—several speakers said 11 years ago—we had a world of comparative monetary stability as currencies were traded at rates based on the values of the United States dollar. Then President Nixon found it impossible to maintain convertibility, and the eventual consequence was that currencies began to float. Then the nations of the Community, which we were about to join, tried to create what was called at the time—if I may complete the phrase which the noble Lord, Lord Soames, recalled—an island of stability in a sea of chaos. However, the metaphor was swiftly changed; the island became a snake. Britain, France and Italy found the pressures against their currencies too great and they had to leave. The snake became a Deutschmark zone, with the smaller European currencies around it.

But this, of course, was too small a group to cope with the consequences of an unstable dollar and a soaring Deutschmark which threatened Germany's export trade. So the idea was born of this new monetary system with built-in safeguards to allow Britain, France and Italy to return to it. Professor Triffin wrote that:

"The Bremen initiative was an instinctive reflex, a desperate desire to make their countries less dependent on the unpredictable vagaries of a shaky US dollar ".

But it was not only that. It was to be inspired and to be supported by a co-ordinated economic expansion. However, of course, that has not come.

But this initiative came to Europe shortly after the utopian and federalist dream of economic and monetary union had been reborn and nourished by President Jenkins' fervent and eloquent oratory. The nascent EMS was, however, not that. It was an urgently needed practical arrangement. It implied the ceding of a little more sovereignty than Bretton Woods had required. Each nation was to remain in charge of its own economy and must intervene if the rate could not remain within the permitted margin.

Between this and monetary union, which demands a single currency for all countries or its equivalent national currencies at externally fixed, unadjustable parities, there is a major qualitative difference. But this difference was not clearly perceived and it caused great confusion in the debates which took place in this country and in Europe at the time. I was the rapporteur on the subject in the European Parliament and I could never stop the federalists from commending the EMS as monetary union; nor could I dissuade the anti-federalists from opposing it for the very same reason.

This afternoon the noble Lord, Lord Banks, has advanced the same idea: this is a step on the road to complete economic and monetary union. It is only a step, but every time that argument is brought forward, it is used by the sceptics to oppose the EMS. I wish that they would forget about economic and monetary units, and simply say that monetary units are perhaps something for the very distant future; and that all the EMS does is to provide an experience which, after long duration, could give an indication whether or not monetary union is desirable and feasible. In short, the EMS is a thing in itself, performing a useful and necessary function for a group of states which do about half their external trade with one another and which have close political links. As several speakers have pointed out, it has, of course, proved possible, in a time of turbulence, for its members to keep their exchange rates within the set limits, and when modest adjustment to a rate has been necessary the change has been accomplished smoothly and without political drama.

The EMS has earned high marks for exchange rate stability, but it has not yet had, as was hoped, a conspicuous effect on prices. One more economic axiom has been disproved. It was thought that for strict discipline over prices it was essential to ensure exchange rate stability. Not so. It is, the pundits are now saying, only in the medium-term or longer that sustained inflation inevitably affects the exchange rate. When the United Kingdom took part in the negotiations it was judged that the time was not ripe for Britain to join, and the Government thought that the EMS was too much like the snake. Some people in that Government seemed to think that the snake shared the divine displeasure which the creature in the Garden of Eden had incurred.

Then, of course, there were many members of my party who were haunted by the ghost of domestic deflation which they thought would have to be summoned if sterling got into trouble. Of course, the time was politically inopportune. An election was imminent and many voters had recently become disenchanted with the Community because they had recently learned of the unfairness of our contribution; and, of course, they had become well aware of the extravagances of the CAP. Of course, it says much for human insufficiency that nobody predicted that Britain would soon be embarrassed by a pound soaring to an inconvenient and unjustified height.

But surely today the pound is somewhere near a realistic level, and the prospect is of oil prices remaining stable or even declining because of depressed demand. Is the time still not ripe? I shall make no attempt to answer, because I think that the question is beyond any individual. But obviously some of the obstacles have been cleared away. Of course, the strict monetarists who give a pivotal role to money supply still believe in floating rates, but whether there are any such people outside the academies is rather doubtful. There may be some people with a voice in monetary policy who fear that the obligation to buy or to sell foreign exchange at a given rate might make them miss their quantitative target. But that target is so elusive that it has become something of a joke. As The Times said today, money supply is no longer the touchstone of national virtue.

But for those who may still have doubts about the effect of the intervention on money supply, perhaps I could quote the Director-General for Economic and Financial Affairs, Signor Padoa-Schioppa. He said in London not long ago:

"There should be no systematic conflict between exchange rates and monetary targets if the two objectives are set as part of a consistent policy.

"Serious problems only arise if the targets are contradictory ".

And he pointed out that most countries in the EMS have had quantitative monetary targets and have not encountered insuperable difficulties.

Then there is the fear that if the pound was fully integrated into the EMS, the special financial relationship with the United States might be weakened and London's ability to compete for business on a world-wide scale would be lessened. Again I must quote Signor Padoa-Schioppa, who believes that these fears are exaggerated; that there is nothing in the EMS to diminish the City's role as a provider of services throughout the world. Indeed, as the ECU develops into a reserve currency there should be a growing business in new financial instruments denominated in ECUs. But if the United Kingdom does not join the EMS fully, the use of the ECU will be held back and the City's share in the new business will be smaller.

Another argument against our full participation has faded. It is no longer true that other members of the Community are more involved in intra-Community trade than we are. About 53 per cent. of the Community's exports are traded within the Community and Britain's exports to the Community are close to that figure. My Lords, is there anybody who still regards a floating currency as a magic solution for our problems? Is there anybody who does not look back with yearning to the Bretton Woods days of growth and full employment?

Surely in the interests of trade and investment we must work for reasonable monetary stability, internally and externally. Surely we should be preparing to enter the stabilised zones where we do half our trade, in the hope that it will, as the noble Lord, Lord Lever of Manchester, has said, provide an example, an incentive, and an opportunity for a systematic liaison with those who control the dollar and the yen.

The Times points out today that the Europeans are now trying to create what is analogous to this; that is, they are trying to create a pool of lower interest rates to protect their nascent recovery from another surge of American interest rates. But, they ask, what will they do when it comes, as seems possible? This is the economic question which overhangs the petty cash of Sir Geoffrey's Budgets. There are answers; we need not be flotsam on the high seas.

My Lords, my noble friend Lord O'Hagan has done a good job in bringing this question once more to your Lordships' attention. I agree with all that he says and wish to support him strongly, because I think that this is very much in our national interest. What an advantage it is that we have well-informed Euro-MPs of such ability in your Lordships' House here in Westminster. It is now very important that the Government should at long last make this country a full member of the European monetary system.

First, industry and commerce really do need a much more stable exchange rate. It is very bad for our exports when the exchange rate goes unreasonably high. It gives an undue encouragement to imports and to excessive exports of capital. The period of high rates we have gone through was really a calamity for our manufacturing industry. It made firms very anxious to reduce their staffs as export orders declined and as imports increased. Import prices were of course kept down, and this pressed on the retail price index. But looking at our inflation rates over the last three years I find it very hard to believe that that discouragement of inflation balanced in any way the effects of greater unemployment on the public sector borrowing requirement, on the morale of our workforce, and on the general reputation of the Government.

In my view, we should all have learned more from the sad experience of this country in the late 1920s when Mr. Churchill, as Chancellor of the Exchequer, revalued the pound upwards by 10 per cent. in order to facilitate the payment of our war debts to America. Coming to our own time, it was a disaster when the pound appreciated by 15 per cent. to 20 per cent. for a period last year.

If we were full members of the EMS I believe that our exchange rate would be more easily held within the permissible limits of the 2½ per cent. swing either way because our membership would discourage a lot of speculative movements of the enormous, loose-footed funds that now swing around the world, and the EMS as a whole would represent a more weighty inertia. In fact, I find it difficult to believe that the EMS would not be made very much more effective if we were full members.

The pound exchange rate looks about right to me now. This is a matter of judgment and I know one should fear to tread, but that is really what I think. I have an idea that my noble friend Lord Roberthall, for whose wisdom I have for many years had a prodigious admiration, feels about the same way. So for goodness sake let us seize this favourable opportunity and make this country a full member.

I also think that our joining as full members would tend to strengthen and build up the new Europe as a whole, and that in itself is worth working for and is very greatly in our own interests.

Having worked a good deal with this type of problem at OECD I do most fully realise the nervousness felt in some Treasury and Bank of England circles, that if we tie our hands in this way we might not be able to defend the new rate permanently. Such defensive action has cost us dear in the past. But I want to say in this connection that if the other members of the EMS can do it successfully, then it would be ridiculous if we could not also do so now that we have a petro-currency.

The Italians have, I believe, a special latitude of a permissible swing of 5 or 6 per cent. instead of 2½ per cent. Perhaps we could secure the same concession. But in any case experience shows quite clearly that no set of rates can be expected to become permanent, and the EMS rates have of course been altered from time to time. So I see no reason why we should do worse than all the others provided the Government take care to look after industry, especially export industry, as they ought to, and provided they continue to wrestle with inflation including both monetary and cost-inflation.

This brings me to industry and commerce, both of which desperately need stability of conditions if they are to progress. I hope, and believe, that our full membership of the EMS would not only produce a vitally needed foreign exchange stability; I believe it would also tend to encourage a greater stability of interest rates, and perhaps a better comparability of rates within the EMS countries. This would really be of great assistance to industry and commerce.

I am not just plugging a few technical points, important as they are. This whole question is really vital for the economic and financial future of this country, and I think that it needs to be looked at on a broad economic background. There are encouraging signs that our industries are at last beginning to pick up after the recession, but they have a very long way to go, and many businesses, like the Invergordon aluminium smelter, are still going bust. It is really essential to look back at our very, very slow recovery from previous recessions and to see the great present danger to our economy, and to the Government, if we do not at once remove the factors which hold our boards of directors back all over the country from making further progress. They have very little confidence at present. They cannot trust the exchange rates; the interest rates; the trades unions; the rating system; or the various taxes and levies. So they really cannot easily invest in new plant, new processes, or new factories. Yet we are in the middle of the greatest industrial revolution of the present century. There is an enormous technological revolution going on while we watch. This country is in real danger of being left behind, with potentially disastrous results on our unemployment and standard of living, for which our politicians of all parties will inevitably be blamed.

In previous slow recoveries since 1950 the Government of either main party have in the end always expanded general demand, with disastrous results, which this Government have rightly condemned. We absolutely must avoid that. What we need is a régime of intelligent exceptions designed to help industry; and, I repeat, intelligent exceptions designed to help industry. Let the Government now join this country to the EMS as full members and make a good start there. Let them use the occasion to have greater stability of interest rates and a greater regard for the effects of our interest rates on the economies of our neighbours. A greater regard for the effects of one's economic policies on neighbouring countries is something which used to be very strongly felt in OECD and has become much weakened in recent years. I hestitate to blame just the monetarists, but they certainly have less regard for that factor than others do. And my noble friend Lord Roberthall mentioned the danger of a relapse into protectionism—and it is a great danger if we are to make a proper recovery.

The Government have no chance of curing inflation unless they get industry going again soon. I have mentioned many factors that need immediate attention and there are many others which I have not mentioned; tax questions, local rates planning questions and many others all need dealing with. The monetary factor is only one, but an important one. The others are vital to the men in the boardrooms, to management and to those on the shop floor, and they are at least equally important. To make this country a full member of the EMS would be a most useful measure to take among the many that are now required.

My Lords, I was suspecting that I should be followed by a horde of noble Lords agreeing with me. In fact, I think I am the first and sole representative of those who have certain misgivings about the step that is proposed. Economists cannot produce experiments, except perhaps Mrs. Thatcher, but what we can do is look back and see how certain policies came out, in favour or against the Community.

British monetary and fiscal policy has been dominated, in my opinion, by the passionate desire, especially on the part of the Bank of England but also of the Treasury, to return to the economic liberalism and freedom of the pre-1914 period. It was a repetitive performance. Even in those days a rather boring pattern was adopted, the Community reinforced by the EMS through those Keynesian doctrines, which had some influence, especially in the immediate period after the war, when we were still supported by wartime controls and some planning. That has now been swept away, to some people's delight.

The first real taste of what might be threatening was in 1947. Dalton, against United States' advice, restored convertibility; the loan which was supposed to underpin and support British reconstruction was exhausted in a matter of hours or days, certainly a maximum of weeks; and next we had the armaments crisis, when Gaitskell, contrary to most Chancellors, pressed for increased expenditure on armaments. That experiment expired in about two years, in 1950 or 1951. It resulted in the collapse of a number of our foreign markets never to be regained. The possibilities opened by the devaluation of 1949 were missed. Fortunately for the Conservative Government, the price of raw materials declined abruptly, giving the country over £1,000 million of new resources to sustain the balance of payments. A new liberalism was set in train with investment increasing very slowly. A new crisis followed in 1960, and another in 1967, and the latter gave a foretaste of what was to come. All of that happened while the Bank loosened its control over foreign payments and plunged the country into deflation, rectified only in election years.

Much more important in this respect was our joining the Community. I recall the debates which went on then, in many respects very similar to the debates going on today—that is, an overwhelming proportion of those who wanted to join tried to match those who were in opposition. Most noble Lords supported the move and most among those partisans pointed to the great potential gains which would accrue to the country by the opening up of a vast market of over 200 million people. Those were in their view the fabulous opportunities. Some noble Lords, however, suggested the dangers due to our opening our markets, as against the Germans opening the German markets. Nevertheless, the new liberalisation measures were accentuated and in the end the pound was floated, much to the displeasure of the majority of this House.

Our relatively more acute slump today finds its explanation in the problems created by Governments of both parties. In the meantime, however, the magnificent discovery of gas and oil increasingly made itself felt; at the moment some £6 billion of relief has been afforded to our balance of payments, with more to come. Regrettably, of course, the Government are giving away a large part of the profits to mainly American companies; 61 per cent. of British oil is really owned by the Americans. Hot money however regained confidence and fled to Britain, having first been diverted to America. The Government and the Bank, acting on foolish monetary lines, refused to intervene against the stream of foreign exchange streaming into the country, wrongly believing that the increase in money supply as such would have an inflationary impact. In fact, most of the moneys did not enter the income stream but were put to precautionary balances in either banks or other institutions.

The pound however, not being managed, rose precipitately, under the influence of hot money, from 1.56 to 2.45 dollars, and it is now back at about 1.82 to 1.83 dollars. That resulted in increasing British imports and stifled British exports. It must be stressed that the pound is still at least 20 per cent. over-valued.

As I have already pointed out, our balance of payments would be in a terrible state without the revenue from the North Sea. The non-oil balance is horrifying and the loss of domestic industries' potential is serious and is threatening to become permanent. It is in this sombre framework that some noble Lords wish to enter fully the monetary system. I do not disagree that that compact is flexible. It can accommodate changes in parities which seem necessary at the time. Unfortunately it is less flexible downwards than upwards, because an upward revaluation would attack exports.

The worldwide depression caused by monetarism is pressing on us, and we must not open a further breach in our defences, especially now when exchange control has been abruptly abolished and an enormous amount of capital is flowing out of the country—estimated at £4 billion since monetary exchange control was finished. Entry into the system might be accomplished if one is lucky, but it is unforseeable what will happen. It seems to me that to take that measure in a situation of inferiority—and despite oil and gas we are still in a vulnerable position—would fit Talleyrand's famous dictum:

"It is worse than a crime, it would be a mistake".

My Lords, I, too, am grateful to the noble Lord, Lord O'Hagan, for having given us an opportunity to debate this subject, which I believe is one of fundamental importance. Many of the points to which I had intended to refer have been covered by other noble Lords with much more skill and authority than I would have been able to command. Therefore, and bearing in mind that we are approaching the end of a short debate, I should like to refer merely to two points, the first of which is perhaps rather peculiar to Ireland.

I start by expressing an interest because I am a non-executive director of the Northern Bank, and with your Lordships' permission I should like briefly to quote the experience of the bank. Historically, the Northern Bank has had branches in all parts of Ireland, both North and South of the Border, and that worked well until the Republic of Ireland joined the EMS, while the United Kingdom did not. Thus we found ourselves faced with fairly massive exposure to the currency of the Republic of Ireland, the punt, and agonising decisions had to be made. In the event, believe it or not, we reckoned that it has probably cost us £7½ million to extract ourselves from that exposure.

None of us likes having a potentially profitable situation eroded in that way, but I think that in banking if you are going to make losses, you should try to make them properly; in other words, by taking calculated risks and lending to trusted customers. On the one hand, there will always be bad debts; so one loses money like that, and one regrets each and every loss. But against that, for every bad debt there are many good lendings, and they offset the bad debts. The bank is thus performing its duty by helping farmers to improve their farms and helping industrialists to install more modern machinery. In those circumstances the odd bad debt, while regretted, is not as resented as anything like as much as is the £7½ million, which is completely wasted—money down the drain. It is not going to do any good for anyone, unlike the other lendings which might he a little dodgy, but which at least are providing employment and, with any luck, making industry and agriculture more competitive.

There is another thing. The withdrawal of Republic of Ireland currency which was in circulation in the North of Ireland cost hundreds of manhours and womanhours—and to what good was that? It was not doing anyone any good at all. Then there is the ongoing cost of reconciliation between the two currencies, and no one knows from one month to the next how the disparity will vary.

I should like to mention one personal, bitter experience that I had. I sold a small parcel of land in the Republic of Ireland for housing development, and in order to assist the developer in his cash flow I came to an agreement with him that I would accept a slightly higher price if he deferred payment by giving me bills of exchange. In the event, over the nine or 10 months that elapsed before the bills of exchange came to maturity the punt had gone down from about 99·5p to 77·5p. I would have done much better had I accepted a lower price at the start and got cash on the nail. But there it is; that is water under the bridge.

I quote that example because I think that it is typical of what is being suffered by many firms and individuals, too, who have operations both within and without the EMS. The inconvenience and the extra bookwork that is involved is not inconsiderable. Therefore, I entirely support noble Lords who say that we would be well advised to join the EMS, and I think that the advantage thereof would be even more greatly appreciated in Ireland than perhaps in any other part of the United Kingdom.

Another factor is that when one goes to the South of Ireland and then on returning with some punts in one's pocket one tries to get rid of them by buying a meal on the train, a surcharge is imposed. If one takes sterling to the South, it is much welcomed, but there is no discount. So there we have inequitability, and were the United Kingdom to join the EMS, this inequitability would be removed.

The other point, to which I shall refer very briefly, is that were we to join the EMS, I understand that monetary compensatory amounts in the field of agriculture would no longer be required. That would be a much cleaner way of doing it and it would save bureaucratic work, which would be most desirable. People keep on telling me that we have a common agricultural policy, but I sometimes wonder myself. I had every sympathy with the noble Lord, Lord Carrington, in what he told us this afternoon regarding his vigorous and sincere attempts to thrash out this question. But we are part of the European Economic Community, and I suggest that it would be only logical that we become part of the European monetary system as well.

My Lords, I had not intended to take part in this debate, and my only reason for doing so is because I feel that to many noble Lords on both sides it almost appears that joining the EMS is one of those very rare acts for which there is everything to be said with nothing to be said against it. I feel I ought to introduce a slight note of discord into this almost universal harmony and say that we ought to consider what possible disadvantages this may bring, which may also be very important, and not just the advantages.

First, I fully agree with the noble Lord, Lord Soames, that this chaotic situation of 50 per cent. variations in the relative currency, which is the dollar and the deutschmark, is absurd and ought somehow to be brought to an end. But it will not be brought to an end by our joining the EMS. I think it is megalomanic to think that the fact that we join the European monetary system will make the world currency system any more stable or any less stable than it would be otherwise. I do not think that, from that point of view, it will make any difference.

