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infinite. However, the increase is more than double for someone in the middle of the scale, because the contribution is being increased from £3.45 to £7.20 for a non- dependant whose income is less than £49.20. At the so-called top end of the scale, for someone whose income exceeds £52.10 a week the contribution is being increased from £8.20 to £12.50, which is an increase of more than 50 per cent. Those are massive increases by any stretch of the imagination or calculation. They are increases that, by definition, are being applied to families who are living in poverty. It is, in effect, increasing a tax that is paid by poor families. It is paid often by pensioners, who are applying for assistance with the cost of necessary glasses, and who happen to have a non-dependant--often a grown-up son or daughter--in their homes.

The Minister did not give himself the chance to tell us how many people are affected by those increases. I hope that, when his hon. Friend the Under- Secretary of State for Scotland replies to the debate, he will tell us how many people will be adversely affected by the increases in the contributions of non-dependants covered by the four statutory instruments.

I want to mention another aspect of the regulations because the House should be concerned not only with what is happening under these regulations, but with what has happened as a result of the regulations that the statutory instruments amend. In other words, the House should be concerned about what has happened during the past 12 months.

My interest in this detailed but important aspect of the regulations arose as a result of a constituent's inquiry. I engaged in correspondence with the Department of Health about my constituent's case. My constituent is a pensioner and his wife is also receiving a retirement pension. Their combined pensions mean that they have an income slightly in excess of the level for income support. Therefore, a voucher is needed for glasses for the husband. Their grown-up son lives in their home and that son did not want to tell his parents--and did not see why he should tell the Government --the amount of his wages every week. Under the old regulations, before the changes that were made about a year ago, he did not have to reveal his wages because the contribution towards housing costs was a standard amount and there was no inquiry into income or means or into the financial affairs of a non-dependent grown-up son or daughter living with retired people. The Government have now introduced a means test for such non-dependants and that son now has to tell the Government and his parents, because he has to put his income on the form, the amount of his weekly income. He refused to do that because he said he did not see why he should have to provide that information.

I wrote to the Minister and asked the reason for the information about income. I received a courteous reply, but the letter did not tell me what I most wanted to know, which was what would happen if my constituent's son still refused to give the information. I received another reply from the Minister who told me that the non-dependant's contribution would be assessed at the maximum rate. The Minister's letter contained detailed figures. When I checked those figures with the assistance of the Library

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staff, I found that they bore no relation to the figures that had been approved by the House a year ago in statutory instruments. They were on a different scale.

Within 24 hours I contacted the Minister's office and 10 weeks later I received a letter from the Under-Secretary of State for Social Security telling me that the instructions issued to the agency benefit unit were incorrect. That was in the middle of January. For months the agency benefit unit had been assessing non-dependant's contributions on incorrect instructions. In every case, the non-dependant's contribution was assessed at £3 more than it should have been under the regulations approved by the House.

I have already explained how the amount to be paid by a person with a voucher is calculated. The penalty, the excess which someone--often a pensioner--has to contribute, can be as much as £9, three times the £3 mistake. In his letter the Minister was kind enough to tell me that fresh instructions would be issued to the agency benefit unit. The House will be pleased to learn that after 10 weeks the Government took the action that was necessary to correct their inaccurate instructions. Can the Minister say how many people were adversely affected by the mistake? How many paid £3 or £9 or an amount in between which they should not have paid for glasses? What have the Government done to refund the money that those people have paid? I await answers to those questions with great interest.

11.42 pm

Mr. John Greenway (Ryedale) : I shall be brief. I should like to make a comment and a plea to my hon. Friends on the Front Bench. My comment is that, in this debate and in the other debates that we had on these charges in November and seven or eight months earlier, it has been said that the amount raised by these charges is insignificant. My hon. Friend the Member for Great Yarmouth (Mr. Carttiss) spoke about a "piddling measure". There is some uncertainty about whether the amount raised by the dental and optical charges will be £140 million or £150 million. That amount is by no means insignificant.

I am sorry that the hon. Member for Livingston (Mr. Cook) has just left the Chamber, because I wanted to remind him and the House of what he said in the Budget debate. He spoke about the likely cost of the tax relief of £40 million a year for private medical insurance for old age pensioners. He said :

"£40 million is sufficient to pay the annual salaries of 3,000 nurses or 1,000 consultants. It is enough to purchase 20,000 ventilators or 1,300 ambulances. It is enough to meet the operating costs of 35,000 cataract removals or of 17,000 hip replacements."--[ Official Report, 16 March 1989 ; Vol. 149, c. 569.]

