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

The Question was as follows:

To ask Her Majesty's Government whether they will make a statement about alleged poaching of National Health Service nurses by private institutions.

No, my Lords, we are not aware that any does take place.

My Lords, is the noble Lord aware that those who represent the interests of nurses, like the Confederation of Health Service Employees and the Royal College of Nursing, are aware that this is an example of frustration for British nurses? It is confirmed by advertisements in the Nursing Times. There are pages of advertisements from overseas organisations offering jobs to British nurses to leave this country and give their services elsewhere in the world. Would the noble Lord please be prepared to consider his reply and examine what I have said?

My Lords, nurses are free to seek employment wherever they choose. Being the major employer of nursing staff, the National Health Service is bound to lose some qualified staff to posts abroad. The department does not collect information on the number of nurses who leave the National Health Service to seek employment abroad. However, the General Nursing Council for England and Wales provide details of the number of nurses who apply for verification of their qualifications to be sent to a registered authority in another country. There were 4,523 of these in the year to March 1981. They do not of course include nurses taking up employment in a country which does not require verification of qualifications.

My Lords, is it not an appropriate tribute to the standard of British nurses that they should be so much in demand abroad? Is it not also slightly offensive to them to suggest that they can be poached like pheasants?

My Lords, whether the term is culinary or sporting, the Government remain of the opinion that the standards are indeed high and welcome the fact that the private sector is beginning to contribute to this.

My Lords, is it not true that the conditions of employment and the facilities—and sometimes better pay—tend to attract nurses from the National Health Service into private medicine? Is not the solution to get the private hospitals to run, and pay for, their own nurse training?

Indeed, my Lords, the Government think that still more can be done in the way of involving the private sector in the training of nurses, though in fact a good deal is being done. It is not our impression that the standards of remuneration and conditions of service are so very much better in the generality in the private sector than they are in the National Health Service.

My Lords, are there not at the moment something over 200,000 qualified nurses employed in the state sector and a mere 6,000 in the private sector? Is not the total number of nurses in all parts of the country at the moment desperately seeking work in excess of 15,000?

My Lords, the private sector is a very small part of the health services. The level of trained nursing unemployment is below 1 per cent. of the whole.

My Lords, is it not rather odd to think that the party opposite are encouraging private education in nursing; and, secondly, is it not interesting that they do not complain when state-educated engineers work in the private sector? Are they honestly expecting that they all have to work in the state sector?

My Lords, the study of the parties opposite is a matter of continuing fascination to me, but I would not seek to explain it to my noble friend.

My Lords, is the noble Lord aware that I would readily agree with him that it is not possible to stop nurses applying for a job wherever they want to go? Secondly, does he not agree that the high standard of nursing in Britain is entirely due to the state system of nurse training paid for by public money? Therefore, under those circumstances, would he not agree with me—I mentioned this in the recent debate—that so far as the private sector in Britain is concerned they should at least pay some token sum towards the training incurred at the expense of the British taxpayer?

My Lords, I said that such a scheme had not passed beyond the possibility of being considered. The noble Lord will be aware that, for instance, at the Royal Masonic Hospital there is the training of both state registered and state enrolled nurses, and at St. Andrew's Psychiatric Hospital there is training of registered mental nurses, so the private sector is not doing nothing. I hope, as does the noble Lord, that it will do more.

My Lords, am I right in saying that if nurses by their free will choose to work in private institutions they will not get pensions, whereas those who work in the health service do get pensions? So what one loses on the swings may be gained on the roundabouts.

My Lords, the question of pensions in the private sector varies from institution to institution.

My Lords, arising from the Minister's answers, would he not agree that the deprivation of nurses in the National Health Service is due to the fact that because of their lower scale of wages they are attracted to three other spheres: not only overseas and the private hospitals but to the nursing agencies? The National Health Service has to pay higher wages to nurses from the nursing agencies than it does to its own staff at the cost of its revenue.

My Lords, as I said earlier, the question of the conditions of service and remuneration of nurses in the private sector is very much a matter for them, but I understand that many independent sector establishments and organisations base their pay scales on Whitley rates and that in a large number of cases no additional financial payments are made. Indeed, the annual salary received by a qualified nurse in the independent sector can be less than she would receive in the National Health Service. Comparisons such as this are difficult to make because of the other terms and conditions of service which might be involved.

My Lords, would the Government care to take a leaf from the Metropolitan Police and print the percentage of coloured people among the serving nursing profession?

My Lords, I think that by any stretch of the imagination that is another question.

My Lords, from the nurses' point of view—because this is a Question about nurses—might I ask the Minister whether it is not possible that some nurses might prefer to work for private institutions?

My Lords, we return to the point at which we started—that the nurses have freedom to work where they wish to do so.

My Lords, is the noble Lord aware that the point of raising this Question in the beginning was the grave apprehension experienced by those who represent British nurses? Because, as the noble Lord, Lord Boyd-Carpenter, quite rightly said, the British nurse, male or female, is held in high regard throughout the world, therefore, that must mean that their standard of training, whether for SEN, state registered nurse or state certified midwife, reflects a great deal of credit on those who train them in the National Health Service and—

Speech!

My Lords, is the noble Lord aware that there is a strong feeling that poaching is going on by people from foreign nations? Would he not at least be prepared to consider perhaps talking to the representatives of our nurses, the Royal College of Nursing and the Confederation of Health Service Employees—

Speech!

so as to understand what the problem is and how it affects the National Health Service?

My Lords, if I can give a brief reply to that rather long question, the Government always have the interests of nurses very close to them and wish to be well informed as to what those interests are.

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

The Question was as follows:

To ask Her Majesty's Government whether, in view of the major casualty off the Newfoundland coast of the oil rig "Ocean Ranger", they are fully satisfied that there will be adequate safeguards for the British operating crew of the new semi-submersible of similar design, "Ben Ocean Ranger", without a further independent design appraisal by an unbiased and disinterested third party.

My Lords, the "Ben Ocean Ranger" will be required to comply with United Kingdom safety requirements for mobile offshore installations operating on the United Kingdom Continental Shelf. This requires an independent appraisal of the design and construction by a certifying authority appointed by the Secretary of State for Energy.

My Lords, I thank the noble Minister. Will there be an independent inquiry before the "Ben Ocean Ranger" puts to sea? Is he aware of the reports, which appeared in the media after the sinking of the "Ocean Ranger", of the unhappiness of the skipper in charge of the vessel, who said that there were approximately 200 design defects in his craft?

My Lords, I would not want the noble Lord, or indeed the House, to be under any misapprehensions about this matter. The certifying authority for the "Ben Ocean Ranger" will be the American Bureau of Shipping. We have to appreciate that the cause of the loss of the "Ocean Ranger" is not yet known. It is therefore premature to call into question the validity of safety assessments by the American Bureau of Shipping. In the case of the "Ben Ocean Ranger" the American Bureau of Shipping will be applying United Kingdom requirements, and in certain areas they involve a more comprehensive assessment of the design than that required to meet the classification rules. In some areas the United Kingdom's exceptions criteria are more stringent.

My Lords, can the Minister then confirm that the "Ben Ocean Ranger" will put to sea before the final reports and conclusions have been reached by the American Bureau of Shipping as to the causes of the catastrophe that occurred to the "Ocean Ranger"?

My Lords, I cannot possibly give any such undertaking because we do not know what results, if any, the inquiries into the tragic loss of the "Ocean Ranger" will reveal.

My Lords, would not the Government agree that a full inquiry is necessary, as the safety of the crew is at stake?

My Lords, we have established contact with the Canadian authorities investigating the incident and we shall be informed of the findings as and when they are known.

My Lords, will the noble Earl answer one final question: are the Government prepared, then, to accelerate the developments in free-falling safety capsules and lifeboats which have been worked on, in order to look after the safety of crew members of these very high structures, which appear to be causing considerable danger to those who sail in them?

My Lords, I have no doubt that these are questions which will occupy a great deal of time and energy on the part of the Canadian authorities in establishing the facts of how this tragedy occurred.

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

The Question was as follows:

To ask Her Majesty's Government whether they will confirm their 1977 conclusion that responsibility for the fate of William Beuasire rests with the Chilean secret police; and whether they will make a public protest, and require a statement and compensation from the Chilean Government.

My Lords, the Government remain convinced that the evidence of Mr. Beausire's detention in Chile is strong. In the absence of a full and satisfactory explanation from the Chilean authorities we cannot regard the case as closed, and we shall continue to press the Chilean authorities to resolve it. Because of Mr. Beausire's status as an Anglo-Chilean dual national, we would have no formal standing to demand compensation from the Chilean Government on his or his family's behalf.

My Lords, I am grateful to the noble Lord for that reply. Will he say, however, that it would be possible for the Government to ask the Chilean authorities to make a statement on this issue—indeed, to demand it? Will he do that?

My Lords, an investigation was taking place into Mr. Beausire's fate. This investigation was suspended, but we understand that there is a possibility of these inquiries being reopened, and we very much hope that that will happen.

My Lords, may I ask my noble friend whether the Anglo part of Mr. Beausire's nationality is satisfactorily established?

My Lords, so far as I am aware, there is no doubt about Mr. Beausire's status; that is, that he is an Anglo-Chilean dual national. Therefore, while the difficulties surrounding his circumstances relate to Chile, we do not have a status in this case.

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

The Question was as follows:

To ask Her Majesty's Government why they do not react to more serious infringements of human rights in Iran in the vigorous way they do to lesser infringements in Poland.

My Lords, we deplore violations of human rights wherever they occur and have reacted clearly and consistently to such violations. The views of Her Majesty's Government and our partners on developments in Iran have been made clear to the Iranian authorities, as have our views on Poland to the Polish Government.

My Lords, is the noble Lord aware that of over 3,000 executions which took place throughout the world last year, over 2,600—that is, around 82 per cent.—took place in Iran; that many of them took place within hours of arrest, and that they were for such offences as intending to demonstrate? So would the noble Lord agree that no one should, in any circumstances, be deported from this country to Iran?

My Lords, the question of deportation from this country would have to be considered on its merits, in the light of the circumstances prevailing at the time. But, as I said in the Answer, we have made our views about human rights violations in Iran very clear, not least in the Unstarred Question that I answered a week or so ago about the Bahá'is.

My Lords, is the noble Lord aware that there was a programme during the weekend about the American attitude to what went on in Iran, where the officials who spoke—I am sorry that I cannot remember their names—confessed that they had been wrong about Iran from the beginning, and that they had caused a lot of confusion and made a lot of mistakes about what has gone on?

My Lords, I did not see the programme to which the noble Baroness has referred and I do not know what it was that the American officials confessed to, or, indeed, which officials were confessing the error of their ways. But it behoves all Ministers and officials to confess the errors of their ways occasionally.

My Lords, is the noble Lord aware that the Foreign Secretary is not proposing a visit of friendship to Iran or to Poland, but is about to visit Israel? May we have an assurance that when he is in Israel he will represent to the Israeli Government the damage done to Israel's reputation in this country by the repression of human rights on the West Bank and, in particular, by the use of firearms against unarmed demonstrators?

My Lords, the noble Lord's ingenuity knows no bounds, but even he is hard pressed to draw an analogy between what he asks and the Question on the Order Paper.

My Lords, although I welcome what the Minister said about deploring what is happening in Iran, and the Government's protests about what is happening in Poland and to the dissidents in the Soviet Union, would not the Government's credibility be rather stronger if they made similar protests against the denial of human rights among allies of the West, such as El Salvador and Turkey?

My Lords, I think that I should answer that question in the same way as I answered the noble Lord, Lord Mayhew.

If I may press the noble Lord just a little further on this matter, I think he will agree that the general impression, rightly or wrongly, is that the Government are concerned only with human rights violations which occur in eastern Europe, and not so much with where most of the torturing and killing occurs, which, unfortunately, is in the so-called free countries of the West. Will the noble Lord do what he can to correct that impression, making it clear that he is even more concerned about violations in the area of which we regard ourselves as a part, than in those areas to which we do not regard ourselves as belonging?

My Lords, let me say, yet again, that the Government deplore violations of human rights wherever they may occur, and we lose no opportunity in expressing our views on the matter.

rose to move, That the draft regulations laid before the House on 10th February be approved.

My Lords, this is one of those occasions when I think one can say that one is grateful to the noble Lord the Minister for his interpretation of this order. I only wish that the explanatory note had said some of the things which he has told us about, for it says nothing at all about cheap imports or about safety precautions. I spent quite a long while going through the whole of Schedule 2 to the 1979 Act to see where the new regulations fit in with the 1979 regulations. Frankly, it was impossible. And I could have saved my time because of the excellent explanation which has just been given by the Minister.

I should like to ask the noble Lord the Minister two questions. First, do the regulations change the wattage of the lamps, or are they as previously? Whether the Minister can answer that question I do not know. They are listed. Secondly, I take it that the consultations which have been held suggest that existing stocks without the new markings will be exhausted within the period of six months, after which the new regulations will come into force. Could the Minister therefore tell me whether there is any possible danger, if I may use that word, of small suppliers having stocks which may last beyond that six-month period and what their position will be under these new regulations?

My Lords, on the point of wattage, I have nothing before me upon it. However, I should not have thought that it ought to be a problem. Obviously, the wattage will vary. The requirements as to standards must surely apply, I should have thought, regardless of the wattage. If that is not so, I shall of course let the noble Lord know. As to his point about whether there will be stocks in some people's hands after the six-month period, I suppose there must always be that possibility. Hopefully, it would only be de minimis. Again, so far as I am aware, nobody has brought forward that point as a cause for concern. On the point of wattage, I understand that what I said was correct: that there is no change. Finally, had the noble Lord, Lord Underhill, got in touch with me beforehand, I should have given him at any time a very detailed explanation.

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

• Consolidated Fund Act,
• County of Avon Act,
• London Transport Act.

moved Amendment No. 1:

My Lords, I can see the case made by the noble Lord, Lord Renton, for this amendment regarding lawful excuse. I have studied the convention which this Bill seeks to ratify. It seems to excuse such acts of terrorism by allowing terrorists to plead lawful excuse. That, I think, is not compatible, or it seems to be not compatible, with the convention. If hostage-taking is permitted with lawful excuse, it is difficult to know what case could be made by terrorists who could plead political and other circumstances or that they were acting with the authority of another Government. The convention lays down very clearly the circumstances or acts which constitute the offence. It is hard to see the justification for the claim made by the Minister, when on Second Reading he said at col. 1121:

"Lawful excuse is a justification in law where the taking of hostages occurs".—[Official Report; 1/3/82.]

In seeking this change, the amendment seems to raise a number of facets. First, it is important that the Bill which seeks to ratify the convention should be compatible with it. This may have been the point made by the noble Lord in moving the amendment. Article 1 of the convention allows no excuse for the detention of persons, or the taking of hostages, or the threatening of Governments. Secondly, it is important that all Governments who ratify the same convention should have similar legal procedures and enactments to deal with terrorism and to make it watertight. Thirdly, it is important to have the fullest co-operation with the states which have ratified, and compatibility of legal procedures between countries will help to facilitate the convention's proposals and the common objectives. It would be very helpful to the Committee, and beyond, if the Minister were to clarify the position in relation to the Bill and the convention itself.

My Lords, I am grateful to my noble friend Lord Renton for explaining this amendment and indeed for the helpful approach taken by his noble friend and mine, Lord Campbell of Alloway, in their earlier discussions on this. It is true, as the noble Lord, Lord Bishopston, has said, that this phrase does not appear in the definition of the offence in Article 1 of the convention. However, the Bill creates a new criminal offence and it was considered necessary to adapt the definition of the offence of the convention but without changing its substance, so as to be consistent with the laws of the United Kingdom and ensure no room for ambiguity. Since a threat to continue to detain a person in order to compel another person to do or abstain from doing any act is one of the elements of the offence, it was necessary to ensure that a situation which fell within those elements but which was not in any ordinary sense the taking of a hostage, was not caught by the Bill.

It is possible to conceive of cases where it would not be appropriate to apply the Bill. For example, there was an episode which was commented on in court in 1959, Regina v Smith, where a company of troops was kept on parade until a soldier involved in some fighting confessed; the court regarded this as an entirely proper way of inquiring into the incident. There is also the more usual case where a group of schoolchildren is kept in school until some petty malefactor owns up. Despite the controversy on educational discipline nowadays, I imagine that none of your Lordships considers that this type of case ought to be caught by the Bill.

It is for the courts to decide, of course, what constitutes lawful excuse, but it is not intended that the addition of this phrase should qualify the scope of the offence so that cases of hostage taking which clearly fall within the scope of the convention would, as a result, escape prosecution. In particular, the phrase would not allow an offender to argue that an act of hostage taking committed on the orders or on the instigation of a Government constituted a "lawful excuse". Nor are the motives of the offender in committing the offence—for example, to force a Government to grant asylum—of relevance in determining whether there was a lawful excuse. In short, the ends do not justify the means. It is certainly not the intention that the inclusion of these words should in any way water down the provisions of the convention. I hope that I have explained the meaning of these words to the satisfaction of my noble friend Lord Renton and the noble Lord, Lord Bishopston, and that my noble friend will feel able not to press his amendment.

My Lords, may I ask my noble friend just one question? In the example that he gave it seemed to me that the words "without lawful excuse" were qualifying,

"detains any other person",

in Clause 1(1)(a) but were not relevant in Clause 1(1)(b). If that is so, would it not be reasonable to transfer the wording "without lawful excuse" to Clause 1(1)(a)?

My Lords, I do not believe that my noble friend Lord Drumalbyn is right in saying that, if I may say so. The provisions of Clause 1(1)(a) and Clause 1(1)(b) are accumulative; that is to say, they both have to be satisfied in order to create the offence.

My Lords, if I may have leave to reply, I should first like to thank my noble friend Lord Trefgarne for his very interesting explanation. It seems to me to be a very fine and subtle point. Having listened carefully to my noble friend, I believe it is only the presence in line 10 of the words "continue to detain" that really justifies the retention in line 6 of the words "without lawful excuse". I think so. I take that point and therefore thank my noble friend and beg leave to withdraw the amendment.

My Lords, I beg to move that this Bill do now pass.

My Lords, I raised a number of points on Second Reading which were not pursued at Committee stage and I have given the noble Lord the Minister notice of one or two points on which it would be helpful to have clarification. On Second Reading I raised several matters. One of them was in regard to extradition. Clause 3 refers to extradition procedures and I should like to ask the Minister whether he is satisfied with the procedures and situations where no extradition arrangements exist between the United Kingdom and other countries? The noble Lord the Minister was kind enough to reply to me on a number of points raised in the debate, but I note that in his letter to my noble friend he states:

"I would like to point out that in the Taking of Hostages Bill there is no obligation to extradite, provided we are willing to submit the case for prosecution".

It would be helpful if the Minister will be kind enough to clarify that point. It seems that, where another state is not a party to the convention, the Bill cannot provide for extradition, although I appreciate that extradition could be possible through powers available under other legislation. I am concerned about other countries which are not party to the convention. The noble Lord the Minister was kind enough to detail in his Second Reading speech those other countries which have not ratified, or which have no extradition or offender fugitive arrangements with the United Kingdom. I anticipate that other conventions such as the hijacking convention, which I understand has more than 100 parties backing it, will help.

The other point I made on Second Reading concerned ratification. There is an urgent need for ratification so that the convention's objectives can become realities as soon as possible. The noble Lord the Minister told your Lordships' House that 17 ratifications and accessions have been made so far and that the convention will come into force when 22 countries have ratified or acceded. This is very slow progress in the period of two and a half years since the convention was signed, in December 1979. As I have implied, five more signatures are still required for enforcement. It would he helpful if the Minister could say something about the action taken by Her Majesty's Government and the United Nations to speed up the rate of ratification—especially by the United States, Canada, Italy and New Zealand, among others, who still have to ratify. I am sure there is particular concern that Eastern European countries are not represented at all. Does this mean that they will not be co-operating in the signing of the convention or in the ratification that must follow before the convention can be enforced? It seems vital that every country and every state signs the convention and ratifies it as soon as possible, to ensure world-wide enforcement. Those who do not do so are providing a refuge for terrorists, and such countries are not discouraging such people as terrorists and hijackers on their soil, with all the terrifying problems they bring to their own nationals and to others.

As I mentioned earlier, while it is vital that all countries should back the convention, it is important too that there is the sharing of knowledge. I believe this is covered by Article 3 of the convention, which concerns the techniques that should be operated when terrorists come to a country. Obviously, powers such as those we are discussing today are not enough alone, because what matters also is the manner in which countries deal with hijackers and with emergency situations on their soil, if bloodshed is to be avoided. It has been proved in the past that already Britain can deal with such situations with firmness and fairness, and so it will be helpful if the noble Lord the Minister will assure the House that the Government really are concerned about the delay in ratification by other countries. Until something is done by all countries there is refuge for people who should be apprehended and dealt with as soon as possible.

My Lords, the noble Lord, Lord Bishopston, may be interested to know that the convention requires ratification by 22 states in order to enter into force. Our ratification would be the 18th and it is likely, therefore, that the convention will enter into force without much further delay. Indeed, I would hope that the fact of our ratification will encourage other states to complete their own domestic legislation. I happen to know, for example, that the United States, Japan, Australia, Austria, Italy and the Netherlands are in the process of preparing legislation. I certainly agree with the noble Lord that it is desirable that this convention should come into force at the earliest possible date, and that as many of the nations of the world as possible should be persuaded to adhere to it. But the convention cannot come into force until 22 nations have signed and ratified the convention. We hope that that will happen before very long.

On the question of extradition, it is the case that the provisions of the Bill are permissive so far as this particular matter is concerned. Thus, it will be open to us to extradite under the terms of the Bill where we think it is appropriate to do so. I am sorry that that was not precisely clear from the letter I sent to the noble Lord, and I hope I have been able to set his mind at rest.

My Lords, I beg to move that this Bill be now read a second time. This is the second Bill to make provision for financial support for the coal industry which has been introduced during this Parliament. The first became the Coal Industry Act 1980. I should like, therefore, to say a few words about why the new legislation is needed and to say how the Government see their future strategy for the coal industry, against the background of its recent history.

In 1947, the year of the nationalisation of the coal industry, there were 958 pits in Britain, over 700,000 men on colliery books and total United Kingdom production was 200 million tonnes. Total inland coal consumption was 187·5 million tonnes, and coal represented 90 per cent. of our national primary fuel needs. By 1972, however, the coal industry had been in decline for over a decade, as British industry, in common with the industry of the rest of the world, had grown increasingly dependent on cheap oil imports from the Middle East. It has become fashionable to talk about the coal industry as an archaic relic of a bygone age. In 1967–68 alone, 62 pits closed, and the reduction in men on colliery books was 43,000. In March 1973 there were 281 pits, 263,600 men on colliery books. United Kingdom coal production in the financial year 1972–73 was 140·5 million tonnes. In 1972 coal contributed only 36 per cent. of our primary energy needs compared with 48 per cent. met by oil.