My second point is this. Is it really so desirable for us to reduce our currency variations in relation to the European countries if that means enlarging the scope of the variations in relation to the dollar area, or possibly the yen area? I can quite imagine that if we maintain our independent situation and vary that much less in relation to the dollar and the deutschmark, even though we may vary it a little more in relation to the deutschmark than we would inside the EMS we would be in a far more favourable position. In other words, I would rather have a situation where the pound/dollar rate varies only by 25 per cent. and not by 50 per cent. if a 50 per cent. variation would be the cost of joining the EMS.

But my third and main point, to which I think completely insufficient consideration is given, is that the pound is still very over-valued. According to the IMF, even after a recent adjustment we have lost 35 per cent. of our competitiveness in terms of unit labour costs in manufactures since 1977. I feel that this is a very important consideration. Of course, it is possible within the EMS to have devaluations, but it will be much more difficult. If you look at the trade figures—I am looking at those for the last three months, which have just come out—you find that imports are still rising much faster than exports. In relation to 1975, our imports of manufactures went up by 75 per cent. taking the average for the last three months, whereas our exports of manufactures have gone up by only 20 per cent.

If you look at the position in relation to last year and take the last three months of 1981, again you find that despite the fact that in 1980 we went into an increasing depression, which should have reduced our imports very much, our imports rose by 12 per cent. whereas our exports rose by only 2 per cent. This is a disastrous record, and I think we ought to bear it in mind before we rejoice too much at our joining the EMS or doing anything which curtails our freedom of action.

My Lords, could the noble Lord help me to understand his argument? As I understand it, he is complaining of what he rightly describes as the disastrous effect of the parities achieved under the floating system as it now exists. Why is that an argument against going into a system which would eliminate or mitigate many of the movements which have produced these deplorable results?

My Lords, may I say very simply that we ought to achieve a far more competitive exchange rate before we join the EMS. We ought to be far more competitive vis-à-vis the Germans and the Europeans than we arc now; and if we should join it now we shall just make a bad bargain.

My Lords, the House will be grateful to the noble Lord, Lord O'Hagan, for having raised this subject today. It has been discussed by your Lordships this afternoon (if your Lordships will perhaps forgive me for saying so) in largely academic and perhaps monetarist terms. It is therefore important, I think, to set this whole debate within its context. While we are debating here today there are over 3 million unemployed individuals in this country. This is rather more than a statistical aberration. It is much more than figures. It expresses itself in the lives of millions of our citizens and their families. Its social consequences are enormous, and still have to be fully apprehended. I wonder whether the confidence in Parliament of those people is going to be enhanced by a feeling, perhaps, that at Westminster these questions become largely institutionalised in the detailed discussions of monetary and exchange control theory. They may not see the relevance of it, and I am very fearful of that. If our debates are to have relevance, they must surely have very serious regard to the state in which many of our countrymen find themselves today.

It seems to me, after having listened very carefully throughout the debate, that most of the contributions that have been made, some of them with eloquence and skill, have been based on an assumption that fundamentally there is nothing very wrong in the way in which the western world and the countries comprising it conduct their economies. There seems to me to be a tacit assumption that, while the ordinary people of the country are expected to have their loyalties to their family, their loyalties to their firm, their loyalties to their region, perhaps, and, last but not less importantly, their loyalties to their country, and are supposed to have specific responsibilities in those fields of which they are often reminded, yet the owners of capital are not required to have any responsibility to anyone whatsoever—no social responsibility at all; money can go exactly where it wishes without regard to the fortunes of the people in the country in which much of the wealth originated. I would suggest to your Lordships that this is a very dangerous supposition indeed.

Perhaps I may say to my noble friend Lord Lever of Manchester that I do not accept that my own political record in public life, which is as long as his, gives him any justification for saying that I am somehow less a socialist than he is—I do not know whether he still acknowledges adherence to that particular philosophy—purely because I may have misgivings about membership of an organisation of a comparatively few countries that might be conveniently classified, and so often is classified, as a rich man's club. The noble Lord may have many more international contacts and carry on international co-operation in many financial fields, and in that he is very eminent; but I think it is dangerous for one to regard one's political philosophy by any reference to that touchstone.

The fact is that the people of the western world—including our own country where there are over 3 million unemployed, Europe where there is total unemployment of 10,200,000 according to the latest figures, and the USA where the figure is approaching 12 million—are not going to accept as a kind of relentless logic that while they are idle there have to be so many human wants unsatisfied. It may satisfy the academics but it is not going to satisfy them. They are not going to be satisfied that their present lot is due to the mysterious onslaught of something which is supposed to be from Heaven or from Hell or from wherever but, anyway, from a supernatural source called recession. They know, as your Lordships know, that it is precisely the way in which human society in the West has for the moment sought to organise itself.

It has been said (and it was emphasised by the noble Lord, Lord Soames, who unfortunately cannot be with us at this moment) that we have had the most volatile exchange rate. This is true. There is one growth industry in the world at the moment and that is the growth of the money speculators. They produce no goods or valuable services for any individual, no goods for the use of mankind nor even any social services for them. Yet the people of this country, of Europe and of America are invited to observe the results of their speculation which is, of course, carried out by the simple transmission of key-tested telex from one capital to another in a matter of minutes where, as the noble Lord, Lord Lever, has already said, £75 billion can be changed within a very short time.

One thing is certain: the volatile rates of exhange have been caused largely by the actions of Her Majesty's Government themselves. When they first put up the interest rates—and they themselves put it up—in 1979 this was followed, as the noble Lord will be able to check from his various graphs, by a rise in the exchange rate due to the inflow of hot money and also to petrocurrency. Beyond argument (and the professor to whom my noble friend Lord Ardwick referred made it clear) is the linkage between high interest rates and high exchange rates. High interest rates very largely have been the direct result, first of all, of the deflationary policies and of the monetarist policies followed in the United Kingdom, and also of the monetarist policies and the deflationary policies followed in the United States.

This has had important results because high exchange rates have meant, first, that it is becoming increasingly difficult to expand exports to anything like the level that they would have expanded had exchange rates been more favourable and, secondly, encouragement of the inflow of imports. It is somehow assumed that if exchange rates were lower, and therefore import costs would rise, this would have an adverse effect on inflation. That is not necessarily so. Because what is not always realised is that only one-tenth of our imports are raw materials and go into the process of production. The remaining imports, after making allowance for imports of food under the special conditions of the CAP, go into manufacturing. What has been happening progressively over the past few years, owing to the very high exchange rates, is that this has amounted to a subsidy to overseas manufacturers whose prices have progressively undercut domestic firms. This is what has happened.

In consequence of this subsidy of the exchange rate—also helped by subsidised energy prices in many countries—there has been a flood of imports into this country of manufactures which is most difficult for our own domestic manufacturers to deal with. They have been beset by other matters. If one looks at the figures for import penetration over the past three years, one finds in field after field where we had previously been net exporters we are now net importers. So this policy of high exchange rates and of high interest rates itself has contributed to the progressive decline of the fortunes of most of the manufacturing sections of our industry.

Therein lies, so far as I am concerned, the anxiety—and I put it no higher than that—about joining the EMS. Despite the association of the EMS with the European Economic Community—of which I am not a devout supporter in view of the fact that, as Mr. Jenkins indicated, it consists at the moment of little more than the CAP and a few peripherals—the reason I am hesitant about joining the EMS is that I am afraid that under this Government we should join it on terms that would seek to perpetuate the disastrous policies that they are carrying out at the present time. As my noble friend Lord Balogh has indicated, the pound is probably over-valued at the present time by some 20 per cent. If we went into the EMS at the pound's existing level there would be a danger—and I put it no higher than that—of fossilising the situation of import penetration into this country, which has already reached very dangerous proportions and has been one of the principal causes of the unemployment from which this country suffers at the present time. These are the things which gave me misgivings.

The noble lord, Lord Soames, thought that perhaps I was going to be dogmatic about this. Not at all. I willingly concede that if it is possible for this country, in conjunction with other countries, to arrive at some kind of organised arrangements whereby one can establish a firm but flexible rate of exchange, I can see the advantages of that. It may well be, as the noble Lord, Lord Lever, has said, that the EMS is the best instrument for this purpose. Indeed, I concede that if that be so there is the advantage in the strategic approach of supporting the EMS on the basis that it is another step towards being able to obtain agreement within a wider context, possibly within the IMF or in conjunction with the various other organisations that have the support of the United Nations and some indeed with the support of the World Bank. I am all in favour of that.

What I do not believe is that it is right at this stage to dogmatise about it. I am convinced that the quicker we start abandoning these wretched, miserable deflationary policies that have scourged the country and produced this large-scale unemployment that exists at the present time, the better it will be for everyone, and it will make it easier for us to participate profitably and co-operatively in an organisation such as the EMS.

My Lords, this has been an interesting and indeed illuminating debate. The fact that many of the opinions expressed have transcended party boundaries will be thought by most people to be a good thing and not a bad thing. The House owes a debt of gratitude to my noble friend Lord O'Hagan for instituting this debate and for the very thoughtful contribution that he made to it.

I must take issue with the noble Lord, Lord Bruce of Donington. We face of course very great problems as a nation and I realise that the noble Lord, in common indeed with all of us, feels very strongly and sincerely about these subjects. But this does not in any way mean that the House should not be debating subjects of the kind that we have been debating this evening. Many people may think that the House is uniquely placed to perform that function.

May I say in that connection that one must be very much struck by the great sense of vision shown by the noble Lord, Lord Lever of Manchester, in his portrayal of the EMS and the European Community as a step towards world-wide international and trading co-operation. My noble friend Lord Soames was equally right in looking at the European Community as much more than a purely economic community. It is an important step forward in international co-operation and has great political as well as economic importance. A number of noble Lords—my noble friend Lord O'Hagan himself, the noble Lord, Lord Lever of Manchester, my old friend—if I may so call him—Lord Roberthall, Lord Ardwick, and others—looked back with nostalgia towards Bretton Woods, as indeed I do.

For 25 years the Bretton Woods system of fixed but variable exchange rates maintained a degree of stability to the great benefit of international trade. Indeed, the benefits which flowed from the system went wider than that. The system imposed a degree of discipline in the conduct of economic affairs: and it provided every incentive for the prudent conduct of economic policy.

The breakdown of the Bretton Woods system in the 1970s was not the result of any weakness of principle in the system itself. It was the result of a number of factors which unfortunately came together at one particular moment in the world affairs. It was the result of rising world inflation, disparities in economic performance and above all the weakness of the dollar. A fixed rate system could not have coped with the oil price shocks of the past decade, and the huge increase in the volume of internationally mobile funds, which today dwarf the size of official reserves. This breakdown in the exchange rate stability while inevitable was of course a great loss, not only with repercussions on international trade; it also removed, as I have indicated, an internal discipline.

It is not surprising that in these circumstances people should search diligently for a successor to Bretton Woods and perhaps least surprising of all that the search for the successor should be made within the context of the European Community.

The greater stability we all seek can in the end only be achieved through a return to more stable world conditions; and, in particular, lower and more uniform rates of inflation. The EMS is a product of this search, as well as a step towards European economic convergence and intregration.

Although it has become customary for people to talk in terms of "When will we join the EMS?"—as indeed my noble friend's Motion does—the position in fact is that we became a founder member of the EMS when it was launched three years ago. Twenty per cent. of our official gold and dollar reserves are deposited in the European Monetary Co-operation Fund; and the Government participate fully in all discussions on the operation and future development of the system. My right honourable and learned friend the Chancellor of the Exchequer chaired the most recent realignment conference.

My noble friend Lord O'Hagan mentioned the discussions currently going on about the possibility of making some useful—though essentially technical—improvements in the present arrangements. I can assure him that Her Majesty's Government are already playing a full part in those discussions.

What is at issue is not simply membership of the EMS but whether we should join the exchange rate mechanism. The Government fully support the aims of promoting an area of greater currency stability within the community, and the contribution that the EMS and the exchange rate mechanism can make towards closer economic convergence and integration in Europe. Nevertheless it was decided when the EMS was launched that we should not at that stage join the exchange rate mechanism. That decision was right at the time; but, not unnaturally, people ask, as my noble friend Lord O'Hagan and other noble Lords have asked, whether the time has not come when a further step forward might be taken. A number of your Lordships spoke in this sense in the debate and powerful voices have been raised outside to the same effect.

There is, however, a difficult balance of advantages and disadvantages to be weighed up in considering sterling's possible relationship to the exchange rate mechanism. Some of the issues are more technical and complex than is commonly realised. I should like to touch on a few of these.

Participation in the exchange rate mechanism places an obligation on Governments to ensure that their exchange rates against other EMS currencies remain stable for a reasonable period of time. The mechanism is not of course one of immutable exchange rates—there have to be periodic realignments of rates to permit the necessary economic adjustments between European Community countries. But too frequent realignments would undermine the raison d'etre of the mechanism and bring it into disrepute.

One implication of this is that United Kingdom economic policy would inevitably become more directly affected by the decisions of our partners and by the policies that they in turn followed. This would clearly be a complicating factor for our own policies. A second implication, not perhaps always sufficiently recognised, is that membership is by no means necessarily an easy option. Maintaining a fixed parity—whether inside or outside the EMS—would often require a restrictive monetary and fiscal stance. Membership of the exchange rate mechanism presupposes a willingness to accept these disciplines and can indeed reinforce the need for them.

It is quite wrong, therefore, to regard membership of the EMS, including the exchange rate mechanism, as freeing us from the need to conduct our affairs responsibly and to accept the necessary disciplines in fiscal and monetary policy. In no sense would membership be a licence to pursue lax or expansionist fiscal or monetary policies.

At the same time our experience in the 1960s and 1970s has shown that it can be extremely difficult to resist underlying market pressures on exchange rates by intervention alone. The attempt to participate in the "snake" in 1972—and our membership lasted a few weeks only—the attempt to halt the depreciation of the pound in 1976, and the attempt to cap its appreciation in 1977 were all overwhelmed by market forces despite massive exchange market intervention.

The noble Lord, Lord Lever, has widened the argument and suggested that an EMS reinforced by the United Kingdom would be able to introduce stability vis-à-vis the dollar. This may very well be a desirable objective, but there is no reason to suppose that the United States authorities would co-operate in such a move. They have a policy, firmly stated, of only intervening in the foreign exchange markets in extremis, and whatever those like the noble Lord, Lord Lever, may wish, a fixed exchange rate system could not have coped with the instabilities of the last decade.

My Lords, does the noble Lord recall that the United States had precisely the same exchange rate policy of not intervening except in extremis, and when the 1978 difficulties arose they mounted the biggest exchange rate intervention ever known in history?—and that was the same Government which had the two opposite positions. There is no reason why this one could not.

My Lords, the noble Lord is an optimist. One of his major attacks upon the United States Administration has been on their interest rates policy, and he himself has repeatedly drawn attention in your Lordships' House, and did so again today, to the damaging effect that the interest rate policy followed by the United States Administration had on the economies of Western Europe. Why he should now think that the United States authorities would bail him out in these circumstances I am not sure; I think it is most unlikely.

Experience has shown that attempts to maintain the exchange rate within the agreed bands would have to involve action on interest rates and perhaps fiscal action as well. Sometimes there measures would supplement the stance of the Government's policies to secure low inflation and continued recovery, but on occasions there could be conflicts which could be very difficult to resolve. There would clearly have been a conflict of this kind for the United Kingdom in 1979 and 1980—and also for long periods in 1981.

The noble Lord, Lord Ardwick, quoted Signor Padoa-Schioppa on these conflicts between domestic monetary policies and membership of the exchange rate mechanism; but I doubt whether even the most ardent advocates of the interest rate mechanism would deny that we would have had such a conflict had we been members in 1979, in 1980 and in early 1981. The Government have since 1979 made it clear that they have to give immediate priority to getting inflation under control and tackling the United Kingdom's deep-seated economic problems. So we would need to be as confident as we could be that sterling's participation would not result in early or frequent difficulties of this kind. Were it to do so we would scarcely be a welcome participant.

As yet the exchange rate mechanism, with its current members, has operated fairly successfully and has not encountered excessive problems. But there are two special factors relating to sterling which differentiate it from most of the other EMS currencies and whose effects must be carefully weighed. First, sterling retains its role as a major currency for international trade and finance. The sophistication of the banking and financial markets in London make the pound attractive for international funds and particularly susceptible to wide fluctuations in demand in response to changing levels of interest rates abroad and varying expectations of future exchange rates. This sets sterling apart from all other EMS currencies except the Deutschemark. Whereas the experience since 1979 has shown that the mechanism can be successful with one such international currency—as indeed one would expect—greater problems may emerge when one tries to link two, as they did in 1972.

The second factor relates to the pound's role as a petro-currency. Sterling's exceptional strength in 1980, and the comparative weakness of other EMS currencies, reflected among other factors the market's contrasting view of the effect of higher oil prices on these economies. As the pressures in the international oil markets have eased and expectations of future price movements been reversed, so their effect on sterling's exchange rate has moderated. But some of the economies affected have still to complete their adjustment to the 1979–80 oil price rises. The factor works in both directions and it would be premature to discount this. Even in recent months developments in international oil prices have been reflected in sharp, short-term movements in sterling against the other EMS currencies. These special characteristics of sterling do not automatically rule out sterling's participation in the mechanism, but they add to the complexity of the judgment on this issue.

Much has been said by my noble friend Lord O'Hagan himself, by my noble friend Lord Soames, by the noble Lord, Lord Hankey, and others about the need for greater exchange rate stability. But stability is something which cannot be imposed simply by Government decision or by joining an arrangement such as the EMS exchange rate mechanism. It is only possible to achieve stability if we tackle the underlying causes of instability. The most important of these is inflation, and particularly inflation at high levels and varying greatly from one country to another. Correspondingly, and in some degree linked with this, we have the high level and volatility of interest rates. Success in dealing with these problems would make joining the exchange rate mechanism of the EMS that much easier and that much subject to less risk. And I have no doubt that if, in this way, we could successfully avoid fluctuations in sterling's parity against the other EMS currencies, much of British industry would regard this as an important benefit. Nearly 40 per cent. of our non-oil exports are to other EMS countries. But it would not help those more concerned with the sterling/dollar exchange rate.

In times of difficulty, people cast around looking for the easy solution, the panacea for our troubles. It is not surprising that the EMS should be cast in this role. But the purveyors of instant solutions do the EMS no good service by this kind of advocacy. We need to recognise that full membership of the EMS, including the exchange rate mechanism, poses great problems and has disadvantages as well as advantages. It is all too easy for people standing on the sidelines, for people or parties out of office and, indeed, with little expectation of office, to see—and talk—only of the advantages and ignore the disadvantages. That is not the way that a responsible Government can approach major issues of this kind.

It is in the light of a careful assessment of all the circumstances that we do not, at the present time, feel able to join the exchange rate mechanism. We must wait until conditions are right, both for the system and for ourselves. But I do assure your Lordships that the Government will keep the situation under constant review. We will study with great interest the points which have been made by all noble Lords who have contributed to what, by any standards, has been an interesting and instructive debate.

My Lords, may I—

My Lords, I should like to thank all noble Lords who have taken part in this debate, and particularly my noble friend Lord Cockfield, who was kind enough to describe me as thoughtful. When I was at university a person who was described as thoughtful was said to have some pretentions to intelligence, but to be fundamentally wrong. I am sure he will take it kindly from me when I say that I deeply admire the eloquent and elegant way in which he evaded many of the most important questions in dealing with the subject under debate tonight. Many of us will forgive him, because of the position he is in and because of the time of year and the approaching Budget. We will forgive him today, but not forever. I thank your Lordships very much. My Lords, I beg leave to withdraw my Motion.