That is what can be done with £40 million. These measures raise about three and a half times that figure, so we are not talking about an insignificant amount.

The Minister pointed out that the take-up is increasing. It happens when charges are changed--this has occurred for the last 30 or 40 years--that for a month or two there is a small reduction in demand. Over a period-- say, when we review the position in a year or two--we will find that there has not been a significant change.

In the three speeches that I have made in the House on this issue I have appealed to the Government to introduce a new contract for general dental practitioners. Members of the dental profession are disappointed that negotiations

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on a new contract have not yet commenced. There is fear that perhaps the profession has missed the boat and that the new contract will not appear.

It is appreciated that, with the general practitioner contract being in the forefront of the Government's mind, the dental profession may have to be patient. I hope that the Minister will repeat the assurance that was given as long ago as last June--that the Government are determined to negotiate and introduce a new contract for general dental practitioners.

The present arrangements for remunerating dentists are 40 years old and out of date. We must have a new arrangement which reflects modern trends in dentistry--the reduction in dental decay--and which will be more beneficial to patients and the profession.

When we discussed these issues on 1 November last, I said that the introduction of charges of this type was often an unpopular step. But I urge hon. Members to reflect that an unpopular measure does not always mean that what is proposed is unreasonable. What the Government propose is right and is in the interest of the NHS, and I hope the House will not divide on it tonight.

11.47 pm

Mr. Nicholas Winterton (Macclesfield) : At this hour I will be brief and simply put a few questions to the members of the Treasury Bench, and particularly to the Under-Secretary of State for Scotland, who will reply to the debate. My hon. Friends will be aware that I was one of those on the Government Benches who strongly opposed the introduction of charges for dental inspections and eye examinations. Does not the introduction of charges in these spheres fly in the face of the philosophy of preventive medicine, which I thought was a No. 1 priority with the Government? Preventive medicine can save money. After all, if relatively cheap treatments are carried out early enough, the heavy cost of certain eye and dental treatments can be avoided. In other words, the small sums of money to which we are referring in these charges could be dissipated in other ways. Is the Minister aware of the co-operation which to date has often existed between opticians and optometrists and eye hospitals in centres of excellence, where competent and able professional optometrists have assisted eye hospitals and taken the pressure off those hospitals, to the advantage of the NHS as a whole? I understand from the profession of optometrists and opticians that, because of the implementation of charges, that relationship is likely to be destroyed or, at best, undermined.

My colleagues on the Conservative Benches often talk about the great benefits of the untrammelled free market. We have seen the problems that can occur with the untrammelled free market in the City and the disasters that resulted from that. It would be constructive, rational and sensible to discuss these proposals with the professions that will be involved, as they are intimately well informed about these matters. The professions should be consulted before the Government introduce measures--and in this case charges--which will affect two very important sectors of the National Health Service. I believe that the professional services do not always need to be open to the free market to provide the best possible service to the people of this country. As I have said, in certain areas we can see that the Government are

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forcing the free market upon the professions. The morality, discipline and self-discipline of those professions are disappearing and the public are suffering dramatically as a result. Costs are also rising.

My hon. Friend the Minister said that people will be able to shop around. Should people who require professional skilled help have to shop around? Do they not go to a professionally qualified person and expect to receive good and reliable treatment? If they have to pay for that treatment, do they not expect it to be provided at an acceptable and reasonable price?

I do not believe that costs are involved in the issues that we are considering today. Many people who require help are least able to shop around and take advantage of what my hon. Friend the Minister described as the free market. I speak with some knowledge about these matters as I have served on the Select Committee on Social Services for many years and I have met many people concerned with the professions who have expressed dissatisfaction and unhappiness that the Government are following this road. They do not believe--and I do not believe--that the public and those who require treatment and assistance will benefit.

It is extraordinary that the House should debate a matter at this time of night which involves a maximum, as I understand it, of £60 million, when these measures will result in substantial additional costs on the Health Service in future.