It was with the realisation that these circumstances could change and in the belief that the coal industry should not completely founder that, under the then Conservative Government, the NCB in 1973 began to formulate its 10-year Plan for Coal. The intention was to restructure the industry, arrest its decline, replace old capacity, improve working conditions, and create a modern efficient and competitive industry, capable of expansion.

Plan for Coal could not have been more timely. After the first major oil crisis it became increasingly clear that imported oil could no longer be counted on as a cheap and reliable source of energy supplies, and that the energy market would shift back towards a greater reliance on coal.

Plan for Coal was approved by the Labour Government in 1974, with full support from both sides of the House. It was based on investment of £140 million per annum at 1974 prices for 10 years, compared with the annual capital expenditure by the NCB of some £80 million, and it was intended to place the NCB in a position of being able to satisfy an assumed demand of up to 150 million tonnes in 1985. Modernisation and efficiency were to be secured by an annual increase in productivity of 4 per cent. and by an annual closure of old capacity of some 3 to 4 million tonnes.

Investment under Plan for Coal has gone ahead and, indeed, has exceeded what was planned. However, the other main targets have not been achieved. It is also now clear that the market opportunities for coal, to which Plan for Coal was geared, are somewhat further off than was envisaged. This means that the coal industry is now having to adapt its plans and strategy in order to work within the parameters of its changed circumstances, while still seeking to secure competitiveness and commercial success.

The facts speak for themselves. First, in 1980–81 United Kingdom energy demand was 3 per cent. lower than in 1972–73. Total National Coal Board sales of coal were 117·7 million tonnes, compared with sales in 1972–73 of 136·6 million tonnes. Moreover, with production of 124·9 million tonnes in 1980–81, the NCB is supplying more coal than the market wants and is incurring the expense of having to put large amounts o coal to stock. Secondly, coal's competitiveness with oil has not improved to the extent that was thought. Since 1979 oil prices have not risen as fast as was feared; and the NCB, whose costs rose at an average of 4 per cent. per annum higher than overall inflation in the five years up to 1980–81, did not make the savings on costs which were hoped for. Finally, productivity, as measured by output per man shift, in 1980–81 was still below its 1972–73 level, and only during the past year have encouraging improvements in productivity been made.

For the reasons which I have outlined, the coal industry's progress towards financial viability and competitiveness has been delayed, and the taxpayer has continued to commit large sums of money to the industry, not only to provide it with funds for capital investment, but also to help finance the gap between the board's revenue and expenditure. The Bill will make it possible for the Government to continue this support of the industry, and its passage gives Parliament the opportunity to reappraise the industry's plans and progress. I am sure that we all share a common concern that the National Coal Board should progress as quickly as possible to a position of financial soundness and viability and play a key role in meeting our future energy needs. The Government's commitment to this is expressed in the substantial amount of public money which will be paid under the framework of this Bill.

The NCB's capital expenditure approval of £886 million for 1982–83 will ensure that its substantial capital investment programme of £805 million this year continues at broadly the same level. The grants to the NCB this year will be over £550 million. In 1982–83 the Government expect to pay to the NCB, subject to parliamentary approval of the Estimates, total grants of over £480 million. Such substantial sums express the Government's confidence in the industry's future potential. We believe that that future can be a secure and prosperous one, provided the NCB can overcome the problems which it faces. This will require a real effort from employees at all levels.

I have already indicated the main areas where improvement is needed. There needs to be a constant drive to keep down unit costs and to improve efficiency. The 3 per cent. improvement in productivity which has been achieved so far this year is encouraging, but it has to be seen in the context of the disappointing performance over the past decade, when there was no real improvement in output per man shift. The recent trend needs to be consolidated and bettered. If the productivity levels which Plan for Coal envisaged had been achieved, output per man shift today would have been 25 per cent. higher than it actually is.

Whatever the savings on its costs, the board can only win commercial and financial success if it can penetrate new markets and strengthen its position in existing ones. The most important area for the board to concentrate on in the short and medium term is the industrial market. However, businesses make their decisions on a commercial basis, and coal has to earn its way by demonstrating its competitiveness on pricing and in terms of reliability and quality of supply. To help industry, and to encourage increased coal burn, an extension of the availability of grants under the Department of Industry's Coal Fired Boiler Scheme was announced in the Budget: the scheme has been renamed the Coal Firing Scheme, and it now covers switching to coal firing from a wide range of oil and gas fired industrial equipment, including boilers, ovens, furnaces, kilns and driers. The minimum threshold for projects has been reduced from £25,000 to £15,000 and the scope of the scheme has been extended to cover several service industries. I very much hope that these changes to the scheme will contribute to its success.

The purpose of the Bill is to increase the borrowing powers of the National Coal Board, to increase the limits on the operating and deficit grants which the Government pay to the board, and to make small adjustments to the arrangements for the payment of social grants. Clause 1 provides for an increase in the borrowing powers of the National Coal Board and its wholly owned subsidiaries, from the present limit of £4,200 million to a new limit of £4,500 million, which may be increased by order to £5,000 million. Clause 2 extends the period in respect of which deficit grant may be paid to the board until the end of 1983–84. It also increases the total limit on operating and deficit grants from the present £590 million to a new limit of £1,000 million, which may be increased by order to £1,750 million.

Clauses 3 and 4 deal with social grants, and reflect the latest improvements to the schemes of payment which successive Governments have made to help with the particular problems of individuals affected by changes in the industry. In March last year, substantial improvements were made in the Redundant Mineworkers' Payments Scheme for people made redundant on or after 11th March, 1981 and Clause 3 gives powers to the Secretary of State to reimburse the board in full the cost of payments related to improved pensions under the new arrangements.

Clause 4 also stems from the improvements in redundancy terms and increases the limits on payments of grams to the board under Sections 6 and 7 of the Coal Industry Act 1977. The relatively modest increases reflect the cost of the improved terms, and also the fact that their introduction has led to a rise in the level of redundancies over the past year. I would emphasise, however, that the potential of the industry's future success can only be realised if those who work in the industry make a really determined effort to win through the present difficulties. I would not wish to understate these difficulties. They are very real and I know that there is no overnight solution. Nor is there a solution which the Government can produce on a platter. It is our job to set the financial guidelines and provide the financial framework which can help the board get back on course. The Bill will help us to do just that and it demonstrates our confidence that the board has the ability to succeed. It is in that spirit, my Lords, that I beg to move that the Bill be now read a second time.

My Lords, we are grateful to the noble Earl, Lord Mansfield, for explaining the purpose of the Bill which, as he said, makes provision for Government financial support to the coal industry. It is an important Bill, providing investment—I do not like the word "subsidy"—in what is perhaps, with agriculture, our most important basic industry. I think that the Bill is also somewhat unusual in that it was passed by another place without a Division on either its Second or its Third Reading. Certainly, as far as these Benches are concerned, we shall do nothing to impede its passage, particularly as I understand, from the point of view of the industry, that the Bill should receive Royal Assent before Easter; and this is certainly in the interests of the nation.

As the Bill is mainly a financial one, I should like, if I may, to make a few general points about the industry, and to ask the noble Earl one or two questions about Government policy over certain specific matters which are causing concern. If I may say so, I think that it gives the wrong impression to describe these borrowings, which are really long term investment, as a subsidy. In spite of all that the noble Earl has said, the British coal industry has the lowest production costs in the EEC. The production costs, including interest payments and depreciation, in the United Kingdom are £35 per tonne compared with £44 in West Germany, £45 in France and £61 in Belgium. In the United Kingdom again, the price per tonne is £1·4, while in West Germany it is over £12, in France about £15 and in Belgium nearly £28. These continental countries also receive much greater Government grants.

I am sure that the House is glad to note that the coal industry has had a very good productivity record in recent months and, as the noble Earl said, output per man shift is increasing. Last month productivity was over 3 per cent. up on February 1981, and last November it set an all-time record. But there is a price to pay for this increased productivity, and I am concerned to see reports that, since the introduction of the productivity incentive scheme four years ago, fatal accidents have increased by 25 per cent. We remember the accident at Cardowan earlier this year. This was not, happily, so serious as was at first feared, although I am sorry to say that nine of the injured miners are still in hospital. However, I am glad to hear that they are on the road to recovery.

Although there were 35 fatalities last year throughout the industry, compared with 46 in 1979, that is still 35 too many. I hope that the Government and the NCB will do all they can to help increase research into safety and to encourage investment in efficient pits; because, my Lords, an efficient pit is likely to be a safer pit. But mining remains a hazardous occupation. There is, furthermore, the risk of pneumoconiosis. I understand that the National Union of Mineworkers has suggested that the Government should finance an extension of the NCB's pneumoconiosis compensation scheme, so that those miners who were previously excluded from the scheme as commuted cases, or their widows, could receive a lump sum of about £600.

I hope that the Government will look sympathetically on this proposal. The sum involved is not large. What we have to strive for continuously is a safer industry, and every pound of capital investment directed towards this end is surely money well spent. Too often we hear the word "subsidy" used by the party opposite, as if this was a one-way affair, when in actual fact we should regard these payments as long-term investments for the coal industry, the people who work in it, and through them for the nation as a whole.

Dealing with the long term, I should like now to ask the Minister about Belvoir, or the North-East Leicestershire project, as I prefer to call it. The NCB has spent £2 million on the planning inquiry. The Central Electricity Generating Board has stated in evidence that the capacity is replacement capacity, and needed to replace the existing pits in Leicestershire and Nottinghamshire which are becoming exhausted. The NCB, the NUM, the Department of Energy and the European Energy Commission all want this project, which will take about 10 years to develop, to go ahead. Indeed, every Member of another place took the same view during the debates on the Bill.

The board's application was made nearly four years ago. The inspector's report was sent in over a year ago. The decision rests, I believe, with the Department of the Environment, although that department is not directly responsible for the energy needs of this country. Surely the Department of Energy cannot be content to leave this important decision to another Government department? But it appears so, since the Under-Secretary of State for Energy, Mr. John Moore, said in another place during the Third Reading debate on 4th March, that this was a matter for his right honourable friend the Secretary of State for the Environment, and the noble Earl's right honourable friend the Prime Minister confirmed that on 11th March. I must, therefore, ask the noble Earl, who speaks for Her Majesty's Government, when we may expect a decision; why it has been so long delayed; whether the Department of Energy is being consulted; and whether this decision, when it is made, will be on environmental grounds alone—and I may say that the NCB are fully aware of their responsibility to the environment—or will our future energy needs be taken into account as well as the future efficiency of the coal industry?

It is a further matter of great disappointment that Government financial cheeseparing of the most shortsighted kind, by their own standards, has been extended to the essential oil-from-coal liquefaction project. The Labour Government had made £20 million available for this project and the present Government said initially that they would continue this. But now they have had second thoughts apparently, and Labour's £20 million has been cut back to a quarter—to £5 million—and the pilot scheme has not even been started.

This is a most important project and one that is vital to our future. North Sea oil will begin to run out early in the next century, which is under 20 years away, and by then we must have liquefaction sufficiently developed on a national and commercial basis, otherwise there will be little industry and no transport, except perhaps bicycles and horse transport. Perhaps the noble Earl will let us know, when he comes to reply, the latest position on liquefaction and the anticipated timing for the next two decades.

Lastly, I should like to ask about the new chairman of the National Coal Board, because the delay in nominating him is causing unease in the industry. Sir Derek Ezra has been chairman since 1971, and I should like to take this opportunity to pay a warm tribute to him and, from these Benches, to congratulate him on his splendid work for the National Coal Board, for which we are all indebted. Sir Derek is due to retire shortly. He has been with the NCB since 1947, a board member since 1965 and, as I have said, chairman since 1971. Sir Derek has an unrivalled knowledge of the industry and he will be difficult to replace.

I hope that the Government, when looking for a new chairman, will consider someone from the coal industry, or at least someone with knowledge and experience of the industry, because this is important. I hope that, for once, they will not follow precedent and appoint someone from outside—as they have done with other nationalised industries—who has come from another field, either from merchant banking or from the academic world, or even whoever is next in turn from the ranks of "the great and the good". I conclude by saying that I support the Bill. I hope that the House will give it a Second Reading and that it will pass rapidly through its remaining stages.

My Lords, we wish to add our gratitude to the noble Earl the Minister for presenting this Bill and we also wish to confirm that it is not our intention in any way to obstruct it during its passage through your Lordships' House. However, in view of the total lack of debate in another place on this Bill, I am tempted to go into more detail than possibly I should normally have done on a Bill of this kind, which is primarily a monetary Bill.

My intervention in this debate is based on the background of a strong support from these Benches in the past for a healthy and vigorous coal industry, and acceleration of its modernisation programmes as outlined in Plan for Coal. It has long been recognised that, during a period of recession and a temporary oversupply in the world oil markets of the mid-1980s, the national coal industry will suffer a difficult period until the energy shortages foreseen in the 1990s become apparent and coal again takes a proper place and receives a profitable return for its contribution to the energy equation.

However, the Bill before us bears little or no relation to the overall policies which I have mentioned. It appears to be nothing more than a request to the taxpayer to subsidise in-built obsolescence in the deeper and more dangerous coal mines of this country. This view is not just my own, but is confirmed in the Second Report from the Select Committee on Energy, as shown in the conclusions reached in paragraph 33. The contention was also expressed by the committee in paragraph 28, that the cost of grants contained in this has,

"more to do with social than energy policy",

and,

"should be borne on the appropriate Votes, which in this case would relate to employment protection or social programmes".

The report then goes on, in paragraph 18, to criticise the departments concerned by saying that,

"it would seem safe to assume that the interests of the consumer and taxpayer were not uppermost in the minds of Ministers when they reached their decision".

This decision, of course, refers to the reduced closure rate of uneconomic pits.

It is my intention to attempt to see how the Coal Industry Bill and the increased borrowings and grants contained in it, affect the taxpayer as well as the consumer in ways which were perhaps not at first sight immediately clear to its authors in the Department of Energy or the Treasury. I say this because, in spite of the very finely produced accounts of the National Coal Board, they do not show up clearly the real costs to the taxpayer in a way which is readily understandable. Furthermore, when these accounts are scrutinised by the Public Accounts and Select Committees, it should be borne in mind that there are only 18 Members of another place in this Parliament—none of whom appears to be in the Cabinet or the Shadow Cabinet—who are professionally qualified to interpret a balance sheet of any kind. It is all too easy for Government departments and nationalised industries to present their accounts and their accountability to the taxpayer in a form that is quite incomprehensible to the majority of Members of Parliament, and equally to the taxpayer.

Therefore, it is with some relief that I read somewhere recently that it is the Government's apparent intention to simplify all accounts for which they are responsible, both directly and indirectly, so that better controls and accountability to the taxpayer can be achieved. I shall return to this point a little later on.

Meanwhile, until this day of dawning arrives, as a non-accountant, I shall make an attempt to interpret the figures contained in this Bill in conjunction with the latest National Coal Board accounts and the effects the implementation of this Bill may have on them. If noble Lords will bear with me, I shall attempt to show—with, I hope, a minimum amount of arithmetic—the financial implications of the public spending contained in this Bill and its apparent reversal of the Government's economic policy intended to hold down inflation.

I wish now to return to the Second Report of the Select Committee of Energy, paragraph 33, in which the effects of the Coal Industry Bill have been summarised as follows, and they are exactly as the noble Earl the Minister has said. The committee states that this Bill,

"provides for an increase in the total outstanding borrowings of the NCB from £4·2b. to a possible £5b."

It then goes on to say that the:

"Secretary of State may pay operating and deficit grants to the Board. The aggregate limit on such grants is raised from £590m. to a possible £1,750m."

In other words, under this Bill, the taxpayer is being asked to subsidise in-built obsolescence in the coal industry to the tune of approximately £1 billion. The committee has made quite clearly the correct distinction between the extended borrowing powers already given to the Coal Board and the extended operating and deficit grants also proposed in the Bill before us. I intend to make the same distinction and to show what effects these very large sums could have on all future accounts of the National Coal Board and, possibly, on the end-consumer as well, be it in the form of coal or electricity.

Nothing has been said from the Government or from the National Coal Board to indicate that the interest charges on these extra injections of finance will be treated any differently from previously—in which case the increased capital borrowings for the board would appear to increase the interest burden by an extra £42 million per year. In the same way, the indirect grants payable to the National Coal Board in this Bill will add to the PSBR an interest burden of a further £162.4 million per year, giving an approximate running total of an extra £204 million per year as interest chargeable to the taxpayer. Coincidentally, this sum of £204 million per year matches almost precisely the current running deficit of the National Coal Board of £206 million per year, as shown in the latest accounts on page 46.

To my knowledge, nothing has been stated by Her Majesty's Government or by the National Coal Board to the effect that the Treasury is prepared to waive its requirement for a 5 per cent. return on capital employed. However, if we look at the Coal Board accounts, the calculations for capital employed, amounting to £2·39 billion, appear to be related only to the fixed assets, while the net current assets do not take into account the current net borrowings. As far as I am aware, this procedure is quite contrary to normal business practice and creates an air of unreality with regard to the Treasury requirement.

Nevertheless, if we accept the terminology of capital employed as shown in the accounts, it would appear that the Treasury is looking for profits in the region of £130 million a year, which, by any assessment, must be hopelessly optimistic against a current running deficit of £206 million a year. If this deficit total of £206 million is then added to the profit target anticipated by the department of £130 million, the board are then faced with finding an extra £336 million per year out of revenue in a market already over-supplied with coal and affected by a downward pressure on prices, with no real sign of an end to the industrial recession to increase demand.

I have the greatest sympathy for the chairman, Sir Derek Ezra, and appreciation for his board for the work which they have done up until this time. They are rather like the nut in the nutcracker: on the one hand they are under pressure to increase revenue to meet a Treasury target while, on the other hand, there is a falling demand with a downward pressure on prices. But the only way the nationalised industries can increase revenue is by increasing prices. If my calculations—which are rough in the extreme, I must admit—are even approximately correct, it would appear to me that the price of coal will have to be increased by about £3 per ton at the existing rate of output; that is, if the Coal Board is to fulfil the targets set by the Treasury and meet the additional interest charges on the new loans extended to it under this Bill. Unfortunately, however, even supposing this were either possible or practicable in real terms, a price increase of this magnitude would have considerable side effects on other industries which directly affect the rate of inflation and daily costs to the taxpayer.

The noble Earl will recall that, in all the calculations submitted by the Central Electricity Generating Board, a price increase of only 2½ per cent. per annum has been allowed for in calculating the future cost of electricity generated from fossil fuel power stations. A price increase of £3 per ton of coal would call for about a 9 per cent. increase in fuel costs to these power stations, which must in turn bring pressure for a large upswing in the price of electricity for industrial and domestic consumers alike—that is, if the CEGB is to produce its 5 per cent. return on capital target set by the Treasury.

It may be worth reminding the noble Earl the Minister that in a CEGB publication entitled Costs of Producing Electricity figures show that there has been a commendable increase in efficiency of generating costs by those power stations which were commissioned between 1965 and 1977, when the fossil fuel charges accounted for 83·2 per cent. of generation costs; whereas coal-fired power stations under construction today are expected to reduce this figure, and therefore the demand for coal, to 62·5 per cent. of the total generation costs, which include by the way the increased construction and interest charges for these new stations.

The reason for including all these figures is to attempt to show the very considerable effect on generation costs if there were a large increase in price on coal delivered to power stations. I shall make no attempt to calculate the increased generation costs in detail, but a £3 per ton increase in the cost of coal could increase the costs per kilowatt hour from 3·8p up to over 4p. The inflationary effects of such an increase, even on the most efficient coal-powered stations built, will inevitably be carried on to the consumers and add to the national inflation statistics.

I am sure it is not the intention of the Government or the noble Earl the Minister to pursue a policy of public expenditure which would in any way aggravate the economy to increase inflation dramatically at this time. Therefore, I hope he will first consider seriously the proposition made by the Select Committee on Energy which suggested that the deficit and operating grants contained in this Bill should be treated entirely separately from the overall financing of the production of coal. These are social grants—some would even call them "ransom" money—and have little or no connection with the promotion of an efficient and modern coal industry in this country.

Secondly, will the Government consider scrapping the rates of return on capital for the nationalised industries which, when all is said and done, are figures taken out of the air by the Treasury officials and bear no relation to responsible industrial forecasting? I doubt whether taxpayers will be either impressed or misled by Government statements insisting publicly to the chairmen of nationalised industries that these targets must be met; while at the same time propagating a public spending policy for the nationalised industries which is claimed to be anti-inflationary, yet in practice is quite the reverse.

I have attempted to show, using the figures contained in the Bill, coupled with the accounts of the National Coal Board, that the time has now come for a complete revision of the kind of thinking which has led to the introduction of this Bill, without apparent further consideration of its side effects on other nationalised industries, the taxpayer, the consumer, or the economy as a whole.

Therefore, I hope that the noble Earl the Minister will confirm that in future the nationalised industries will soon be able to present their accounts in a form more closely aligned with the statutory requirements of private sector industries; in particular that the financing by grant or loan in the Coal Industry Bill before us will be clearly identified by purpose and intent in the balance sheet, so that social and political measures are isolated under a separate Vote from the trading accounts, and can be judged accordingly by the taxpayer at a general election.

The Government would do well to take note of a statement by the Domestic Coal Consumers' Council in their latest annual report, which said that,

"we have told the NCB that we intend to press on resolutely with a policy of seeking more and better information about their finances in order to respond positively to price increase proposals."

This is just one fairly small section of taxpayers who are bewildered by the figures published by a nationalised industry, as they cannot see the effect in terms of their daily life or the way in which their money has been spent.

If the noble Earl the Minister confirms that the Treasury requirement of 5 per cent. return on capital employed will still apply to the National Coal Board in the years to come, I also hope that he will give his definition of the term, "return on capital employed". In particular, will he say whether the current liabilities—that is, the existing borrowings, plus those contained under this Bill—will not be applicable to this formula? It would appear to me that, whatever calculations are used, the National Coal Board is grossly under-capitalised in its fixed assets, and this fact is confirmed by the chairman, Sir Derek Ezra, in his statement on page 3 of the accounts, in which he says as follows:

"the Board's difficulties are part of the overall problems arising from financing arrangements for public enterprises, where the whole emphasis is on short-term 'cash limits'. These make no distinction between the finance required for current operations and that for fixed investment. This, and the inclusion of the external funding requirements of public enterprises in the PSBR make the implementation of strategic investment programmes more difficult. A solution to this problem must be found, to the benefit of both public and private sectors, which are closely interdependent".