My Lords, before the noble Lord sits down—

rose to call attention to problems of Inner London traffic congestion over the next six years resulting from growth of public, private and commercial road usage; and to move for Papers. The noble Lord said: My Lords, this is an entirely non-party issue, because it affects members of all parties and members of no party at all. I have drafted my Motion to cover only short-term problems for a traffic organisation which is out of date by 20 years. I propose to leave entirely alone consideration of long-term issues, such as how much public transport we ought to have and who pays for that transport. I propose, also, to leave entirely alone the effect of any roads which are likely to be opened over the next five years. Incidentally, there are no significant roads which are likely to be opened in that time. When the M25 is opened, it will have very little effect without feeder lines, which are as yet unbuilt, and, as it takes 10 to 15 years for planning, designing and negotiating for any road, they come right outside the province of my Motion this evening.

My Lords, I am certain that the whole House will be grateful to the noble Lord, Lord Balfour of Inchrye, for opening this debate and for giving us an opportunity to discuss this important matter as well as for the practical way in which he has put forward some valuable suggestions. I only hope that my suggestions will be equally valuable. I am pleased also that we are going to have the advantage of a maiden speech by the noble Lord, Lord Plummer of St. Marylebone, whose vast experience as a previous leader of the Greater London Council will be very helpful to us in this debate. I recall that a former Prime Minister is alleged to have telephoned the noble Lord in Tokyo and told him to clear Parliament Square. Perhaps we may know tonight what proposals the noble Lord made.

I agree with the noble Lord, Lord Balfour of Inchrye, that we must deal with the situation as it is at the moment, which could be aggravated by the possible and almost certain increase in the number of cars and lorries. The situation today would be even more desperate but for the services which are provided by our public transport system. The noble Lord referred to the number of cars which come into London each day. Over and above that figure, during the morning rush hour each day, some 900,000 passengers come into London using British Rail and London Transport's bus and underground services. Over and above that, far more people use public transport services on cross routes, and vast numbers use cars on cross routes. It is often where the cross routes converge with traffic bound for central London that huge congestion occurs.

Whether it is practical or not, I certainly agree with the noble Lord, Lord Balfour of Inchrye, that we know that where there have been temporary flyovers a great benefit has been achieved—and if it is possible to do this elsewhere, let us see it done. Anyone who uses the Southend arterial road who knows what the conditions were like at Gallows' Corner long before we had the temporary flyover, will appreciate what great benefits can be secured. Setting aside all arguments about 40 tonne lorries which we shall have later, I am glad that the noble Lord referred to the problem of large lorries. When I travel into London by car I cross Graham Road in Hackney, which was featured in a BBC programme not so long ago. This suffers a continual procession of extra-large lorries, and not only does this interfere with traffic flow, but, in addition, this is a road which large numbers of people use as their residential road. We have to live with the lorry, but I believe we must contain its effect both on traffic flow and on the environment.

There are already powers for excluding lorries from certain areas and for defining lorry routes. One thing we must always be aware of is that, whenever one defines a lorry route, one pleases some people but upsets others. I believe that the GLC found this out in a survey they conducted a few years ago. Speaking for myself, there is one thing I am very definite about. Any suggestion of a general ban on lorries in London is absolute nonsense, both for economic reasons and because it would be impracticable to administer. Lorries of more than 40 feet are already excluded from a six square mile central area. This helps that particular area, but it also presents acute problems for the roads just adjacent to the area from which those lorries of 40 feet or more are excluded.

I am glad that the noble Lord, Lord Balfour of Inchrye, referred to the M25 orbital road because, while that may bring some improvement, the Armitage Report has stressed that benefits would be limited—and I quote,

"to a maximum of 5 per cent. of all lorries because so great a proportion of the lorries have business in London".

So while there will be some benefit in moving around London, there is always that problem in the end. In paragraph 235, the Armitage Report also points out the difficulty of enforcing the present limited controls on lorries. I quote:

"The GLC have found a 40 per cent. infringement rate in central London for their length restriction in spite of improved signing, a number of prosecutions, and the involvement of significant police resources".

The next paragraph of the Armitage Report disturbingly points out that the police do not give high priority to devoting resources to lorry control. Perhaps the Minister will deal with that point in the Armitage Report, because if it is correct there is not much use our talking about further control to expedite the flow of traffic by dealing with lorries if the police do not regard this as a high priority.

I wonder also whether greater encouragement could not be given to the development of transhipment centres. These could be established on the M25 and other motorways, and also near the start of some urban clearways, where loads of large vehicles can be broken down into smaller vehicles for delivery. I know it will be suggested by road haulage interests that this is costly, but we must consider the present cost to the environment and the cost of congestion on our London roads.

On the question of car parking, I completely agree with the noble Lord, Lord Balfour of Inchrye, that the problem is the avoidance of obstruction—and that is the real purpose of on-street parking control—and this obviously means enforcement. No one wants to harass private motorists—most of the Members of your Lordships' House are motorists—but this important question of enforcement is one to which we must pay some regard. In our debate the other night on the orange badge scheme for the disabled the noble Baroness, Lady Gardner of Parkes referred also to the shortage of traffic wardens at the present time. The latest figure I have, which comes from a GLC document, is that the number of traffic wardens is down to 1,200, while the required strength is 2,500. We must ask why. Is it because conditions of work are unfavourable? Is it because people do not like the way they are treated by motorists? Or is it a question of wages? Someone needs to tell us why it is, especially in these days of unemployment in London as elsewhere, that we cannot get the number of traffic wardens we need. Without an effective number of traffic wardens, all our talk of enforcement is pie in the sky.

We are also concerned to learn that the courts are able to deal with only 20 per cent. of parking tickets not paid within the statutory period for payment as a fixed penalty. If that is so, then, together with the other factors to which reference has been made, it means that the system of parking control is in absolute disrepute and people take no notice of it. Yet I believe we all agree that the enforcement of parking control is essential. A way must be found to see that parking penalty tickets are paid. There must be both a foolproof system and a cheatproof system. I cannot believe that with our modern computer records at the licensing department in Swansea there should ever be any problem in "chasing" individuals who have offended.

I agree completely with the criticism of the noble Lord of the large contravention of the regulations through meter feeding and exceeding the time paid. I understand that no less than one-third of the users of the 15,000 meter spaces in central London come under that offence. The number of illegal parkings on yellow lines which impede traffic flow, and in many cases cause traffic flow to be in one lane instead of two, is very substantial. I am told that 20,000 cars each day are parked illegally on yellow lines in central London alone. Enforcement again is the important factor if you are going to reduce obstruction of traffic flow. The GLC has sought legal powers to introduce wheel clamps. This was discussed in the debate on the 1981 Traffic Act and I was prepared to second the Motion. I think the Minister was looking at this matter. But I regard this as a last resort. I believe that clamp sets are expensive. Obviously this is the thing to do for removal from a dangerous position, but again, if there is shortage of police resources in dealing with obstructions, that is a factor which we have to consider. Again it comes down to the question of resources available to those who have to carry out enforcement.

Then we must look at the question of the provision of off-street parking. I know noble Lords would not want too many figures, but in central London I understand there are 32,000 spaces provided in public off-street parking, one-third of which are controlled and owned by local authorities. But there are another 60,000 spaces provided in office buildings. How far should the number of cars coming into the centre be controlled by increasing charges? The GLC can tackle this matter on the public car parks, but it has no powers at present—I do not believe there is legislation—to deal with the position of the 60,000 which are in the private car parking provided in office buildings and so on. The 60,000 is something more than half of the non-resident parking places in central London.

We are also told that 70 per cent. of all new car purchases in London are for companies. I must ask the question, is travel by car always essential because there are business visits that have to be made during the day, or in many cases is the car an employment benefit?—in which case one ought to look at this problem. The effect of the company car situation is reflected by a survey conducted of parkers in central London. This showed that 38 per cent. had company cars; 68 per cent. were persons whose work made other trips necessary after they had parked, and therefore their situation is understandable. Some 40 per cent. actually had their parking provided for them. If we take 68 per cent. of parkers needing to move their cars later for important business engagements, which one can understand, that still leaves 30 per cent., and 30 per cent. is something like 40,000 cars coming into the centre which have no need to move again once they are parked.

For many years I worked not far from here, in Smith Square. I never travelled up by car unless I was going to a late-night meeting either in London or in the provinces. But I looked across the road yesterday at the Abingdon Street car park, with 250 places, at quite an early time; there were "House Full" notices, " Season Tickets Only ". If I tell your Lordships that the parking fee for between six and nine hours is £3.15, which is £16 a week, then it must be people with very high salaries or people who have the whole of their expenses paid by the company. I am certain I could never have afforded that.

There is always the danger, too, that whatever we do in central London could worsen the situation in adjacent inner London areas. We have to consider the problem of making a worse situation in the near inner London areas; often that is where congestion occurs. When I travel to this House by car, as I do when we are sitting late—I never travel when I have an early morning meeting because it takes longer—I have to cross central London through the City. I can assure your Lordships that the worst congestion is in the inner London areas, not the central London areas, where the routes cross over and where all the lorries are diverted.

I am glad the noble Lord, Lord Balfour, referred to encouraging the maximum number of motorists to leave their cars at car parks and travel in by public transport. It was a very welcome step when we found BR stations and London Transport making this provision. I make two pleas in regard to this: first, charges must be kept to a minimum if we are to encourage people to do it; secondly, the number of parking places in the suburban areas must be adequate—and this affects outer London as well as the GLC. I am in the first district council over the London barrier. I can tell your Lordships that quite a number of travellers put their cars in the car parks, but the car parking facility is very limited and people overflow into neighbouring residential streets and shopping areas and create a nuisance or an obstruction to traffic flow.

It is, I believe, impracticable to carry out what has been suggested in some quarters, a system of licensing for entry into central London. I believe the administration would be almost impossible. If we cannot cope with the illegal operation of meters and illegal car parking on yellow lines, I am certain we are not going to cope with a customs place at every entry into London to see that people have the entitlement to come in.

Surveys show that in most cars travelling into central London there is only the driver; I am told the average is 1·3 persons per car. We must ask ourselves: why do people travel in and out each day by car, with all the inconvenience and frustration, despite travelling at the same time morning and night and not shifting their car once they get here? We have to understand why. A number do it because of the cost of public transport. This applies particularly to those in the south of London—I live in the north-east—who have no underground service to speak of and rely mainly on British Rail. The costs to many people are prohibitive, and they find it worthwhile having all the frustration of travelling in by car to central London. We have to consider what will encourage car owners not to suffer this frustration and to make use of other methods of travelling into central London. It surely can only be by the provision of suburban car parks reasonably priced, and the provision of adequate and reasonably priced public transport.

I do not want to go into the political arguments surrounding the recent House of Lords judgment, but we must consider what is to be the policy. How do we encourage an efficient public transport system, which already in London carries, on average, 4½ million persons a day? If we take out Saturday and Sunday it means something like 5½ million people using public transport services already. How are we going to increase that number? Whatever one says about the Fair Fares policy, it was an effort to try to meet the needs of people in London and to get cars off the roads. Therefore, I must ask: What do the Government propose to assist the GLC to meet this situation?—because we are going to be faced in the very near future with higher fares on public transport in London as a result of the Lords judgment. We are going to be faced in the immediate future with a reduction of services, a contraction of services. Frankly, unless we tackle this problem we are not going to find it possible to divert people from using cars and come in by some other method, because public transport will be the only means. I agree we want it to be efficient. I am reasonably satisfied with my Underground service. I get from Buckhurst Hill, even though I have to change at Mile End. Unless the Government have some policy for assisting the GLC, I believe we are going to have increased traffic problems in the years ahead.

My Lords, I must agree with the last speaker. I am absolutely certain that, as things stand at present, we shall have increased traffic problems, and I am particularly grateful to the noble Lord, Lord Balfour of Inchrye, for raising this question at this moment. It seems to me that all of us are going to say variations on the same theme. However, there are three or four absolutely obvious things which could be done, which must be done, and I hope that this debate will make them clear.

First, I should like to support the noble Lord, who opened the debate in his demand for a dynamic effort, because that is what there conspicuously is not. There are a number of different people working very hard on different problems but there is no dynamic effort at the moment and that is what we must have. The situation was already visibly deteriorating even before the GLC capers, and after the legal decision it is perfectly clear that it will be deliberately worsened and two things will be done which are the opposite to what ought to be done; fares will be increased and services will be reduced. They are the opposite of what everybody in this Chamber not only wants, but knows must happen. Therefore, we must look for some kind of concerted effort.

It is ridiculous not to recognise the social and commercial side of passenger transport. I found the views on commercial transport of the noble Lord who opened entirely satisfactory and I shall not talk about commercial transport because I think that he has dealt with it, with some additions from the noble Lord, Lord Underhill. I shall confine myself to passenger transport which is something about which I know, because I use it every day. The waste of time, the waste of petrol, the damage to the nerves, the noise, the fumes, the accidents, the deaths and the terrible conditions for old people humping their baggage about and all the rest of it is a disgrace to this country. We must have a comprehensive plan. I think that the noble Lord was absolutely right to limit it to six years. It is no good going too far ahead. But the money should be set aside in a phased plan and this Government, the next Government and the one after that should either keep to it or be seen clearly not to be keeping to it and we the public can then blame them for it.

I should like to tell your Lordships one or two short facts. In London the buses carry three times as many passengers as does the Underground—5½ million; 1¾ million every day. Secondly, each train mile more or less breaks even financially: each bus mile costs 80p. Therefore, the common sense approach here is that we should try to extend the scope of the Underground and switch more passengers to it. How can that be done? To extend the Underground is expensive and long term and comes outside the six years, to some extent, but it is a good investment. The LPTB suggest various extensions which they think would be not only efficient but economic, but they say that there is no immediate prospect of capital becoming available for any of them. That is the counsel of despair and that is what is so fearfully frustrating. Sir Peter Masefield somewhere suggests that at least two miles a year of Underground extensions should be undertaken; I think that we should demand a minimum of that. We must not succumb to the hope-destroying rule of the Treasury; never buy today what you can pay more for tomorrow. But I admit that the Underground extensions are long term. If the service were better, more people would use it. Therefore, that is the next common sense approach which has been made by both the previous speakers.

At present the current capital investment of the Underground is about £140 million a year and it is perfectly clearly inadequate. What would make it adequate I do not know, but that could easily be found out. When I was a boy trains used to run every two minutes. Last night I left this House at a quarter to six, which was absolutely the middle of the rush hour. I waited for five minutes on Westminster station and for eight minutes on the Embankment station. Both plat-forms were dangerously crowded and the trains were only fit for sardines. Nobody will travel by tube in these conditions if he can avoid doing so. This is a perfectly simple question. Sir Peter Masefield and his colleagues know how to make a railway run properly, but they are not given the money to do it.

The only point on which I differed from the noble Lord who opened, is that it is no good not talking about money. There is not any other serious problem. Given the money you can make all the stations as good as the new Embankment station or Charing Cross, both of which are very nice. If you came to Chalk Farm, you would see a very serious difference—the wind is so strong going down the stairs that you cannot stand up. There are all sorts of things which are dreadful about the tubes but they need not be—the skeleton of the service is absolutely first-class. So at least we should extend the tubes every year by a small amount and at least we should give them the necessary money to run them properly.

I turn to the buses. The buses lose 80p, a bus mile. So the more people we put on the buses the more we shall have to subsidise, but that I think must be accepted. We are told that if they ran every day at the same speed as they run on the less congested Saturday roads, they would go 15 per cent. faster and save £30 million a year.

There are two main reasons why they are congested, both of which are perfectly obvious and have already been mentioned. First, parking; and secondly, private cars—too many, and many of them with just the driver. Common sense suggests, which the noble Lord worked towards, that a heavy fine—I said £30 and he said £20 or £25; I do not mind the figure, so long as it is a heavy fine—should be substituted and there should be enough traffic wardens to enforce it. The GLC say that they have just about half as many traffic wardens as they need. There may be difficulty in getting them. I do not believe that that difficulty is insuperable. In my view, with a little bit more money and a little bit more attention, they could get it.

The first debate I ever opened in this House was on penal affairs and as an example of the fact that sanctions sometimes work, I said that if any parking offender was strapped to the parking meter and given 40 strokes of a split bamboo there would be no more parking offences. That is clearly true. I am not suggesting that, but I am suggesting a heavy fine which is rigidly enforced. My belief is that that by itself would do more to let the buses run not in triple ranks as they invariably do now. If you want a No. 137, you cannot get less than three. It is not their fault: it is the fault of the traffic. I believe that such a situation could be avoided by this matter aloned—dealing properly with parking. In my view, we must, between us today—and I think that everybody will, as it were, vote for it—insist that whatever else you do not do, you must do this.

When it comes to too many cars and solo drivers, there is only one way to deal with that; namely, to make motoring short distances in London so disagreeable and expensive that people stop doing it. I stopped driving here in a car years ago, although it is the one place where we have the splendid perk of a car park, so you can do so. But nobody can drive legally around London and hope to park legally. It simply is not possible. If people want to go shopping, they have to stop and that is the end of the matter.

So we must do what we can. The price of petrol and maintenance is doing the best for us and, if we could enforce the car parking, it would be all right.

Thirdly, British Railways—who run, in London and the South East, the most intensive commuter service in the world—are in exactly the same position as the Underground although, of course, on a larger scale. If we look at what Sir Peter Parker says, we find that they do not have enough money to maintain their stocks, their signalling and the other things they have to do to make travelling by rail attractive. Actually, they are already full and pretty well up to capacity in the commuter times. By careful advertising and salesmanship they have increased their passenger traffic between peak hours by about 25 per cent. This is very valuable and very good; it takes people off the roads.

But Sir Peter said that he had had to extend the use of his coaches from 30 to 40 years. A 40-year old coach is getting on. Clearly, the equipment is deteriorating in a way that will make it more expensive to put right when it becomes too old, and so on. I do not want to go on too long because I think that everybody will agree with me, and I shall agree with everybody else; and I hope that we shall get somewhere.

However, I should like to refer to the noble Lord's vicious circle. This is not quite a vicious circle. One remedy will not deal with this situation; it needs several remedies. In my opinion, if you dealt with car parking, if you dealt with the Underground, and if you dealt with the bus service, one by one, they would improve one another. If a few more people went on to the Underground, if fewer cars were parked in the way, the buses would go faster and gradually the service would become better. Without a good public service there is no hope of putting matters right.

I just want to conclude with these few words. I never understand what lawyers are doing and it seemed to me, after a very superficial look through the papers, that someone had suggested that public passenger transport should not be subsidised. This cannot be true. If someone did suggest that, it should be altered at once. There is not the slightest question that public passenger transport must always be subsidised. It must be subsidised a good deal more than it is at the moment. We must face that. I hope that the dynamic effort which sets out those things that must be done as an absolute minimum can be phased over six years, and that we can force our Governments at least to allow that expenditure in order to keep this great capital a place in which we can live.

My Lords, I am very grateful to my noble friend Lord Balfour of Inchrye for enabling me to join in this debate. I enter into it with some caution as the subject of central Inner London congestion has been a matter of contention for a very long time. As the noble Lord, Lord Underhill, remarked, a Prime Minister was forced to comment upon this on another occasion.

I hope that your Lordships will accept that the points which I shall endeavour to make are in no way intended to be provocative, but are merely to seek a solution. My credentials are that I was at one time Opposition Leader on the Roads Committee of the London County Council and on the Highways and Traffic Committee of the Greater London Council. Subsequently, for some six years I had overall responsibility as Leader of the Greater London Council. From the 1960s to 1973 there was largely a bi-partisan policy at County Hall which enabled several much-needed long-term measures to be taken to alleviate the problems of road congestion in London and Greater London. This agreement became even more important on the advent of the Greater London Council because of the likelihood of a change of political control from time to time.