I hope that my right hon. and hon. Friends on the Treasury Bench realise that opposition to the charges does not rest exclusively with the Opposition parties. It is felt very deeply on the Conservative Benches as well--and not because we are dogmatic or trying to appeal to groups outside the House whose votes we may need at the next election. Those of us who voted against the charges during debates on the Health and Medicines Bill did so because we were convinced that the Government had not presented a good case and because going against the philosophy of preventive medicine would not benefit the people of this country.

11.53 pm

Mr. Sam Galbraith (Strathkelvin and Bearsden) : I want first to thank the hon. Member for Macclesfield (Mr. Winterton). He dealt with the broad general principles involved with the charges for eye tests and the question of preventive medicine. We have debated those issues before and, as the hon. Member for Macclesfield spoke about them so eloquently, he has removed from me the obligation to deal with them tonight. I am grateful to him for his contribution about the general principles.

As the Minister said, there are 12 sets of regulations before us, half referring to England and Wales and the other half to Scotland. There are no significant differences between those two groups so I shall not confine my remarks to one or the other.

Like my hon. Friend the Member for Livingston (Mr. Cook), I want to concentrate on the regulations which deal with charges for general ophthalmic services and those dealing with exemptions. Having heard the hon. Members for Banbury (Mr. Baldry) and for Ryedale (Mr. Greenway), I take more than a passing interest in the regulations dealing with charges and, in particular, wig charges in the NHS. That is not because of my particular problem in that regard. I take a passing interest having

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been responsible for great charges for wigs in a former life because of the nature of my work. It was part of my work dealing with patients who had what is known as traumatic alopecia, which involves having one's head shaved prior to a particular procedure. That was expensive, but I was not aware of the charges at that stage. The hon. Member for Ryedale pointed out that it was important to know of the charges because that reflected a discipline within those who work in and use the services. I changed my practice so that that expense did not fall on the NHS. I did so with no knowledge of the charges, simply because I thought that it was necessary. My point is that it is not necessary to know of the charges in order to change practice. I also did so without a budget of my own and without my hospital opting out. I think that saved the NHS a considerable amount. That is one reason for my interest in that.

I was interested to hear the hon. Members for Banbury and for Great Yarmouth (Mr. Carttiss) talking about the introduction of charges. When the Health and Medicines Bill was debated in Committee I made a deal with the right hon. Member for Braintree (Mr. Newton) that as long as I accepted that the Labour party was the first to introduce charges, he would never mention the matter again.

However, the important point about charges, which was touched on by the hon. Member for Macclesfield, is that the charges that we are debating are different in concept. Previous charges have been made for the provision of treatment. These charges are for screening processes. If someone has a problem and needs treatment for which there is a charge, there is a deterrent effect, but the treatment is likely to be taken up. However, if someone is told there is probably nothing wrong with him but it would be useful to be screened for which there would be a charge, that does have a deterrent effect. There is an important quantitative difference in charges for screening processes.

The Minister said that he thought that it would be--to use his word-- unlikely that charges would have a deterrent effect. When we debated the Health and Medicines Bill in Committee, my hon. Friend the Member for Livingston read out various statements that were made, such as that it was unlikely that the charge would stay the same, that the charge would go down or that it was likely to go down. That has not been borne out by fact.

I have no confidence that, as the Minister suggested, the market will regulate costs and the price will go down. As the hon. Member for Macclesfield said, the market is not quite the same in health care as elsewhere. A colleague of mine in private practice wished to reduce his work load. He thought that the way to do that was to put his prices up. Much to his amazement, rather than reduce it, it significantly increased the number of people who came to him. It is an American philosophy, apparently, of which I was not aware, that the way to attract patients is to put the price up because they think that they are getting a better service. I am not confident that prices will fall. The market does not operate in health care. All our experience of health care systems that operate a pricing mechanism is that prices inevitably rise.

The Minister said that prices will not prove a deterrent. He said that 2 million pensioners will be exempt. He did not mention that that means that 7.7 million will not be.

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He said that even those who are not exempt will be eligible for subsidy if their income is just above income support level. I hope the Minister realises that, to get the subsidy, people have to fill out a lengthy form. It will surprise such people to be asked on the form

"Are you going to visit someone in prison?"

Pensioners and others who want to claim for an eyesight test will wonder what on earth that has to do with their vision.

