House of Commons Hansard Debates for 18 May 1993

Mr. Powell : I am very grateful for the comments of my right hon. Friend.

I will conclude now, Madam Deputy Speaker, because I know that a number of other hon. Members are waiting to be called in the debate. An article in The Guardian on 10 May is headed :

"Major plans fast law on Sunday trading".

There is an opportunity here to have a fast law on ajor issues. The DIY stores, garden centres, extension of the size of the shop--all were agreed in Committee, together with 28 other liberalisation actions on Sunday trading. I

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thought that would induce the Government to say that that was sufficient and to take the Bill on board, so that we could have a decent law on Sunday trading.

It is high time that the Government took action, and that they remembered that private Members' Bills and activities within the House should be honoured by the Executive.

5.27 pm

Mr. Jacques Arnold (Gravesham) : I do not believe that we should adjourn for the spring recess without considering the impact of the proposed high-speed rail link across the borough of Gravesham. The House will recall that we are now in a six months' consultation period and that the clock has been ticking since April. There are certain points that I wish to bring to the attention of the House. The high-speed rail link runs alongside the A2 and therefore past the homes of some 5,000 householders in my constituency. It is proposed to tunnel beneath Pepper Hill, to what effect on the residents we just do not know. That is why I called in March for a geological survey to assess noise and vibration, if any, and the prospects of damage during the construction period to the properties situated above.

I have been glad to note the appointment of two consultancies : Sir William Halcrow and Partners and Scott Wilson Kirkpatrick and Partners, both of which have geophysical experts on their professional teams. I hope that they will get on with the job, that they will do their soil and chalk testing and that they will carry out an investigation of the presence or otherwise of dene-holes beneath the houses in the area.

But they must make haste. Local people, with the technical support of Gravesham borough council, need to see the results of the survey as soon as possible, because it is only with the survey that they can compare the tunnel route--with the advantages that it brings of low-level running in cuttings alongside the A2--with the alternative route, which involves a wide curve around Pepper Hill through open countryside. The plans for this route have been done only in outline, but they show the route to be at a considerable elevation, which would be detrimental both to Northfleet and to Istead Rise, the nearby village to the south. We certainly need precise details on the alternative route that may be proposed.

I hope that my right hon. Friends will encourage Union Railways to hasten its assessment of putting passing loops into the Ebbsfleet valley. That would allow a realignment at the A227 Wrotham road crossing, which could be at a far lower level and might even pass beneath the carriageway of the road. We also need a careful assessment of the environmental impact on the historic parish of Cobham. I wonder why such wide cuttings are necessary in the plans, and why they cannot be narrow, walled cuttings.

During the period of consultation, I hope that much other work will be done, not least to give careful consideration to the matter of compensation. Homes at Scalers Hill and Henhurst would be severely blighted if the railway were constructed, and the hundreds of residents of Pepper Hill are in jeopardy until the certainty of the plans is established.

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My constituency is adversely affected by the high-speed rail link. It relies on the Government to ensure adequate environmental protection and compensation. People in Kent are not just apprehensive ; they are also looking for opportunities that the railway might bring for jobs and new industries. That is why I wish Blue Circle Industries godspeed with its Kent Thameside project to tie in its landholdings with a potential international station. It has the strong support of Gravesham and Dartford borough councils, and its plans complement the exciting proposals that the Government introduced for the east Thames corridor.

Hon. Members will understand that we of north-west Kent are all under great pressure and are vulnerable to potentially great changes. It will be reassuring for local people to know that the House and the Government understand their anxieties and are sympathetic to their proposals.

My hon. Friends the Members for Taunton (Mr. Nicholson) and for Corby (Mr. Powell) have clearly articulated the fears of their constituents, of mine and of most hon. Members about the scares surrounding the sub-post offices. Those fears, principally the fears of the sub-postmasters, have put the issue on the public agenda, and it should be looked at fair and square in an attempt, not to scare the most vulnerable people--pensioners and other beneficiaries of social security--but to understand the two distinct elements of the problem.