The chairman's plea to the Government is similar in its terms and in its urgency to those of other chairmen of nationalised industries, like British Rail, who appear to have difficulty, as do many others, in interpreting the present Government's policy on capital investment; in particular, the lack of distinction between short-term cash limits and long-term financing for modernisation.

It would be quite wrong to pursue these wider issues involved at this time. However, I would be grateful if the noble Earl could perhaps solve one problem for me, which is to explain in the simplest terms as to how long-term capital investment in fixed assets is inflationary, and short-term subsidising in-built obsolescence is not.

There is one further thought which occurred to me while preparing for this debate, and it is simply this. I wonder whether the problems that are being experienced with communication between the chairmen of all the nationalised industries and the members of the Government of the day are primarily due to an inability on the part of the Government Ministers to understand some of the basic terms used in balance sheets, and which affect the operation of any company, whether it be the sweet shop on the corner or one of the biggest commercial enterprises in Europe. Having read and listened over a number of years to speeches given by Ministers, and terms like, "return on capital employed", "net current assets", "revenue and capital", "gearing", and all the normal jargon of a business in the market place, from the way these terms are used it is quite clear to me that they do not understand what they mean. If this is the ease—I apply these remarks equally to members of the executive of the National Union of Mineworkers—it is small wonder that the efficiency and the accountability of this great industry is in such disarray.

I want to end as I began with stating that it is the desire of all of us on these Benches to see the strengthening of the coal industry take place over the next 14 years, in order to meet the demands of the 1980s at a profit for all those who are employed or connected with it. Therefore, we wait with increasing impatience, against a background of 3 million unemployed, for the Government to agree a long-term capital programme, which has to be implemented now if it is to be effective, and which bears no relation to the short-term cash limits contained in this Bill.

Our warnings of the past about the dire consequences of lack of investment in the coal industry have apparently gone unheeded. They may pass unheeded again, so perhaps the Minister may pay attention to a warning of a completely different kind which was reported in the Guardian on Friday 19th March:

"The National Coal Board press office said that one of their miners at Silverwood Colliery had fled in terror from the pit after confrontation with an apparition at the coal face".

The report described the apparition as representing a mine worker in a distressed condition wearing an outdated helmet and a tattered old pullover and waistcoat.

"The Coal Board went on to say that a miner had been killed near the same spot 14 years before this incident occurred".

The question I ask is whether the apparition was from some tragedy 14 years past, or was it an omen for the state of the coal industry 14 years hence?

My Lords, it would be churlish not to join with the noble Lord, Lord Strabolgi, in saying a fond farewell to Sir Derek Ezra, whose achievements for the industry over many years have been outstanding. Sir Derek himself knows that he has his cirtics, but I am certainly not one of them. I have always admired what he has accomplished, and, as noble Lords know well, whenever I speak in a debate on coal I am really speaking about one of my loves, because I sat for a mining constituency for many years, and nobody will accuse me of wanting to bash either the industry or the splendid men in it.

I was much interested in that part of the racy exposé of the economics of the industry which I could understand given by the noble Lord, Lord Tanlaw. I do not know whether he is an accountant by profession. Listening to him, I could not help saying to myself that accountants are barnacles on the backside of industry. However, he drew attention—rightly, in my view, and not a minute too soon—to the urgency of getting a clear distinction which everybody can understand between capital and trading accounts. Members of your Lordships' House on both sides have said that time and again when addressing successive Governments. We have pleaded for it, but we have never received a proper answer.

Because of that, it is possible, on the one hand—and the noble Lord, Lord Tanlaw, was closer to the truth than I should like to admit—to describe social grants as ransom money, or something very like it, while on the other we have the position taken by the noble Lord, Lord Strabolgi, that there are no subsidies, that it is all investment for the future. Whether they are subsidies or investments for the future, we all know that a Conservative Government were innocently optimistic in the last Coal Bill several years ago, and I wonder whether they are not still being so.

Perhaps it is important, before we rejoice in the great help the Government are now proposing to give the industry, to remind ourselves of the trenchant comments which stemmed from the unanimous conclusions of the Select Committee on Energy in another place when looking at the Department of Energy's estimates for 1981–82. I will quote a few lines from that report, repeating and stressing that this was unanimously agreed by an all-party committee:

"The aggregate limit on … grants is raised from £590 million to a possible £1,750 million. We have pointed out that the practical effect of the extra financial support is to enable the surplus output created by the continued operation of uneconomical pits to be exported at subsidised prices… We have argued [that] a programme to phase out high-cost, uncommercial pits would bring down the average cost of the Board's coal and might lead to an increase in sales to the home market based on a genuine competitive advantage".

Those were significant and serious points made, I repeat, by an all-party committee in the other place. That committee finally concluded:

"We shall return to this matter in our examination of the estimates for 1982–83, paying particular attention to the need to ensure that the additional funds made available by the Government to the Coal Board have been spent on the purposes for which they were granted and that the taxpayer is not being asked to pay twice over for the consequences of the Government's change of policy".

The change of policy referred to was of course a consequence of the crisis in the industry just over a year ago. The figures concerned are enormous and they are partly to enable the board to match up with and join in resisting the importation of cheaper coal.

The difficulty the industry has to face—and I believe it is the wider context of which the industry needs to be reminded and of which we should remind ourselves—. is that, in the generation of electricity, coal is steadily losing ground to nuclear power. As a matter of fact, once the first two PWRs are commissioned, the nuclear content in the generation of electricity will be about 18 per cent. Should the Severn Barrage come into being, that, on the face of it, would eat into the Coal Board's market by a further 6 per cent. Thus, the Coal Board is up against it in competition with other sources of energy.

Yet the Coal Board need not, or should not, be unduly frightened because, when one compares the capital cost of providing a new kilowatt/hour capacity, one finds that oil works out at more than 7p; that the Severn Barrage, if it is amortised over 25 years, would work out at 6p; but that the Severn Barrage, if amortised over 50 years (which might be more reasonable when the time comes), would come down to 3p. That is roughly the price of new energy capacity from coal; but, when one comes to nuclear, one finds that Sizewell B will be 2p per kilowatt/hour capacity and Hinkley Point 1.5p. Here is a measure of the competition coal has to face.

It is relevant in that context to remind ourselves that Selby will be a tremendous step forward, replacing the old Yorkshire coalfield, producing probably 10 million tonnes a year for a century, at a capital cost of about £1,000 million, which is not high for capacity of that sort. It will bring a wonderful change—namely that the wages content will decline from an average of 48 per cent. elsewhere to only 18 per cent. I join the noble Lord, Lord Strabolgi, in anxieties about the depredations upon common sense that originate under the aegis of the Department of the Environment in regard to Belvoir. If and when Belvoir goes ahead, no doubt that will replace the Leicestershire coalfield on terms similar to Selby. If coal is to keep its position and defy world competition, costs must go on coming down, so the old pits have to go, as the Select Committee stressed.

Although it is true—and we welcome it, and we must honour the miners and, indeed all concerned, for it—that productivity in 1981–82 was of the order of 3 per cent. to 4 per cent. more than in 1980–81, that is still lower than the Plan for Coal target. That was an increase in productivity of 4 per cent. per annum. But what surely is important to bear in mind is not simply that there is, or should be, a good domestic market for coal; there is an enormous overseas market. It is interesting to look at the estimates made by the World Energy Conference a few years ago as to the world reserves of energy. The estimate was that there is enough oil for 25 years, enough gas for 45 years, enough uranium for 70 years, and that there is enough coal in the world for 300 years for all the world's needs.

The World Energy Conference pointed out, furthermore, that if one takes only a 1 per cent. per annum growth in the world industrial societies' economies, and of course a great deal less for the less developed countries, it looks as though the world's need of energy by the year 2020 will be rather more than three times what it is today. Indeed there is every reason to expect the world coal trade in the early part of the next century to be as lively and widespread as is today the world's trade in oil. So coal has it in itself to take up the eventual oil/gas deficiency, although there is a factor of about three to one in thermal efficiency as between coal on conversion to oil or gas and the alternative fuels.

The question is: can the United Kingdom coal industry grasp this opportunity over the next generation? In this House we all know that the lead time on any major energy project is of the order of 10 years. So we are now talking about anything that might happen in the mid 'nineties. Therefore the early years of next century are only about 10 years on from now in terms of lead times, and that surely argues the immense urgency of disentangling the Coal Board's muddled finances. I am not blaming the Coal Board, but I am blaming the tradition that capital account on the one hand and trading account on the other are hopelessly muddled up and confused. So it is quite easy to say here that every miner is subsidised to the extent of £35 a week. That is not a term that I especially like, and I know that the noble Lord, Lord Strabolgi, does not at all like the word "subsidy". But there is an element of subsidy, as there is also an element of investment, and these need to be disentangled.

Far the most encouraging feature of the coal industry now is—and I am sure everyone will agree—the enormous bank of common sense among the men. We have all recently heaved a sigh of relief at the decision of the miners to pursue what I would choose to call a steady course. Much depends on their leadership from now on. I greatly hope that the new president of the National Union of Mineworkers—a man of enormous ability and, may I add, charm as well—will focus on trying to make the best of the industry, rather than, let us say, falling back on attitudes that might amount to confrontation. The greatest asset of the coal industry is the men. I think that the greatest liability is the muddle of the accounts.

My Lords, before dealing with the subject of the Bill, I, too, should like to add my word of tribute to the work done by Sir Derek Ezra as chairman of the Coal Board. His quiet efficiency has been impressive, and while joining the noble Lord, Lord Strabolgi, in that tribute, I would not go along with him entirely on the job description for the new chairman of this nationalised industry. I hope that the Government will find a man who can interpret the policies of the Government, live with the Treasury, give leadership to the workforce, and explain to the public the objectives of his business. If the Government get a man who has all those qualities, they will be very fortunate. I have never felt that the fact that Peter Parker never drove an engine made him a better chairman of the Railways Board. So I wish the Government well. The appointment of chairmen of nationalised industries is an extremely difficult task. I often feel that there should be a course at the Civil Service College for potential chairmen of nationalised industries.

I now turn to the Bill. We on these Benches will support it. We are talking about very large sums of money, and when the taxpayer sees a Bill of this description, like any other investor he has to look at the prospectus. Invariably when one looks at a prospectus one looks at three main headings: First, has the industry a future? Secondly, is it efficiently run? Thirdly, should the taxpayer be asked to carry the total burden of the investment, or are there any other sources of finance available to the industry?

I consider that sufficient has been said today in connection with the future of the industry, and I am sure that the noble Lord, Lord Taylor of Mansfield, who is to follow me in the debate, will add his weight and experience to the case for the industry having a future. However, like other noble Lords who have spoken, I believe that the question of coal as a competitive fuel source will require that costs be kept in mind, and of course the hope is that investments like Selby will make that possible.

The second question is: is the industry well run? What is its track record? What has it done in the past few years? In productivity terms it has met its targets. In 1979–80 it increased productivity by 2·24 per cent., in 1980–81 productivity increased by 2·32 per cent., and last year by 3·5 per cent. Absenteeism used to be one of the great plagues of the industry. In 1977 it stood at 17 per cent., in 1980 it was 12 per cent., and last year it was down to 11 per cent. In terms of streamlining the industry and slimming it down, we note that in 1947 there were 704,000 employees, while in 1981 there were 226,000.

I always believe that the other great criterion of good management is labour relations, and here again, although there have been much-publicised confrontations between workers and employers in this industry, I consider that the labour relations have not been too bad, and I am sure that we all rejoiced in the acceptance of the last wage agreement. I should like to say as an aside—and this is perhaps a Social Democratic point—that the avoidance of strikes has been due in some part to the fact that the miners' union is a democratic union, and it observes secret ballots, rather than votes at the local football ground, in deciding where and when a strike might take place. So, in terms of running the industry and meeting its targets, if I were looking at the prospectus of this company I would say that the trends are encouraging.

I should like to say a few words about the running of the industry and the management, since recently Mr. Patrick Jenkin, the Minister in another place, has said that he is going to restructure nationalised industries, recruit more part-time directors to the boards, and then recruit in the Treasury a number of economists who will again monitor the performance of the industries. That is quite apart from the monitoring that goes on in the particular Ministry to which the industry is responsible. So we are going to get a new structure in what is a reasonably well managed industry at the moment.

Yesterday the Sunday Times had an interesting article on this subject in which it pointed out that this Government were always regarded as the non-interventionist Government. In fact, in the running of the nationalised industry and in the Coal Board there is a great deal of Government intervention, which must blunt the edge of good and efficient management. Let me describe the situation according to yesterday's edition of the Sunday Times. It says that there will be,

"a majority of non-executive directors in the latest establishment fashion. Finally, the Treasury is recruiting a cheap six-man unit of economists and industrial accountants to monitor the board's performance against agreed objectives".

Then it goes on to say we should look at what will happen.

"First, planners and managers make their plans. Then they must convince non-executive directors; the board then submits plans to sponsoring Ministries and the Treasury, which draft alternative briefs for their political chiefs, who eventually decide in a cabinet committee. For simplicity, I ignore the Monopolies Commission and Commons Select Committees…".

In fact, the National Coal Board, whose record I have just described, is going to be one of the candidates for the Monopolies and Mergers Commission audit team, who will shortly investigate.

I ask your Lordships this. Suppose you were running a private industry and you had, first of all, naturally and rightly, to convince your board. Presumably the function of a non-executive director of a nationalised industry—at least, this is how I have always understood it—is to monitor managerial performance and measure how far they are meeting the objectives, long-term and short-term. But that is now to be subject to a management audit by the Monopolies and Mergers Commission. It is then to be monitored by the sponsoring Ministry and the Treasury, and then back it goes again to the new team of accountants who will survey the progress. How will you get efficient management in any industry with that degree of intervention?

I counsel the Government, when I say that the taxpayer is being asked to commit himself to very large sums today, to ensure that the structure for spending that money provided by the taxpayer is such that it can be spent wisely, and is streamlined and efficient. I cannot understand the Government, who applaud private industry and say that one of their achievements is that they have slimmed down industry and have been able to streamline industry as a result of their policies. Yet it looks as though in the nationalised sector they are adding a heavy bureaucracy which will certainly blunt the edge of management and, if I may say so, make it extremely difficult to attract the right people to the chairmanship. The chairman is going to spend half his time, not running the industry but attending committees, investigations and inquiries, and that is not good, sound and efficient management.

If we agree that investment is necessary—the noble Earl, Lord Lauderdale, made the point about the hopes for Selby—the average production of tonnes per man-hour in the United Kingdom at the moment is 2·3 tonnes. The 23 pits which were scheduled by the NCB as possible closures were producing only 1·5 tonnes per man-shift. The Selby coalfield will produce 10 tonnes per man-shift. It is estimated that production costs at Selby could be £18·5 per tonne. Last year, the NCB delivered price to the power stations was £40 per tonne, so there is undoubtedly a case for investment of this kind.

Now if we agree that investment is necessary, we should be warned that, even though we are dealing with very large sums in supporting the industry today, just last week Sir Derek Ezra pointed out in the Financial Times that support will require to go on for at least another five years, and confessed that some of the bills for the last financial year's closing had not been paid to machinery suppliers because they had to keep within the EFL, the external finance limits—the rigid limits set by the Government. So we come to the question that if it is true and if it is right that there ought to be investment according to the Bill the funds made available for investment are all, as usual, to be channelled through the National Loans Fund.

I want to ask the Minister an interesting question which occurs to me at the moment, and it is this. Increasingly, according to the Budget, Government funding will be done on an index-linked basis. The NLF is simply the instrument for transmission of money raised in the gilt market to finance the nationalised industries. I am rather interested in what are the long-term borrowing anticipations of the nationalised industries if we are going to raise money in the market on an index-linked basis. You cannot possibly relate these two forms of borrowing, and it is an interesting point.

But I suggest that we ought to be breaking through these rigid EFL and PSBR controls. If you are borrowing entirely through the National Loan Fund, it means that there is a certain rigidity in your borrowing. This may have been all right when you had a comparatively high inflation rate and when, in fact, you had a negative interest rate situation so far as repayment was concerned. But if you are now borrowing on a 15-year basis, and the interest rate is declining, it is a rather different picture. You are not repaying in cheap pounds. So I should like to see the Government look at these large sums and ask, "Is there no other way of financing?"

We on these Benches are committed to a mixed economy, and there are opportunities in the Coal Board financing, as in other areas, for injecting private capital. There is no reason in the world why you should not experiment with the injection of private equity capital into the nationalised industries. It makes much more sense than the doctrinaire commitment to sell off nationalised industries. You should in fact look at the possibility of private investment being fed into the nationalised industries. I was encouraged to see in the Chancellor's statement the other day at least one glimmer of hope in the Telecom bond. Considering the long-term prospects of the Selby coalfield, I wonder whether a Selby bond, which would be on the market and available for private investors, might be an interesting experiment.

A number of people have been looking at this, and on Wednesday, 17th March, the Financial Times, in an article which begins,

"Mrs. Thatcher's Government is getting itself into a tangle over the nationalised industries",

goes on to say:

"Preoccupied with the need to screw down nationalised industry spending, ministers have given little thought to some of the underlying problems. One of the weaknesses of present arrangements is the fact that for historical reasons most nationalised industries depend almost wholly on loan capital".

When you consider the vast assets that are in the balance sheet of the National Coal Board, they should not be based on purely loan capital.

Then the Financial Times goes on to commend the report of the 100 chartered accountants who looked at the financing of state-owned industries. I hope that the Minister can be encouraged to read that interesting document because it points out that the constraints that are placed on the nationalised industries in this country do not exist in any other country in the world. The nationalised sectors in France, Australia or elsewhere do have the same kind of constraints which our nationalised industries have to live with.

I shall not quote the many recommendations which they make, but they say that the financing of nationalised industry should be more flexible, with greater access to the full range of private sector finance, giving a bigger role to management in pursuing the methods of financing best suited to their own widely varying circumstances. This would contribute a corresponding increase in commercial financial disciplines which might be more effective than the whole team of monitoring economists with which we are going to be saddled. It is for these reasons that from these Benches we will support the Bill in the hope that we can encourage the Government to look at this burden which is being placed on the taxpayer in the provisions of this Bill and see whether there is not a mixed economy solution.

My Lords, I welcome this Bill because it gives an assurance that the industry will have a future. My reply to my namesake, the noble Lord, Lord Taylor, when he asks me whether the industry has a future, is this: As I see it at this moment, if this industry has no future then neither has the country.

I join with those who are grateful to the noble Earl for explaining the clauses. I wish he had said a little more about social grants, grants for other purposes and the deficit grant. But we will look at his speech tomorrow, when perhaps I shall find I am mistaken in that regard. Summarising the purpose of this Bill, it is quite simple to me: it is raising the limits of the borrowing powers of the National Coal Board to enable it to carry out the statutory requirements, both so far as today is concerned and so far as the future goes. In the other place there was general agreement on both sides of the House in welcoming this Bill. I should like to say that, as I understand it, all who are connected with the mining industry, the Coal Board and the unions, welcome the proposals that are contained in the Bill.

Before I come to them, I should like to make a digression. It has been mentioned. It was also mentioned in the other place. Only a few days before the Second Reading took place there was a very nasty accident in a colliery in Scotland, at a place called Cardowan. The miracle was that there were no fatalities; but many of those miners received very serious injuries. We heard today that nine of them are still in hospital, and unfortunately many of them are suffering from very severe burns. Imagine a man working in a 2½ ft. seam! I have some experience of that. You are not able to stand up, my Lords. So when the flames were travelling down the face the men were not able to stand and run away from the danger. They were there on their knees, and they were trapped.

The reason why I mention this matter is that it would be appropriate—although so far as we are concerned it is a little belated, but this is the first opportunity we have had—to join the other place in extending our sympathy to those who were injured, and at the same time we should join in paying tribute to the rescue parties and to all who expedited the passage of the injured from the pit. Just imagine getting stretchers in a 2½ ft. seam to bring the men out! Praise is due to all who took part in expediting the passage from the pit to the hospital, where the men, as I have said, are continuing to receive treatment.

Now I come to the purpose of the Bill which, as I have said, is to lift the ceiling of the borrowing powers of the NCB. To put that in its proper context, we should understand that coal mining today is not merely a pick and shovel affair, as it used to be. The transport of coal from where it lies, where it has been placed by nature, to the surface is no longer by putting it in tubs which are drawn by ponies. Now the mining industry is a highly technical and mechanical operation; it has completely changed. The advance of technology has brought about changes in the getting, the transporting and the preparation of coal. The preparation is not unimportant because the customer wants as clean a product as he can get. A complete revolution has taken place in these operations. Today, as I see it, the mining industry is a highly capital intensive industry. What we required in terms of liquid capital before the technological revolution to sink a couple of shafts and equip the faces for production was peanuts compared with what is required today.

With your indulgence, my Lords, I shall give one or two examples to prove beyond any doubt whatever the assertion that the coal industry is highly capital intensive. First, my information is that the monetary cost to equip a coal face today—say 300 to 400 yards long—is £1 million. Before the war and since, the same length of face was split into eight or 10 units—or "stalls" as we used to describe them. A figure of £50 a unit would not be an under-estimate. Some of the equipment was purchased by the men themselves. The old coal owners found the flat sheets; they found the sleepers and the rails; but the men themselves provided the other tools that were required: picks, shovels, sylvesters, and so on. They brought that equipment themselves.

Number 2: Think of the new virgin coalfield which has been mentioned already today—Selby. It was referred to by Mr. Eadie in another place as,

"that jewel of the United Kingdom coal industry".

I repeat what has already been said, that by 1988 or 1989 the hope is that it will be producing 10 million tonnes of coal a year. I would ask your Lordships to think what that means before Selby is in full production. It means an investment of £2 million to £3 million per week. In round figures that is £100 million a year. If the time of cutting the first sod to the time of full production is 10 years, as has already been said, that is £1,000 million before any production takes place.

May I give one more example? A month ago I read, and have since had it confirmed by one who was present, that at a conference of NUM branch officials in the Nottinghamshire area, the chairman of the Coal Board, Sir Derek Ezra, said:

"In Nottinghamshire alone in the last full year the Coal Board have invested £100 million".

I do not mind confessing to your Lordships that I thought I had got one or two noughts wrong, because it is a staggering figure that £100 million in one year should be invested in only one area of the whole of the British coalfields. But he also added: "It is proving to be justified". I am pretty certain that what Sir Derek meant by justification was increased production and productivity. Without going into a lot of detailed figures, may I summarise by giving a quote from the latest report of the National Coal Board, from the chairman's statement. He said:

"The trends in operational efficiency during 1981–82 were most encouraging: (A) an overall OMS record of 2·47 tonnes"—

that happened during May 1981—

"(B) overall productivity for the first quarter of 1981–82 was 4 per cent. above the quarter of the previous year".

So the large sums of money that have been invested are now beginning to pay off, on the evidence of the chairman of the Board himself.