My experience on this has been that traffic congestion in Inner London cannot really be solved only by measures that are taken there. Unless long-term commitments are adhered to, the necessary changes simply cannot be made. As I see it, the solution to Inner London's congestion must surely be found in an overall strategy, which will, in fact, take many years to implement, and also be part of an integrated transportation plan with public transport, which has a vital part to play.

From the start—and, indeed, with very few exceptions—London's roads were unplanned and just grew up from the centre, like the spokes of a wheel, to meet the needs of the horse and carriage. Little or no action was taken in building roads to enable movements to be made round or across the area during the rapid expansion of London in the 19th century and of the suburbs during the early 1920s. As a result of this, traffic is constantly directed towards the centre to find its way across the area, and long-term solutions are conveniently shelved while conditions become steadily worse.

Although successive Governments planned and constructed massive motorways pointing to the Greater London area from all sides, little or nothing was done to receive and disperse this traffic, which could only force its way through suburban shopping centres and down residential roads. As a result, hundreds of thousands of people are condemned to live on the principal radial routes within a few feet of heavily trafficked roads and all the damaging effects there are of noise and fumes. On the few routes which have been planned and completed, it is very striking indeed that, in the long interim period to completion, housing and offices have been successively constructed so that the design minimises the environmental problems and gives much improved living and working conditions for those alongside.

I agree that lorries cannot just be banned from the central area. I do not think that that is any solution. If they are to be put on lorry routes, as has already been suggested by the noble Lord, Lord Underhill, then what is good for some people will be bad for others. Ninety-two per cent. of goods in Inner London are carried by road, and nearly everything that one eats, wears, uses or reads comes by a motor vehicle. Surely it is time that provision was made for this flexible form of transport and thus reduce costs to the consumer. The hidden costs of congestion must now be enormous and, with the high cost of fuel, the need for action is even more urgent.

If I may say so, it is only when one deals with the huge area of Greater London and the impact of the built-up areas beyond it that one can appreciate how large it is. It is evident that the decline in industrial development in London has to some considerable extent been brought about by the poor quality of the capital's inadequate road system. A great deal has been said about the need to complete the outer orbital route known as the M.25, which it is said will syphon off traffic passing through the central area. But I think that this ignores the enormous generation of essential traffic journeys actually created within the area surrounded by the M.25.

Traffic in London is made up of a complex mass of cross-country journeys, not only for commercial purposes but also by the more than 50 per cent. of households who own a car; over 90 per cent. of those journeys originate and finish within Greater London. In order to relieve the congestion in Inner London from time to time various palliatives have been taken, starting with white lines, yellow lines, on-street and off-street parking schemes, traffic management schemes, one-way streets and banning right-hand and left-hand turns. Most of the opportunities to do more on these have run out and all depend, as has already been said, on enforcement, which is so clearly lacking at the moment.

One of the matters for which I pressed the Government very strongly when I was on the GLC was owner liability. This meant that when the car was transgressing one could serve the summons on the owner and not on the driver. It was surprising how many people suffered from amnesia when they were asked who was driving on a particular day. We got the legislation, but it was not taken further. When the licensing of vehicles was removed from the GLC to Swansea and to the large computer, which we all hope is working now, it was then intended that an offence should be marked on the computer and when the driver came to renew his licence he was told, " Yes, when you have paid your fines. " I still think that this would be a very good penalty, and would deal only with those who transgress.

Now everywhere cars are parked on the pavements, which is a danger to pedestrians and of course breaks the pavingstones. Unless regulations are enforced they inevitably fall into disrepute. More and more people find that the regulations can be ignored. Thus the congestion escalates and the problem is compounded. I would submit that over the next six years it is essential to strengthen enforcement, and at the same time to invest in a long-term programme of primary roads in Greater London, especially to exist with the existing motorways outside.

Although I would very much like to comment on London Transport, I feel that this would not be the occasion. But, as has been said by other speakers, an improved road system is not the only consideration. It is also vital that we maintain, and indeed improve in order to obtain, an efficient public transport system, as each—that is, dealing with enforcement and the public transport system—is essential to London and a solution to congestion. But I agree with my noble friend Lord Balfour that something must be done, and quickly.

My Lords, I know that your Lordships would wish me to congratulate the noble Lord, Lord Plummer, on one of the most knowledgeable maiden speeches we have listened to for a long time. I am very happy that the luck of the draw should give me the privilege of congratulating him because he and I both served together on Marylebone Borough Council many years ago, and I then had the privilege of congratulating him on his maiden speech in that council. I am very happy indeed to tell your Lordships that it was just as good as the speech he has made tonight. I hope that we shall hear him frequently because he obviously speaks with great knowledge.

The noble Lord, Lord Balfour, who introduced this valuable debate, was, like Lord Plummer and myself, an inhabitant of St. Marylebone. He and I lived in the next street to each other. He will remember that the streets in those days were peaceful and quiet little backwaters. If he went down them now he would find—leaving aside today as being a special occasion because of the strike—that they are once again parking places, and on the pavement at that. I therefore endorse the remark that he has made, as many other noble Lords have too, about the need for enforcement. I hope that the noble Lord who is to reply to this debate will be able to confirm that some steps are being taken to increase the number of wardens who, with all their misfortunes, are at least doing a job as best as they possibly can.

The noble Lord, Lord Plummer, also referred to the horse and cart. When I first joined your Lordships' House—and I had the honour of joining here some 39 or 40 years ago—I remember hearing with pleasure one of the senior policemen here telling me that as a young policeman one of his duties was to hold my father's horse when he dismounted at the riding block, which was then at the front door of Westminster Hall, and help him off with his spurs because he was not allowed to wear spurs in the House. I think my father was the last Member of Parliament to ride there on horseback and take his place. He had to give it up because he could not get across Marble Arch in safety. My Lords, you could not get across Marble Arch in safety now in an armoured car. You only have to stand and look at the traffic outside our own door during the rush hours to realise how serious the traffic on that main artery is. Only this country would allow a main artery to drive right through the main capital city of the country.

The noble Lord, Lord Balfour, went out of his way to say that we are not to discuss long-term remedies. I quite understand that. But the noble Lord, Lord Plummer, has endorsed the fact that we must not forget them; we must not overlook them. I think it was Voltaire who said that the best was the enemy of the good. The best, of course, is putting a main road system right; but I quite agree that we should not over-look some of the smaller things that can be done.

I agree with two noble Lords opposite who praised the Underground. It is far and away the best way of travelling around London. We have done a good deal since the war: the Jubilee line; the Victoria line; the extension out to Heathrow; the rebuilding of several stations. If there are any pennies going spare I would say give priority to the Underground. Reinforce success. It is by far and away the best way of getting around.

Let me turn to two or three of the smaller things which have been ventured in the past but seem to have gone by default. We have moved out Billingsgate and Covent Garden. There was an appalling row when this was started but it seems to be working all right. What about Smithfield? What about Spitalfields? What about many of the other congested centres of London which could be moved out—only, of course, after a considerable row; we have to face that.

We used to talk did we not?, about the staggering of working hours. This was done to a considerable extent, but that seems to have gone by default. I have asked many people in businesses with which I have contact whether they stagger their working hours, and only a few do. Why cannot we revive that? Why cannot we revive the movement of business out of London to the country and the suburbs? I think it was the noble Lord, Lord George-Brown, who was the Minister who started that.

Croydon, which used to be a small suburban town, is now a large commercial city. Some of the seaside resorts have also followed suit. But this is lagging. It should be revived. We should find more means of encouraging people, and private firms as well to move, out. What about shops on Saturdays? There was some talk of that in days gone by. Do your Lordships realise that Fifth Avenue in New York, one of the principal shopping centres of the world, is open all Saturday? I believe that a few of our principal shops in the centre of London are open on a Saturday, but very few indeed.

What about taxis? taxi meters, that is, not the taxes you pay. The noble Earl, Lord Selkirk, has a Question down on 4th February about taxis. I shall be interested to see how the Government deal with it. Taxis are a paradox. They are never there when you want them. If you do get them you cannot afford them. And always, if you want one urgently in the rain, they are travelling home in the opposite direction from yourself with their lights switched off. When I was a boy there used to be many taxi ranks around London. They have almost entirely vanished. I know of half a dozen, and no more. There is one in Sloane Square; a very obvious one. They take the taxis off the street where they are cruising, wasting time, money and petrol, and blocking up the streets. They are there where you want them, where you know the taxi rank is, and they always do a good business there. Why cannot we revive the taxi ranks that we had in the old days?

I appreciate that these are only small remedies, and when we get up and try to go home after this debate we shall see the big trouble that the noble Lord, Lord Balfour, told us that we must not discuss: that is, enormous, thundering hordes now going up to 40 tonnes, past our own front door in the House of Lords—where, incidentally, I should like to see a taxi rank installed as soon as possible. How serious the situation is was brought to my notice only a few weeks ago when I was coming down to listen to a debate on defence in your Lordships' House. I was stuck behind a lorry for about 10 minutes in Belgrave Square. The taxi driver said sympathetically " I hope you are not pressed for time, gov'nor ", to which I replied, " I am, rather. I am going to listen to a debate on defence in the House of Lords ". " Defence? Don't worry about that, " he said. " If the Russians ever get here, they'll never get any further than Hyde Park Corner ". Voltaire said that we must not let the best be the enemy of the good. We have discussed the good today and have left the best, which is the main road, strictly alone. But let us remember Voltaire's next line:

" The best is the enemy of the good, but it is often an excuse for doing nothing ".

I hope today we can prove Voltaire wrong.

My Lords, I wish at the outset to add my congratulations to the noble Lord, Lord Plummer, on his maiden speech, coupled with the hope that he will draw from the well of experience of his distinguished career often to address your Lordships' House in the future. The terms of the Motion for the debate are drawn very simply, but, while supporting their irrefutable contention that traffic in Inner London is getting more congested, I cannot agree with the implication that that applies equally to commercial, public and private transport. My own experience and the data from the supervising bodies which I shall quote shows that some of those categories are increasing, some rather steady and others decreasing, albeit with a marginal overall increase, which is not quite what the Motion says.

I have no special vested interest to declare except that, as president of the Islington Society, I am committed to trying to support that arguably worst affected United Kingdom borough from total traffic strangulation. I warmly thank Transport 2000 and LATA, the London Amenity and Transport Association, for the collection of data I shall use, but in all cases I shall quote the origin of the data and, as is the custom in your Lordships' House, take personal responsibility for any errors and omissions.

London traffic is like an onion and is best analysed in the same way; that is, by peeling it layer by layer and examining the result. I believe the true picture to be mercifully simple and clear, although many would obscure and confuse it to make themselves wiser by their understanding, and—to use that awful modish word— "interpretation" of it to the rest of us. To try to present a balanced picture, I may wish to repeat some figures we have already heard, and I hope noble Lords will bear with me.

The first layer of my transport onion is total traffic density. Inner London percentage changes in traffic levels increased by only 1 per cent. in the seven years from 1973 to 1979, or on average less than .2 per cent a year. That may surprise many, but my figures are drawn from an impeccable source, the historical data in the Greater London Council Traffic Planning Programme for 1981–84 published, as required by the department, annually, and in this case in 1980. Indeed, these total traffic figures are so full that the changes in level are stated month by month for all the 84 months of the 1973 to 1979 seven-year period. If the actual level in 1973 is taken as a base of 100, the corresponding levels for the next six years, to 1979, were 99, 97, 97, 98, 101 and 101, or a 1 per cent. net increase, as I mentioned—very moderate.

The second layer of my transport onion is that of all commercial traffic. Evidence given by the department to the Armitage Inquiry, which reported last year, showed that in the five years from 1973 to 1977, goods lifted by road transport fell from 1,672 to 1,422 million tonnes, or by 14·95 per cent.; let us call that 15 per cent. or on average 5 per cent. a year. More recent figures were not quoted to that fairly new inquiry and therefore, subject to anything the Minister may tell us, are not available. However, while I understand that the trend in national commercial road tonnage is again upwards, so far as I have been able to discover, it does not look like approaching anything like the 1973 levels in the foreseeable future. So the total weight of freight on all United Kingdom roads was down from 1973 to 1977 and now rises only slowly. And, without specifying actual figures, the department confirmed to Armitage that the figures for London were similar.

Contributory causes for that, perhaps surprising, fact may be conjectured in the closing of the London Docks and the fact that the resident population of London is falling sharply, combined with the greater part played in commercial freight movement by airports and other United Kingdom seaports. But, although it may never reach 1973 levels, the trend of commercial traffic is again upwards, and what is of more concern to us here today perhaps, the vehicles used are getting bigger and less manoeuvrable, causing more congestion by virtue of their size than by their change in number.

Next I wish to consider public transport. The GLC TPP, already quoted, states in Annex C the number of passengers entering Central London between 7 and 10 a.m. daily. By London Transport bus it was 157,000 in 1969, 144,000 in 1973 and 103,000 only in 1980, a fall in 11 years of 34 per cent., of which over half took place in the last two years. I shall return in a few moments to the part buses must play, but, on present evidence, there is no congestion from that vehicle category's passenger demand. Indeed, simple arithmetic projection of the rate of decline of passenger travel into Central London by bus over the last four years of the period quoted—that is, for 1977, 1978, 1979 and 1980—predicts that the decline is so staggering that the last passenger will be carried in 11.13 years from 1980—or, more digestibly, that every present Central London bus will be empty by 1992, which is in 10 years time. I wonder whether the Minister realises that. Did the bus passenger levels fall or were they pushed is a question I shall return to shortly?

Although tube and rail cannot contribute to Inner London traffic congestion, they are closely related and it is essential to see what has been happening to them. The London Underground passenger level has fallen by 20 per cent. over the 11 years 1969 to 1980. But, after a low in 1976 of 316,000 passengers each morning, there was an upwards trend in the next four years to 1980 of 8,000 per morning or ¾ per cent. per year. But these last years should surely have seen increasingly full use of the two completely new and extensive lines, the Jubilee and Victoria lines, which is hardly the interpretation I can get from an increase of ¾ per cent. per annum. So we add two complete underground lines to the seven existing, making, crudely, 29 per cent. extra underground lines, and get ¾ per cent. extra utilisation. There is something very wrong here.

Passengers entering central London by British Rail have fallen from 450,000 each morning in 1969 to 411,000 in 1980. Taken together, rail, underground and bus passenger numbers fell by 178,000, from 1,016,000 in 1969 to 838,000 in 1980, that being 17·5 per cent. or roughly 1½ per cent. a year, accounted for by falls of 9·5 per cent. on British Rail; 20 per cent. (but now rising again slowly) on the tube; and 34 per cent. down (and sharply worsening) on the buses.

The next and last category to consider is cars, together with motor and pedal cycles. Each morning, 105,000 cars entered central London in 1969, and by 1980 that had risen 31 per cent. to 138,000. Significantly, nearly one-third of the whole 11-year increase took place over the very last recorded year; namely, over 1979 to 1980. Motor and pedal cycles nearly doubled over the 11 years to reach 26,500 in 1980—surprisingly to me at least—to one-fifth of the level of all cars.

Consolidating the figures I have quoted for the 11-year period 1969 to 1980, the changes in inner London traffic levels were as follows: All traffic up 1·1 per cent., of which rail was down 9·5 per cent., tube down 20 per cent. but rising slowly again, buses down 34 per cent., and fast declining, cars up 31 per cent., and accelerating, and motor/pedal cycles nearly double.

Doctors say that fast performance is generally a reliable guide to future behaviour. Over the next six years specified in the wording of the Motion all traffic seems likely to move very slowly upwards in level. Those types using roads and contributing to congestion will exhibit widely different patterns; the tube will rise very slowly, buses will be over halfway to disappearing altogether, motor/pedal cycles will proliferate, and cars look like rising by an extra one for every five that we now have.

The total number of people entering central London each morning from 1969 to 1980 fell 17·5 per cent., but the proportion using private cars rose from 12·4 per cent. of the total in 1969 to 17·5 per cent. in 1980—an increase in cars approaching half as many again! We may calculate that if enough people switched from private cars to increase the usage of public transport by just 10 per cent., there would be a reduction in private cars of 45 per cent.

Older, but nevertheless interesting, information from the Greater London Development Plan inquiry of 1970, based on 1967 figures, showed that 67 per cent. of road traffic in central London was then cars, and I understand that there are approximately double the number of cars now.

Inner London has, I believe, got itself into a closed travelling-thought loop along the lines of, (as we have already heard) " I cannot rely on the number and frequency of buses, the tube only marginally attracts me, rail less, so I'll use my car ". Traffic management schemes are not working in diverting traffic, still less in restricting it, for, in 1968 (the latest year for which I have been able to discover the figures) the Metropolitan Police district issued 1½ million tickets—1,499,634 to be precise. Of those 1½ million, 52·3 per cent. were paid, 44·8 per cent. got away with it for seven different and specified reasons—some of them quite amusing—and a tiny 2·9 per cent. were brought to prosecution. So if you did not choose to pay, you had a 15 to 1 chance of getting away with it.

I believe that the Metropolitan Police commissioner has about only 1,200 wardens towards an agreed establishment of 2,000, and needs 4,000, he says to do the job effectively. I wonder whether the Minister believes that there is now an argument for separating all aspects of traffic management—parking, speeding, et cetera—away from the responsibility of the police, who I believe find the work inappropriate and disagreeable to their endeavours to maintain good relations with as many of the general public for as much of the time as possible.

The national game in Italy is avoiding paying income tax, and in London it seems to be " playing chicken " with the traffic wardens. Most illegal parking risks a £46 total fine if towed away, and usually is from within a few hundred yards of an organised, established parking facility usually at a rate (as we have already heard) of £3 to £4 per day.

The solution must be to attract travellers in, and into, Inner London back on to the buses, to reinforce an under-utilised tube network, and thereby provide the carrot, obviating the necessity to use the seductive, but in practice totally ineffective, stick of parking restriction penalties.

But, alas! just as the figures seem to show that passengers are being drawn back on to the tubes, I heard Mr. Tony Riley, manager of the London Transport Executive's Underground service say on LBC radio last week in an interview that he has been required by the executive to trim £10 million from the 1982 part of his forthcoming budget, equivalent to £15 million in a full year, and that he proposes to do this by cutting all tube operating hours from a 5.30 to a 6 a.m. start and back to a midnight from a half after midnight close down. This must surely encourage those planning to enjoy London nightlife to bring their cars in in the morning to be sure of getting home afterwards. But Mr. Riley did say that his measures need the approval of the Secretary of State under the Act. Please will the noble Earl restrain the Secretary of State from giving his approval?

GLC figures show, however, that the number of London Transport buses entering central London each morning between 7 and 10 o'clock has fallen from 4,000 in 1969 to 2,600 for each year from 1978 to 1980—that is, by 35 per cent. So, having had one-third of our buses taken away, is it surprising that people are collapsing, disgruntled into their motor-cars, exhausted, fed up, and half awake?—and each full double-decker bus is replaced by 80 to 90 single-passenger private cars, which must lead to rampant congestion.

Whatever the national debate on the "Fares Fair" policy has or has not decided, it has shown conclusively that the demand is there and that seats will be taken up again if the right financial deal is offered, for in the first three months the number of passengers, on each of what must have been the same number only of buses and tube trains, increased by about 10 per cent. That is an increase that is doubly significant when it is remembered that these increases were both in the teeth of adverse conditions; protracted bomb scares on the Underground, and bitter, icy weather—the coldest October for years, and protracted pre-Christmas snow—for the buses.

A comparison of subsidies for public transport for London compared with other capital cities show subsidies at the following levels: New York, 45 per cent.; Paris, 65 per cent.; West Berlin, 61 per cent.; Brussels, 70 per cent. And London? Livingstone would have given London 55 per cent. Full implementation of the Law Lords' recent judgment reduces this to only 25 per cent.—just over one-third of that of Paris.