This complex application form includes many questions : "Do you and your partner have a home improvement loan or loan for repairs? We will get in touch with you about this Do you or your partner get housing benefit? Tell us the full amount for rent and rates and the amount for rent after housing benefit is taken away. This will be the actual amount of rent you pay If you or your partner are a council tenant, or if you agree that the council will pay housing benefit straight to your landlord or landlady " and so on. I hope that the Minister gets the point. These complicated methods of claiming help for those just above income support are a disincentive to claiming.

The regulations on general ophthalmic services list those who will gain exemption. The Minister also read out the list of those who will be exempt ; I ask him for an assurance that it will be kept under review. One or two necessary exemptions may not have been included. These exemptions were wrung out of the Government in Committee and on Report. One of the concessions that we obtained was that for people aged 40 or over who are the parents, brothers, sisters or children of people diagnosed as suffering from glaucoma. Grandparents are missing from the list. Will the Minister include them? There are not many of them, and I see no valid reason for their exclusion.

Will the Minister consider exempting patients with cataracts? By that, I do not mean those whose condition has been dealt with--they will be eligible because of their complex optical appliances--but those who have been diagnosed and are having regular examinations. On Report, the Minister of State gave an undertaking that the uptake of tests and waiting lists in hospitals would be closely monitored. What systems are in place to enable that monitoring to be done? If there is evidence of lower take-up, will the Government reconsider this matter?

The Minister asked for our comments on a matter that is not in the regulations ; I am only too pleased to give him mine. I was surprised that the two-tier sight tests were proposed at all. On Report, the right hon. Member for Braintree introduced what is now section 14 of the Act. He told us then that new clause 15 was

"essentially a consumer protection provision".

He said that it differed from the original clause, and had therefore been tabled rather than a mere amendment, in that "we have decided that it is right to take the power, which curiously does not exist at present, to specify clearly in regulations what duties a practitioner must perform as part of a sight test.

As the House is aware, the sight test is generally understood and expected to include a test to establish whether spectacles are required, and an eye examination in which signs of injury may be detected It is our intention that, under whatever arrangements people receive a sight test, there should be certainty about what they are getting and that it should include a proper eye examination."--[ Official Report , 13 April 1988 ; Vol. 131, c. 226.] The right hon. Gentleman did not say that it might. He did not say that there would be a differential in sight tests. That is what we were led to believe, and that was our understanding. Imagine our surprise when we found that

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the proposal was not for a proper eye test, but for a two-tier test. One tier will be for refraction of vision ; the other will be the full eye test.

I ask the Minister to consider that proposal very carefully. He said that he might be swayed by argument, and I trust that I will be able to persuade him not to introduce the two-tier test. For ophthalmic medical practitioners it will pose considerable ethical problems, based on what is expected under the General Medical Council's "fitness to practise" rules and regulations, under which it is incumbent on them to do whatever they think necessary. I understand that under the proposals the ophthalmic medical practitioner or optician will have to state clearly that two sight tests are available, and that one will not include the full examination. What will be the position should a patient present to an ophthalmic medical practitioner or optician and agree to the simple sight test but not to the full examination? In the course of that test, either from the history or from the initial sight test, what will happen if the practitioner feels, on the basis of either the patient's history or the initial test, that a further examination is necessary? Will the patient be entitled to that further examination free, or will he have to pay for it? Can he opt out of having the test at all? That will, as I have said, present an ethical problem ; more important, it will present a considerable health problem for the patient.

Throughout the Committee and Report stages of the Bill much emphasis was put on the need for a full eye examination, rather than an examination limited to a test of vision. I hope that the Minister will consider carefully before proposing regulations for a two-tier examination. I assure him that Opposition Members will vote against any such regulations.

12.7 am

The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Forsyth) : I am happy to give the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) the assurance that he sought that the exemptions will be kept under review. I am sure that he will recognise that as we are currently considering the results of consultation on the question of a two- tier test--as he describes it--his comments will have been heard by my hon. Friend the Parliamentary Under-Secretary for Health and will be taken into account.

The concept of asking patients to make a contribution towards the cost of their treatment is not new, and certainly not original to the present Government, as the hon. Gentleman himself acknowledged and as was emphasised by my hon. Friend the Member for Banbury (Mr. Baldry). It is therefore difficult to understand the protests being made about the rational development of that principle. What is even stranger is the challenge to measures concerned with providing relief from charges for those on low incomes.