This is not the first Bill of its kind, although it may be the last before the general election; but I do not think it will be the last, taking the long-term view. The Bill gives the NCB the opportunity to invest in major projects at existing collieries and in providing new capacity for future energy requirements. Selby is the up-to-date example.

I believe myself that investment is the key to providing a highly efficient coalmining industry, not only in meeting current energy requirements but in securing future requirements. So far as energy requirements are concerned, today is important; but so is tomorrow. Since the agreement of 1974, to which the noble Earl referred, there has been a progressive increase in capital investment in the industry. In 1974 it was as low as £68 million; in 1981 it was £736 million. Coal-mining is an extractive industry, as we are all aware. It is once for all: there is no second helping. I quote from the latest annual report at page 19:

"Because mining is an extractive industry in which individual collieries become exhausted as the available coal is removed, substantial investment is necessary each year simply to maintain the industry at its existing size. Apart from essential replacement of plant and machinery, the main thrust of the board's investment programme is to provide capacity in new mines and at existing collieries where there are proved reserves of coal which can be worked economically".

We have heard a lot today about subsidies. I do not accept much of what was said when I think of the interest payments, which is an indication that the Coal Board have some loans upon which they have to pay interest. Last year, interest payments were £256 million and an operating profit of £69 million was turned into a loss of £186 million. It would be interesting to know what loans have been received since the board took over the industry, the interest that has been paid and the grants, the net amount paid by the board.

In conclusion, there are two matters I should like to mention. The first concerns subsidence. No industry carries such a burden for subsidence as that carried by the coalmining industry. Our local Mansfield paper only last week reported that the Co-operative Society dairy, which was opened in 1950, only 30 years ago—an up-to-date dairy—has to be demolished because of subsidence. The latest amount that the National Coal Board had to pay for last year was £85 million. The interest payments of £256 million and the payment of £85 million, added together, make a pretty heavy burden for the Coal Board to carry. I wonder sometimes whether people south of the Trent—excluding Wales—where there are no coal-mining operations, realise the amount of this burden and what a serious matter it is not only to the Coal Board but to others who are affected. The NCB, rightly, are legally responsible for the repair of damaged property and, on evidence that comes to one, the board had a good reputation for dealing with it. It would be morally indefensible, as was the case at one time, not to repair damaged property or not to replace when damage is so extensive that the place has to be demolished.

The only other question that I want to put—it is becoming an annual one, and I hope that the noble Earl will have something definite to say to us—is about the Vale of Belvoir project. The application of the Coal Board to mine coal in the Vale of Belvoir was made in 1978. The inquiry took place and it cost the National Coal Board £2 million in planning requirements and consultative fees. The inquiry ended in May 1980. The inspector reported in December of the same year, and it is now getting on into 1982, but we still do not know the answer, or why the Minister for the Environment is procrastinating by not coming down, after all this time, and saying, "Belvoir shall" or "shall not be operated as a mining area".

I hope that the noble Earl will have something to tell us on that, because the Coal Board is anxious and the union are anxious—particularly in the areas of Leicestershire and Nottinghamshire, where I come from and where pits are likely soon to be exhausted—about what provision is being made to absorb the men, so that they can continue in the industry which is necessary for the energy requirements of the nation.

My Lords, I must first thank noble Lords who have given this Bill a general welcome. The debate has been an interesting one and, of course, it has gone down avenues which are slightly broader than the subject matter of this Bill. For instance, mention has been made by several noble Lords of the recent report of the Select Committee on Energy. As the House will know, the Government have not yet adopted a stance and, as it were, given a reply to the Select Committee, although it is true to say that my right honourable friend felt bound by a letter dated 11th March to write to the chairman pointing out a number of misunderstandings of fact, and that letter was made public.

What I must do is to reply to some of the points which noble Lords have made and answer some of the questions put to me. It may very well be that I shall not get round to all of them, or shall not be able to answer all the questions, but I shall read the Official Report with care and perhaps I may answer later any noble Lord whose question or point is not covered.

The first noble Lord to speak was the noble Lord, Lord Strabolgi, and the first point which he took up, which I should answer, was on the matter of productivity and safety. What I have to say to him is that there is no indication that the introduction of the incentive scheme in 1978 has led to an increase in accidents. The noble Lord pointed out, quite rightly, that fatalities in coalmines in 1981 amounted to 35 persons, and I agree with him that 35 is too many. But I equally must remind him that that figure was at a record low. The individual year's figures fluctuate up and down, but the average rate of fatalities in the four years up to 1977 was over 50 a year, while the average for the four years since 1977, during which the incentive scheme has applied, has been under 47. So I do not agree that the introduction of the scheme has, in any way, adversely affected safety in the pits.

The noble Lord also mentioned Cardowan, as indeed did the noble Lord, Lord Taylor of Mansfield. I am sure I am speaking for the entire House when I say that the conduct of all those who were involved in the rescue operation was absolutely exemplary, and the courage and fortitude of the injured men themselves excited the admiration of everybody in the country—not least in Scotland.

The next matter which the noble Lord, Lord Strabolgi, raised—and it was raised by a number of other noble Lords—was the question of Belvoir. I understand the points which have been made about this by several noble Lords. The fact of the matter, though, is that this is a matter for my right honourable friend the Secretary of State for the Environment. It is his job to consider the inspector's report, which is what he is presently doing, and it is his task to make his decision and to give it and publish it as soon as possible. I hope noble Lords will appreciate that, in those circumstances, it is impossible—and, indeed, it would be quite improper—for me to comment in any way.

The next matter which the noble Lord, Lord Strabolgi, raised was that of liquefaction—

My Lords, I am sorry to interrupt the noble Earl, but surely the Department of Energy have something to say about Belvoir. Are they being asked?

My Lords, when a decision comes—and the noble Lord, who has been either in Government or, at any rate, on the periphery, if I may so describe a Lord in Waiting, knows—

I am sorry, my Lords, but I must interrupt the noble Earl again. I was not a Lord in Waiting. I had the honour of being Captain of the Yeomen of the Guard and Deputy Chief Whip.

My Lords, that is a bit nearer the centre. But at the centre of Government, decisions like this are for the Government and I can say no more. May I get on to liquefaction? This Government have never swerved from their commitments to the board's oil-from-coal project. In May last year, we announced £5 million support towards the cost, construction and commissioning of the pilot facility. A decision to concentrate development on a single process facility based on liquid solvent extraction technology was then made by the board, in the light of the commercial interest, and we fully accept that decision.

We committed funds to extend process design studies, and we agreed to pay 53 per cent. of the cost of the three-month proving run on the small-scale equipment at the Coal Board's coal research establishment. This run was carried out in the period September to December last year to test the performance of the LSE process in conditions comparable to commercial activity. The results of this proving run have been encouraging in showing a satisfactory catalyst life, and further tests will be carried out this spring, with Government support, to assess process changes and also to confirm performance with different coals.

In addition to support from the Department of the European Community, the NCB is holding discussions with the private sector, with a view towards their financial support and participation in the project, and it is no secret that both BP and Phillips Petroleum are interested in the LSE process. BP participated in the proving run last year and made a valuable technical and financial contribution. Both they and Phillips are considering support for this further proving run, which should provide the information which they require before a decision to support construction of the pilot plant can be taken. The board have a free rein in their negotiations to form an industrial consortium to manage the project. This Government believe that the commercial discipline and technical experience of private industry are vital to the success of the project, and we endorse and encourage such participation.

That disposes of most of the points made by the noble Lord, Lord Strabolgi, except that about the chairman of the National Coal Board. I say at once that I join in the general acknowledgment of the House in thanking Sir Derek for all his efforts on behalf of the National Coal Board, and of the community, over a very difficult period of time. We are in the process of finding a successor to Sir Derek and I am afraid that I cannot comment further at this stage. That does dispose of the points made by the noble Lord, Lord Strabolgi. I have been thinking on my feet. If I in any way minimised his contribution to the efforts of the last Labour Government, which in many ways were deplorable, but not so far as he was concerned, then I apologise to him unreservedly.

I pass now to the noble Lord, Lord Tanlaw, who I think was concerned with the social considerations, not least, of this Bill and also with the incomprehensibility, or otherwise, of the National Coal Board accounts. I think he said that he was not an accountant. I certainly am not, although in another life I used to look quite frequently at fraudulent sets of accounts. I have to say to the noble Lord that the form of the National Coal Board accounts is a matter for the board. My right honourable friend the Secretary of State has given a direction to the board which requires that their accounts shall conform, so far as practicable, with the Companies Act 1948, as it has been amended, and the best commercial accounting practices, including statements of standard accounting practice.

The noble Lord then turned, so far as the taxpayer is concerned, to deficit and operating grants and asked in effect, I think, whether they should be considered to be social spending. Deficit and operating grants for the National Coal Board have nothing to do with the entirely separate social grants which take account of the industry's legacy of social problems. They have everything to do with the board's mainstream operation of producing coal.

The noble Lord suggested that we should scrap the required rate of return so far as the National Coal Board are concerned and waive their interest. The National Coal Board must justify to the nation the very large funds—as I think I have already said, over £800 million in the past year—which were made available for capital investment. They must offer a real prospect, on the basis of sound appraisal, of earning a proper return on capital. Similarly, the National Coal Board must service their interest costs like any business—or any citizen. Not to require this would, I feel, be suspending the laws of reality in favour of the board. The Government help the board to meet their interest costs on revenue account by means of the deficit grant on their operations, but we do believe that the true cost must be visible and must not be suppressed.

My Lords, I wonder whether the noble Earl can clarify one point for me. The accounts appear to show that the net current assets of the National Coal Board are outweighed by far by the net current borrowings. This is not normal commercial practice in a company which is to be considered solvent, and it is not normal commercial practice to use this formula for return on capital employed.

My Lords, I take the noble Lord's point. The next matter was the question of long term investment which the noble Lord said is inhibited by a concentration on short term cash limits. This takes us to the financial guidelines which we set. The board are given these as to their external financing limits and their capital approval. The board's capital investment is continuing at a substantial level. I said in my opening remarks that their capital this year had been approved at £805 million and that next year it would be £886 million. However, commitment to the board's future which these figures represent does not minimise the need to set the board some financial guidelines in the form of external financing limits.

The other noble Lord who touched on this matter was the noble Lord, Lord Taylor of Gryfe, particularly on external financing limits. Speaking as an individual, if Ministers are ever allowed to, this is something to which future Governments are going to have to pay the very closest heed. One of the Government's principal roles in relation to the National Coal Board, is the same as for other nationalised industries: to set for the board a clear financial framework within which the industry will have to operate. The main ways in which this is done are the following: setting an external financing limit for each year, a capital investment approval and a limit on the amount of operating and deficit grants which the National Coal Board may receive. The external financing limit is the full measure of the board's demands on the public sector borrowing requirement and is an important tool of management for the board and for the Government. The previous Government recognised this. It was they who introduced EFLs during the economic difficulties which they encountered in 1976 to 1977.

So far as the National Loan Fund is concerned, the Government are the National Coal Board's banker. The board borrow from the National Loan Fund on terms which they certainly could not expect in the private market unless and until they had a full Government guarantee. I was very interested in the noble Lord's suggestion as to the importation of private capital into the National Coal Board's finances. I think the Government are ready to consider practical and realistic ways of introducing private capital into the nationalised industries, but any such capital must be against the background—I think this is common sense—of the particular industry's financial performance and difficulties. The Government's aim, as I think I have said, is to see the establishment of efficient, competitive, financially sound industry, and this of course applies particularly to the coal industry which we are considering today. But this target will require a great deal of dedicated effort by all those in the industry.

This Bill, as I said at the beginning, is an earnest (if that is the word), if any further proof is required, of the Government's commitment to the coal industry and to the National Coal Board. In the circumstances, therefore, I hope that noble Lords will realise the immense benefit of a Bill like this, short term as its aims are, to the industry and, most importantly, to its confidence over the next couple of years or so.

My Lords, I beg leave to move that this Bill be now read a second time. First I want to thank the noble Earl, Lord Ferrers, for giving me such a detailed Written Answer on 4th March to my Question about awards made or proposed by some wages councils during the lifetime of this Government; it appeared at columns 1449 and 1450 of the Official Report. My interest in this subject arises from my attempts to suggest ways in which to alleviate unemployment through the creation and expansion of small businesses. Wages councils are quangos which not only cost more than £3½ million annually to run but are also highly inflationary, are increasing unemployment, and are pricing young persons out of their first jobs. I have received many letters from retail trade associations and from their members throughout England, Scotland and Wales, but two which arrived only this morning illustrate very clearly what is wrong. A retail tobacconist and confectioner says:

"I am taking the liberty of informing you that my business is bleeding to death, owing to the enormous increase in wage levels for counter assistants over the past three and a half to four years. When the latest increase takes effect next month the hourly rate will have risen from 75p to £1·55 an hour—this being an increase of 107 per cent. in approximately four years. During the same period, owing to the combined influences of inflation, the approximate doubling of VAT and the punitive increases in tobacco tax, the shop is taking more money but the effective turnover is 10 per cent. less. To survive, each time the Wages Council increases the rate of pay, we have to reduce the staff or their hours. The so-called minimum rate of pay has become the impossible maximum. I hope you may be able to help reinstate our basic human right to negotiate the terms of our own survival".

I think that that is a very telling letter. As I said, it arrived with me only this morning. The second letter comes from a fashion shop for women, which employs several staff. I will quote just one sentence:

"I could take on a teenager if the wages council adopted a more realistic approach—but further, the levels of awards inhibits me from taking on staff in general".

That is my chief complaint about wages councils; they are inhibiting the small shopkeeper from increasing his staff and are certainly preventing teenagers from getting their first jobs.

A little history. Most wages councils came into being in the 1920s, some taking over from trade boards created under the Trade Boards Acts of 1909 and 1918. In 1945 the Wages Councils Act started to bring the various councils together. They were consolidated further by the Wages Councils Act 1959 and by the Employment Protection Act 1975. Now the Wages Councils Act 1979, which is the Act I want to see abolished, has consolidated,

"the enactments relating to wages councils and statutory joint industrial councils".

The power to establish a wages council or to vary its jurisdiction lies with the Secretary of State, but he has no power to control its activities once it is established. Abolition is the only remedy. Incidentally, the 1979 Act does not cover agricultural workers or butchers but it does affect some 2¾ million employees. The functions of wages councils are laid down in the Act. Section 14 provides that councils may make orders fixing the remuneration, requiring holidays to be allowed, and fixing any other terms and conditions for all or any of the workers in relation to whom the council operates. Subsection (7) gives a wages council the power to make its orders retrospective to the date on which the council agreed to the new order, irrespective of whether its proposals have been circulated for comment by employers or employees.

I asked a question last year about that, and the answer I got was that in the 12 months to 31st March 1981, 36 orders were made, of which 25 were issued after their effective dates of operation. So 25 out of 36 orders were made retrospectively. Section 15 gives wages councils the power to enforce their orders and makes failure to operate conditions at least as good as those laid down in the orders a criminal offence. Section 22 allows the Secretary of State to appoint inspectors to help carry out enforcement.

Schedule 2 to the Act deals with the constitution and appointment of members of the board. It states that a wages council shall consist of not more than three persons appointed by the Secretary of State as being independent persons and such number of persons appointed to represent the employers and workers as the Secretary of State shall fix. He has power to make up numbers if necessary. The Secretary of State appoints the chairman and the deputy chairman from the three independent members. The schedule is not absolutely clear about voting, but I understand that there are generally only three votes cast—one from each side of the trade and one from the independent members. Members can be appointed for up to five years without prejudice to reappointment, and remuneration and expenses may be paid to members as the Secretary of State thinks fit; that is a subject I have not gone into.

The Act also deals with statutory joint industrial councils, which allows the Secretary of State to convert wages councils into them in certain circumstances. They have a far less damaging effect because there are no independent members and disputes between employers and employees which cannot be settled in such a council go to arbitration in the normal manner. My Bill would also abolish these councils, but I am quite prepared to have the Bill amended to allow them to continue functioning.

There is one more piece of background information which we must consider, and that is the ILO convention from the League of Nations of 1928; a convention concerning the creation of minimum wage fixing machinery. It was accepted by the United Kingdom and ratified by us in 1929. Article 1 states:

"Each member undertakes to create or maintain machinery whereby minimum rates of wages can be fixed for workers employed in certain of the trades in which no arrangements exist for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low".

Article 3 states:

Each member shall be free to decide the nature and form of the minimum wage fixing machinery … provided that the employers and workers associated with operating the machinery do so in equal numbers and terms".

Article 9 states:

"A member may denounce ratification every five years".

Our next chance, I believe, is in June 1985, but neither the USA, Japan, South Korea, Singapore nor any of the Russian soviet republics have ratified that convention.

So much for the background; now for some facts and comments. Again, on 31st March last year, I asked a Question about the number of wages councils. There were 33 wages councils then, using, on 31st December 1980, 148 outdoor inspectors, 122 other staff, costing, for 1980–81, £3.68 million. A year later, now, there are 27 councils. This reduction has been achieved by the winding up of one council, the Pin, Hook and Eye and Snap Fastener Council, and by the merging of seven councils to form the Clothing Manufacturing Wages Council for Great Britain. In July 1979 there were two other mergers. Six councils had been merged to form the Retail Food and Allied Trades Wages Council, and three councils had been merged to form the Retail Trades (Non-Food) Wages Council. So there are now 27 councils, each having three independent members, a total of 81 posts.

According to a very interesting Written Answer given by the right honourable lady the Prime Minister in another place on 19th February this year, those 81 places are held as follows: by 39 persons of whom 30 are academics; 18 lecturers hold 50 posts between them, 5 professors hold 8 posts, 7 other academics hold 9 posts; the other 14 posts are held by 4 barristers with 9 posts, and one each by a retired civil servant, a retired industrial manager, a director, an administrator and a chartered accountant. So 67 of the posts are held by 30 academics and only 14 by 9 persons with possible commercial experience. When we look at this membership in relation to particular councils, we find for clothing manufacture a barrister, a dean of faculty and a senior lecturer; for hairdressing, a barrister, a senior lecturer and a lecturer; for retail food and allied trades, 3 senior lecturers; for retail non-food a principal lecturer, a senior lecturer and a lecturer.

My Lords, I intend to confine the rest of my comments to those two retail trades wages councils, because they affect the livelihood of more than 1 million employees spread all over the country, and, of course, their employers, in such businesses as bakeries, confectioners, greeengrocers, grocers, newsagencies and tobacconists, under the retail food wages council; and booksellers, stationers, drapers, boot and shoe shops, outfitters, furnishers, fancy good shops, do-it-yourself shops, under the non-food retail wages council. As I said, both of these wages councils are, as it were, controlled entirely by lecturers—admittedly lecturers with experience of wages councils, because one member sits on four other wages councils boards, one member sits on three boards, three members sit on two other wages councils boards, and the last member sits on one other wages council board, but not on the other retail council.

Can these lecturers be completely impartial? However eminent, and however knowledgeable of industrial affairs they are, they probably have never had any experience as employers in commerce. But all have experience as employees because they are themselves employees. Even Lord McCarthy's tribunal has as one of its members an employer. In the two councils I am now looking at, I have heard criticisms about this situation, and also criticisms about inconsiderateness, or at least casualness, because one of the independent members did not bother to turn up. in one case there was an adjournment of a meeting to another date when the gap between the two sides was only 50p. It probably costs the country £1,000 for each meeting of that wages council. Finally, no employers' representatives, as far as I know, have ever been consulted about the appointments of these independent members.

These councils are quangos of the worst kind. would like to quote, if I may, from the excellent speech made last Wednesday by the noble Lord, Lord Thorneycroft, which reads:

"I do not think that we ought to let people like Professor Clegg wander around too much. I was in the shadow Cabinet before the last election, and I think I can honestly say that I begged my colleagues to dump Professor Clegg before the election: to say that we would have nothing to do with him. I thought he was a public danger and I was right. …my colleagues …felt that they could not follow my advice. But the results have been disastrous—in loss of jobs, in increase in interest rates. This profession of the professional negotiator, conciliator, arbitrator, and the rest is one of the biggest dangers we have in this world. I am not referring to Members of your Lordships' House. Members of your Lordships' House rise to the head of every profession, including this one. But there are others, throughout the country—wages councils, for instance—who are all pricing people steadily out of jobs".—[Official Report, 17/3/82; col. 680.]

I agree entirely with those remarks by the noble Lord, Lord Thorneycroft.

My Lords, are there 30 little Cleggs sitting upon the wages councils, sitting on 67 seats of the 81? I do not know. But I suspect that there may be six sitting on the two retail wages councils. I am assuming that the awards made in the autumn of 1979 which were shown in the Written Answer of the noble Earl, Lord Ferrers, to me were consolidatory rather than increases, and I use those awards as my base. Since the autumn of 1979 one of those councils has made two further awards and the other has made three, and both now have further awards due to come into effect next month. Just taking sales assistants in the two councils, the percentages increase on the 1979 level of their pay for those over 20, in the non-food council, 31½ per cent.; in the food council, 27·8 per cent;. for 19 year-olds, 53·9 per cent.; and 47 per cent., because the adult age had been brought down to 19 years old. That is straight arithmetic, and it does not take account of the various accessories, which also happened.

My Lords, if the noble Lord would allow me, would the noble Lord like to tell the House the actual amounts of earnings those percentages relate to, whether or not the workers got them?

My Lords, I have not worked that out. I have no doubt the noble Lord himself will do so if he wants to speak. I am now going on to the accessories which happened with the wages councils awards. I think the best one to look at is the non-food proposal which is due to come into effect on 5th April. There are 11 points intended to take effect from 5th April; increases in minimum rates for all workers; reduction in the number of separate categories of workers to four; the establishment of common rates for workers outside London by merging provincial areas A and B; an increase in the differential to £2·50 per week for all workers in London; no deduction specified for the provision of meals and/or accommodation; four weeks' annual holiday for workers with at least 12 months' service with a proportionately increased holiday entitlement for workers with less than 12 months' service; the additional day of customary holiday provided for in the Christmas and New Year period to be taken between 23rd December and 2nd January; and other changes which have resulted from the harmonisation of the three wages orders whereby certain conditions already applicable to workers in one or more of the three trades have been extended to the others—and of course, they have always been extended upwards.

In addition to that, and intended to take effect from 4th October this year, are the following. The working week is to be reduced to 39 hours for all workers, but weekly overtime is still to be based on hours worked in excess of 40. The hourly rate for part-time workers is to be calculated on the basis of a 39-hour working week and there is to be increased payment for Saturday work for those full-time workers who are currently excluded from this provision because they do not work on a rota system. I have not been able to calculate the total effect of that proposal but it is enormous and most of my correspondents say that this proposal alone works out at about 11½ per cent. over the last one—11½ per cent. at a time when the Government norm is 4 per cent. That must be inflationary.