Others more expert than I in law and economics must argue the mechanism for legal and affordable increased support, but one thing is certain: if we do not offer greater encouragement—and this means financial subsidy—to extensive, but under-utilised tubes and our dying bus service, congestion by private car will soon strangle Inner London.

Building more roads, reliefs, and by-passes is certainly no effective treatment for increasing congestion, which simply follows Parkinson's Law, fills the space available, and leaves our roads with Parkinson's disease. Maybe it is time to reconsider a toll on all vehicles entering this city. But these are "stick" techniques really. What the donkey needs is the "carrot" of financial subsidy for tubes and for buses. I see no alternative. Does the noble Earl who is to reply? I warmly welcome the spirit and the intention fo the noble Lord, Lord Balfour of Inchrye, in setting down this Motion for debate.

My Lords, first, I should like to add my congratulations to those already extended to my noble friend Lord Plummer of St. Marylebone. We are extremely fortunate that he chose this evening to make his maiden speech. I am also very grateful to my noble friend Lord Balfour of Inchrye for initiating the debate, because it enabled me to go to Scotland Yard last evening and very early this morning to visit its central traffic control and area traffic control, both of which I found extremely interesting. I was able to see at first-hand the enormous problems which the police face and to hear from them how they think things might be eased.

We all have the right of free passage on the highway, but it seems that we are becoming increasingly selfish and aggressive to achieve this ideal; and I also feel that we are less law-abiding, possibly because of lack of enforcement of regulations on parking in our cities. I think that we all have different figures, but from the figures that I have received I understand that of 12,000 vehicles illegally parked in central London each day, only one driver in 10 gets caught, despite 5,000 parking tickets being issued every day. I also agree with my noble friend Lord Balfour and the noble Lords, Lord Underhill and Lord Donaldson of Kingsbridge, that a fine of £6 or £10 is completely unrealistic and that in this day and age we should think more in terms of £25. It is an extraordinary state of affairs that the car costs the London community more than crime.

I entirely agree with my noble friend Lord Balfour that there should be more, and larger, car parks alongside suburban stations, as is the case outside Paris. His suggestion that one should be able to buy a rail ticket at the same time as one pays for a car parking ticket seems to be an extremely good one, which surely would not cost much.

I do not understand why taxis cannot be called for from, for example, the Hyde Park car park, which is not the most convenient of car parks. I understand there are no means of getting a taxi there. I wonder whether the GLC should not have direct control over all public car parks, in the commuter areas as well. Another thing I should like to know is this. I walk and I use London buses a great deal; I do not like the Underground very much, but that, I think, is a female reaction. Why are our buses not controlled centrally by computer, as in many major cities? This would surely prevent the bunching which infuriates one as a passenger, and in itself causes congestion. Are there enough bus stations in the centre of London, so that these vehicles, when they are not needed, can be parked?

The noble Lord, Lord Underhill, mentioned the scheme which was used in Tottenham Court Road to enforce regulations. I understand that the £20,000 experiment roughly equated with the resulting fines; and, hopefully, this might be used again. I was hearing from the police, and was shown by them, what happened when there is a breakdown. If one lane of a two-lane highway is blocked—it was the Blackwall Tunnel, I think, this morning—a mile of queue forms every six minutes; so any noble Lord who is sitting in his car about six miles from Blackwell Tunnel may have some sympathy with the police who are trying to sort out the problem. It is not their fault if it takes a little time.

My Lords, I appreciate that I have not really produced anything in the way of a solution but have posed a number of questions, and decisions will have to be taken. But what can we do now to alleviate the congestion? This evening, no one has mentioned the clamp—I believe it is called the Denver clamp—or the Hannibal wheel lock, and I wonder whether, if it is introduced, it might be called either the Howell Hasp or possibly the Avon Arm lock. But in this clamp, which I saw today—and I hope it will be accepted—it seems we have an excellent deterrent. I tried it out for size, and it weighs about 24 lbs, so 50 of these could be taken in a van with a team of four policemen. The great advantage of it is its simplicity, and, being bright yellow, it is easily visible. I feel sure it would deter any of your Lordships who saw it attached to an offending car in the street. I understand that the cost is about £200 to £250 per clamp—that was the price I was given today—and police in Central London would require 300 of them to do the job effectively.

Another reason for using the clamp is that car manufacturers—and they include British Leyland, with their new, wonderful Mini Metro—are making their vehicles far more thief-proof. This means that in some cases, whereas previously the police have been called and have been able to get into a car and drive it to the pound, they are now unable to do that. That is so even in the case of the small cars; and very often, as your Lordships know, the transporter which takes these cars to the pound is a large vehicle and in narrow streets cannot get near to the transgressing car; so we have an unending problem.

Like other noble Lords, I feel that decisions to deal with congestion in our capital city must not be taken on any political grounds. Co-ordination between all interested parties is absolutely vital, and I hope that this evening the Minister will give us some encouragement as to the future of our great city.

My Lords, I should like to add my thanks to those expressed to my noble friend Lord Balfour for putting this subject down on the Order Paper, so enabling this debate to take place; and I should also like to congratulate the noble Lord, Lord Plummer, on a most admirable and well-informed maiden speech. We long, I think, to hear Lord Plummer's second speech, which may be more controversial, because his views on the operations of London Transport and the Law Lords would indeed be fascinating; and doubtless we shall have the opportunity to do so.

I should also like to thank Lord Underhill for the tone in which he spoke for the Opposition; and the fact that the great majority of speakers in this debate will be agreeing on some of the major questions at issue is, I think, in itself significant. But, if I may, I should like to go slightly wider than Lord Balfour himself did in introducing the debate because Lord Balfour said he was specifically going to exclude the long-term ideas about how much public transport there should be and who should pay for it, and personally I think this is the heart of the question of congestion in Inner London.

First, I think I should say, as someone who uses London Transport regularly, frequently and intensively, that it really ought to be said, in relation to the figures that Lord Broadbridge drew to the attention of the House in what I think was a fascinating contribution, that the reason why the private motorist uses his private car in London is because the service on the public system has been deteriorating. The regrettable situation resulting from the industrial dispute on the railways has revealed that there are immense advantages to individuals and to the community as a whole in having private transport available, so that they can in fact get into London even when the railways are not operating.

I remember on one occasion when we had a London Transport strike as well—I think it was in 1958, as I recollect—that even so the city continued to function, even in those days, when there were many fewer private car owners than there are today, largely because the private car was there. So I think we must not take it as axiomatic that the person who uses a private car is necessarily acting against the public interest. The reason why he is using a private car, as I think almost all your Lordships have said tonight, is because of the problem of public transport, and it is that particular question that I want to raise tonight.

There have been repeated suggestions for a co-ordinated strategy for public transport in Inner London, or in Greater London as a whole, and this is a view which I myself used to share; it seemed to me sensible that all public transport throughout the capital should be co-ordinated. But that, I must say, is a view which I have ceased to hold, largely because I have come to the view, regrettably, as a London Transport user, that the present structure of London Transport cannot long survive. I think that if London Transport had added to it responsibility for what effectively was the old Southern Railway, the commuter routes of Southern Region, I hate to think how soon confusion would become worse confounded than it is at present.

At the moment we have in London Transport a managerial structure which manifestly, for one reason or another, is not capable of coping with the problems of serving a great city. That is not an attack on Sir Peter Masefield, for whom I personally have the highest regard—he is an immense public servant of tremendous experience and ability—but the whole managerial structure clearly is not standing up to the strain of taking the radical decisions which need to be taken. So the first proposal I would suggest for the noble Earl who is to reply, and through him to the Secretary of State for Transport, who clearly must be thinking about London Transport pretty radically at the moment, is that I do not see why it is necessarily logical that the organisation which runs the tubes should also be the organisation which runs the buses.

I happen to share very much the view of the SDP spokesman in the debate that the gradual extension of the tube service throughout the capital would make a radical improvement over (I think, in fact) a quite short time, but it would require a more efficient tube service. I mean, we all have horrible stories of the tube. The other day I stood on St. James's Park Underground Station, which is beneath the kind of skyscraper in which the London Transport Executive actually lives, and I waited literally for over 35 minutes before a train arrived. By the time the train arrived, the Black Hole of Calcutta had nothing on it. I complained to London Transport and they wrote back and pretended that this was a one-off incident. Anyone who travels regularly by tube knows that it happens frequently. It does not happen in Paris. It is caused by poor quality management. Perhaps the management is blackmailed by the unions or perhaps the unions are blackmailed by the management. I do not care. All I can say is that if the management cannot run the London tube they cannot run anything.

It is clear that this set-up cannot run the buses. I have been using buses all through this winter. From my home in Chiswick to Richmond is a 10-minute drive and a 20-minute walk, but you must allow 50 minutes by bus. Sometimes it takes 10 minutes by bus but, more often, 50 minutes. To say that this is caused by traffic congestion is absurd. It is caused by rostering duties and by buses being abandoned in the middle of the street while the crew go and have their dinner. Then there are the poor old-age pensioners who form 99 per cent. of the people who travel on the buses. They are pleased to be on a vehicle which, at least, is warm so that they are not at home paying high heating bills. Whoever runs the buses cannot do it properly.

I have a drastic solution to the bus problem. One of the few pieces of recent legislation which seem to work well and efficiently is the 1980 Transport Act. Independent bus operators now run coach services which people previously said could not be made to run. I met a man who lives in Bournemouth. There is now a regular coach service from Bournemouth to Heathrow. Previously he had to go by Southern Rail to Waterloo, change, and get on a British Airways coach—and it took about a day and a half! The journey is done now in two hours. The reason why the ASLEF dispute will not bring the whole of England to a grinding halt is because people take coaches. And when they do that, very few return to British Rail.

I know that the reason why London Transport was set up allegedly was to stop the pirate buses who were driving down the living standards and working conditions of the people who were working on the London General Omnibus Company buses in London in the 1920s. Personally, I would de-regulate bus travel in the Greater London area and allow people to ply for hire and to operate vehicles according to the demand in the market. Why should it be thought that the present double-decker bus, plus or minus a few cosmetic variations, should be the sole form of public transport available in the London area apart from black taxis? Anybody of whatever class of income who wants to go about the City rapidly uses a mini-cab. This is because the black taxis will not go to the suburbs where people live, but only across town, and the buses are unreliable.

I think—and I now introduce a partisan note into the debate—that the Conservative Government, who are supposed to believe in the working of the market, might try to see whether the market works in the case of the London bus system. I cannot believe that it is beyond the wit of man to devise some alternative transport mode on the roads of the capital.

I have an interesting study from the World Bank of urban transport provisions throughout the world in the developed and developing countries. There are enormous cities which run on Jeep-links, as they call them, in Manila—converted Jeeps bought by enterprising Filipinos, which provide an adequate and rapid system in Manila. There is a whole variety of transport systems which are monolithic urban monopolies like London Transport which, as the noble Lord, Lord Broadbridge, showed, are failing to provide a service on the buses which people will use. Can we not replace this monopoly by some more radical form of transport? We must be more ingenious in thinking about what form of public transport provision we can make on the roads if we are to talk in terms of reducing private passenger car usage, which is something we all favour.

My Lords, may I express my gratitude to the noble Lord who has just spoken for having left a reasonable time. I am grateful. I apologise to the House for not having put my name down previously. I spoke to the noble Lord, Lord Balfour of Inchrye, yesterday, who asked me if I should like to speak. What I want to express is my satisfaction, as a motorist who has driven in London regularly for over half a century, with the improvement which I see has happened. When I was driving in the early 1920s, traffic blocks lasting half an hour were regular. There was a lot of horse traffic and no one-way streets. Steadily, the situation has improved. Apart from the exceptional occasions, one can now get from here to a motorway inside half an hour, and from a motorway to here from any direction within half an hour. I call that very good indeed. I have driven in, and shopped in, every capital in Europe. I do not think there is one which is as good. I feel that this pretty satisfactory state of affairs in our being able to get about better, even as the number of vehicles increases, is something we should be proud of.

It is certainly not brought about by a system of strict enforcement. I remember a friend of mine, now a Member of your Lordships' House, who, as a young man, was rash enough to summons, and summons successfully, a police car for exceeding the 30 mph limit. For every single day of the next six weeks, he got a summons for something. If you tried to enforce the traffic laws strictly you would bring the traffic to a total standstill. Look out and think on it!

Traffic laws are there as a moderate deterrent to get people to behave sensibly. The noble Lord, Lord Underhill, says that at any given time there are 20,000 people in the Greater London area parked on yellow lines. The conclusion I draw from that is that that is a measure of the parking capacity of the yellow lines which is probably about right. It works this way. Nobody has mentioned the zig-zag lines. Where the police put zig-zag lines, I have noticed that they are almost totally observed. They are the places which the police think are dangerous. Where you have double lines, in effect they say, "You are at risk here and pretty serious risk; but we will not worry too much if you pop out to get a newspaper or make a single purchase". On single yellow lines, I would say the message is: "Do it at your own risk, probably but if you are inside half an hour you arc all right".

That is the way, I think, in which those lines are understood by the motorist. In bringing about the balance between the transit motorist who wants an open road and the shopping or business motorist who wants the opportunity to stop, we have not got it far wrong. I would suggest, from the point of view of the motorist who uses his car in London, that one does not want to expel him. A large proportion of motorists use their cars because they like doing so. It is a free country. It is something we like to do. We ought to try to make parking more available. In a tremendous number of areas the streets are over-used and pavements under-used. It is only at exceptional times and in exceptional places, that the pavements are anything like fully occupied.

I believe that a system whereby vehicles were parked with two wheels on the pavement and two in the gutter would subtract very little from the road and would be an absolute minimum inconvenience to the people on the pavement, because there is lots of room for them anyway. I think this is a very good idea.

Another point is that we do not make use of the room available in our parks. Whenever there is a garden party at Buckingham Palace look at the number of cars that can be fitted into St. James's Park. Why can we not do that every day? They are not inconveniencing anybody. There is a great deal of area where cars can be parked, preferably on meters, because one does not want car owners to turn the park into a garage and to leave their vehicles for a month in the park. There should be a reasonable control of time and a reasonable level of deterrence which is tremendously short of strict enforcement. I believe that we start from a very good level of the most satisfactorily trafficked city in Europe, one in which the standard of driving has improved quite astonishingly during my lifetime, in which the accident and injury record is the lowest in the world, and for which I should like to say "Thank you".

My Lords, I should like to start by congratulating my noble friend Lord Balfour on secur- ing this debate on a subject which is of interest to so many people and which is always topical because it is intimately related to everyday matters of life in this capital city. I also much appreciated his constructive introduction. I should also like to congratulate my noble friend Lord Plummer of St. Marylebone for his excellent maiden speech. I am sure he is correct about his overall strategy, although I will have some more to say on that. The whole House will join me in saying how much we look forward to him speaking in the future.

I welcome the occasion for having an opportunity to outline the position of Her Majesty's Government in regard to traffic and transportation matters in the inner area of Greater London and on roads in particular. It may be wise if I say something on the responsibilities because I have been asked a lot of questions which fall way outside the brief of the Department of Transport.

My right honourable friend the Secretary of State for Transport is highway authority for the national system of trunk roads and motorways. In that capacity he is responsible for reviewing the adequate functioning of the system in terms of its extent, its safety for those travellers who use it and its maintenance. There are no national trunk roads in the inner area of London. However, my right honourable friend carried on behalf of Her Majesty's Government an overseeing responsibility for the safety and proper management of all public roads in England which are under the ownership and management of the numerous local highway authorities.

The Greater London Council are responsible for the main or metropolitan roads in their area—but not the trunk roads—while the London boroughs are responsible for the network of minor roads; Inner London is the area covering what was previously administered by the old London County Council. It is now made up by 11 London boroughs plus the Cities of London and Westminster; and, apart from GLC's metropolitan roads, these authorities are responsible for all the roads in their areas. As well as being highway authority for metropolitan roads GLC is also the traffic authority for all roads in Greater London except, of course, for my right honourable friend's trunk roads.

My Lords, I am sure you will agree that this explanation is essential background if there is to be proper appreciation of the Greater London Council's responsibilities in regard to road and traffic matters in the inner area. I have a few statistics and was going to say a word on them. The House is indebted to the noble Lord, Lord Broadbridge, for his excellent resumé. I am not quite sure that I appreciate him using the idea of an onion. That always leads me to tears, and I am not at all sure that traffic matters will not do so as well!

I think I should say a word of warning. Some of his statistics were, I thought, a little selective. Perhaps they did not reflect, for instance, the changing work patterns in London and the growth of suburban centres such as Kingston and Croydon. Also, his statistics about the subsidy were not quite complete so far as London Transport is concerned because the total grants mean that London Transport has had over 50p for every £1 earned from fares over the past few years.

My noble friend Lord Balfour mentioned something on traffic growth. Statistics are not easy matters to consider, and there are different ones going round. My statistics are that traffic growth in the inner area has been only about 10 per cent. in the past 10 years—this compares nationally in the country with 30 per cent.—with growth in the next six years likely to be at a lower rate. There has been a one mile per hour reduction in speed for the 10 per cent. growth. However, whatever the statistics, nearly all speakers are agreed that inner area traffic flow conditions are not satisfactory. I do not think that we should be too critical. Here I agree to a certain extent with the noble Lord, Lord Paget, but not on his abuse of a lot of the laws which he seemed to he encouraging us to break.

Your Lordships may recall the submission in 1969 to the Minister of the day, of the Greater London Development Plan. Foremost in that plan was the proposal to build a primary road network in Greater London consisting of 13 radial routes and three ringways. This plan was examined in great detail by a monumental inquiry headed by Sir Frank Layfield, QC. The panel presented their report and recommendations in December 1972. But the issues were so controversial in a time of shifting attitudes to major urban road programmes that the plan was not finally confirmed by the Secretary of State for Environment until seven years after its original submission. By then the GLC, elected in 1973, had announced that no new motorways could be built in London and abandoned all the major road plans of their predecessors. The plan therefore emerged with the primary road proposals reduced—particularly in relation to the three ringways.

There was a further change of administration in 1977 and that council sought to redress the balance of new road building in Greater London in a fairly modest manner. But, as my noble friend Lord Plummer mentioned, such is the time needed for preparing major urban road schemes that none of their proposals was under construction last year when a new administration, with a distinct leaning towards a public transport solution, decided against proceeding with the preparation of some of these major road proposals.

Of the originally proposed innermost ring road (the so-called " Motorway Box ") only the Blackwall Tunnel and its north and south approaches have been built. Ringway 2 north of the river is essentially my right honourable friend's North Circular trunk road, which is being consistently improved as many noble Lords who use it will know, and who see the frequent roadworks. The M.25, which a number of noble Lords have mentioned, now incorporates a substantial part of Ringway 3, mainly to the north and north-east of London. I believe that when it is finished, in 1986, it will alleviate the problem of some of the through traffic in Hackney and that area.

The pattern of radials remained much as it was because these are essentially the existing main roads converging on Inner London. However, since the Greater London Development Plan was confirmed in 1976 the M.11 has been constructed so far as the North Circular Road. The largest casualty in the GLC's road programme has been the West London relief road which was intended to connect the Chelsea Embankment to the M.41 at Holland Park. The last known estimate for this 2½ mile long scheme was £220 million and this will give the House some indication of the astronomic costs of road building on a large scale in Inner London. However, two or three very large GLC schemes in the outer area are proposed, and the council is seeking general public reaction to them. This is not a satisfactory story; but I believe it is unreal to argue these days in favour of new roads on the scale of the " Motorway Box ". However, it is not unreal to expect that the largest local authority in the country should be able to proceed towards an agreed objective which maintains a reasonable balance between highway investment and public transport investment.