The hon. Member for Strathkelvin and Bearsden asked me whether there would be proper systems to review the take-up of sight tests, both private and NHS. We will certainly undertake a survey of private tests through NOP in the autumn. He also asked about cataract sufferers, who will be able to obtain free NHS sight tests if they are referred by their hospital consultants.

The hon. Member for Southport (Mr. Fearn) and the hon. Member for Strathkelvin and Bearsden complained

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about the problems of form filling, particularly for the elderly. I have a certain amount of sympathy with the hon. Member for Southport's complaints about form AG1, which is a daunting prospect for some people, although research has shown consistently that the key element as to how well claimants deal with forms is the clarity of individual pages and not the overall length of the form. However, I dare say that the hon. Gentleman's experience, like mine, is probably not entirely in line with those findings. He will be delighted to know that we are currently reviewing the form to find out how it can be improved. I stress that people receiving income support or family credit get free treatment automatically and others on low income can claim help.

The hon. Member for Southport also asked about the sight tests being provided through British Home Stores at £2.50 for pensioners. He asked whether they were proper sight tests. I understand that they include a full eye examination, so what my right hon. and learned Friend said to the House appears to be taking place.

A number of points were raised by the hon. Member for Southport, the hon. Member for Strathkelvin and Bearsden and my hon. Friend the Member for Macclesfield (Mr. Winterton) about the deterrent effect of charges. It is not accepted and never was throughout the debates on the Health and Medicines Act that charges will have any deterrent effect. When the supply of NHS spectacles ended it was argued that people would be deterred from going to the optician. That has not been the case and spectacle sales and sight tests have increased. My hon. Friend the Member for Ryedale (Mr. Greenway) stressed that point in respect of dental examinations and charges. That did not persuade my hon. Friend the Member for Great Yarmouth (Mr. Carttiss) or my hon. Friend the Member for Macclesfield who were concerned about the apparent contradiction between bringing in charges for dental examinations and our clear commitment to preventive medicine. The dental examination charge is in no way contrary to the philosophy of prevention set out in "Promoting Better Health". It still pays to visit the dentist regularly. Moreover, the charge will help to release some £50 million, as my hon. Friend the Member for Ryedale pointed out, for positive measures to encourage the prevention of dental disease, including fluoridation, improved and more widespread vocational and postgraduate training for dentists and a new programme to promote dental awareness among young people. It will also help to finance preventive measures in other primary care services.

The hon. Member for Southport asked about backlogs and the use of discretion for late claims for refunds. He is quite right that there have been some delays in processing claims for help with NHS costs. However, I am pleased to say that from a peak of more than 9,000 cases, the agency benefits unit had reduced the stockpile to about 2, 500 cases on Monday and had cleared it completely by this morning. People who have incurred NHS costs while waiting for their claims to be assessed will be able to claim a refund and will include those who have purchased glasses or contact lenses following a sight test. The normal one month for claiming a refund will not apply. I hope that that meets the hon. Gentleman's point.

My hon. Friend the Member for Great Yarmouth asked about the cost of dental and sight tests for the unemployed. The unemployed people who are receiving

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income support, as most unemployed people are, get free dental and sight tests, free dental treatment and full-value vouchers for glasses as well as free prescriptions.

The hon. Member for Preston (Mrs. Wise) complained about the design of the forms which have been issued. The first two batches of forms from the printers did have reversed prescription details. That error has now been corrected and the forms which are due for delivery to family practitioner committees next week are correct. The hon. Lady was also concerned about a delay in issuing instructions. Revised instructions were issued to health authorities and family practitioner committees to arrive no later than 21 March. That gave them sufficient time to issue them to their practitioners, but I understand that some delayed issuing them until Friday 31 March. The hon. Member for Birmingham, Hodge Hill (Mr. Davis) complained about the regulations amending the scheme for helping people with low incomes and about incorrect instructions being issued. The amending regulations simply ensure that the scheme for help with NHS costs is kept in line with the income support scheme on which it is based. The hon. Gentleman asked about the number of people who had been affected because for part of the year 1988-89 the agency benefits unit was not assessing claims strictly in accordance with the 1988 regulations. The cases concerned will be reviewed and we will be writing to the people concerned to find out whether they have paid more than they should have done.