We have not only got an inflationary situation which is damaging the small shopkeepers. Why should my fashion shop in Lincolnshire be made to pay the same wages as Debenhams in Southampton or Birmingham? Why should my tobacconist from Kent or my baker from Suffolk have to pay the same wages as the multiples like Tesco in Manchester or Leeds? This is not only a horribly inflationary set of quangos—it is far worse than that. We have a closed shop, or rather 27 closed shops, backed up not by union management agreements, but by the whole force of the law. I defy anyone to argue that these are not closed shops. The wages councils fix all the terms and conditions for these 2¾ million employees and no employee may take a job except under terms and conditions as good as, or better than, those promulgated by the councils. If an employee is prepared to accept something less than that set down, he or she becomes a party to a criminal offence and is not allowed to do so—not even to give up a holiday or work extra hours without claiming overtime. That, to my mind, is the worst of closed shops. I know that Her Majesty's Government are very "anti" closed shops and I hope that they will make that another reason for abolishing wages councils.

In normal wage bargaining, even within a closed shop, the employer and employee have to reach an agreement which could, in certain circumstances, even lead to lower rates being paid temporarily, or a standstill for a period. But such an agreement for the employer and employee within wages councils is a criminal offence. It is not collective bargaining as we know it. It is the relentless creation of further unemployment by persons out of touch with reality, and the Government can do nothing about it unless they abolish those councils.

It will, of course, be argued that there are 2¾ million people who will become liable to harsh treatment from hard-hearted employers if these councils are abolished. That was certainly the case in the 1920s and may even have been so in the 1950s. But now that we have had a welfare state for more than 30 years it is no longer a serious danger. The poor employees are protected by the rates of unemployment benefit and supplementary benefit. Unless an employer offers more, he will be most unlikely to find anyone to take his job.

I have with me the latest claim of the employees' side of one of these two councils. I do not think that I shall follow that point because it is rather late. But that claim does show that the claimants—the union—are not interested in the small shopkeeper. I believe that the Government are sympathetic to these arguments, but feel constrained by the International Labour Organisation convention to keep these councils going, at any rate until the next date of termination of our ratification of that convention which will be 1985. But why should they consider that they cannot abolish wages councils ahead of that date? I quoted from Article 1 of the convention, which qualifies the need to set up this machinery for trades or parts of trades in which no effective arrangements exist for collective bargaining and where wages are exceptionally low. I do not believe that there are any places where wages are exceptionally low today. I, therefore, see no need to keep wages councils. I believe that they could be abolished straight away without breaking the convention. What I would like to see is the union come to its own collective bargaining arrangements with employers who employ its members, and let the small employer and employee go their own way—make their own bargains in different parts of the country to suit each other. I beg to move.

My Lords, before considering the merits or otherwise of the Bill before your Lordships' House, I should like, with your Lordships' permission, to take up one or two points which the noble Lord, Lord Spens, has made. First, I think that it is a pity—and it is becoming something of a practice in certain parts of your Lordships' House—to use the term "quango" as a term of abuse. There have been many quangos which have done extremely useful jobs. A quango is, in fact—despite its rather unfortunate name—a way in which jobs can be done in a more expert way and often a great deal more cheaply than if they were done through ordinary bureaucratic machinery. All the quangos that I happen to sit on are unpaid, but that does not make them any less useful. I am a great supporter of the quango in its proper place. So every time anybody uses "quangos" in that way I intend to defend them.

The second point that I should like to take up—and here I must declare an interest—was the curious attack which the noble Lord, Lord Spens, made on academics as independent members of wages councils. It appeared to be a great argument against the existence of wages councils that they had a number of academics on them in an independent role. I never sat on a wages council while I was an academic—and neither before, nor since—but I know a great many people who have done so and if we are to have independent members—and the constitution of the wages councils requires that we should, and it is necessary at the present time that we should for reasons that I shall refer to later—it seems to me that appropriately selected academics are very appropriate people for doing the job.

The noble Lord, Lord Spens, seems to have a picture of an academic as someone who has never emerged from a cloistered university town, who does not know anything about what is going on inside industry, and who is quite incapable of making independent judgments. The fact of the matter is that a number of the people who sit as academics on wages councils come not only from universities, but from polytechnics, which work very closely indeed with industry. A number of the people who take posts of this kind have, in fact, come from industry; a number of them, as part of their academic duties, take part in consultations in industry and, in both research work and in consultation, are very closely associated with the work in industry. So why they should be regarded as so totally unsuitable for the task of the independent member I find very difficult indeed to understand.

The third point that I should like to raise is the rather curious use by the noble Lord, Lord Spens, of the term "closed shop". I am no particular admirer of the closed shop, but by no conceivable stretch of the imagination can the definition of a "closed shop" be used to include a wages council. So far as I can see the only way in which he was using that term, is that the wages council prohibits people from taking employment below a particular level of pay. I can see no possible link between that and a closed shop, which, as we all know, requires the membership of a particular trade union. Indeed, it is one of the problems of a wages council that a great many people inside industries concerned are not, and are extremely unlikely to be, members of trade unions. Therefore, what the closed shop has to do with the whole argument about wages councils I am afraid completely escapes me.

I turn now to the matter of the Bill as it stands. We, on these Benches, do not support this Bill. In saying this, I am not saying that we have any great enthusiasm for wages councils as such. A great many people who have looked at wages councils believe that by no manner of means are they the ideal instrument for doing the job that needs to be done. I will go along with the noble Lord, Lord Spens, in agreeing that in some cases the pay of youngsters is higher than is appropriate, and that in certain cases it prices people out of a job. As a matter of fact, I doubt whether this is true of very many of the wages councils. It happens in certain other areas of industry, I think largely because, for quite different reasons, the age at which young persons reach the adult rate was reduced to 19 and in some cases to 18. This has narrowed the differential between the adult rate and the starting rate, and in some cases has made youngsters too expensive. I accept that.

I also accept that wages councils are not a very efficient instrument for doing the job that they are supposed to do. Contrary to what the noble Lord, Lord Spens, seems to believe, it has been shown that in a considerable number of cases wages council requirements are not met and that, in fact, people are being employed below the level to which they are entitled under the wages council for a number of reasons: partly because there is great ignorance among many people as to what, in fact, they are entitled to; secondly, because in bad times people are unlikely to take up complaints of this kind; and, thirdly, because where wages councils cover people in outwork—a notoriously difficult kind of employment to control in any way—and where in outwork there is a considerable amount of sub-contracting, as happens quite frequently in certain trades, a great many people are being paid (I do not know how many; by definition, one does not know how many) below the required level laid down by the wages council. Therefore, for the job that they are supposed to do, it is true that they are not, in fact, doing it very efficiently.

I agree of course, with the noble Lord, Lord Spens—this is inherent in the whole idea or wages councils as it was in the trade boards when they were originally set up in the first decade of this century—that it would be very much better if we had properly organised collective bargaining between employers and employed for determining pay and conditions of employment for people covered by that particular industry The whole point is that wages councils were set up because such organisation was lacking, and it is generally agreed by all concerned with these questions that the sooner people get round to being organised as employers and as trade unions, so that they can negotiate effectively—as in the major areas of industry—the better.

It is built into the legislation that when this happens and when it is agreed by the two sides that they are now ready to negotiate in the normal way, the wages councils will he folded up after a request by the Minister. I agree that the sooner that happens, the better. However, the point of the matter is that it has not happened in a great many concerns and in a great many industries, and there are whole areas—especially areas where women are concerned, who, although they are now more inclined to join trade unions than they were in the past, tend to be under-represented in trade unions—and whole tracts of employment in which organisation is not sufficiently strong to enable proper collective bargaining to be set up. As long as that continues, the case for a wages council continues.

I should like to see much more effort put into getting the kind of organisation that is needed, and perhaps the burden of the noble Lord's criticism might lead the Government or other appropriate persons to attempt to stimulate once again proper organisation in the industries concerned. However, although it is easy to criticise wages councils, this is not the time when they should be abolished. With 3 million unemployed, and with levels of school-leaver unemployment in some parts of the country running to 40 per cent. of school leavers, surely to withdraw the only protection about minimum levels of pay would be to ask for exploitation of a pretty crude kind.

The noble Lord, Lord Spens, said that with the modern welfare state it would not be possible, or that it would be highly improbable, for people to be employed at what used to be called "sweated" wages. But, after all, adult unemployment benefit is only £25 a week, and I imagine that one is not suggesting that pay levels should get anywhere near that figure. In the case which the noble Lord quoted in the retail trade, where, to his horror, over a short period of years the rate had gone from 75p an hour to £1.55 on a 39-hour week, it works out at only about £60 a week. Noble Lords will agree that to live on £60 a week with modern transport costs, modern rents, not to mention modern rates, does not leave very much spending money in anyone's pocket. If that is the kind of figure that wages councils are giving, they can hardly be regarded as a dangerous instrument of inflation. Therefore, although we need to move away from this system in due course, when we have unemployment levels of the kind we have at the moment, surely now is not the time to do it.

Is it likely that collective bargaining will be strengthened at the present time? I said a few moments ago that what is needed is, of course, proper organisation on both sides so that free collective bargaining can take place. But, again, with over three million unemployed, it is patently clear that trade unions are in a much weaker position than they are under conditions of full or near-full employment. Is it in the least realistic to imagine that this is a time when trade unions will be able effectively to organise those who they have failed to organise through so many decades? We only have to state the position to realise that this is the last time when collective bargaining will effectively take over.

If we want to do something about the, I agree, in some cases, too high rates for youngsters, we need a comprehensive policy to show what we can do for the employment of young people. If we had agreed that we would move to a position in which youngsters between the ages of 16 and 18 were virtually trainees and we had a proper programme for ensuring that they were treated as trainees rather than as young workers, then their position in relation to wages councils could well be reviewed. But we are not in that position yet.

There are signs in some of the policies coming through from the Manpower Services Commission, which we understand, to some extent at any rate, have the support of the Government, that the time may come when a programme of this sort will come into being. When it does, then of course the position of young people, school-leavers and under-18s, in relation to wages councils would have to be totally reviewed. But until we have a position in which we have not got such high unemployment, until we have a comprehensive policy for dealing with the 16s to 18s, until trade unions are in a position to organise effectively in these difficult areas for organisation, until there is evidence that the levels of pay being given by the wages council are in fact, instead of being still really very low, dangerously inflationary, then I submit that this is not the time to get rid of the wages councils.

My Lords, we must thank the noble Lord, Lord Spens, for producing this Bill and asking us to debate it for a Second Reading in order to study this problem. Unlike the noble Baroness, Lady Seear, I think it is pejorative to describe all bodies of that sort as quangos, and automatically assume they are wrong as a result. What is important is that when we have a system or structure which was first set up in the 1920s, it is almost essential that we should have a good look at it. In many cases it is fair to say that it may well have expended its usefulness and no longer be relevant to the affairs of today. Things have changed, and we need to look at it from that basis.

My experience is more with joint industrial councils. As your Lordships may know, I was an employer member of a joint industrial council for some four years until last year. I know that the noble Lord, Lord Spens, has said in his rather sweeping Bill which is going to sweep away the 1979 Act that the joint industrial councils would go too, but he generously said that he might keep them if we put amendments down to that effect. I shall disclose in due course what I think about joint industrial councils, but I mention them at this point only to say that that is where my knowledge of the matter mainly lies. I have not had the privilege of sitting on a wages council, though a lot of what I have to say has relationship to both types of council.

The first thing I would say, which I think the noble Lord, Lord Spens, said, is that surely in the 1920s and 1930s there was every justification for these bodies to be set up in the first instance. At that time it was perfectly natural that we should sign the ILO Convention to which the noble Lord referred. But once again I am not sure that one need automatically therefore think that they are the right thing for the present day. The noble Baroness, Lady Seear, rather said this, but said, on the other hand, that this is not the right moment to sweep them away. Maybe she is right. We shall come to that.

Joint industrial councils have a great advantage in that they are voluntary, and to a greater extent in that not to comply with the minimum earnings levels which they strike is not a punishable offence as it appears to be for a wages council. I should have thought that maybe a way through this is not to sweep away the wages councils, or to sweep away bodies which look after the minimum earnings levels of people, but to sweep away the wages councils and make them all joint industrial councils and all voluntary, because I rather suspect that the threat of a criminal punishment is not particularly justified in this area.

There are one or two basic points which apply—and always have—to all companies and employees in this general area. It has been my experience, in getting to know small companies and large ones very well indeed, that there are people who would rather go to work for a small company for a lesser wage because the small company is more friendly, everybody knows each other—I am talking about companies employing fewer than 100 people; in fact, in the main companies that employ more like 20 or 30 people—and people will enjoy that because they can get to know each other, and they will accept a lower wage accordingly.

Dare I say it?—in some cases people would rather go to a company like that because it is unlikely to have a trade union, and in many cases people definitely dislike what I would describe as the bossiness of trades unions. Sometimes the bossiness has a rather nasty, harsh note to it, and that is disliked even more. You must accept, therefore, that there are some people who will accept a lower wage; but the question is what should that be.

Large firms, on the other hand, have to pay relatively more (certainly this is my experience) because they are paying, if you like, for anonymity; for the fact that people do have a less interesting job, and quite often a less interesting task within the firm. But, of course, the larger firms on the whole can afford the extra wages because they have the economies of scale which go with the capital expenditure of the larger firm, and they can economise on that side and then afford to pay more to the workforce that they have to employ. Therefore, there is a difference of attitude, and it is important to accept this.

Another basic factor which comes back to something I said earlier is that I have found that on the whole trades unions lack the resources to service small companies, so even if they would like the membership of those companies they really cannot do it because they have not got enough officials to get around and see all the small companies and bother with the interests of the people who work within them. That is another basic factor.

Another factor on the contrary side is that unquestionably unfair competition develops in small firms where one firm will pay a wages council, or joint industrial council, rate and another will not. So far as I can tell, though it is difficult to get these things pinned down, where this happens it tends to have a local reason. If one firm is in a particular part of the country, it will find that the going rate for that part of the country is higher than it is in another, and therefore it will pay more and pay the wages council rate, and in the other part of the country where the general wage level is lower they will pay less.

When this happens there is unfair competition because the firm that is paying less in wages, particularly a small firm, can retail its goods at a lesser price. This then leads to people grumbling. I have had people ring me up and say, "What can I do about this?" I say, "You can report them". They say, "I could not possibly do that. That would be sneaking, and we don't want to report people to officialdom". I have described all that because it is a useful background point. One wonders—I think that the noble Baroness, Lady Seear, mentioned this, and certainly the noble Lord, Lord Spens, did—whether in fact the wages councils are being effective even though they are there. Perhaps it is better not to have something that is not being effective.

There are three changes since 1950 which I should like to call to your Lordships' attention which have accentuated the differences to which I have referred. have been associated with the biscuit industry for the last five years. In 1950 there were about 400 different company members of the Cake and Biscuit Alliance and there are now fewer than 40. Whereas when there were 400 they represented a total range, from the very large companies right down to the very small, today the structure has changed completely. We have very few really big companies, a moderate number of medium-sized firms which are subsidiaries of large conglomerates—both of which have the same attitude to the employment of people and the same sort of resources with which to conduct their businesses, so they have the same way of doing things—very few medium-sized companies and only one totally independent medium-sized company.

As for small companies—the Bolton Report described a small manufacturing company as one employing fewer than 200 people—there are very few of those, and the vast majority of the remaining companies employ fewer than 30 people, and there are a lot of those. They are the people who are particularly affected by joint industrial council rates because all the other companies—that is, those employing 200 and more—all pay more than the JIC rates. The whole point of the gap represented by firms in the middle is that the difference between the attitudes and needs of the bigger companies compared with the smaller ones are more accentuated now than they were, say, 30 years ago. That means that the sort of results produced by the JICs are not necessarily entirely suited to the smaller companies.

Another relatively recent happening—I suspect it has been going on all the time but it has got worse in the last year or so—is that there is always a tendency on the part of the trade unions to seek to reflect wages council and joint industrial council increases in the negotiations they are having with individual companies. One must try to resist that because the wages councils and JICs are dealing with very small firms and the amount of increase they obtain, in real terms as well as in percentage terms, may be very different from that which has been struck by the bigger company, for whatever reason. The pay-off, as it were, from that is that increasingly the people in the bigger companies are beginning to say, "Why should we serve on these councils? It is a waste of our time. All we find is that the trade union members are using what we negotiate for the smaller companies, which are not our companies, against us and sometimes they are extremely rude to us because they say, 'We are paying lots of money. Why don't we force the little chaps to pay a lot of money as well?'".

There is, therefore, an attitude growing in the area in which I am operating by which the people in the bigger companies do not want to serve on the joint industrial councils—and I suspect the same applies to the wages councils; the membership statistics produced by the noble Lord, Lord Spens, seemed to endorse that—and the present situation is resulting in the councils being second-rate. I do not want to run down the academics, but Lord Spens made the point that there were more academics than perhaps were needed, out of proportion to the total membership of the councils, and that there should be more independents generally. I support that. If the councils are getting a second-rate membership, they will not do their job so well, and that is another reason to wonder whether they should be swept away.

I must mention the important topic, to which several noble Lords have referred, of the threat to young people. I am absolutely sure that trying to narrow the gap between the adult worker and the 16 and 17 year-old, a movement which has been going on consistently, has been to the detriment of young people. It might be a good thing if, as the noble Baroness said, we had a system more akin to the German one—in effect of compulsory further education for everybody up to the age of 18—and that may be so, but in the meantime, small firms with juvenile rates established for them by their councils are not so inclined to employ young people as they used to be. The multiplicity of small firms in various districts which can take on a youngster for a relatively low salary which they can afford was one of the beneficial ways in which people got on a friendly basis and could see what business and industrial life were all about.

I am, of course, referring to tendencies rather than cut-and-dried results. On the whole, the sort of wage levels being struck for young people are pricing them out of the market, and in my view that is disgraceful. If we did not have such regulated procedures, maybe there would be a greater opportunity for people to be employed at an acceptable rate. As the noble Lord, Lord Spens, pointed out, the unemployment rate and the supplementary benefit rate between them provide a yardstick which did not exist in the same way in the 1920s. I am not for one moment saying it is the yardstick we want as the working wage. I am simply saying that because it is relatively high compared with the 1920s, even the poorest firms have to pay more, so it gives us a better yardstick than we had before.

Taking all those points together, probably the wages councils have expended their usefulness, as have many other bodies of that type. I should like to see joint industrial councils retained on a wholly voluntary basis as between one side of industry and another, and I hope that in Committee the noble Lord, Lord Spens, as he indicated, will encourage an amendment allowing for that provision, along with anything else that goes with it in the 1979 Act to be retained, and I should have thought that would provide all the basis we needed to justify ourselves before the ILO. We should probably find that we would not have so many wages councils as at present, and there might be larger groupings. Perhaps the Government would do what they have done with the training boards, and say, "You can wind up your wages council if you will have a voluntary joint industrial council", which effectively is what they have said over the training boards.

I hope something will be retained, because an aspect, which has nothing to do with wage rates or training, which is gradually becoming eroded by the winding up of all these bodies is that the areas in which representatives of trade unions and employers can meet in an atmosphere which is not one of direct wage negotiation affecting their own companies are being narrowed down. The training boards are being swept away—on a previous occasion I spoke to your Lordships about that—and perhaps we shall now lose the wages councils. Let us hope we keep the JICs, for that reason alone, for all we shall be left with will be Neddo. The trouble with Neddo is that although it has subsidiary bodies, it tends to operate at such high levels, talking only to top businessmen and very grand trade unionists, that people at the ordinary working level do not get to meet each other in an atmosphere in which they are not directly negotiating. So I should like to see saved out of this something that allows that kind of dialogue. But, on the whole, let us sweep away the wages councils.

My Lords, I join the noble Lord, Lord Mottistone, in welcoming the initiative of the noble Lord, Lord Spens, in introducing the Bill, and even if your Lordships do not give it a Second Reading, I think we should nevertheless be very glad of an opportunity to discuss this subject, because I believe that the whole attitude represented by the wages councils needs looking at again. I should make it clear that I am speaking only for myself. The Social Democratic Party has not, I think, reached so precise a view as the noble Baroness, Lady Seear, seems to have done. As your Lordships will know, the SDP is committed to an incomes policy when it comes to power, and it will then have to decide whether or not it will need something like wages councils. But in my view it is quite certain that a new incomes policy will be one in which in all wage bargaining the public interest is much more closely represented than it is at present. So, even if there are wages councils, they will be different from what they are today. But, as I say, I am not able to use the term, "We on these Benches".

The very first job I ever had when I was an engineering student was in a railway workshop. I worked with a fitter. I do not know whether the IWW was then represented in Australia, but if it was not, that fitter was a corresponding member of it. I was indebted to him for a little book of songs for the use of militants. One of them began:

"There is a factory over the way, Where 80 wage slaves toil all through the day".

Looking through the songs, I found that the term "wage slave" kept coming up, and I think that we need to concentrate on that when thinking about the history and the present use of the wages councils. Of course the term "wage slave" implied that the worker was not in a much better position, if any better at all, than the slave, The slave had to choose between obedience or death. The boss could not actually kill the worker, but the alternative to disobeying was that, if he did not get his wage, he would starve to death. So the wage slave had the choice between obedience and starvation.

It was recognised that the unions were able to exercise some countervailing power on behalf of their members, but, in the trades or occupations where there were small units scattered all over the place, it was very hard to organise them. It was even more difficult, if there were an agreement, to see that it was carried out. So the whole attitude towards the classes of workers who were covered was that the state had to step in and behave in a paternal manner towards them. That is expressed in the great detail in which the wages councils today are empowered to set out all the conditions of work. Furthermore, as the noble Lord, Lord Spens, has pointed out, the worker is not at all free to make a bargain with the employer, unless it is on the same, or more favourable, terms. There is a degree of rigidity about the councils which is not, I think, found anywhere else.

The mentality that we meet when dealing with wage slaves does not take any account of the changes that have taken place in the last 30 years or so—the changes brought about by full employment and by the welfare state. I appreciate that we do not now have full employment, but we had it for 30 years, and in my view it did much more for the workers than the trade unions or wages councils could do. In those conditions it is impossible to think about anything like that is meant by wage slaves. If a man with a reasonable degree of health and capacity wants a job, the state creates the conditions in which he can get one, and the market processes in fact are the great safeguard. So, that makes the thinking behind the wages councils something of an anachronism. That is my attitude towards them—that they are anachronistic. I mentioned the welfare state, and it has already been mentioned by the noble Lord, Lord Mottistone. That is the other side of the situation. Now the choice is not between obedience or starvation; it is between obedience or social security, which is a very different thing.