If I may turn to one subject which I do not believe any speaker mentioned—traffic control—I feel this is a pertinent subject to the central issue of this debate and it is one way of combating traffic congestion. In recent years there have been considerable advances in traffic control techniques, in which British equipment manufacturers and the Department of Transport have played a leading part. A problem can arise with existing fixed-time computer-controlled traffic-light systems which are set to traffic patterns predetermined by extensive traffic measurements. To maintain the efficiency of the control system, these measurements have to be repeated as traffic patterns change. This is a laborious process and it has proved particularly difficult to keep the complex control plan of signals in central London up to date.

The new computerised systems that have been developed are traffic responsive and can make the necessary adjustments continuously and automatically. The GLC's decision to make a substantial investment in the new split-cycle offset optimisation technique system is to be welcomed, and it is hoped that it may lead to significant improvements in traffic speeds in the central area.

I shall now turn to illegal parking, which I think almost every speaker has mentioned. The Government, of course, recognise—

My Lords, regarding the strict enforcement referred to, these automatic timing devices are in fact based upon a speed of nearer 50 mph than 30, are they not?

My Lords, I hope they will be based on the maximum speed limit, which is 30 mph, and I am sure they are able to be set correctly. I know that the noble Lord, Lord Paget, has a lovely way of trying to beat the law, but we shall make a point of ensuring that they will keep a speed of 30 mph. The Government recognise that the extent of illegal parking in London is a constant frustration to the authorities in implementing their traffic management plans. The GLC and the London boroughs have a statutory duty to secure the expeditious, convenient and safe movement of traffic. They are greatly hampered in that objective when very large numbers of people feel free to disregard parking regulations—regulations which are made in the public interest to safeguard the capacity of the roads, for the movement of traffic and to preserve essential access.

We acknowledge that there is far too much illegal parking and that the risk of a penalty being imposed, from the point of view of the person who parks illegally, is low. These problems are being given detailed attention, and legislation will be introduced this Session to secure a major reform of the fixed penalty system. The changes will be based on proposals published in the report of the inter-departmental Working Party on Road Traffic Law in May 1981. They should make the system much more effective and substantially strengthen the disincentives to illegal and irresponsible parking. My right honourable friend the Home Secretary has announced an increase in the fixed penalty for parking offences to £10, in association with the proposed legislation, and I look forward to our debates in this House on those measures when they come before us, because I have a feeling there is going to be some pressure to increase them.

I should like to pay tribute to the traffic wardens in their efforts in law enforcement. As many noble Lords have said, they are very short of staff. My figures show that they number just over 1,300 at the moment, which represents an increase from the level they have been, but their establishment is about 500 more than that. Until we get up to establishment we shall not know whether that is a satisfactory number for law enforcement or not. However, we are looking at ways to try to get more recruits. It does seem strange, as my noble friend Lady Gardner said the other night, that with unemployment in London of over 300,000, there should be 500 vacancies for traffic wardens.

The noble Lord, Lord Broadbridge, mentioned that law enforcement might not continue to be the responsibility of the police, but I am sure that on reflection he will feel that law enforcement must remain the duty of the Metropolitan Police.

My right honourable friend the Secretary of State for Transport has consulted interested organisations on the case put forward by the Metropolitan Police for the introduction of wheel clamps to deal with illegal parking. My noble friend Lady Sharpies mentioned that. They can be called the Denver Shoe or the Bulldog Clamp, and we think that possibly the Bulldog Clamp is a rather more successful mane. If wheel clamps are introduced—and I emphasise that no decision has yet been reached because the responses to consultation are still being evaluated—they would be complementary to the fixed penalty system, and not a substitute. Their supporters claim that they would improve traffic conditions through a general deterrent effect, although vehicles causing serious obstruction would still have to be towed away or moved to a position where they could he immobilised.

Turning now to London Transport, one cannot get very far in discussing traffic conditions in any major city without considering their effect on public transport and the effect of public transport on traffic. There is no doubt that for London Transport's bus services, road traffic congestion is a major problem. There are three main reasons which make the problem in London worse than in other provincial cities. First, the congestion is over a wide area and not just confined to the innermost areas; secondly, the congestion tends to last longer; and, thirdly, the traffic flow is so delicately balanced that any minor disruption such as a traffic light failure or vehicle breakdown can cause widespread disruption. Your Lordships will recall that my noble friend Lady Sharpies gave a descriptive example. I have spoken earlier about congestion in general and about some of the ways in which things might be improved. So far as buses are concerned, the use of bus lanes is a further option, but I cannot pretend there are any overnight, magic solutions.

It has been said that the imminent fares increase on London Transport will force masses of passengers to travel by car instead of by public transport. We believe that this is fancy. There is no evidence to suggest that significant numbers of car-users switched to public transport when the lower fares were introduced and there is no reason to believe that the reverse will happen later. Such increase in the use of public transport as occurred under the low fares policy is likely to have been mainly through the greater use of the system by those who already use it. I do not deny that the increase on fares may lead to lower use of the system, and this is to be regretted. We should all like to see a better public transport system with lower fares, but let us not delude ourselves on two issues. First, such a system has to be paid for by someone. Secondly, it is unlikely to tempt many car-users out of their vehicles. We have had some quotations given about Paris and, if I may, I would take that as an example where, despite a highly-regarded and relatively cheap transport system, road congestion is still a major problem.

London Transport has been very much in the news since the noble and learned Lords gave their judgment just before Christmas on the GLC fares policy. The House may recall the discussion that followed the Statement made on 18th January by my noble friend Lord Bellwin. I shall not dwell long on this matter, but I wish to make quite clear where the Government stand on the question of subsidies and, in some measure, to answer a question of the noble Lord, Lord Underhill. Like our predecessors, we believe that subsidy should continue to be paid where this is needed to keep necessary public transport going. Indeed, last year some £1·2 billion went in support to the bus and rail services of this country. The transport supplementary grant settlement approved by my right honourable friend the Secretary of State for Transport reflected this policy; and over one-third of the expenditure accepted for revenue support within that settlement was for the GLC and London Transport.

We deplore the fact that Londoners will shortly be faced with much increased fares on London Transport services. But let there be no mistake about where the blame for this lies. This state of affairs arises from the irresponsible policies of the present administration in County Hall, which deliberately increased the costs of the services at the same time as they reduced the fares.

We, like the noble Lord, Lord Donaldson, want to see healthy and efficient public transport in London, with a fair balance being struck between the costs to the fare-paying passengers and the costs to the public purse and the ratepayers of London. An important factor in achieving such a system is for London Transport to review its operations to try to ensure that the services meet real demand and are provided as efficiently and cost-effectively as possible. To this end London Transport is already making to the Greater London Council proposals which have been published in the press, and which were particularly referred to by the noble Lord, Lord Broadbridge. It is not for me to comment on them individually but where closures are concerned they must be agreed by my right honourable friend the Secretary of State for Transport. I understand that London Transport are concentrating on those parts of its operations which carry few passengers or where facilities are duplicated close by. So far as bus services are concerned, I understand that the bus miles it is proposed to run this year are still above the level operated in 1979. I hope that this will put the matter in proportion.

My right honourable friend the Secretary of State has already made it clear that the Government will legislate to enable the GLC to provide travel concessions for old people. He has also said that he will if necessary, introduce legislation to allow London Transport to spread the cost of paying off this year's deficit over a reasonable period. But the Government will not legislate to enable the GLC to return to its unbalanced policies at the expense of the ratepayer.

I began by reciting the responsibilities of my right ho nourable friend the Secretary of State for Transport. I should like now to remind you, if I may, of the contributions which Her Majesty's Government are making to the problems of transport and environment in the Inner Area. My right honourable friend is concentrating his programme of trunk road works in the London area on routes such as the North Circular Road, the extention of that route in North-East London through the proposed South Woodford to Barking Relief Road and subsequent linking to the London—Dover route A.2 at Falconwood to South-East London, via the programmed East London River Crossing. I hope that this will please my noble friend Lord Balfour. In this way, the Government are making a very substantial contribution towards providing a means of keeping longer-distance traffic out of London's Inner Area. To relieve Greater London of its element of through traffic, the Government's most noteworthy contribution is the pressing ahead with the M.25, which, as I said earlier, we hope to complete during 1986. These trunk road improvements in and near Greater London amount to an investment of about £1 billion over the next decade.

It might be appropriate at this point for me to remind noble Lords of the substantial financial support which the GLC receives from my right honourable friend by way of Transport Supplementary Grant. London has over the years consistently received the lion's share both of resources, in terms of its share of accepted eligible expenditure, and actual cash grant. In the settlement for 1982–83 which was announced recently, London's share of approved resources was nearly 25 per cent. of the national total of just over £1,600 million. Also, its cash grant of nearly £200 million was close to 40 per cent. of the national total.

Before closing, I think that I ought to say something about heavy lorries. Each year about 250 million tons of freight is carried by road, rail and water in Greater London. Over 200 million tons is freight generated by London itself and of this, as my noble friend Lord Plummer said, about 90 per cent. goes by road. It is, therefore, no exaggeration to say that London life, as we know it and see it, depends on lorries.

The GLC have set up an independent inquiry panel to assess the benefits and costs likely to arise from imposing bans on heavy lorries within the Greater London area and the conclusions are awaited with interest, although I think that my noble friend Lord Balfour slightly jumped the gun by saying what his views of the conclusions could be. But I look forward to the current year, 1982, as the year in which we shall at last be able to take action on the heavy lorry. The Government have put forward a comprehensive and realistic approach to the problems of heavy lorries that holds out the first serious hope for years that the whole issue will be dealt with constructively and vigorously. Proposals were set out in the White Paper, Lorries People and the Environment, published on 1st December. Our aim is to get safer, quieter and cleaner vehicles on to the roads as fast as possible, to keep these vehicles away from people as much as possible, to make full use of alternative forms of freight transport where practicable and to give our enormous and vitally important transport industry a full chance to move freight competitively.

Far from making the present unsatisfactory situation worse, these proposals go in the opposite direction. For instance, they point the way out of the present deplorable pattern under which lorries are not allowed to carry the full load for which they were designed, with the result that there are more of them on the roads than there need be. Our proposals will make a very significant contribution towards reducing congestion on our roads. We estimate that if the proposed regulations were in force now, there would be over 9,000 fewer heavy lorries on the road. None of them would be bigger than the large ones we see now, but they will carry up to one-fifth more. They would run fewer miles in total and most would be required to have additional axles to spread the weight more evenly on the road.

There are those who are resisting the Government's initiatives for civilising the lorry and coping with the growth of environmental damage. I find it odd that those genuinely concerned to improve our environment should align themselves against the approach outlined both by the Government and in the report by Sir Arthur Armitage. Attempts to block the Government's measures for making the lorry more acceptable amount to condoning the present pattern. I am sure it is in the interests of every community suffering from heavy lorry traffic to see that the opportunity presented by the Government's proposal is seized and built upon. Reduced congestion is just one of the benefits that can be gained.

To answer one or two specific questions which were raised, my noble friend Lord Mancroft mentioned staggered working hours and shop opening hours. It is, of course, for individual firms to decide themselves whether it is in their own interest to stagger working or opening hours. Her Majesty's Government do not want to impose this, but any initiatives by firms will be welcomed if congestion is eased. There is, of course, a restriction on shopping hours, which I believe my noble friend Lord Mancroft may have had some responsibility for bringing in when he was in the Home Office in the 1950s. There is also a new Bill by my noble friend Lady Trumpington to change shopping hours, which would, of course, help this.

I was asked about the parking revenue and what it is used for. It is used mainly for making up deficit in parking accounts, for road improvements and for the support of public transport. I should like to join my noble friend Lord Mancroft in his tribute to the Underground. I find it hard to take some remarks which were made by noble Lords. I, too, have travelled on the Underground and have always found it excellent, and considerably better than in many other countries. Of course, over the last few years they have opened up new lines and stations, and it has been a fairly good success story.

I should like to remind noble Lords that car sharing has now been legalised and that is one piece of legislation of this Government. Business cars have, of course, been caught in the last two Budgets and are no longer as acceptable as they were. There are, of course, still taxi ranks around. However, I have a slight feeling that they wait outside the more expensive hotels rather than around Sloane Square. The noble Lord, Lord Vaizey, mentioned coaches and the 1980 Act. I appreciate his kind remarks on that. Of course, it is early yet to know what will be the final results of the freeing of coaches to private enterprise, but if it is highly satisfactory it may well produce further legislation.

All London road users cannot but be interested in the many points which have been raised this evening. If I have not answered them all, it is because there were so many. But the Department of Transport and, I am sure, those in County Hall and local governments in Inner London who are interested in traffic will study the numerous points made by various speakers in this debate. All noble Lords have contributed interesting suggestions, which show that no one involved in traffic laws can rest on his laurels. We have stretched from pink tickets to car parks, to shopping on Saturdays, to owner-liability. Tonight's short debate can only be of value in the continuing discussion of this capital's congestion problems.

My Lords, in asking permission to withdraw my Motion, may I say that I think it has been a two-way debate. We have received from the Minister a most admirable and full reply, the contents of which I hope will be circulated well beyond the limits of your Lordships' House. Secondly, the Minister has received something. He has received the views of many noble Lords on all sides of the House, views which are varied and of which, I am quite sure, Her Majesty's Government will take notice.

I should like to thank all the speakers who have taken part in the debate today, and particularly do I thank and congratulate the noble Lord, Lord Plummer, who has enhanced the quality of our debate today by his maiden speech. I beg to leave withdraw my Motion.

Motion for Papers, by leave, withdrawn.

rose to ask Her Majesty's Government what consideration they are giving to the Williams Committee Report, A Heritage for Scotland—Scotland's National Museums and Galleries, The Next 25 Years.

My Lords, I must begin by asking the House and the Minister to forgive me for not waiting until the end of the debate. I have a long-standing engagement of some importance to myself in default of which I would be letting people down, so I must ask the forgiveness of the House for not staying until the end.

We must be extremely grateful to the noble Earl for asking this very important Question. I did not always consider museums as one of the great things in my life, but I was converted many years ago in another place. I was the duty Member of Parliament on the Liberal Bench and I had to listen to the late Lord Boyle speaking on museums. I thought this a terrible bore, until he had been speaking for about two minutes, when I suddenly realised that this subject was very much a part of life, of immense importance and enormously fascinating.

My contribution to this debate tonight is not to go into the details of the report, which the noble Earl has already stressed, and the importance of a National Museum in Edinburgh. I would like to give my experience of the genuine desire of the Scottish people in various parts to have an understanding of the past in order to understand the present and the future, and their own basic efforts to do so. I would like to take two local museums I know about. The first is a Hound croft called Laidhay in Caithness about 20 miles south of Wick. It is absolutely typical, a long house with the house at one end, a door through into the byre, thatched and furnished with all the original equipment of a Caithness croft.

This was entirely done by the efforts of a small committee in Caithness headed by a friend of mine, Robert Moward, who raised the money with innumerable ceilidhs and raffles and all the other things. They have made an absolutely splendid job of this croft, and it is visited by thousands of tourists and a great number of people from Caithness itself who are fascinated to see how their forebears lived. This is an example of the interest in Caithness in what is nowadays called a folk museum.

In the county where I live, my own county of Angus, we have at Glamis a row of cottages, with the Angus folk museum, which is absolutely fascinating. This work was instigated and carried through by Lady Maitland of Burtonside, who died the other day at the age of 90. She with great enthusiasm and great support got together a whole lot of furniture, farm implements, churns, all the paraphernalia of life in the past, and assembled it in this excellent row of cottages. The Glamis estate, the noble Earl, Lord Strathmore, gave the cottages. The result is that we have another absolutely fascinating local museum entirely as the result of the initiative of local people. I think these two examples show that there is a tremendous desire among the ordinary people of Scotland to see that their past is properly illustrated and available to them and their children.

For that reason alone I think the noble Earl's Question ought to be answered in a favourable manner. He is talking well into the future, and I hope that under a Tory Government we are not always going to be as hard up as we are at present. I think the noble Earl, Lord Mansfield, might well and should give a favourable answer to this essential and very important Question that has been asked by the noble Earl, Lord Perth.

My Lords, I think we are very much indebted to the noble Earl for raising this question and making such a fascinating speech himself about an extremely fascinating document. I think this is a subject which we have never before aired in your Lordships' House, and I am very glad that it has been brought up tonight. We in Scotland have some of the loveliest museums and galleries in the United Kingdom. I so much agree with the noble Earl when he talks about the National Gallery in Edinburgh. I think it is one of the most beautiful galleries, certainly in the United Kingdom, and I would even say further afield, in Europe. It is a really marvellous little gallery. What is more, our galleries attract very large numbers of people. Any of us who have attended, as I have since the very beginning, the Edinburgh Festival, will have noticed that a tremendous number of people are fascinated by the galleries and the exhibits that are shown, especially on those special occasions. We get a very good return for the money that is spent on our galleries.

The Williams Report makes fascinating reading and it covers all the galleries in Scotland. I so agree with Lord Mackie that some of these small museums, which are spread throughout Scotland—and there are some in the Borders, too—are extremely attractive and represent a great interest in the locality and in the type of life which people led in the past. I am particularly interested in the proposal for the National Museum of Antiquities of Scotland, which I agree very strongly should be renamed "the Museum of Scotland", and for which it is obviously vital that we should have more accommodation. This museum has a wonderful collection covering all the history of Scotland, from the earliest days of primative civilisation to the present day. It was started in Queen Street in 1781 and is still there. I wonder how many museums begun in 1781 are now in the same premises. Much of the collection has to be hidden away and is only shown when space allows or on special occasions. I wonder what other great museum has been so limited over those many years.

I know that all the museum authorities and different Governments—because it was Lord Ross of Marnock who appointed the committee—realise that this is a very important matter. The museum should be enlarged, and many plans have been made but always questions of finance have frustrated any action. I have a letter here from the Director of the National Museum of Antiquities in which he says:

"Efforts to get more space to show the great collections to the public have now been going on for nearly half a century. The Government agrees the need for a new national museum with 90 per cent. more space than is at present possible. But in 1976 the proposed museum for which plans had been made and the site cleared were cancelled because of Government economies. The project was then within a few weeks of being put out to contract".

That is a quotation from Dr. Fenton, who is the Director of the National Museum of Antiquities.

I do hope that we may give this proposition further support. The John Watson site would provide the accommodation needed. The trustees of the museum have put forward proposals for the John Watson site, and there have also been suggestions concerning other sites. I do so agree with Lord Perth, that to put the museum in Waterloo Place would be most unsatisfactory. It would be very much better that it should be on the John Watson site, and the Museum of Modern Art could go to the site in Queen Street. An exchange could be made. I think that it would be an advantage to both museums.

There are other suggestions put forward which would relieve the congestion and allow the collection to be rehoused. I would like to add my plea to the Government for action on this matter. I believe that it would be an investment which would pay dividends as it would attract so many more visitors. Once the public had learned of the treasures that they are unable to see, and once the tourists had heard of the developments, the capital expenditure would certainly earn interest. More people—both the young, learning about Scottish history and Scottish heritage, and the old, who love to see beautiful things—would find the attractions of this gallery very great indeed.

I should also like to back up the proposal in the Williams Report about which the noble Earl, Lord Perth, has spoken, as regards the museum of industry which I hope very much can be located in Glasgow or in the West. I have a great personal interest since my family, the Tennant family, were the earliest people to develop the chemical industry and were involved in the beginning of the great industrial revolution in Glasgow. I think that it would be very appropriate that there should be a museum of that kind in the West, but I would stress more strongly that, while that should be the aim for the future, the particular suggestion concerning the national museum of Scotland should be adopted now or as soon as possible.