Mr. Terry Davis : Given that the letter admitting that the incorrect instructions had been issued was sent to me by a Minister three months ago, surely the cases should have been reviewed by now.

Mr. Forsyth : If the hon. Gentleman would like me to I shall ensure that I write to him to explain the background. It is a complex matter and I am sure that he will understand that every effort is being made to identify the people who may have suffered and to ensure that they are properly treated. I shall certainly write to the hon. Gentleman if that will be of assistance to him.

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Mrs. Wise : I am sure that my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) appreciates the offer of a letter but this matter affects us all. The Minister should come to the House and explain how many people were wrongly assessed and tell us specifically when it is put right.

Mr. Forsyth : I understand that about 15,000 claims were affected by the error, but that does not mean that that is the number of people who will lose out. The hon. Lady should be concerned, as I am sure we all are, with the particular circumstances of those affected and I can give her an assurance that everything is being done to put matters right.

Mr. Terry Davis : The Minister would have had more time to obtain the information for which we are asking if his hon. Friend the Under- Secretary had given way during his speech because I would have put some questions to him which might have saved us all some time. The Minister has told us that 15,000 people have been affected. Can he tell us how many cases have been reviewed during the three months since the Government admitted to me that they had made a mistake? After all, it took them 10 weeks to write to me with that admission.

Mr. Forsyth : I have already explained to the hon. Gentleman that we will be writing to the people concerned to find out if they have paid more than they should and that we will ensure that the matter is put right. I would have thought that he would accept that. My hon. Friend the Member for Ryedale asked about the new dental contract. I can give him the assurance that he sought. Negotiations will begin soon and I can repeat the assurances that have already been given to the profession about that. I am sure that he will welcome that.

I think that I have covered all the points raised in the debate. The regulations ensure that proper exemptions are made and that a balance is reached between obtaining a proper contribution from those who are able to afford it and those who are not. I commend the regulations to the House.

Question put and negatived.

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Industry (Subsidies)

Motion made, and Question proposed , That this House do now adjourn.-- [Mr. Maclean.]

12.19 am

Mr. Jerry Hayes (Harlow) : The debate tonight concerns unfair competition in the European Community and direct subsidising, which are against article 92 of the treaty of Rome and which deliberately and unfairly undercut jobs and industry in this country. Before going into the general, I want to go into the particular. I am speaking about a company in my constituency, Cossor Electronics, which has been there for a long time. It has a large, dedicated and professional work force who have worked hard to make the company the world leader, not only in electronic components, but especially in air traffic control. As it is the world leader, no one could have been more horrified than myself and my constituents to hear that in the past few weeks it has lost contracts in air traffic control to the value of £80 million, not through lack of keenness, competition or misunderstanding the market, but simply because of unfair competition from abroad.

That has happened in Australia, Thailand, Turkey and central America, and it could happen in other countries. The facts are simple. Two European member states--France and Italy--have been directly and illegally subsidising unfair competition, so much so that on the air traffic control contract that was awarded to the French and the Italians a few days ago in Australia they were able to offer their products at 40 per cent. below their own catalogue prices.

After dealing with the particular, I shall turn to the general. In the run- up to 1992, state aids could be used as an alternative to tariff barriers and other forms of protection. Uncontrolled state aids could be a threat to the unity of the Common Market and to the system of free competition. There is a danger that the combined effect of independently applied national policies would lead to incoherent, contradictory results at Community level. Only further Community control can ensure that any benefits obtained from state aid outweigh the resulting distortions in competition.

An interesting report was issued by the Commission only a few weeks ago. It is a survey of state aids and says that the total annual volume of state aid in 1986 amounted to about £65 billion, which represents 3 per cent. of gross domestic product, or £517 per employed person. The amounts are so high that not only are the effects on competition pronounced, but their macroeconomic impact cannot be ignored. Aids exceed direct taxes on companies, and constitute an important factor in budget deficits in certain member states.

It is worth looking at those countries which are abusing the system. I am delighted that my hon. Friend the Member for Ilford, South (Mr. Thorne) is present. He has been working hard on behalf of his constituent company, Plessey, against unfair practices, as has my hon. Friend the Member for Isle of Wight (Mr. Field), who cannot be present this evening but who supportss what my hon. Friend the Member for Ilford, South and I say.