The councils do not take any account of public policy and are on the whole inflationary in their impact; and here I should like for a moment to come back to the question of full employment and mention a point that I meant to make earlier. When we had full employment, there was always a residue of unemployed of about 200,000 or 300,000. Some of them were people moving from one job to another, but some were people who could not quite fit in to the ordinary structure. They could not work regular hours, or could not do a full day's work, or were living in a difficult part of the country.

When one operates a full employment policy—on which I was for many years responsible for advising the Government—one cannot push the management of demand to the point where it would reduce the unemployment to nil. That would be very inflationary. The people who say, "Oh, there are still 200,000 unemployed, and therefore you must expand more", are quite wrong. What is needed is a degree of flexibility so that those who cannot quite fit into the ordinary system can find places for themselves. It happens that those places arise most of all in regard to small businesses, for people in special circumstances, and, due to the extreme rigidity of the limits that the councils set, their existence is actually militating against the absorption of those who are somewhat excluded from the system. Of course it is certainly the case that today a great many people would be employed if there were more latitude, if there were at least the ability to strike a bargain between the individual and the employer, which is precluded.

I have been talking as if we were back in full employment, and we have not got full employment today. The noble Baroness, Lady Seear, raised an awkward point when she said that this is not the time to get rid of the councils; but the reason why I think we have not got full employment is that the Government of the day have put the defeat of inflation ahead of maintaining high levels of employment. They have rejected the idea of an incomes policy, and so they have adopted a monetary policy in some way. The purpose of that is clearly to have some control over wage settlements and to say to workers, as they do say, "If you insist on inflationary wage settlements you will price yourselves out of a job". Of course, there has been some success in that policy. A great many workers now, when they find that their employers are on the verge of bankruptcy, accept lower levels of wage.

I do not agree with that Government policy: I think the price we are paying in terms of wasted resources is much too high a price, and that, whatever the difficulties of an incomes policy in the past, if we are to get back to full employment and some sort of wage stability, we shall have to have an incomes policy. But I wonder whether the Government can explain why, if they are adopting this particular method of dealing with inflation, they still have the wages councils. If the policy is to let the existence of surplus labour press down on wage bargains, why do you have, in the area where this is most likely to have some effect, this very rigid system? I hope the noble Earl will deal with that point when he winds up.

To sum up, my Lords, I think that at least in conditions of full employment the wages councils are an anachronism. I think that if we are to keep them we ought to ensure that the public interest is represented on them, and that the extreme rigidity which entirely prevents people from striking an individual bargain needs to be looked at.

My Lords, I am glad to join other noble Lords in thanking the noble Lord, Lord Spens, for bringing this Bill before us. I particularly want to congratulate him for his perseverance in moving from asking polite Questions about wages councils to proposing their outright abolition. In this he has the support of the informal group known as the Repeal Group, whose efforts I referred to when the noble Baroness, Lady Trumpington, moved her Bill to repeal the Shops Act on 9th February. I am delighted to follow, for the first time, the noble Lord, Lord Roberthall, and I hope to demonstrate that economists are not obliged to disagree on these matters. I urge him to keep on raising his voice in the Alliance, because he may help to lead the noble Baroness, Lady Seear, back into the paths of true Liberalism.

It seems to me, my Lords, that the case for this Bill is a good deal stronger than that for the Shops Bill, to which your Lordships gave an unopposed Second Reading in February. As we have heard, wages councils had their origins in 1909, when four trade boards were set up to fix minimum wages in the sweated trades of tailoring, lace, box and chain-making. The Act was extended in 1918, and the boards were renamed wages councils in 1945. Although they have declined in number, that bears testimony rather to the merging of small councils than to the abolition of many very significant councils. Certainly since 1938 the tally of workers covered has increased from 1½ million to 2¾ million.

A number of noble Lords, including the noble Lord, Lord Mottistone, have raised the question that what was fitting in 1909, when workers lacked the bargaining power that comes from education, from knowledge, from employment exchanges, from greater mobility and from generous social benefits, bears no relation whatsoever to the conditions of the 1980s. The noble Baroness, Lady Seear, might ponder the transformation in conditions of domestic servants before telling us these stories about the likelihood of workers being greatly exploited in the absence of minimum wages. It seems to me that what started as benevolent welfare policy has come to exert a malevolent economic effect, and it has done this at a time when low pay has much less to do with poverty because the low paid are preponderantly young people or women who live in households with two or more earners. What is worse, from prescribing bare minimum wages, which the least efficient employer was compelled to pay, wages councils have come to set what they regard as "reasonable" wages, especially for young people, at levels that even the most profitable firms find it difficult to improve upon.

The report Priced Out by the National Federation of Self-employed and Small Businesses shows that during the 1970s the dubious independents and employers' representatives on these councils did not prevent the more single-minded trade union representatives from pushing up wages much faster than inflation. The figures there show that the six largest councils increased adult wages 4-fold and juvenile wages 4½-fold, compared with a 3-fold rise in prices over that decade. At the same time, in retailing the age at which the adult wage was paid has been lowered from 21 to 19. So that where, 10 years ago, a school-leaver would start at a little over half the adult wage, he must now be paid 60 per cent., and by the age of 18 he must be paid 85 per cent. of the wage of an adult with, perhaps, a lifetime of working experience.

The wages orders issued by the councils are often of the most baffling complexity. They deal with holidays, hours, regions, meal and rest breaks and unsocial hours, and they prescribe different rates of pay at varying times. An LSE study in 1980 identified in one wages council 166 minimum rates that were prescribed. The personnel director of a leading retail chain told me last week that he could not be sure of understanding the annual changes even when he had expert legal advice at his elbow. Nor are wage costs the end of the matter. At least 30 per cent. must be added for national insurance and other employment expenses, without allowing for what are called compliance costs and for such benefits in kind as staff buying discounts and meals, which are totally ignored by these jolly quango men on the wages councils.

There can be no doubt that the escalation of total wage costs has reduced employment opportunities. The foundation of all economic analysis is nothing more arcane than that prices affect quantities. If wages are increased, other things being equal, the demand for workers will be reduced at the margin. All the empirical evidence of the operation of minimum wages, particularly in the United States of America over a very long period, shows that they cause unemployment especially among the most vulnerable. Two leading black American economists, Professor Sowell and Professor Williams, have recently shown that when the cost of employing people is artificially raised under the federal minimum wage law, the resulting unemployment is concentrated on the young, unskilled, inexperienced, female and, even more severely, on the ethnic minorities.

Nowhere—except perhaps in rent control—has well-intentioned policy produced more perversely damaging results than in raising wages without regard for market realities. Thus, in Britain the pace has been set by the Low Pay Unit, which would today be more accurately branded the "No Pay Unit". Why could they not learn from the evil experience of South Africa, where minimum wages were deliberately supported by white trade unionists to reduce the job opportunities of unskilled black workers by pricing them out of the labour market?

It is no use opponents of this Bill taking refuge behind their undoubted good intentions. In economics—as in much well meant private conduct—good intentions are no guarantee of good results. In Britain the bleak road to higher unemployment has been paved by good intentions. Indeed, all our most grievous economic and social disorders have been caused not by malevolent design but by the amiable confusions of misnamed "do-gooders", who undoubtedly meant well but who have inadvertently caused much of the havoc that we see around us.

I hope that we shall avoid verbal competition in compassion. There is no important difference between us in all parts of the House on the principle of a minimum income. But whether that is provided through supplementary benefits or, as I would prefer, through a reverse income tax, it is the province of social policy and should not be attempted by manipulating prices, such as wages, rents or interest rates which must lead to costly distortions throughout the economy.

Whatever the sceptics may say—including the noble Baroness, Lady Seear—we know that wages can be too high for the good of employment. That is why Labour and Conservative Governments have been driven to multiply job subsidies—especially for the young—simply to undo the damage of the trade union wage push. It is also why some workers have voluntarily settled for wage standstills or even for wage reductions to save jobs—an option that is rendered illegal by the Government's stubborn enforcement of the Act which we are now seeking to repeal.

My Lords, I urge all who care more for reducing unemployment than for preserving their emotional purity to join in supporting this Bill, if necessary through the Lobby.

My Lords, when we on this side of the House first saw the Bill that has been introduced by the noble Lord this evening we thought that he must be joking and that his main purpose in bringing forward the Bill was to secure an adequate parliamentary opportunity to discuss the whole question of the operation of wages councils in a constructive way. Instead of that, what we find tonight is that the noble Lord has followed the true precept of his Bill and wants the abolition of wages councils.

There has been much discussion this evening about the percentages in which the various awards of wages councils have moved over the past few years. Of course, as is inevitable when any question of econometrics arises, we have had the learned observations of noble Lord, Lord Harris of High Cross, who certainly cannot be accused of compassion, but who nevertheless makes some claim—albeit modestly—to intellectual purity.

However, I am afraid that his reputation in this regard has become somewhat devalued since many of us recall his speech of 13th February, 1980—two years ago—when he was supporting Lord Cockfield's contention that the rate of inflation would automatically go up with the increase in the money supply after two years. I invite the noble Lord to contemplate his own speech, which is at col. 247 of Hansard for that day, so that before he makes any further observations on economic matters he can go through a piece of intellectual refurbishing.

The reason why wages councils were originally established—and indeed they were pioneered by the Liberal Party—was in order that those who were very low paid could be protected from exploitation. Oddly enough, in times of full employment it could possibly be argued that their existence would have less justification than in times of unemployment, because of course it is precisely in times of unemployment that the protection of the weak—if that indeed be a valid political objective—ought to be safeguarded.

What we have had so far this evening—with the notable exception of the noble Baroness, Lady Seear—has been nothing more nor less than a desire, quite overtly expressed and precisely because of the existence of large-scale unemployment at the present time, to go back to the law of the jungle and have the weakest to the wall and the devil take the hindmost. This has been the argument, with the notable exception of the noble Lord, Lord Roberthall, whose speech ought to be printed and circulated immediately in the Hillhead division of Glasgow so that the electors there would know precisely what is the policy of the Social Democratic Party.

My Lords, will the noble Lord give way for a moment? I made it perfectly clear that I was speaking for myself and not for the Social Democratic Party.

My Lords, I quote the noble Lord's words—I took a note of them:

"The SDP will need to decide whether it needs wages councils or not".

Those are the noble Lord's words. It has not made a decision yet. The noble Lord reminds me of the story about the late President Hoover when on an election campaign. He invariably answered questions:

"Well, yes; and then again, no",

and thereby of course he pleased both parties.

For the real truth of the present position, so that we can assess it not so much in terms of percentages but in terms of actualities, I venture to draw your Lordships' attention to a feature in The Times of 3rd March. It says:

"… official figures show that 4,750,000 people earn less than £85 per week. Perhaps a quarter of this group earn less than £60 a week and many are unquestionably at or near subsistence level".

The article goes on to give an individual example which I venture to give to your Lordships this afternoon, because behind all the percentages and other statistical calculations there does lie the personal position of people who are in receipt of very low wages indeed.

I shall quote only one example. Mrs. Doreen Marriott, who is 51, and has to look after her disabled husband, her unemployed son and an 18-year-old daughter, lost her job last week. As one of the better paid home workers—she sewed pants and T-shirts for a local firm in Hinckley, Leicestershire—she used to earn about £45 a week. It was a vital addition to the £70 a week the state provides. With half that £70 going on rent and fuel, the loss of her job has forced her to rethink her family budget—"We are just living from day to day".

Your Lordships will observe that the earning figure there was £45 a week. From some of the statements made this afternoon one would imagine that the wages councils have been making wage awards in double figures and indeed, in the case of younger people, have been making wage awards on adult scales. I have in front of me the statutory minimum rates in respect of the hairdressing industry. First-year apprentices are paid £27·50 a week, second-year apprentices £31, third-year £42; hairdresser, first year, £49, hairdresser, second year, £53, hairdresser, third year £57, chargehand £61 and manageress £73. Those are the statutory rates. I venture to suggest to your Lordships that sums on this scale do not add anything to the inflationary pressure in the country at all, bearing in mind the extraordinary rates they now have to pay. In fact, these statutory minimums in most cases are below those paid by firms negotiating agreements with the trade unions. If it is suggested that all these areas of activity should be covered by trade unions, I could not agree more; but it is fair to say that in the food industry in particular, the Co-operative Society, Sainsbury and Tesco, all pay wages which are substantially above the statutory minimum. The point has been made that this means that there is unfair competition between the smaller and the larger firms; but the real principle behind that argument is that precisely because a firm is small, perhaps inefficient or does not do its buying correctly, it is the workers in those industries who should pay. That is the real argument.

I very much doubt whether this evening Her Majesty's Government would argue for the abolition of the Wages Councils Act, which would take these provisions away: at least, I sincerely hope they would not, because at the moment there are 27 wages councils responsible for laying down minimum pay for over 2½ million workers in this country. That is accomplished through the Wages Councils Act 1979.

The gravamen of my argument is this: it is absolutely vital for the interests of nearly 3 million people and their families that this minimum protection is retained.

I shall argue further that it is not only important that it should be retained, but that in fact it should be enforced, because one finds that in a very large percentage of the cases that are investigated at least one-third of those cases reveal under-payment to the workers concerned. If the noble Lord will refer to a Written Answer given by his right honourable friend the Secretary of State on 17th March to a Question raised by Mr. John Grant, he will find that of the establishments inspected where under-payments were expected, no less than 41 per cent. of the cases investigated revealed under-payment by employers.

The real question is: Why is it that so few cases were investigated? Why is it that, bearing in mind the fact that there are some 390,000 firms involved, we have only 119 inspectors to be able to supervise the enactment?—because if every firm were visited it would be about once every 10 or 20 years. Quite clearly, the existing inspectorate is inadequate to carry out the task. Indeed, where the investigations have ultimately resulted in some discovery of the facts, no less than £2 million has already been paid to the under-paid workers concerned.

I do not like to lecture the party opposite too much on law and order, which I believe ranks fairly high in their philosophy, but the Wages Councils Act 1979 is part of the law, and it is the duty of the state to enforce the law. Therefore, if I may quote—

"(3) If an employer fails—

(a) to pay a worker to whom an order under section 14 above applies remuneration not less than the statutory minimum remuneration; or

(b) to pay him arrears of remuneration before the expiration of the period specified in the order; or

(c) to pay him holiday remuneration at the times and subject to the conditions specified in the order; or

(d) to allow to any such worker the holidays fixed by the order;

he shall for each offence be liable on summary conviction to a fine not exceeding £100".

In this case, in the year 1981 which we are now discussing, there were a very large number of cases indeed in which the Act was infringed: nine prosecutions only were taken. One wonders why. When we come, as the noble Lord will recall, to defrauding the Department of Health and Social Security, which is disobeying the law—and I would not in any way defend it—we find that when there is the merest suspicion of that 1,000 extra staff are employed, bringing their total to 5,000, in order to detect alleged frauds among the people in receipt of social security. On that principle, the person concerned has been found guilty of stealing from the state.

What then happens to these people who are known to have broken the law and, in effect, have stolen from the workers whom they employ, by paying under the amount which the law prescribes under Section 14 of the Act? We find nine prosecutions, in spite of the fact that extending the percentage that has been detected so far to cover a full investigation shows that the amount involved, so far as the underpaid in this country are concerned, is in the region of £28 million. It looks very much as though there is another kind of law for a person who has been found guilty of defrauding the state by claiming excess social benefits, even though it could be argued—and I think that noble Lords opposite have argued it from time to time— that any amount involved is greatly exceeded by the amount not taken up by people who do not claim their benefits.

So the gravamen of my charge is that this Act is not being enforced and that where offences are detected prosecutions are obviously undertaken with reluctance. I do not think that this is a satisfactory state of affairs. As I have already shown, the minimum wages fixed by the—

My Lords, would the noble Lord allow me to intervene?

My Lords, I shall be finishing in a moment, if the noble Lord will forgive me. The minimum wages fixed by these wages councils are, at the most, in the region of £50 or £60 a week, which in this day and age, with the prices and the rents now existing, is a very poor wage indeed. The poorer section of the community, including the people who ought to receive some benefit from the operations of the Wages Councils Act, do not get very much support at all in the popular press. They get no organised help from those great leaders of the media who occupy editorial chairs or other positions of media responsibility, by drawing the attention of the public to their plight. They have very few champions. They have a lot of attackers, some of them snide, and most of the attackers living in very comfortable circumstances, with very considerably in excess of the £50 to £60 a week which constitutes the top level of the awards by the wages councils.

Members of your Lordships' House will have to make up their minds as to what they think about this. Noble Lords will have to make up their minds whether they really want this residual protection—however badly applied, however patchily administered and however much abuse and disobeying of the Act there is—taken away. It is not our custom to deny a Private Member's Bill a Second Reading. Many of us would like to introduce Bills from time to time, and we should always like to feel that when our Private Bills are introduced they will get a Second Reading. But I have to tell the House that if this Bill is not withdrawn tonight, we shall have to oppose it—and oppose it very vigorously—in any remaining stages that the House might decide to accord to it.

My Lords, before the noble Lord sits down, was he arguing that he sees the Government as spending lots of money employing many more inspectors, so that more of these firms which are not quite paying the minimum earnings levels declared by the wages councils should be taken to court and punished for their offences? Is he therefore saying that he would like those firms to employ fewer people or to go into liquidation, and thereby increase the unemployment of the country at large?

My Lords, I do not concede the inference which was contained in the noble Lord's question. The purport of my remarks was very clear. The law is set out in the Wages Councils Act 1979. It is up to the Government of the day to enforce it by the best means that they know. Otherwise, they run the risk of not being even-handed in bringing people before the law.

My Lords, we have had an interesting debate this afternoon, partially because it was not wholly unanimous. I congratulate the noble Lord, Lord Spens, on the enormity of his Bill. In about eight words of Clause 1, he would succeed in sweeping away all the wages councils. Some may say that that would be a very very profitable use of eight words, but of course life is not quite so simple as that. I thought that the noble Lord put his case in a very moderate, persuasive and engaging manner and I congratulate him on—to use a colloquial term—his in-depth research which he has clearly carried out on wages councils.

The noble Lord, Lord Bruce of Donington, somewhat churlishly, I thought, criticised the intellectual purity of the noble Lord, Lord Harris of High Cross. He said that it had been tarnished, and the reason why it had been tarnished was that the noble Lord, Lord Harris, had agreed with my noble friend Lord Cock-field. Far be it from me, a mere non-intellectual, to comment on the intellectual purity of other people, other than to say that if the crime of the noble Lord, Lord Harris, was to agree with my noble friend Lord Cockfield, then his intellectual purity, which in my mind was never in doubt, might assume an even greater pristine clarity.

The wages council system is not, of course, an unchanged creation of the early decades of the century and it has reacted to change circumstances. My noble friend Lord Mottistone said that, as wages councils were set up in the 1920s—although, as the noble Lord, Lord Harris, said, they started in 1909—it might not necessarily be inappropriate to consider whether they are correct for today. They have not remained the same. In 1969, there were 57 councils and since then 16 councils have been abolished and others have been merged, with the result that there are now only 27 wages councils. Those councils which form the major part of the system today—those covering retailing and creating—came into being only after 1940, and not in 1920. These councils exist only where there is shown to be no adequate alternative collective bargaining machinery to replace them. The need for them is kept constantly under review.

The councils are independent of Government. It is for them to decide what minimum rates should be set for the 2¾ million workers, the majority of whom are women, who are estimated to come within the system. The councils are made up essentially of representatives of employers and trade unions. These representatives are appointed by the trade and not by the Government. But the Government do appoint three independent members to each council, as the noble Lord, Lord Spens, quite correctly pointed out, whose job it is to assist the parties to reach agreement. For this, the Government pick people who can be seen clearly to be independent of the two sides and, indeed, of the Government—as they must be if they are to carry out their role under the legislation. The noble Lord, Lord Spens, was somewhat derogatory about academics and got, if I may so describe it, a political thick ear from the noble Baroness, Lady Spens.

Lady Seear.

I am so sorry. It is perfectly terrible that I should have even begun to confuse the noble Baroness, Lady Seear, with the noble Lord, Lord Spens. They are two totally different—I was going to say "objects" but I will say people. However that may he, I enjoyed the way in which the noble Baroness came to the spirited defence of the academics and of the quangos. The noble Lord, Lord Roberthall, reminded us of a little bit of poetry. I am bound to say that while the noble Baroness, Lady Seear, was referring to quangos I could not help recalling the little jingle which I saw one person write that began:

"You should see me dance the quango".

I accept that there is very real concern about the operation of the system. Many criticisms are currently made and they demonstrate a very great deal of feeling, which the Government readily recognise. The fact that councils are independent of Government does not of course mean that the way in which they function should not be a proper concern of Government, and I can assure your Lordships that we take most seriously the many comments and criticisms which have been made to us of late about what people see as the defects of the system.

The most worrying accusation is that the existence of the councils has adverse effects on inflation and employment. Those views have been mentioned tonight. I am bound to tell your Lordships that we have received many letters about recent proposals for increases in minimum rates in the retail trades and I have no hesitation in telling your Lordships that the Government have been concerned about the volume of protest which has arisen therefrom. Indeed, my right honourable friend the Minister of State for Employment has written to those councils drawing their attention to the weight of feeling which has been expressed directly to Ministers.

We have on very many occasions emphasised to all negotiators, whether in the wages council sector or in the economy at large, the need to consider the effects of their decisions on inflation and employment levels. It is right to point out, though, that over the years the rates which have actually been paid by many employers in industries which are affected by wages councils have been above the minimum which have been set by the councils, although it is arguable that the difference is at present diminishing. Clearly increases in the statutory minimum rate are bound to have an effect, although not necessarily a uniform one, on the rates which are actually paid. Smaller companies in particular may well be paying close to minimum rates. That is one of the reasons why we ensure that small businesses are fully represented on the councils. But to keep it in perspective, overall earnings, excluding overtime, are, on the latest figures, still substantially above the minimum rates which are set by the councils. This suggests that a large proportion of those wage-earners who are affected are in businesses which, probably for perfectly sound reasons, are content to pay above the minimum. This may well not apply to the many very small businesses which, although large in number, may each employ relatively few people and who may well not be able to pay above the minimum. I accept that these are the ones which are the most hardly affected by a council's determinations.

When the noble Lord, Lord Spens, said that he is wanting by his Bill to help small businesses—that this is what his Bill is about—I accept that the Bill would have that effect. But of course there are other facets to the problem. Inevitably, at times when people are worried about the state of their businesses and are aggrieved at increases in costs which may be forced upon them, some of the criticisms must centre on the way in which decisions are finally reached in councils when there is no agreement between the two sides. I have to tell your Lordships that while the Government are not privy to the proceedings of the councils, we have ascertained that over the years there is no evidence of any bias on the part of the independent members towards one side or the other. But the effect of wages councils' determinations is bound to have an effect on the employment of young people. The Government are concerned that all negotiators, including those on wages councils, should take particular care in setting rates for young people.