I beg the Government to consider the present position and to see whether something cannot be done to fulfil some of the recommendations of the Williams Report, not because they are going to be spending money, but because they are going to be earning money and interest and will redound to the credit of Scotland. I hope very much indeed that the Government will view this matter with some sympathy and some support.

My Lords, we are most grateful to my noble friend Lord Perth. He has gone through the main points very thoroughly indeed, and so I shall not detain your Lordships for long. However, there are just one or two points that I should like to make. There is an idea which rather follows on from what the noble Lord, Lord Mackie of Benshie, was saying, about the localised museum. It might be possible to have some travelling exhibitions. We know that in Edinburgh a considerable number of things are never seen or never shown because there has never been room to do so. Some things might be lent even to the local museums.

I had the honour of opening a very good museum at Gairloch in Wester Ross, and it is quite one of the best small museums that I have seen. Most of the work was done by Sheriff Murdoch. It is quite excellent and among the exhibits there is a most beautiful pot still, and I think I know where it probably came from. In any case there was a terrible panic about it. An excise man came up, probably from Inverness, to take a bit away so that it could not be used again. There was a perfectly good sheriff with me at the time and I was very surprised that there was such a panic. Anyway, if the local museums could be helped in some way it would be of assistance and could perhaps take some of the overload which is carried by the more central museums in Edinburgh.

The idea of an industrial museum on the West Coast is excellent. But we do not want to wait too long for all this, because the way things are going at the moment, if we do not watch the situation we shall lose many of our indigenous population who are very interested in these things. We have only to consider what has been happening recently. I shall mention just three things: the cancellation of the gas-gathering pipeline; the shutdown of the Corpach pulp mill and the quite inexcusable closedown of the Invergordon smelter. I hope that the Government will realise that a bit of money spent on the kind of thing involved in the Question can help, and also might make them a little more popular.

My Lords, I join with other noble Lords who have expressed their thanks to the noble Earl, Lord Perth, not only for his speech in introducing this debate but for his long years of attention to the whole subject, which we greatly appreciate. In my view this is a very important report and the matter it raises is very important. This should be an important debate, which it is not. I say that because it is tucked away into a corner, which it should not be. The noble Earl, Lord Perth, is much too goodnatured to be as irritable as I am over a matter of this sort, but I feel that the usual channels should have seen to it that we had a proper occasion to call attention to this extremely important matter, the importance of which has been referred to by so many speakers.

I am very glad that the noble Lord, Lord Ross of Marnock, is to speak because, as has already been said, it was he who, as Secretary of State, in February 1979 established this committee. The noble Lord shakes his head. I may be wrong, but we shall hear from him who was responsible. I understand that it was not him, but the fact remains that this excellent committee was created and launched at that time and its work has been recorded by the report which we are discussing today. Along with my noble friend Lord Cromartie, I feel that this is a matter as regards which, as he said, we do not want to wait too long. We cannot hang about over this because there is a great deal to be done.

I was born in Edinburgh and I was educated at the Edinburgh Academy. I lived at one time a few hundred yards from John Watson's within sight of Donaldson's Hospital across the Water of Leith. So I am not only intimate with the area involved, but extremely interested in the powerful Addendum, Chapter 10 on pages 89 to 93. Oddly enough, my grandfather, the eminent Victorian artist, is buried, as is my father, in the Dean Cemetery nearby where lies Lord Cockburn, whose spirit and influence is perpetuated by the Cockburn Association. I mention my grandfather not only because of his connection with the Royal Scottish Academy (RSA) but because his today priceless collection of medieval arms and armour found its way into the Royal Scottish Museum early in this century.

The committee's recommendations deserve most careful study, and, as I have said, they should not have been tucked away, as it were, into this corner. But it is to the Addendum, Chapter 10, to which close attention should be drawn, and particularly to paragraph 10.8. Yes, indeed, legislation should be "immediately introduced" as it "will take time to enact". That appears in the report and bears out what my noble friend Lord Cromartie has said.

At this stage I must say that in a way I am deeply dismayed by the speech of the noble Earl because my information is that the John Watson's site is off as regards the Royal Scottish Museum. I have turned over in my mind what is happening there, and perhaps when my noble friend Lord Haig speaks he will be able to tell us where we stand in regard to it. But it is clear from what the noble Earl, Lord Perth, said that an enormous number of ramifications have to be researched and brought together. I think that these can best be dealt with in the recommendation which is included in Addendum 10.8.2:

"… a Chairman independent of museum and gallery interests, [to be] appointed by the Secretary of State for Scotland ".

As the noble Earl has pointed out, it seems to me that the present number of trustees is too many, that the body does not work very well, that there are internal jealousies and that, therefore, we must concentrate on this recommendation that a working party must be established under a man who has a powerful personality, with position and qualities which will be of paramount importance, demanding, as they will, talents such as those of, say, Sir Mortimer Wheeler or Sir John Marshall, who was his predecessor in India. Let us pray that a suitable forceful character can be found to get this whole thing going and so establish the importance of the various propositions in their true sequence.

It is a very complex subject. Its ramifications for Scotland's heritage are enormously diverse. I say this because they extend from, say, the fact that the Royal Scottish Academy building is private property—and there is a legal problem—to Scotland's industrial heritage, as my noble friend Lady Elliot pointed out, and I agree with everything she said. I look forward to the speech of the noble Lord, Lord McAlpine; Glasgow is the place for that—Lord Kelvin and electricity, right back into the mists of time. It also extends from, say, folk museums like the Gladstone Court Museum in Biggar, which I daresay was in the mind of my noble friend Lady Elliot when she spoke—and the noble Lord, Lord Mackie of Benshie, referred to the one in Caithness—to the Western Isles; from Scotland's medical and surgical traditions to the Christian Churches and so on. Some working party it must be; that is my view.

Then what about the question of wind and water-tight storage? I think that the noble Earl will agree that that will be a tremendous transitional problem. I think the House will agree that there must be a provision for space to store a large amount of precious material. As for the Museum of Scotland, I think it is agreed that it should be in Edinburgh. That is fair enough. As the problem unfolds and in the light of decisions already reached, it is also clear that if the John Watson's site is not to be available, a variety of solutions still exists. I would join with speakers who have already said " No " to Waterloo Place, especially when you think of the sites that can be made available for the purpose.

In the circumstances that I have outlined—namely, that the John Watson's site may not be available—at this moment Donaldson's Hospital seems to me to be the best bet. Of course, it is a hospital for the deaf. But my information is that that is the sort of undertaking which need not necessarily be situated in such a monumental building, in this huge space which will provide accommodation for developments far into the years ahead. Incidentally, you would not expect me to fail to point out, if you are worrying about the traffic passing Donaldson's Hospital, that the pattern of the traffic of Edinburgh will change with the completion of the southern by-pass road.

There is one final point to which one of my consultants, in whom I place great faith, draws attention, and that is " Outreach " on pages 8 to 10. He says " Golly! what a word ". He also says in a letter:

"It is very difficult to mount travelling exhibitions and to exhibit the contents properly ".

I see such an exercise as more educational than historical. It crosses my mind, from listening to the noble Earl, Lord Cromartie, and to the noble Lord, Lord Mackie, that travelling exhibitions, which maybe difficult and expensive to mount, might conflict up and down the country with existing folk museums, which as we all agree, are so important and so attractive to Scotsmen from all over the country. I believe that a decision with regard to outreach can wait, and wait upon the current amazing developments of video cassettes, slides, films and the like. These developments. which were almost inconceivable a few years ago, are likely to reach fruition fairly soon.

Therefore, I come to the question of cost. Let us suppose that the arrangements which the noble Earl, Lord Perth, has outlined will involve £50 million. It is as well to remember that this is approximately the same amount as a small part of the cost of expanding the nuclear base at Coulport. I look forward to the later speeches with the greatest interest and, again, I thank the noble Earl for raising the subject. I hope that another time we may be able to deal with it to a fuller extent.

My Lords, like other noble Lords, I welcome the opportunity given to us by my noble friend Lord Perth to discuss some of the various proposals which have been made by the Williams Committee as part of their valuable work. The part of the report to which I want to refer is where it deals with problems arising from shortage of accommodation. These problems affect in particular the National Museum of Antiquities of Scotland and the Scottish National Gallery of Modern Art, and solutions to these two problems are urgently needed.

In the report the rival claims upon the use of the converted John Watson's School are discussed and the committee have come out in favour of the Museum of Antiquities. The long standing promise of a permanent gallery site for the Gallery of Modern Art, now about to be implemented, is again under attack. With great emphasis it is proposed that a new museum of Scotland should be created and should have a prior right to occupy John Watson's School. I very much welcome the proposal for a museum of Scotland. I think that it is a very fine concept which would hold exhibitions, encompassing the art and culture of Scotland over the centuries. But ideally this museum should be housed somewhere near the centre of the city so that visitors from abroad many of them of Scottish origin—would manage during a brief visit to Edinburgh to include it in their itinerary of visits to our main sites and buildings.

My noble friend Lord Ferrier has suggested that I might explain the position of the Gallery of Modern Art. A permanent home for the Gallery of Modern Art is long overdue, and indeed was promised over 30 years ago. Space at Inverleith House is extremely limited, and I understand that last autumn there was not enough space to show even the pictures collected during the past 18 months. A beautiful painting, "Queen Maeve" by Yeats, which was purchased for £12,000 some 15 years ago when I was a trustee, has hardly ever been shown. A proper home has now been found and offered, and plans for reconstruction are well under way.

It would be quite wrong to alter course now whatever alternative homes might eventually become available. On the score of alternative homes, I submit that the Williams Committee have been less than fair. Their proposal to move the gallery to Glasgow would mean removing it from the nation's capital. The suggested Botanic Garden alternative has never been an option to the Modern Gallery, and I doubt whether the objections to it could ever be overcome. The view that John Watson's is too big for the Gallery of Modern Art and the restoration department is disputed by the National Gallery trustees, who maintain that the acquisition of Watson's in place of Inverleith and Ainslie Place will mean a barely adequate provision of space.

The plan to move John Weston's has been supported by the Secretary of State with great perseverance. The National Gallery trustees are happy about it. The alterations are already under way. Only the Williams Committee are trying to upset things, and I hope that their view will not be heeded. The publication of the Williams Report has pointed out the need for some kind of consultative body which will meet regularly, and will advise the Secretary of State particularly, when alternative plans have to be considered and one has to be given priority over another. I suspect that the Williams Committee are slightly biased in their approach since they have tried to ride rough-shod over the National Gallery of Modern Art.

A properly constituted Scottish museums commission, which I agree should be established, could give advice which would reflect the views and opinions of all the museums and galleries concerned, who would have representation on it. This would provide a body able to co-ordinate the needs and wishes of galleries and museums in Scotland. The Williams Committee have given some indication as to how such a body would operate. They have highlighted many of the problems which face the museums and galleries in Scotland. They have shown the need for a permanent body to carry on the work they have begun with such distinction. We should be grateful to them even though we do not accept all that they have proposed.

Lastly, I should like briefly to refer to the discrepancies in what is paid to the three national galleries in Scotland, compared with the equivalent London galleries, the National Gallery, the Tate Gallery, and the Portrait Gallery. I understand that the allocation of money is reviewed from time to time, and that the review was instituted some time during the 1960s at a time when I was a trustee. Perhaps I should have been more alert about the problem and the wisdom of accepting a ratio which was somewhat unfair to Scotland.

Originally in 1960 the allocation for Scotland to cover salaries and wages and general expenses was £57,000 compared to £184,000 for London. Then, at the first review some five years later, Scotland received £1,373,000 compared to London's £7,297,000, which represented an increase of only 23·7 per cent. for Scotland, compared with an increase of 39·5 per cent. for London. I should like to ask my noble friend Lord Mansfield if he would look into these discrepancies.

Public attendance in our galleries is related to the services provided. The quality of our exhibitions which, in the case of the Gallery of Modern Art, have had to be curtailed; the numbers and pay of staff required to man the proposed extensions; the costs of a good public relations staff—all these depend on the amount of money to be provided. This question of a fairer distribution was not part of the findings of the Williams Report, but it is perhaps a legitimate question for me to ask at a time when money is liable to run short. Money will be in short supply no matter how you divide the cake. If the size of the cake is not to be large enough to cater for the increasing volume of museum visitors, then the possibility of making some form of museum charges may eventually have to be considered.

My Lords, enthusiasm is a very important thing in life; a quality that is dangerous, exciting, but essential to the nation and the world. It seems to me that one of the prime duties of your Lordships' House is to guide enthusiasm into channels that are of benefit to the nation, the country, and the individual. In regard to this Scottish heritage we have a great opportunity to do a very important thing. Enthusiasm is latent in the Scottish breast. The Scots can be roused to tremendous enthusiasm, but do not let them be got hold of by politicians arousing a nationalistic spirit of politics. Let us be proud of the emblems of our contribution to civilisation which are constructive, and not be destructive.

It is rather amusing to me that I am suggesting that we guide enthusiasm, when my enthusiasm has been entirely guided on this particular subject by my son, who happens to be on this committee, but obviously the child is father of the man. I should like to confine my remarks to Chapter 2, clauses 8 and 9, of the report. That is the question of original engineering in the Clyde Valley, which is to some extent the home of the industrial revolution, being preserved. The most beautiful craftsmanship, things that are in factories, shipyards and works that are becoming redundant, will be scrapped unless the Government can be persuaded to provide somewhere to put them on a bridging basis until we are ready to house them in our ultimate museum. I urge noble Lords to do everything they can to that end. I do not think it would cost a lot of money. With a little brainpower and some help from the various authorities, it could be simply achieved. I may be something of an extremist, but I believe genuinely that we have steam engines, pumps and other beautiful things that have been built which generations to come will classify as equivalent to the works of Mr. Chippendale. I will not waste the time of the House at this hour. That is the one point I wanted to dwell on—the importance to Scotland of preserving our emblems of construction—because we do not want to concentrate just on daggers and claymores showing what a lot of violent men we were in the good old days. Let us be proud of the things we should be proud of and do our best to preserve them.

My Lords, we are grateful to the noble Earl, Lord Perth, for initiating this debate and unlike the noble Lord, Lord Ferrier, I believe it is an important one. You cannot tuck Scotsmen into a corner for long, and I am glad to see that the Principal Deputy Chairman of Committees saw fit to be clad in a kilt as she presides over our proceedings tonight. Let us appreciate exactly what the committee had to do. We have heard from a member of the committee and from the father of a member. Let me make it clear at the outset that I was not the father of that committee. We are talking about February 1979, although some people seem to think that I was the Secretary of State for Scotland for ever.

It is a tribute to you, Willy.

Be that as it may, my Lords, but at that time I was a humble Back-Bencher.

Never humble.

Always humble, my Lords, even as Secretary of State. It was my successor, Mr. Bruce Millan, who set up the committee in February 1979. I wish to express my appreciation to the members of it and the way in which they worked, and I was glad to hear tribute paid to Dr. Alwyn Williams, the principal of Glasgow University. They invited me there to speak in October of last year, about a week after the report had been published, and I got, rather than the job I was on, lobbying by Alwyn Williams about the Scottish Heritage Report. And if that was not enough, it was followed by a letter from the noble Earl, followed by another letter from a friend of mine who happened to be the chairman of the trustees of the National Museum of Antiquities of Scotland, Mr. Kennedy. I am therefore well enough briefed on this matter, apart from which I have a little place in the history of it as well.

The committee worked with speed and they did not miss much. That is evidence itself of how quickly they appreciated the time of almost crisis within the whole national museum and gallery scene in Scotland. Today, three of the 25 years about which they speak have already gone. This is a time for decision and, having made decisions, to lay plans. I appreciate that the committee had to work at a time of depression; indeed, they were reminded of that in their terms of reference, in that they had to bear in mind that things were difficult and resources limited. Nevertheless, it is at such a time that one must not get in the mood of thinking that the depression will last for ever.

If we believe in our country, then now is the time to advance, certainly ambitious schemes but not over-ambitious ones, and I was glad to hear the noble Lord, Lord McAlpine, make his speech in the tone in which he made it. We have something to be proud of in our past and we shall have something to be proud of in our future. Therefore, we should have our plans prepared so that, when the recession lifts, we shall he able to go in straight away and not have to start de novo, because that is what has happened time and again in respect of museums. We want and must have a museum for Scotland and that is the first decision that must be taken because the position of the National Museum of Antiquities is really a crying scandal.

I thought that I had done something in, I think 1967 or 1968 when, with the very considerable help of the (now) noble Baroness. Lady Lee of Asheridge, we got Treasury approval in respect of the Chamber Street site. We thought that all was well, the National Museum of Antiquities was going there. That was a long time ago. Eventually the land was bought, and cleared, and then we were into a financial trough again; it is obvious that this is no longer an option that is open to us. It would cost at least £18 million, and now in the light of the new duties and responsibilities that we see, and the development of the museum scene, that is not on.

Having made the decision, the Government must very quickly make up their minds as to whether they are going to listen to what is said in the report itself about John Watson's School, or whether they are going to make some other temporary arrangement, because we must remember that the York Buildings arrangement is not satisfactory from a long-term point of view. As the noble Earl, Lord Perth, said, it provides only 28 per cent. of the space that in 1952 was adjudged to be necessary. 1952! There has been very considerable development since then in regard to what should be done and what could be done with the museum. So that possibility is out.

Now what are the Government going to do? Anybody who has read the report will appreciate, first of all, they considered it so important that they had an interim report. That interim report went to the Government—there was not a very satisfactory reply—and it re-emphasised what was seen as the right solution to the gallery scene in Edinburgh. There was also an addendum stating what should be done if what was recommended was turned down.

I am sorry that I have to disagree with the noble Earl, Lord Haig, but he was very courageous in putting his point of view tonight with regard to the National Gallery of Modern Art. He will appreciate of course that this is an argument which on the one hand involves a body that is 20 years old. I remember the Bill going through the other House. I think it was in about 1958 or 1959, and I believe that the gallery itself was started in 1960. On the other hand, the National Museum of Antiquities was started 201 years ago, with a £20 grant from the Earl of Buchan, who was a friend of Burns. I had to get that one in! But you are not going to get The Cotter's Saturday Night; you got Tam o' Shanter last night, and that is enough. I think that the museum was at The Mound originally, and then it moved, hut not when the noble Baroness said. It moved to its present site in 1891, and let us not forget that the building was donated by Mr. Findlay, who was the proprietor of the Scotsman; and it has been there ever since.

We had a Royal Commission in 1927, and it said that the time was not far distant when the Museum of Antiquities would require a separate building if it was to play the part it ought to play as an educational institute specially designed to stimulate Scottish archaeological studies and the teaching of history. That was in 1927, over 50 years ago. In 1949 the Standing Commission on Museums and Galleries, after visiting Edinburgh, stated that it was quite lamentably cramped, and had only a quarter of the space that it needed. It has the same space today.

In the Philips Report in 1952 we had again the same thing; and we had the lamentable report from the Earl of Perth as to what has to be done in order to mount an exhibition. Some of the valued exhibits have to be taken out and stored away somewhere; I think that some of them are silver. We heard about another exhibition mounted on a stairway. This is not good enough for what is one of the oldest museums in Britain. It is really one of the most important of the galleries from the point of view of the whole spread of Scotland's life, Scotland's living, Scotland's—not culture, but cultures, and the whole history of men and Scots in Scotland.

I think that Scotland lacks pride if we allow this to go by the board. We must bear in mind John Watson's School, with all the surrounding possibilities of development. I think that the school is far too large for the Gallery of Modern Art. It could be nearer, and indeed the present building in Queen Street would suit it, and with the National Portrait Gallery as well, that would be fine. Remember, too, that we have to do something with the National Portrait Gallery, because I was impressed by the fire risks to valuable records of Scottish life that are there; and, once again, it is an appreciation of exactly what it is we are up against in this particular situation.