We must look at the main villains. Italy gives about five times as much as France and Germany. Of the small member states, Greece and Ireland give a significant volume of aid. In 1986, the United Kingdom gave £1.9 billion in aid, France gave £3.6 billion, Germany gave £4.9

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billion, and Italy gave £16 billion. In other words, Italy is now giving nearly nine times as much as the United Kingdom. Those results alone must show that a review of policy is essential.

In most member states, grants and straight tax reductions were the most common form of intervention. We must take into account that France and, to a lesser extent, Italy have been using more opaque forms of aid, namely equity participation, guarantees and soft loans. But we are talking about £65 billion of Community money being spent on feather-bedding industries. Of course one must understand that, to a certain extent, strategic industries and industries in difficulty--for example, coal, steel and railways--must be protected. But if one forgets those industries, over £30 billion of member states' money is being deliberately and illegally spent on unfairly feather-bedding industries and undercutting competition.

Just as the United Kingdom has been remarkable for its modesty in state aid, Italy has been remarkable for the extent of the aid that it has given. It has the most expensive regional policy for the less prosperous peripheral regions--one cannot complain about that--and it also has the largest interventionist industrial policy aids and the largest aids granted through public holding companies. In addition, apart from France, it has the largest aids for exports and, apart from Germany, the largest aids for research and development. Yesterday, I flew to Brussels and had the opportunity of speaking to Sir Leon Brittan, the Commissioner with responsibility for competition policy, financial institutions. I am delighted to say that he gave a significant undertaking. He said that he intends to use much more actively the Commission's powers under article 93.1 to review the important existing aids which, by their nature and volume, adversely affect competition and intra-Community trade. Perhaps most important of all, although the Commission takes a strict line against aids for exports to other member states, no action has ever been taken on aids to exports to Third world countries. There is no doubt that such aids can distort competition inside the Community. The sheer volume of the aids and the large differences between member states make it essential to consider the position afresh. The feather-bedding of nationalised industries must stop. There can be no room for policies that have the effect--even if it is not always the intention--of discriminating against the private sector. The private sector must be allowed to compete on equal terms. It must be the market, and not state aid, that is allowed to rationalise the industrial structure and determine the number of firms that should be allowed to compete.

Mr. Neil Thorne (Ilford, South) : Is my hon. Friend aware that the bid by GEC--Siemens for Plessey will be particularly affected by the fact that, because the German telecommunications industry is heavily subsidised, the real cost of producing equipment in Germany is considerably higher than it is here? Consequently that company will not be able to compete internationally. In those circumstances, unemployment will be created because Japan and other countries would be able to undermine our industry.

Mr. Hayes : My hon. Friend makes his point very well indeed. This is the difficulty. More than £30 billion of Community money, member states' money, is being spent on feather-bedding state industries, at the expense of fair

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competition. Let us have a free market, let us have a situation in which we can compete, but let us compete on equal terms. Let us have a level playing field. At present the playing field is not level ; it is slanted against the companies in my hon. Friend's constituency and in my constituency.

Let us make no mistake : it is not only firms and jobs in Ilford, South and in Harlow that will be at risk ; firms and jobs in every constituency will be at risk unless the Commission acts quickly, and unless--and this is where I bring my hon. Friend the Minister in--the Department of Trade and Industry makes it absolutely clear that it will not put up with unfair competition. My hon. Friend will have to say, "Let's have the evidence", but he knows as well as I do that this is going on. If this is what the French and the Italians are doing to British industry now, what on earth will happen to jobs in our constituencies, to the people who have been working hard to make this country competitive and a great exporter again, after 1992 unless the Government and the Commission act quickly?

12.33 am

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins) : I congratulate my hon. Friend the Member for Harlow (Mr. Hayes) on raising this topic. We have come to expect him to show, on any occasion, that he is happy to draw attention to the interests of his constituents. The case that he made tonight, and has made on other occasions, is one that we view with considerable concern. Obviously, I am impressed that my hon. Friend the Member for Ilford, South (Mr. Thorne) is in the House. His presence adds weight to the case that my hon. Friend the Member for Harlow makes. It is worth dealing specifically with the case of Cossor, which I know is dear to my hon. Friend's heart, and which he raised with Sir Leon Brittan yesterday. My experience of the aerospace industry, both with my hon. Friends on the Back Benches and now as a Minister, leads me to believe that there is quite a lot going on about which we might be concerned. However, my hon. Friend, as a lawyer, will understand better than most that demonstrating proof is very different from having suspicions. We have to consider how best to go about doing just that.