One particular concern which has been put to us, although I do not think that it has been very much in evidence this evening, is about the present minimum rates for those under 18, in so far as they might prevent employers applying under the recently introduced Young Workers Scheme. The aim of the scheme is to encourage employers to pay more realistic wages to young people and thereby to improve job prospects.

Employers within the scope of wages councils must of course pay at least the minimum rate which is set by the wages councils. At present, most wages councils have minimum rates for those under 17 which lie between £30 and £40. The rates for 17-year-olds are between £40 and £45. Therefore, the majority of 16- and 7-year-olds would attract grants under the Young Workers Scheme. It would of course defeat the object of the Young Workers Scheme if we were to set the earnings limit at such a level as would accommodate all young people, even those whose minimum rates of pay were relatively high. The point is that negotiators on wages councils should keep the Young Workers Scheme in mind when fixing minimum rates for young people and, as soon as details of the scheme were announced, the Government wrote to all members of wages councils so that they might be fully aware of the scheme's provisions. I hope that they will take these into account in their negotiations.

There are also worries, which I accept, about the burdens which are placed upon employers by the sheer mechanics of the wages council system. They often focus on the complexity of the wages orders themselves and the requirements on employers to supply information and to deal with the wages inspectorate whose task is to enforce the wages orders. The noble Lord, Lord Harris of High Cross, described the orders as being sometimes of baffling complexity. The Government are concerned to help councils to simplify their wages orders, and for some time now we have been ready to assist councils in their work. I am glad to be able to tell the noble Lord, Lord Harris of High Cross, that considerable progress has been made: eleven councils have now issued simplified orders and several more are expected to do so shortly.

It is right that the law should be enforced, and the wages inspectorate has an important job to do. I am glad that the noble Lord, Lord Bruce of Donington, accepted that. We have, however, made reductions in the number of inspectors by reverting to a level of inspection which operated satisfactorily for many years up to 1978. There will, therefore, be a consequential reduction in the burdens which the system of inspection imposes on employers.

The noble Lord, Lord Bruce of Donington, complained that there are not enough checks on employers. He said, I think, that the schemes are badly applied and inadequately enforced. I can tell him that in 1978 the Labour Government increased the number of staff to 320.5, including 177 outdoor inspectors. The new level is, according to the statistics, not 320.5 but 221.5—quite a reduction, including 119 outdoor inspectors. Using the modified methods, the reduced level of staffing should enable one employer in 10 to be contacted each year, which is the same proportion of checks on pay rates as was carried out prior to 1978. But the figures for 1981 show that pay checks were made on 37,800 establishments during the year. This total is above the 36,000 achieved in 1977 and the 36,800 achieved in 1976 under the terms which existed when the party to which the noble Lord, Lord Bruce of Donington, belongs was in Government. The protection which is currently afforded to workers in wages councils' trades is therefore no less and is numerically somewhat more than that afforded in the years preceding 1978.

I thought it right to put the generality of the picture; in view of the many criticisms which have been made, I thought it only right to make the position clear on major matters. If I have appeared somewhat defensive of the present system, this is not because the Government accept it unquestioningly but in order to put it in balance. I accept the force of the view that wages councils can in theory do just what they like in setting wage rates which then have the force of law; that by so doing they can force employers to pay more and therefore force up costs, prices, and inflation; or that they can reduce profits margins, which at a time of recession are already slender, and thereby create unemployment. In any of these circumstances, such action does not create employment, which is what the Government wish to see done.

On the other hand, to do away with wages councils, which is what the Bill in the name of the noble Lord, Lord Spens, would provide, when there was no other wage bargaining procedure at all would result in a free-for-all in wages in those industries which by their nature tend to be small and diverse. This could undoubtedly lead to exploitation by some employers. It could result in those people who are already in employment actually finding their wages cut or finding themselves put out of work by the employment of young people at very much lower rates of pay. At a time of high unemployment, we do not wish to see (and nor does any other noble Lord) employment prospects curtailed. At the same time, no one wishes to see others who are in work being summarily displaced by those who would be paid less or being themselves paid less.

It is a difficult balance to keep. It is not just an economic argument—there are also social factors to consider. Whatever views one may have, there would be one overriding problem if this Bill were to go through, and that is our commitment to the International Labour Organisation Convention No. 26, to which the noble Lord, Lord Spens, quite rightly referred. This convention binds us to provide a minimum wage-fixing machinery where there are no other arrangements for the effective regulation of wages and where wages are exceptionally low. The noble Lord, Lord Spens, said that the United States, Singapore and Russia have not ratified this agreement. He may be right but we have, and our signature on the convention inhibits our freedom of action. To take any dramatic action before 1985, to which year the noble Lord also quite rightly referred, when we may denounce the convention, if that seems appropriate, would leave us in clear breach of our obligations. This is something that we could not easily contemplate.

This Bill is, of course, a Private Member's Bill and it is not for the Government to dictate its future. I will only ask the noble Lord, Lord Spens, to consider whether, in view of this, he thinks it appropriate to proceed with his Bill and if so, how. As I have explained to your Lordships, there are fairly far-reaching considerations here. We must have regard to binding international commitments which presently inhibit our freedom of action. I will only add that, whatever your Lordships decide to do with this Bill, the noble Lord, Lord Spens, has provoked a most timely debate on an issue which we know concerns and worries a great many people. I can assure your Lordships that the Government will be looking closely at the arguments which have been put forward today. We share the belief of the noble Lord, Lord Spens, in the need to do whatever we can to free the labour market from any unnecessary and artificial restraints which may affect business performance, competitiveness and jobs. I can assure your Lordships that we will continue our efforts to slim down the system where it has outlived it usefulness.

My Lords, I am most grateful to all noble Lords and to the noble Baroness, Lady Seear—whom I see departing—for their contributions this afternoon. We have had a very interesting debate. I do not propose to summarise the debate again, because the noble Earl, Lord Ferrers, has done that very well for me. I want to make just two points. The first point is that which the noble Earl, Lord Ferrers, finished up with; our international obligation. It seems to me that there is no reason why we cannot continue or ratification of this convention yet abolish wages councils. The provision in Article 1 of the convention says only that there is the need to make these arrangements for collective agreements where wages are exceptionally low. I do not believe that wages are exceptionally low any longer. We now have welfare state benefits which protect member employees from such a situation. Therefore, I do not see why the Government cannot just say that wages are no longer exceptionally low—"exceptionally", remember—and go ahead with abolishing the councils without incurring the wrath of others who have ratified the convention.

The other point is that which was raised by the noble Lord, Lord Bruce of Donington, when he said that the protection of the weak ought be to safeguarded. Of course it ought to be safeguarded. I do not believe that wages councils' awards are doing that job. The awards are now such that the ordinary small retailer is unable to continue paying them. Therefore, he has either to put up his prices or get rid of some of his staff. He cannot put up his prices because he is in competition with larger stores who are able to accept such increases; he is left with no alternative but to sack some of his staff. Would not the noble Lord, Lord Bruce of Donington, consider that it is better to allow member employees to negotiate something less than the full increase from a wages council award in order to keep their jobs? I believe that that is the way in which we can protect the weak; following the rigidity and inflexibility of wages councils is not the way to do it. I should like to see this Bill go further because I should like to see whether we can amend it in Committee to take account of the joint industrial councils.

My Lords, before the noble Lord, Lord Spens, sits down I ought perhaps to inform him, in the light of what I said before, that, if he does press his Second Reading we shall—in view of what he has had to say—have to divide against him.

My Lords, I am sorry to hear that. I thought that the noble Lord had said that he was not going to divide against me at Second Reading, but at any further stage. I feel that I should like to go ahead and so, my Lords, I beg to press the Motion.

rose to ask Her Majesty's Government what steps they are taking to deal with the great increase of hard drug-taking by the young in major cities.

My Lords, we, on these Benches, are extremely grateful to the noble Lord, Lord St. Just, for initiating this short debate this evening. I should like to thank him for such a timely debate, because, with the recent release of the Home Office figures—which show a 40 per cent. increase of new notifications over previous years—it is time that we showed some concern for this increasing problem.

I speak as chairman of the Standing Conference on Drug Abuse, which is the representative body of all the non-statutory agencies working in the drug-related field. The question of Home Office notifications is one that was last raised in a debate which I initiated in October 1979. As many of your Lordships may or may not know, the Home Office figures show only the people who are taking opiate-type drugs. There are many other people—particularly abusers of barbiturates and amphetamines—who are not referred to at all in these statistics, and there is no accurate way of figuring out exactly how many there are. However, I think that a figure of 25,000 is a fairly modest estimate of the number of people with drug-abuse problems in the country; in fact, it may well be nearer 50,000 than 25,000. There has been a particular attempt to try to reduce the prescriptions of barbiturates through normal medical channels, but still large quantities of them are found on the streets. There is even evidence to show that illegal manufacture of barbiturates is on the increase.

Like the noble Lord, Lord St. Just, I should like to praise the efforts of the customs and the police who have been seizing ever-increasing quantities of hard drugs, particularly heroin. I believe that last year the figure was 191 lbs. I think it is true to say that in the last three years the price of heroin on the street has remained stable; in fact, at one point it even dropped. In times of inflation—to use a well known political phrase—in real terms this actually means that heroin is considerably cheaper now than it was three years ago. We also have reason to believe that heroin is infinitely more readily available throughout the country, not just in London, as it was mainly in the 1960s. There is a particular increase in Scotland; I think that Glasgow has shown a dramatic increase in the number of addicts being registered there. As regards the availability of barbiturates, we must remember that most of these pills originally come from a legitimate source in this country. They are not being imported; this is a home-produced problem and one that must be looked at very carefully.

As the noble Lord mentioned, many addicts are pushers. Obviously, for many addicts the only way in which they can finance their own addiction is by dealing in the drugs. I think that one must define fairly clearly someone who is attempting to make a vast fortune out of the improper use of drugs, and someone who is in the unfortunate position of being a drug addict but having to find some way of financing his habit. indeed, if there had been a shortage and a reduction in the amount of heroin around, I am sure that we would have seen the price go up, and that has not been the case.

City Roads, which is a short-stay, multi-drug abuse detoxification centre in London, was originally set up mainly to deal with people with barbiturate and amphetamine problems. Earlier on there was virtually no instance of anyone going there with a heroin problem. Now many people who go there use heroin as part of their cocktail of drugs. This is mainly because it is relatively cheap and also available.

I should like to give one more example to show how the figures do not relate to what is going on. Another London agency, the Hungerford Centre, carried out a survey between September 1979 and December 1980. it had 430 contacts; 51 per cent. of them were regularly using opiates; 31 per cent, were using barbiturates and amphetamines, and only 13 per cent. of these people were in treatment, receiving prescriptions and believed to be notified to the Home Office. That is a small example, but I think it shows that the size of the problem is much greater than that which is reflected in the Home Office figures.

Considerable concern is also being expressed over the widespread use of hard drugs on a national scale. In fact, there are few facilities outside London and the Home Counties, and these were mainly set up in the 1960s, when we were talking about a much smaller problem than we are today. As those facilities can no longer handle the situation that now exists, we must start planning for the future.

As I have said, SCODA represents the non-statutory agencies which with the drug treatment centres, are doing an extremely valuable job. Another example is the rehabilitation houses' survey during 1980, which showed that eight houses with 103 beds had 998 inquiries. They followed up 539 applications, and 67 per cent. were assessed as suitable referrals. Unfortunately, only 37 per cent. of those people could be admitted, and 28 per cent. of those people were self-referrals. I am particularly concerned about this because here we have an addict who, for whatever reason—it may or may not be intended prosecution for a drug offence—actually wants to stop being an addict and, unfortunately, through lack of space or lack of per capita funding from local authorities, is unable to obtain admission to a rehabilitation home. I think that we must look at creating more space for rehabilitation, particularly for people who want to get off of their own accord and who obviously do not have the unlimited funds which are available to certain sections of the private sector to receive treatment.

Funding of services in the drug field is obviously an extremely difficult problem. It is a known fact that they are not a particularly popular client group in accident and emergency units of hospitals, in the courts, or on the streets of whatever town they are in. As has been suggested, it is difficult to obtain funding from charities, because, again, it is not a popular sector of the community. In many instances local government is increasingly reluctant to provide funding for people seeking treatment. I believe that it is the duty of Her Majesty's Government to finance a network of services throughout the country, or to make a requirement that local authorities should provide the same facilities.

At the moment the situation is that many agencies are having great difficulty in obtaining funds at local level. City Roads, which I have already mentioned, has just had a reprieve for six months by virtue of a further grant from the Department of Health and Social Security. I might add that it is funded by the London Boroughs Association, two regional health authorities, the Home Office and the DHSS. An independent study, which has just been undertaken for the DHSS, shows that, subject to one or two minor things, it has been doing an extremely good job, and this extra funding has been given so that it can try to raise the money at a local level.

I do not think that it is really fair to expect a relatively small unit to have to spend an enormous amount of time dealing with about five or six different organisations in order to try to get the funding that it requires to continue in business. That is a particular operation which requires 24-hour, round-the-clock nursing for their clients. It is a hand-to-mouth existence which is unfair to them, and it is also unfair to their drug addicts who go there. I was told the other day from somebody working in a drug dependency unit that they also have expended an enormous amount of time trying to justify their existence and their financing. The facilities available for drug addicts were fairly inadequate several years ago, and for them to have to justify their existence now is really rather pointless.

This is a common problem in both the statutory and non-statutory field. It is very demoralising for the workers who work long, unsocial hours in that particular field. Their future is not assured, and I might remind Her Majesty's Government that rehabilitation is still considerably cheaper than prison, and a more attractive alternative. I would urge the Government to consider the possibility of central funding for drug services, and hope that something concrete can come out of this short debate, because I am sure that by the time we come round to the next one the figures will he showing an even greater increase.

My Lords, I am sure that all of us taking part in this dedate feel that it is tragic that we should have to debate this issue at all, not only because drug addiction destroys those who become addicts but because it is essentially a problem amongst the young. It is said that there are no old addicts. They have either been cured or they are dead.

I am personally very grateful to the noble Lord, Lord St. Just, for raising this issue tonight. The statistics which have recently been produced, inadequate as they are bound to be, are still horrifying. The peak age for drug addiction seems to be around the age of 29, and it is people between the ages of 16 and 40 who are mainly involved. But the increase in the numbers of those becoming addicted is so dramatic that it is a cause for real heart-searching on the part of us all.

It has been said that the present crisis could have been predicted, and indeed that it was predicted, but it is no use wasting time on time wasted. We need to address ourselves to the present situation. The first point that I wish to make is that all drug-taking of whatever kind is dangerous, and young people can all too easily graduate from one drug to another until their case is hopeless.

My particular responsibilities lie in the East Midlands and I have been trying to discover what the situation is there so that your Lordships can get a picture of what happens in the provinces. Drug addiction is certainly not a purely local London problem any more. The major cities of the country have a greater problem than we do in Nottingham. Nevertheless, it is well for us to hear what is happening in the provinces.

One of the startling things is that although we do not have so much addiction to hard drugs there is a real problem at the younger end of the age range. There has been a quite dramatic rise in the number of young people glue sniffing; an activity which is legal, quite uncontrollable, but the consequences of which for the future are at present totally unknown to us. Who knows whether the next step for one of these youngsters who is at school—because it is between the ages of 15 and 17 that this is particularly taking place in our part of the world—may not be soft drugs, and then hard drugs?

At this age it is almost a sort of recreational drug-taking; something done for kicks under the influence of their peers. But, as with all crime, it leads to other crimes of petty theft and then to something worse. In Nottinghamshire 80 per cent. of police time in the drug squad is taken up with the question of cannabis abuse. As I said, other major cities are facing worse problems than we are, but the warning lights are on for us, and we need to act now if we are to prevent a worse future.

It is not that the police have been backward in making some significant seizures of cannabis resin in our part of the world: up to about £½ million-worth. In talking to the police I am impressed that they feel that they are not being hindered by the law from doing their work. In the field of drugs they believe that the law is clear, that the penalties are ample, and that the police powers of search and arrest are adequate. So it is not legislation that is required.

The problem we are debating today is, I fear, at heart a commercial one, and even a political one. Too much money is being made in the traffic of drugs, and Governments have not been beyond using this trade to influence policy and secure advantage. I speak of course of Governments outside this country. We are up against a big problem. The point I am trying to make, however, is that there is something that we can do to help the future; namely, to work at the problems facing young people before they add drug-taking to their unlawful activities and ruin their lives.

It requires some financial help to those who are able to work at the problem among the young people themselves. Recently the Government have been farsighted enough to put some modest resources into a scheme pioneered in Nottingham whereby field workers get involved with teenagers who are either truanting from school or are unemployed. This is a voluntary scheme in which young men and women of great dedication and social conscience are seeking to provide for disillusioned and bored young people the motivation to do something constructive, so that they are helped to avoid getting into trouble and starting that long slide from intermediate treatment to borstal, and eventually to prison.

Nottingham Youth Action, as it is called, is an imaginative scheme which has the support of both the city and the county of Nottingham, and I mention it because it has in fact only got off the ground because central Government saw that there was here a serious attempt to deal with a serious problem and were prepared to support it financially. Again I quote this because the same needs to be done for drug-addiction. The problems are allied.

Financial stringency is a healthy incentive to look at the way in which we spend our money and make sure that we are getting our priorities right. I submit that, if the Government say that this is merely a local problem, as I believe they do say at times, then they must be failing in their responsibilities. Some help, even of a temporary nature, is essential to get worth-while schemes off the ground locally. I was interested to hear what the noble Earl, Lord Denbigh, said just now about the unpopularity of local funding. It is all the more urgent then that the Government give a lead.

The problem that we are debating can only be solved by strong policing of criminals, by adequate support of Government funds, and by one other thing which I should like to mention; we need to engender in the media helpful reporting of this problem. There is evidence that at times the press have not been wise in the way in which the problem has been presented: we need to help people see that it is pathetic rather than sensational to be a drug addict.

I am told that drug addition in Harlem, on the other side of the Atlantic, is not the problem it might be in the black community because that community has its own pressures against the taking of hard drugs. I was interested in talking to the police in Nottingham to discover that the same is true there. We have a fair number of people of Caribbean origin and they do not graduate from soft to hard drugs because of the pressures exerted within their own community. We could learn a lesson from them. Support in peer groups for common-sense reasons to enable young people to avoid getting into the drug habit is a way of dealing with the problem, and we need to support young people working among young people.

I should be failing in my duty to the East Midlands if I were not to speak about the work that is being done in the therapeutic field. The East Midlands is served by the Trent Regional Health Authority. Our area has a population of about four and a half million people. Statistics reveal that the opiate-dependent population is as high as one in 2,000. Recent research, as yet uncompleted, could put the figure as high as one in 1,500. What resources do we have in the East Midlands with which to tackle the problem? There is an addiction unit in Nottingham at the Mapperley Hospital. Like most addiction units, its main responsibility is for opiate addicts. Patients are seen as out-patients, although the unit has access to in-patient beds. It is staffed by a consultant psychiatrist, social worker and other support staff, and it serves patients who, in the majority, live in the Nottingham area. In Sheffield, in the same region, the Royal Hallamshire Hospital provides an out-patient service, although it does not have the staffing support available to the Nottinghamshire unit. The Doncaster Royal Infirmary provides a similar service to that provided in Sheffield.

That is the total statutory provision for the Trent Regional Hospital Board. You may say we are lucky. If you are a drug addict in Truro, you have to travel to Bournemouth, I believe, to get any help. In addition to that statutory work, there is in Leicester a voluntary organisation called INFO which funds one social worker dealing with drug addicts, but all appeals for financial help in what is an increasingly big job have gone unheeded. There is also in Nottinghamshire, only about three miles from where I live, work by the New Life Foundation, a charismatic organisation led by a Baptist minister which has done devoted residential work in what was a large retreat house for the Kilham Fathers. I know how desperately hard that organisation has found it to raise support for the work it is doing, with the result that in some cases they are charging fees to patients.

That seems to me to be paltry provision for such a great conurbation of cities as Sheffield, Nottingham, Leicester and the four and a half million people who live around us. I believe that throughout the country there has been no very real increase of support services for drug dependents since the early 1970s, even though the problem has escalated alarmingly. My plea therefore is that the Government should really take the problem on board, see it as a problem which needs priority funding and so give local authorities the chance, first, to support those who are already doing some work, for they have the valuable experience they have gained and dedication to the job, and, secondly, to enable new work to be started which can give a much wider geographical spread to the efforts now being made. This is an important debate, despite the lateness of the hour and the short list of speakers. I hope with all my heart that the Government will be able to take the problem much more into their own hands and that the debate will evoke a very real response from the Government.

My Lords, I wish to thank the noble Lord, Lord St. Just, for the opportunity to speak on this subject. The Government should address themselves not only to the problem of hard drugs but to the so-called problem of soft drugs. We have heard from several speakers that there is supposed to be a link between soft and hard drugs, but in my view that is a great over-simplification. Certainly the majority of hard drug users started with cannabis or something of that sort, but, then, one might as well say that every meths drinker there has ever been started with milk. There does not seem to me to be anything inevitable about the progression from one to the other, and indeed the right reverend Prelate gave an example of that in the black community in Nottingham. The progression might be rather more inevitable if the milkman, to continue my metaphor, brought meths or lager along with the milk.

I feel that the connection between cannabis and hard drugs is largely one of supply, the same pushers, if it is possible to talk about the supplier of cannabis as a pusher, supplying both. I would, therefore, argue for the separation of the supply of those; in other words, for the legalisation of cannabis and the amendment of the Misuse of Drugs Act to allow for that. The open sale of cannabis would abolish the exposure of cannabis users to the temptation to go on to something harder and lethal. As the Government must be aware, there are a great many users of cannabis. The law is being abused throughout the country, not just by Rastafarians, hippies and other wierdos or freaks.

The average cannabis smoker is no more a freak than the average drinker, yet the law treats him entirely differently. I cannot see why that should be so, for there is hardly any evidence that cannabis in itself harms the health or society or that it is addictive; it may be habit-forming, but that is different. If we compare cannabis with the widely tolerated—in fact, virtually obligatory—alcohol, the list of hazards to health resulting from drink are endless, starting with sclerosis and heart disease and ending with a hang-over, something which most of us have experienced at some time. The social effects of drink are colossal—driving, crime, domestic strife and so on. How does cannabis compare? So far as I have been able to make out, from experience and what I have read about it, cannabis may induce one to be idle, silly and sexy but very rarely, if ever, nasty.

I conclude, therefore, that if one views the matter from a sufficiently detached viewpoint, one could make a far better case for the prohibition of drink than of cannabis. Goodness forbid that should be so, as would be one of the first to suffer. But I feel one could make quite a good case for saying that an enlightened Government would encourage cannabis rather than prohibit it, which is what the present Tory Government do and what Governments in the past have done. I therefore ask the Government to consider amending the Misuse of Drugs Act.