So I hope there will be a speedy decision by the Government. Think again about what was put forward by the Williams Committee and, having done that, having made the principal decisions, get on with the business of preparation. I think the financial aspects of it were well covered by Lord Perth. There is no doubt about it: in what is put forward by the committee—I mean, the intervention of the Crown Commissioners—there is far less by way of public expenditure that worries the Chancellor than some people would imagine. But that has to be done.

On the question of the Scottish museums commission, I was a wee bit chary about this at the start because in the case of a committee like this, if the Government do anything they will deal with the organisational aspects; that costs them nothing. But the museums commission itself, without the upgrading of the status and the creation in principle, for a start, and then the plans in relation to the accommodation, would be just a bit of whitewash. But I do not think, as some people fear, it need be a separate tier coming between the museums and the Secretary of State.

I think that most people who have looked into this question—and I had a letter, too, from the Council of Museums and Galleries of Scotland—see this as the first recommendation, in fact. They refer to it because they think it is time there was a look at the whole museum field in Scotland, taking in the points that were raised about the folk museums. I think this is a very important point. It was referred to by the noble Earl, Lord Cromartie, by the noble Lord, Lord Ferrier, and by the noble Lord, Lord Mackie of Benshie. I could list all the other places. There has been an upsurge of interest in this connection, and it is one that we must harness and use in this respect.

But this small body—which is not meeting every day and all day and should not be an expensive Quango, to my mind, because people in this field, I find, are more ready to give their services for nothing because of the importance they feel belongs to their subject—could advise the Government on overall policy. They could advise the Government in relation to many aspects of it, but not get too mixed up with the division and distribution of monies because that would be fatal—and, remember, there is a certain jealousy from the smaller and outer museums which are supported through the rate support grant, for instance, that the more that is given in the centre, the less they will be able to get. But I think their enthusiasm is going to carry them through.

I was fascinated by what had been done in the Shetlands, by what had been done on the Island of Arran, and even what is being done in Ayr. I never thought the day would ever come when the council of Ayr would buy a Henry Moore, but they did. There was great discussion about it, of course, but they came to the right decision in the end. So there is this out-reach. A lot of travelling exhibitions are being shown at the present time. They could be expanded; and I like that part of the report that covered this. Of course, it may require changes in respect of the rules and the inhibitions upon the galleries at home. I was interested to see that there is 16 years' experience in, I think it is, the council arranging these things, and they feel that this could be done and they could help very considerably.

It is one of the things on which the committee reported, and I think it was their first recommendation that struck me:

"A more general awareness of the extraordinary range and wealth of the heritage that they house ".

That is their first point. Then:

"This should be achieved not by dispersing national collections but by increasing the number of loans and travelling exhibitions ".

This is important, but it means, too, that the question of security and environment has to be tackled. But it is altogether the question of the general awareness. I do not think that the Scottish people themselves are aware of what is contained in the National Museum. It is probable that people outside Scotland are more aware. In Vienna, which I visited during the Recess, an American woman started to tell me about all that was in the National Gallery. She had gone there to see two or three pictures. I had gone to Vienna to see only one.

The same thing is true about Glasgow and what they have done there. We have a Museum of Transport in Glasgow run by the local authority. We can build upon that. I was grateful for what was said about the Museum of Industry. We must do that. We must make arrangements in relation to the storage and getting funds—and not necessarily, I think, from the Government but from some private sources. Let us get the storage space and decide on the things which have to be discarded at the present time and keep them pending the production of that.

The focal point, undoubtedly, is the National Museum of Antiquities being raised in status to that of the Museum of Scotland and the determination that it will be not merely a change of name but a change of status and the development of that idea. More and more attention should be paid to the people's aspect of it, to the popular aspect. I do not know whether the noble Earl, Lord Haig, has read the survey; but one thing which troubled me in that survey of people who visited the various galleries and how long they stayed—and the survey cost £7,500—was that the average stay in the Gallery of Modern Art was 15 minutes. Let no one be deceived in relation to how popular it is. It is in the Botanic Gardens in Edinburgh. Many people go to it because of where it is and not perhaps because of what it is. Nevertheless, I think it is a good thing. But it troubled me that the average visit was of a quarter of an hour.

We have a lot to do. We have all the stuff; but they cannot display it because they do not have the room.

This is a challenge to the Government and to the whole of Scotland and I hope that we take it up. I express my appreciation once again to the noble Earl, Lord Perth, for introducing this matter.

My Lords, first of all, I should like to add my voice to those who have thanked the noble Earl, Lord Perth, for giving us the opportunity to debate the Williams Report this evening. I also welcome the opportunity, which the Question raised, to mention the work of the museums and galleries service in Scotland. I would suggest that we give insufficient recognition to this service, to the dedication of those employed in it and to the high standards achieved, both in the presentation of the nation's collections to the public and in the important sphere of research and of conservation of these collections. It was in order to ensure the maintenance of these standards and the expansion and adaptation of facilities to meet changing needs that the previous Secretary of State set up the Williams Committee.

Before turning to the points raised by the noble Earl and by the other noble Lords who have spoken, I would like to thank Dr. Williams and all the members of his committee, which, of course, includes the noble Earl, Lord Perth, for the very considerable work they undertook in investigating the issues put to them and in preparing their report. The committee was given the broad remit of looking at the future of Scotland's national museums and galleries and assessing their needs over the next 25 years.

The committee took evidence from a large number of organisations and individuals and they visited not only the national museums and galleries but a number of local museums in order to see for themselves the institutions at work. They took account of all aspects of the museums' life including their educational role, their inter-relationships, their management and their accommodation needs.

The committee produced an interim report in August 1980 which is a commendably short time; and then in September last year their final report was published. As has been said, they make no less than 116 recommendations, covering all areas of the national institutions. Broadly, the recommendations fall into two groups. There are first those which could be said to be directed at the national institutions themselves and indeed many of the recommendations are already reflected in the policies adopted by these museums and galleries so in effect the report re-affirms the good practices that already exist. In so far as the recommendations contain additional proposals, these will be for the national institutions themselves to consider and to implement as appropriate.

The other recommendations are those where it is for Government to give a lead and we will be studying these recommendations closely, at the same time taking full account of the views we have received in response to our consultation on the report. We will also be taking into account the numerous unsolicited comments we have received—and are indeed still receiving. Your Lordships will understand that until we have given full consideration to all the views received it would not be helpful for me tonight to prejudge any issues. The debate is, however, most timely in the helpful contribution it makes to our deliberations. We are now considering the comments, and the Government will make a Statement as soon as possible; but the issues are important and difficult and I cannot say tonight when decisions on all the recommendations may be reached.

Turning to the particular points which the noble Earl and other noble Lords have raised, I should like to take first what the committee consider to be their most important recommendation—the proposal for the establishment of a Museum of Scotland. This they envisage would be based upon the collection of the National Museum of Antiquities of Scotland, which necessarily links with the question of accommodation for that collection. The question of housing was indeed the subject matter of the interim report submitted by the committee in August 1980 when they pressed that the site at John Watson's school be reserved for the purpose. I hope it may be helpful to noble Lords if I give some background on this complex and difficult matter to avoid any misunderstanding.

The John Watson's building, in Belford Road, Edinburgh, was offered to the trustees of the National Museum of Antiquities in 1977 but rejected by them in favour of the provision of a city centre site for the museum at some future unspecified date. The building was then offered to the trustees of the National Galleries of Scotland who accepted it as a home for the Scottish National Gallery of Modern Art at present entirely inadequately housed in Inverleith House in the Royal Botanic Garden. If the noble Lord, Lord Ross, wonders why folk do not stay there for very long, he only has to go there and soon all will be revealed.

I have been there.

My Lords, by the time the Williams Committee submitted their interim report, planning for the conversion of the former school for use by the Gallery of Modern Art was already well advanced. Here thanks are due to the Crown Estate Commissioners who are generously bearing the costs of the conversion.

In the light of the Williams Committee recommendations, however, the whole subject of the future use of John Watson's was re-opened and Scottish Ministers conferred at length with the trustees of both the National Museum of Antiquities and the National Galleries. The trustees of the galleries agreed to relinquish their claim to the John Watson's building on the understanding that they would then receive in return the use of the building presently occupied by the National Museum of Antiquities.

The trustees of the National Museum of Antiquities said that they were willing in principle to accept the John Watson's site but only if certain conditions were met. They required the immediate construction of further extensions to the building, plus assurances on staffing levels and on priorities within the museums and galleries building programme. These were not conditions to which the Government could agree in the present financial climate but the trustees were not prepared to accept the building on other terms.

Various other possible accommodation rearrangements were then discussed, but none was found which could satisfy both parties without considerably greater financial expenditure than could be incurred. My right honourable friend the Secretary of State therefore announced in April 1981 that the work on converting the former school for use by the Gallery of Modern Art would continue. There has been no change in circumstances since that time to give reason for questioning that decision. One of the matters which the noble Earl, Lord Perth, claimed, was that it was not too late for John Watson's to be given to the Museum of Antiquities as not too much work had been done. But since my right honourable friend announced his decision in April 1981 further work to convert John Watson's for the Gallery of Modern Art has gone forward. To change that decision now would involve a considerable waste of expenditure on work which has already been done for the needs of the Gallery of Modern Art. Those needs are significantly different from those which the Museum of Antiquities, either as itself or as a Museum of Scotland would demand, so the position is, to all intents and purposes, irreversible except at great public expense.

My Lords, may I ask the noble Earl whether he would be good enough to look at that again? As I understand it, the main work which has been done up to date represents such things as the eradication of dry rot, and the main extra work has not in fact reached an irrevocable stage. I would therefore ask that he makes quite sure of what he has been told at the present time.

My Lords, I used the word " irreversible " rather than the word " irrevocable ". What I said was:

"irreversible except at great public expense".

That is the information I have been provided with. Having said that—and I quite appreciate that it may not be welcome to the noble Earl—let me also say quite categorically that we are fully aware of the difficulties faced by the National Museum of Antiquities in its present accommodation. Conditions are cramped and there is insufficient space to display adequately the extensive collections the museum holds. Work is already under way for the conversion of a building across the street from the museum's headquarters and its opening later this year, I am glad to say, will ease the museum's most pressing accommodation problems. It will contain an extra 1,300 square metres of gallery space, almost doubling the area available to the museum for display in central Edinburgh, together with another 1,000 square metres for additional office and laboratory facilities. At the same time, we are studying how best to meet the museum's needs in the longer term.

This relates directly to the committee's recommendation, which was strongly supported this evening by the noble Earl and by other noble Lords, for a Museum of Scotland. I can well understand the strength of feeling which has grown in support of this concept. At the same time, I would suggest, in common with many supporters of the proposal, that it is misleading to speak as though this would be the founding of an entirely new institution. The collections in the National Museum of Antiquities already provide a substantial foundation for the museum envisaged by the Williams Committee. Therefore, what is needed, in my view, is to build on this strong foundation—which brings us directly up against the inhibition I have already mentioned: that is to say, the inadequacy of the present accommodation.

There is no doubt that the present difficulties severely limit the scope for expanding activities and for fulfilling the role of prime repository for artefacts representing the cultural heritage of Scotland, as proposed by the committee. As I have said, we fully recognise these inhibitions and the serious difficulties imposed on the staff working in conditions that are far from ideal. That is why we are looking urgently for ways in which the museum can be expanded, while necessarily taking account of the extent and timing of available resources.

I hope that I am not being unfair to the noble Earl, Lord Perth, in saying that he was really posing two options; that is, either we build a new Museum of Scotland or, more cheaply, we convert John Watson's. From what I have said, I hope that I have dispelled any impression that we are confronted simply with a need to choose between housing the National Museum of Antiquities in an entirely new building in the centre of Edinburgh, or else in John Watson's. The latter course has been rejected by the parties concerned; the former would require resources that simply are not available. We are, therefore, proceeding step by step in meeting the accommodation needs in the manner I have described. I have to say, although a number of noble Lords were not over-enthusiastic, that one of the possibilities which is currently being considered for the longer term is the site in Waterloo Place, and no doubt we shall consider Waterloo Place in the light of the comments which have been made by your Lordships this evening.

The noble Earl raised another matter regarding finance. In effect, he suggested that the Crown Estate Commissioners could finance improvements to the Queen Street building by buying it from the Government and leasing it back at the same rate, as in the case of John Watson's. We are, of course, grateful for the generous assistance of the Crown Estate Commissioners in providing the resources for the purchase and refurbishment of the former John Watson's School, but we must not forget that, at the end of the day, there would be a cost to the Government and to the taxpayer in terms of the annual rental charges which are levied to pay for the cost of these developments.

If the plan suggested by the noble Earl were adopted, the sum realised could be used towards the cost of refurbishing the building. But even assuming that the resources realised would be sufficient to pay for the conversion work necessary at Queen Street, the proposal would have the disadvantage that there would remain a significant cost to the Government in terms of increased rental charges for the foreseeable future. But this is certainly one of the issues that we shall be considering, before coming to decisions about ways in which it would be possible to meet the future accommodation needs of the national museums and galleries. However, as I have already indicated, it does not seem to us to offer a reasonable basis for questioning again the decision which we have taken on the use of John Watson's School; a decision which, as I have said, is now being implemented.

The committee also suggested that a working party be set up to facilitate the creation of the Museum of Scotland. I agree with the committee that, if a new museum is to be set up, careful thought will be required on the steps needed to plan for it. It will be necessary, for instance, to identify the precise role for a new museum, taking into account, in particular, the roles already filled by the other excellent national institutions in Edinburgh—the Royal Scottish Museum and the National Galleries of Scotland. We will also have to consider whether the development of ideas for a new museum should be the task of an ad hoc working party, such as the Williams Report has suggested.

As I have pointed out, the Museum of Scotland is already present in embryo in the National Museum of Antiquities of Scotland. This is clearly reflected in the range of its current collections, though many of them are not at present on display to the public. I would repeat that what the present museum needs is additional space and resources to become the Museum of Scotland. I recognise that all these matters are difficult issues. Conflicting views have been expressed on them, and we shall have to consider them very closely before coming to any final conclusions.

Returning to the question of forward planning, some have advocated that this planning for a Museum of Scotland should be the first task of the Scottish Museums Commission, which the report proposed should be established and which has been referred to this evening. The proposal for an independent body to co-ordinate a museums policy for Scotland has elicited a great deal of support, although here again it is only right to say that other suggestions equally worthy of consideration have been put to us. Here, too, we shall need to weigh the issues carefully and to have particular regard to the roles in respect of Scottish museums played by the United Kingdom's Museums and Galleries Commission and the Council for Museums and Galleries in Scotland, which in recent years has done much splendid work on behalf of Scotland's network of local museums.

Another interesting suggestion from the committee to which a number of noble Lords have referred to-night, not least my noble friend Lord McAlpine of Moffat, is the setting up of museums specifically directed to industry, a concept which, as the committee recognised, would need to be considered in relation to the role of the Royal Scottish Museum with its acknowledged expertise in science and technology and having regard to the extensive collections of material from Scotland's early industrial heritage held both by that museum and by Glasgow museums and art galleries.

I fully share the committee's concern that we should aim to preserve for future generations adequate examples of industrial plant and developing technology. Scotland was outstanding in the van of such developments in the past and we must not allow this to be forgotten. Suitable preservation would be of value not only in historical and educational terms, as I have implied, but in increasing tourist interest possibilities, particularly in lesser known areas. But even the construction or adaptation of a suitable store for the often bulky items involved would have significant cost impli cations and we have, I fear, to study those before we reach any conclusions.

The committee also considered the status of the Royal Scottish Museum which, unlike the other national institutions in Edinburgh, is not governed by an independent board of trustees and whose staff are Scottish Office officials. The committee did not see any particular drawbacks in the continuation of this arrangement but it recommended that an advisory council be established for the Royal Scottish Museum to provide a source of independent advice to the director on the wide range of the museum's activities. This, too, is a recommendation which we will be considering with care.

Only some of the 116 recommendations in the report have been discussed tonight. If I may refer to the criticism of my noble friend Lord Ferrier as to the form which this debate has taken, I am afraid that I have not been privy to any discussions which there may or may not have been through the usual channels, but what I suggest that we have had is a very valuable airing of views on the major proposals which the Williams Committee made. I would repeat that in our current consideration of the report close attention will be paid to all that has been said by your Lordships.

I think I must make a little mention of the comments which were first made by the noble Lord, Lord Mackie of Benshie, about the part which local museums can play in displaying and interpreting the history and traditions of the more rural parts of Scotland. He instanced the Caithness Museum and the Angus Folk Museum. We are fortunate to have such a wealth and variety of museums throughout Scotland. Many of them, as the noble Lord, Lord Mackie, said, are created and run by voluntary effort. But I should remind your Lordships that the Government, for their part, give help towards local museums in two distinct ways: first, by means of grants for the purchase of items for their collections through the Local Museums Purchase Fund, administered by the Royal Scottish Museum, and, secondly, via the Council for Museums and Galleries in Scotland which gives advice and financial assistance to local museums for the conservation of objects in their care and for the improvement of displays and fittings and which also organises touring exhibitions to local museums. We recognise the excellent work which many local museums are doing and we will continue to give them help in this way.

The mention of touring exhibitions brings me to the point which was made by a number of noble Lords—last, but not least, by the noble Lord, Lord Ross of Marnock. I note what noble Lords have had to say about the committee's suggestion that the national museums should organise their own travelling exhibitions of objects in their collections. The committee's view was that those who do not have ready access to the permanent displays of the National Museum in Edinburgh should nevertheless be able to see from time to time selections of the objects they hold. It is suggested that in so doing the National Museum should consult with the Council of Scottish Museums and Galleries and the Scottish Arts Council, who already organise travelling exhibitions to avoid unnecessary duplication. The Government support in principle the view that selections of our national museums should be available to as many people in Scotland as possible. How that can best be achieved in practice is another of the matters we shall want to study closely in the light of the comments in the report.

My Lords, on this question of outreach, my point was that this might be something which is first class, but which in view of the financial problems could well wait and might come later.

Yes, my Lords, the setting of priorities is something on which the Government will have to decide, bearing in mind the parlous state of our national finances. The noble Earl, Lord Cromartie, also spoke about travelling museums and I agree with much of what he said.

I come now to the points made by my noble friend Lord Haig. I was very glad to have his support on the decision to house the Gallery of Modern Art at the former John Watson's School. As an artist of considerable distinction, if I may say so, the noble Earl's comments have particular value. The noble Earl also went into the question of finances. He said first of all, in effect, that the funds for galleries in Scotland and England are determined by periodical reviews which reflect badly on the Scottish galleries. I believe that is a fair way of summarising his remarks. What I have to say to the noble Earl, is that the figures are not set, so far as Scotland is concerned, at periodic reviews. For some years past the figures have been determined annually in the light of current needs and resources.

If it is said that Scottish museums and galleries come out badly in comparison with those in England, I have to say to my noble friend that the funds in question are not coming out of the same cake. Scottish museums and galleries are financed by the Secretary of State for Scotland out of his block. He has to determine how best to allocate the resources available to the very many competing requirements in Scotland. He has to bear in mind such problems as severe industrial dereliction and social deprivation. Against that background, I say that the share which has gone to the museums and galleries is commendable and reflects the importance which we attach to the preservation of our heritage.

We as a Government will have to take a number of difficult decisions, and I make no apology when I say that necessarily they will be bound by financial considerations. Therefore the Government's task is to plan the most effective deployment of the resources available. Our aim in so doing will be to build on the collections we are so fortunate in holding already, and on the reputation and skill of those manning our museums and galleries, so to ensure in the years ahead proper acquisition, display and conservation of these vital elements of our heritage.