I am aware that Cossor Electronics, which is a fine company--as is Plessey, which is in the constituency of my hon. Friend the Member for Ilford, South --and the United Kingdom ground radar industry generally, is meeting strong competition from other European suppliers and overseas markets. The consequences of a continuing loss of business in this market are of great concern. My hon. Friend the Member for Harlow rightly stressed that his constituency and others will be affected if the loss continues.

As my hon. Friend the Member for Harlow is aware, my Department stands ready to intervene on the company's behalf, with the appropriate authorities, providing that real evidence can be presented on the origin and destination of the alleged subsidies. It is regrettable that at present we have seen no hard evidence, although we may have some suspicions. I am alive to those suspicions becoming hard evidence. If my hon. Friend can give me more information, or if company representatives can do

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so, I shall be more than happy to act and to encourage the Department to pursue the matter with the Commission. I await that information.

My hon. Friend the Member for Harlow touched on the general principle of state aids, and I shall dwell on it in a more general sense as I believe that the House will value my doing so. One of the Government's basic aims is to encourage and secure an environment in which business can operate freely on the basis of fair competition in an open market. In the European Community too, competition policy has been seen as crucial to securing the Community's basic aims. With the coming of the single European market, state aids and other elements of competition policy become even more important. Once the single market is established, state aids will be virtually the only remaining instrument of protection available to member states against competition within the Community. Firm and even-handed enforcement of the state aid rules is therefore a vital factor in the creation and maintenance of a genuinely single market. It is essential that barriers to trade within the Community are not replaced with illegal or unjustified subsidies which serve only to protect uncompetitive industry. Indeed, industry in the Community will not win in world markets through that sort of protection.

My hon. Friend the Member for Harlow referred to feather-bedding, and his point was well taken. Efficient companies, which should benefit from the single market, would be prevented fully from using the advantages that they have gained through their efficiency. They may be deterred from exploiting their advantage if they believe that this may provoke distortions of competition in other member states. As a member of the international trading community, the EC cannot only look inwards. It must uphold and respect the rules imposed under other international agreements. It is therefore especially important for the Community, as well as for the United Kingdom, that the state aid regime is enforced rigorously and even- handedly. I should make it clear exactly what that regime is.

The rules are laid down in the treaty of Rome. They concern any aid granted by member states or through state resources which distorts, or threatens to distort, competition by favouring certain undertakings or the production of certain goods. The treaty does not identify what counts as an aid. It can be any form of subsidy, any relief from financial burdens such as taxation or social security benefits or interest on loans, or any other measures with similar effect. All aids are considered to be incompatible with the Common Market in so far as they affect trade between member states, unless they can be justified by providing some compensating Community benefit.

The treaty of Rome lays down those general rules. It also gives the Commission power to enforce them and lays down the procedure for so doing. Member states must notify to the Commission all plans to grant aid or to change their arrangements for granting it. This applies to schemes for granting aid and, sometimes, to individual projects. The Commission is then responsible for scrutinising the proposal to determine whether it is compatible with the Common Market. If it cannot agree following this examination, it can open a formal investigation procedure and consult all member states

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about the proposal. The Commission may then agree the proposal, amend it or impose conditions, or reject it entirely.

Member states may not pay aid until their proposal has been agreed by the Commission. If a member state pays an illegal aid, the Commission can order the aid to be repaid--that means clawing it back from the recipients--and it can take member states to the European Court of Justice to have its decisions supported.

The Commission can also investigate aids which are being paid by member states under schemes already in force, either on its own initiative or as a result of a complaint. I anticipate such a complaint from my hon. Friends in due course. If the aid is found not to be compatible with the Common Market, the Commission can order the scheme to be changed or stopped or, in extreme cases, the aid reclaimed.

All that underlines the fact that clear rules exist in the Community to secure fair competition and to ensure that subsidies do not distort trade. The key point is to have the rules enforced by the Commission in a rigorous and even-handed manner. My hon. Friend emphasised that strongly. The Commission has been tightening up markedly over the past few years, and it intends to continue doing so.

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