My Lords, we are grateful to the noble Lord, Lord St. Just, for bringing this subject before the House. I would remind noble Lords that the Question tabled by Lord St. Just was:

"To ask Her Majesty's Government what steps they are taking to deal with the great increase of hard drug taking by the young in major cities".

I hope the Minister will tell us of some constructive proposals and suggestions.

I was very interested in what the noble Earl, Lord Denbigh, said about the difficulty of voluntary organisations working in this field. It seems to me that in all the cuts that have been made by the Government in funding for the health service and social work in the localities great pressure is being placed on voluntary organisations to step into what is really an unattractive field of work. This is very unfair, and I know of several voluntary organisations that are in great difficulty as a result of the recession, of having to pay VAT, and of being faced with other problems which arise from the current economic position. I believe that it is the duty of Government to take a fuller responsibility for these less attractive, yet vital, services in the community.

To be honest, the ordinary members of the public would rather give some money to Oxfam, blind babies, or lifeboats—all of which are excellent in themselves—than they would to running a centre for drug addicts, perhaps next door to themselves. This is one of the least popular efforts that can be made, and the Government must try to accept that they are placing an unfair burden on voluntary organisations in this field.

In this short debate we are trying to deal with a problem which goes deep into the history of human fallibility and one which has proved intractable throughout the ages and in many countries. I have talked to a police officer in Hong Kong, where the favoured treatment was what they called "cold turkey" where a person was shut up in a cell and left with a glass of water to sweat it out. That imposed terrible strains on the human body. I was in America last year, when I talked to psychiatrists who were undertaking long, expensive treatments of Vietnam war veterans who, under the terrible stress of the war, had found some comfort and release in the taking of drugs. I discovered that nowhere from Hong Kong to New York had anyone found a total answer to the problem.

I have to ask the Minister whether in this country the Government are doing all that they can, through the Health Education Council, for example, to try to deal with preventive measures. For instance, I wonder whether we are doing as much as we could to inform parents and teachers more fully about the hazards involved. Last week I was talking to a young teacher, who said that in the whole of her teacher training the question of possible drug-taking among pupils was never raised. No information was given on spotting the symptoms among older teenagers—and we know from statistics that the 15- to 18-year age group can be involved. If a teacher has no knowledge with which to spot that a child is behaving in a difficult way, and so cannot relate that to the possibility that the child is taking drugs, there is a breakdown in the system.

I wish very briefly to refer to a report from Glasgow, and to quote what the Minister said in another place on 3rd December 1981, as reported at col. 5 of the Official Report.

The Minister said:

"There has been a dramatic increase in the number of new heroin addicts seen at the two drug clinics in Glasgow in the first six months of 1981".

But it seems to me that by the end of that debate the other place had not gone on to produce a programme which would deal with the question which had been investigated and set out in a very serious report relating to Glasgow, which is something of a new location for this kind of problem. Many years ago it was not such a problem in Glasgow, but suddenly there has been an epidemic of drug taking in Scotland. I am not sure that we are doing enough to tackle the problem—and I am not at all making this a party point, since goodness knows! in my living memory at least no Government have been able to find the answer.

I should like to return to the theme of prevention and of Government help. Dr. John Strang, who is the Director of the Manchester Drug Dependency Unit at Prestwich Hospital, was quoted in the Observer of 28th February 1982, as saying that he has 60 out-patients a week, and a waiting list of 100. Now here is the breakdown. A young man or a young woman, having got to the point of facing up to his or her addiction, has the courage—I am sure that it does take courage—to march to a hospital and say, "Please help me. I want to get off these drugs." The doctor has to say, "You will be No. 101 on my waiting list". I say in all sincerity that, if that happens, the young man or woman is not likely to go back again. Often a young man or a young woman goes along to seek help in a moment of crisis, and to be turned away is entirely destructive.

I want to ask the Minister, why is there a waiting list of 100 at the Manchester Drug Dependency Unit? And if there is a waiting list of 100 there, how long are the waiting lists all over the country? Why are the resources of these essential places being restricted? This is the politics of the situation. The only political point that I want to make in the debate is the question of making resources available, of finding the priorities. The fact that people who seek help should be turned away from hospitals is totally deplorable. To me it is as inhuman as turning away someone who has been badly hurt in a car crash. One would not say to a person who had been half killed in a motor accident, "Go away; we have a waiting list of 100. You will have to wait". But drug addicts are often in a position that is just as serious. So I very much hope that the Government will tell us that they are taking positive steps to increase the amount of help that is available, and that they will make the extra help available quickly. I repeat that the person who is turned away will be very unlikely to go back.

I want to ask the Minister a particular question, of which I have given him notice. I have been very interested in the history of legislation on this matter, and I found myself wondering whether we should give more thought to returning to the pre-1968 decision about heroin, when there was a tolerance for prescription by GPs for registered addicts. I must confess that I am in two minds about this question, because I have seen both sides of it. On the one hand, if a person who was dependent on heroin could go to his registered family doctor and reveal his position, he could then get a monitored prescription. This meant that he was under medical care—and we all know the medical side-effects of drug abuse of malnutrition, of liver damage and so on.

At that time it seemed to some of us that thus being under medical care was a good thing. On the other hand, I know that there was a great deal of abuse. I regret to say that there was abuse by some doctors by way of over-prescribing; there was abuse by patients I who sold part of their heroin to friends or to other pushers; and there was abuse by patients who came and made temporary residence arrangements in different areas covered by several doctors, and so were able to accumulate drug supplies.

On the other hand, at least that gave us some statistics. At least we were able to find out something about the number of people coming for help. I submit that the Home Office figures for addicts are a complete nonsense, because there is now no reason why an addict should come forward and register. At least before 1968, by registering, he stood to get some heroin from his general practitioner. But now he does not. So why should he (or, I regret to say, she) bother to register? This makes me query all the figures we are getting from the Home Office.

I should also like to ask the Minister whether the number of break-ins at pharmacists have increased since these new rules were brought into force. Has addiction been reduced? So far as I can obtain figures, there have been more break-ins at pharmacists and people stealing hard drugs, and addiction has not been reduced. So I am not sure whether we should not enter into some meaningful new discussions with the medical profession about whether we should have another look at the situation and consider (I do not go any further than that) looking again at these new rules.

Then I have to ask the Minister about the work of the Customs and Excise department. One reads in the press—and I will not go further than this—that there is to be a reduction in the number of civil servants. I am wondering whether the reduction applies to the customs service; whether we are to have fewer searchers, fewer customs men and women on duty trying to keep heroin and other dangerous drugs out of the country. It seems to me that it would be quite unfair for the Government to say kind things about their concern if at the same time they are cutting down the number of customs officers who might be helping.

I think we all appreciate the part that the police are playing in various parts of the country, but I should like to ask again—I am sorry I am asking the Minister so many questions, but I think that this is a very important debate—what discussions they are having with the Governments of those foreign countries which are the providers of some of these drugs. It seems to me absurd for us to be trying to get our customs service and our police service to deal with these drugs if at the same time their production in overseas countries is increasing. I should have thought that it ought to have been a priority for the Government to try to discuss with Governments in Pakistan, Iran, Turkey and South-East Asia how we can stop this poppy-growing epidemic.

That is an easy question to ask but it is a hard one to answer. To my mind it is very much involved with the standard of living and with alternative employment in these countries. It is no use telling a peasant in Pakistan to stop growing poppies if you do not tell him how to earn a living otherwise. This is where I feel it really is an international problem which is much concerned with overseas aid and development, so that it ought not to be necessary for anybody anywhere to grow poppies to produce hard drugs to destroy another human being in another part of the world.

I was very glad that the noble Lord, Lord St. Just, referred to the pushers, because they are the real criminals; and I am not sure whether or not the Government are thinking about increasing the penalties for these destructive people in our midst. As I say, it is a very complex question. I think that there may be some connection with the present mood of despair and failure, and that it has something to do with unemployment, with boredom and with the lack of facilities in many of our big cities. In fact, when the police in London issued a report the other day which gave the colour of certain criminals arrested for assault and battery, I would have been more interested if they had broken the figures down into the unemployed and the employed.

I should very much like to know how this pattern fits into the number of people, especially young people, who have been charged with the possession of dangerous drugs. How many of them are unemployed, and how many are employed? I think that is much more important than the colour of their skin; and I think that if we are going to put this problem into the social framework that it deserves, we ought to be asking questions of that sort. Of course, the pity is that if this continues to be an epidemic among unemployed young working-class people, they quickly become unemployable and they quickly become involved, not only with related health diseases but with crime and with blackmail.

The report from the university in Glasgow to which I referred earlier, the Ditton Report, has found that addicts are increasingly coming from working-class families. There is a quite different epidemic today from the rather trendy university experimenters of the 1960s. Therefore, we are faced with a very serious social problem. I do not think we know enough about it. We certainly have not yet found the answers. All I would ask the Government tonight, as we look at these complex social and personal problems, is what they are doing about it. Because that is the Question before us tonight, asked by the noble Lord, Lord St. Just: what steps are they taking to deal with the increase in hard drug-taking? I look forward to hearing some hopeful and positive reply.

My Lords, may I congratulate my noble friend Lord St. Just on raising this important and difficult issue. It is a fact that there has, over the last few years, been a substantial rise in the extent of drug misuse in this country. We do not have precise figures of the number of individuals who misuse hard drugs, but the indicators of a growing problem, in terms of quantities seized and reported addiction, clearly exist. The number of addicts notified to the Home Office by medical practitioners has doubled in the last five years, from 1,700 in 1977 to 3,400 in 1981. Although the majority of notified addicts are currently in their late twenties, there has been a significant growth in new notifications among the younger age group. There are, however, many who misuse drugs who never attempt to seek treatment. Estimates for the total number of hard drug misusers range from 5,000 to 40,000, and the true figure probably lies somewhere between these two estimates. My noble friend is very right, therefore, to bring this situation to your Lordships' attention this evening; and I am grateful for the opportunity to reply to the many points that have been raised. It would be wrong of me to suggest that there is any easy or quick response to this problem. It is one which must be tackled in a number of ways and over a considerable period of time. I will try to explain briefly the various forms of response that are being planned or made.

The increased availability of hard drugs, particularly heroin, on the black market is undoubtedly a major factor in the increase in drug misuse; and part of our efforts are directed at stemming the movement of drugs into this country. Drug trafficking is very much an international problem which requires close co-operation between the authorities of the countries involved—which might be termed the producer countries, the transit countries and the consumer countries. This co-operation takes place at a number of levels. First, the United Kingdom takes an active part in the work of the United Nations Commission on Narcotic Drugs; that body last year agreed a five-year programme of action, which was endorsed by the General Assembly, aimed at achieving united action in the fight against drug abuse.

Assistance is also given to individual countries in practical ways through advice and training, particularly for law enforcement officers; and the United Kingdom makes an annual contribution to the United Nations Fund for Drug Abuse Control, which, in addition to enabling law enforcement capacity in key countries to be improved, finances major projects in developing countries aimed both at reducing the illicit production of narcotic drugs and at countering the effects of drug abuse.

In Europe, the United Kingdom participates in the work of the Council of Europe Co-operation Group against drug abuse and illicit trafficking in drugs (known as the Pompidou Group). This body is now developing a programme of activities particularly suited to the needs of European countries.

Co-operation between national law enforcement agencies is also of great importance in the fight against drug trafficking. I am pleased to be able to report to your Lordships that the liaison developed between our own customs and police officers and their counterparts in other countries is now closer than it has ever been. These close links make a valuable contribution in detecting drug traffickers, and the customs officers and the police deserve much credit for this. I should also mention the Central Drugs Intelligence Unit, located in New Scotland Yard; this is staffed jointly by police officers from a number of forces and by customs officers, and has an important national and international role to play in this task.

The noble Baroness, Lady Jeger, asked about the reduction in the number of customs officers, and my noble friend Lord St. Just said that he hoped that there would be no further reduction. It is true that there has been some reduction in the overall numbers of customs officers deployed, but these have been predominantly in areas where results were meagre, and in support staff. The emphasis has been on concentrating available resources in those areas which have proved the most successful and in developing expertise and initiative. In particular, the Investigation Division, which is staffed by selected personnel who are highly trained investigators, has been substantially increased.

Turning to the work of our own law enforcement agencies, I am sure your Lordship would wish me to join in paying tribute to the valuable work done by HM Customs. They have had notable successes in the past few years, and in 1981—as has been mentioned by several noble Lords—there has been a total of 326 seizures of hard drugs which I understand are worth at street level about £20 million. They have seized 90 kg of heroin, 6 kg of morphine, nearly 10 kg of opium and 13½ kg of cocaine. The task of these men is difficult and sometimes distasteful, and it can be dangerous work.

I have already mentioned the important role of the police in preventing and detecting illicit traffic in drugs. About a year ago, the Association of Chief Police Officers held their first National Police Drug Conference; a second conference is to be held later this week. These conferences provide an opportunity for chief officers to review their priorities and practice. They indicate the seriousness with which our police service now views this problem and the determination with which it is responding.

The police are increasingly concentrating their efforts on those who traffic in hard drugs. Many noble Lords have referred to the terrible pushers who make money out of this. The police have had some notable successes over the past year or so. My noble friend Lord St. Just and the noble Baroness asked whether the penalities for pushers should be increased. The maximum penalty under the Misuse of Drugs Act is 14 years and/or an unlimited fine. This indicates the seriousness with which Parliament has viewed this offence, and the courts have on occasions-imposed the maximum penalty. That is a high penalty.

Turning to the subject of treatment, I should have liked to give your Lordships a clear picture of the facilities available for treatment; but I find that these vary widely from area to area. The right reverend Prelate gave us examples of this. Within the hospital service most drug misusers are treated as out-patients. The consultant psychiatrist responsible may run a full-time drug dependency service for a 100 or more out-patients; he may be a general psychiatrist with a special responsibility in his contract for drug misusers providing a limited number of sessions; or he may be a general psychiatrist who sees drug misusers within a general psychiatric clinic. The staff support may vary from none at all to a team which may include other medical staff, nurses, social workers, clinical psychologists and clerical support. In some areas, psychiatric nurses work with drug misusers in the community. Precise information is not available centrally about "hospital-based treatment facilities"; but interpreting those words to cover everything I have described, there are about 50 such facilities in England and Wales, 18 of them in London, which provide some specialist service for opiate addicts.

Relatively few hospitals have designated in-patient beds, but these range from a whole ward to one or two beds. We know of about 100 designated beds for drug misusers in England and Wales, mostly in London. Most consultants, however, depend on the availability of general psychiatric or medical beds when in-patient treatment is needed—for example, when a patient is willing to undergo complete withdrawal from drugs or is in an acute intoxicated state.

Help is made available to patients in many ways. First, from some general medical practitioners, as the recent notifications of addicts show, and some work within the hospital service. My noble friend Lord St. Just questioned whether there were enough psychiatrists trained and working in the drug misuse field. I would say that the question of the professional training of staff of all descriptions is a matter in the first instance for the appropriate professional training bodies, including the universities and the Royal Colleges. As I have already said, the services are patchy. The staffing of clinics for drug misusers, both medical and nursing staff, and their in-service training, are matters for individual health authorities—and in the case of social workers, individual local authorities—to determine in the light of local needs and available resources. It is likely that health and local authorities and those responsible for professional training will wish to review the situation in the light not only of the statistics indicating an increase in the numbers of drug misusers but of the recommendations expected from the comprehensive report of the treatment and rehabilitation working group of the Advisory Council on the Misuse of Drugs. Those reports are expected during the course of this year.

Help is also available from local authorities, though I doubt that many, apart from members of the London Boroughs Association and metropolitan authorities, would claim that they play a major part in helping misusers as such. They may, however, become involved in helping with associated family problems, with children or adolescents in trouble, or in co-operating with housing departments on accommodation for vulnerable young people. Help is also available from voluntary organisations. There are over 200 places provided in rehabilitation houses in England and some local authorities, notably the London Boroughs Association, contribute to the financial support of rehabilitation houses and other voluntary agencies providing support and counselling for drug misusers. The Department of Health and Social Security and some health authorities also contribute in cash and kind to some voluntary organisations. Two national organisations whose valuable work is recognised by the Department of Health and Social Security in the form of grant aid are the Institute for the Study of Drug Dependence and SCODA, the Standing Conference on Drug Abuse. The noble Earl, Lord Denbigh, is the chairman of SCODA and his speech today was immensely interesting and has greatly helped us to understand the problem of drug misuse and the part played by dedicated voluntary organisations in helping drug misusers. I am sure that his speech will be read with great interest by my right honourable friend the Secretary of State. People who have already begun to misuse drugs can be helped, and the evidence suggests that the earlier help is sought the better the outcome. The drug misuser may need a wide range of help over time for a chronic, relapsing and sometimes fatal condition. His or her problems are complex and daunting. It is no easy task for the health, social and voluntary workers in this field to provide a network of effective support of the right kind and at the right time.

Your Lordships may ask: Is this demanding work worthwhile? So much depends upon the motivation of the client and on his willingness to be helped and to help himself. The answer most surely must be, Yes. It is encouraging that in areas where treatment and rehabilitation facilities are available over a period to drug misusers this increases significantly the number enabled to live a more normal, socially acceptable and ultimately drug-free life. We need to know more about what factors make misusers of drugs more likely to seek help, and we can hope that as knowledge is gained and experience of providing effective responses is disseminated successes will become more widespread for the benefit of the drug misusers, their families and our society.

The Secretary of State for Social Services is far from complacent as to whether the present services are adequate to respond to the needs of drug treatment and rehabilitation. The problem has been changing. Not only is there the increase in opiate abuse shown in the recent notification figures, but a recent trend is multiple drug misuse, including opiates as well as other drugs which are not subject to the same control. In consequence, professionals working within the established hospital-based facilities are reviewing their roles. I repeat once more that services are patchy. Resources for statutory and voluntary services are constrained and the question must be asked: could they be better deployed to provide the range of help that is needed?

This is, however, a very difficult area. The advisory council, a statutory body set up under the Misuse of Drugs Act to advise the Government on all aspects on drug misuse hopes to produce reports on prevention, treatment and rehabilitation by about the end of this year. Meanwhile, the Department of Health and Social Security pump-primes innovation by statutory and voluntary agencies and provides research, for example, to determine how information on the nature and extent of drug misuse problems can be obtained in particular localities with a view to helping health and local authorities to make reliable assessments of the appropriate responses required from their services. Also the department, jointly with the Medical Research Council, funds the Addiction Research Unit whose work, it is hoped, may give new insights into dealing with this difficult problem.

I shall now attempt to answer some of the questions I have not yet turned to. My noble friend Lord St. Just referred to the black box and said that it definitely worked. He also said that he did not quite know how or why it worked, and I do not think that anybody else knows that yet, either. The question of whether the black box itself and the treatment works or whether it is some psychological operation is not yet decided, but it is entirely up to local health authorities to have the black boxes if they wish to have them. The choice of methods of treatment is for the medical profession and the funding of medical equipment and in-service training is for the decision of the health authorities.

The noble Marquess, Lord Tweeddale, raised the subject of cannabis. This subject has been raised many times before, so I think I must pay attention to that. The House will be aware that the Advisory Council on the Misuse of Drugs asked a group of eminent experts to assess the evidence of the effects of cannabis use. The group's report, a copy of which is available in the Library of the House, states after very careful assessment that there is insufficient evidence to reach any incontestable conclusion and that more research is needed, especially with regard to long-term effects. As long as there is substantial uncertainty about the harm caused by cannabis the Government share the view expressed by the advisory council that a cautious approach to any change in the present law is necessary. Noble Lords will be aware of the danger that reducing the current penalties might be misinterpreted in certain quarters as an acknowledgement that the health risks involved in using cannabis have been exaggerated. That could lead to an increase in its use, and surely none of us would want to encourage that. The Government could not responsibly support a change in the law relating to cannabis as long as the dangers of using that drug are not adequately known. We do not intend to introduce or support legislation to alter the existing law concerning cannabis.

The right reverend Prelate, in his extremely interesting speech about the Midlands, referred to glue-sniffers. I will only say to him that we in the department have no evidence to suggest that those who abuse solvents or glue in their youth, later graduate to the abuse of hard drugs. I know that it is early days, so I hope that evidence of that kind will not come to us in the future.

The noble Earl, Lord Denbigh, referred to the financial problems of voluntary organisations which are doing valuable work in this field, and the right reverend Prelate mentioned the problems of funding local schemes for young people at risk. If the advisory council makes recommendations on changes in the arrangements for funding voluntary organisations or statutory treatment in rehabilitation services, these will receive consideration by health Ministers. But there would need to be compelling reasons for departing from the policy that provision of services is a matter for local decision and local initiatives by the health and local authorities.

The noble Baroness, Lady Jeger, asked about waiting lists. While I am aware of some difficulties, precise information cannot be obtained without disproportionate cost. The scale of services provided by a particular hospital is a matter for the district health authority to decide in the light of their assessment of local needs. But if the noble Baroness has other cases in mind, apart from the one in Manchester to which she referred, I shall be very glad if she will let me know. I am grateful for the information which she gave us about Glasgow.

The noble Baroness also asked about the registration of addicts. A person who is addicted to heroin may still receive heroin from a doctor in a drug treatment centre, and a general practitioner can still prescribe drugs, other than heroin or cocaine, to addicts. The major abuse problem in the 1960s was caused by doctors who were over-prescribing drugs to addicts. The present arrangements were introduced to combat this, following the recommendation of an interdepartmental committee chaired by the late Lord Brain.

The noble Baroness also referred to prevention measures. Experience has shown that the scaretactics which were popular some years ago do not succeed in preventing people from experimenting with drugs. Evidence suggests that, as in other areas, a person can be well aware of the dangers of drug misuse and yet not be deterred from experimenting. Experts in this field argue now that a more positive approach is needed, which attempts to promote a healthy attitude to living in general and which does not concentrate specifically on drugs. A number of bodies have adopted this approach, particularly as regards health education in schools.

If I have not answered all the questions—and it is getting very late—I will certainly write to noble Lords. I have tried as quickly as I could to give an indication of the range of responses that are being made to what is undoubtedly, and regrettably, an increasing problem. I repeat that it would be wrong to suggest that there is any quick or easy answer, but that must not be an excuse for complacency. We need to respond in a cool and discriminating way, and to develop the expertise and the range of services that are already available. This will require a close and continuing partnership between the many agencies involved at local, national and international levels. The reports which are awaited from the Advisory Council on the Misuse of Drugs will, I am sure, make an major contribution to the development of policies and strategies for prevention, treatment and rehabilitation of drug misusers, and will assist in ensuring that available resources are used to the best advantage.