First, there are problems for the Department of Social Security which pays the benefits. Then there is the future of Post Office Counters and of sub- post offices throughout the country. We need to understand these two different, but intertwined, aspects to learn how to safeguard the future.

Dr. Robert Spink (Castle Point) : Does my hon. Friend accept that it is not just a question of wanting to cherish the post offices and sub-post offices in our constituencies--that it is also a pragmatic question of paying out benefits and pensions? Thirty-five per cent. of those who receive benefits do not have bank or building society accounts, so they rely on post offices to distribute the money. We will therefore seek to defend and protect those post offices whenever we can.

Mr. Arnold : I know that my hon. Friend and many other colleagues do their utmost to defend our sub-post offices. His point is extremely valid.

Let us look first at the problem for the Department of Social Security. It spends £200 million paying out benefits, almost all of them across post office counters. That pays for the administration of more than 1 billion pieces of paper a year. That is phenomenally expensive, and it is worth reflecting that the £200 million would be immensely valuable if most of it could be paid directly to the beneficiaries.

Given my previous employment in the travellers cheque industry I can understand that a system involving 1 billion vouchers is wide open to fraud, which is not only a waste of taxpayers' money but consumes vast amounts of money that could be used in other ways. What on earth is the Department to do about the problem of costs and of fraud? It is looking at a system that has already been partly introduced on a voluntary basis : automated credit transfer

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to the bank or building society accounts of beneficiaries. To do that effectively, the Department has to find out what beneficiaries will and will not accept.

Much of the problem has arisen in recent weeks because of market testing. A number of new pensioners were offered several options for payment. A small number of them were not given the written option of having the money paid by order book through Post Office Counters. The market testing was carried out to determine the reaction of the beneficiaries. We all know what that reaction was--there has been an extraordinary row, clearly expressing the wish of beneficiaries to have the option of receiving their benefits through vouchers payable at sub-post offices.

It was perfectly proper for the Department to carry out the market testing, and no doubt Ministers will learn the lessons from it, as was intended in the first place. We cannot get away from the point made by my hon. Friend the Member for Castle Point (Dr. Spink)--that about 35 per cent. of pensioners and social security beneficiaries do not have bank or building society accounts. They have no means of receiving benefit besides receiving it in cash across the counter at sub-post offices.

The lesson to be learned from this episode is that beneficiaries must continue to be given the choice of how to be paid. I have no doubt that, due to increasing familiarity with bank and building society accounts, there will be a steady swing towards credit transfer and away from the payment by voucher. By common agreement in the House--particularly among Conservative Members, who represent most of the rural and suburban areas of the country--we understand the need for post office counters, both Crown and sub. The House should think about how to find a secure and valuable future for a terrific asset--the sub-post offices of this country.

It is inevitable that the number of vouchers will decrease as pensioners increasingly opt for automatic transfer of benefits to their bank or building society accounts. It will be a gradual change, but it will happen. As I said, I used to work in the travellers cheques industry and I was worried about my future because I thought that the travellers cheque--a paper voucher--was illogical and bound to be phased out. However, the current worldwide travellers cheque market is worth more than $40 billion. It may be illogical, but people want travellers cheques.

The same applies to pensions and social security benefits. Vouchers may be illogical in these days of electronic banking, but people want the security of their order books and vouchers that they can cash. However, post offices should be under no illusion--it is a wasting asset. We should be looking for new sources of business that would give the sub-post offices a viable future. The clearing banks are reducing their enormous branch networks, so that might be one opportunity. In my constituency, Barclays bank has closed its smaller branches at Northfleet and Meopham. That is being repeated throughout the country. Therefore, there is an opportunity for sub-post offices to go into encashment and across-the-counter services for our financial institutions.

I direct the attention of the House to a particularly interesting phenomenon--telephone banking. It is best exemplified by First Direct, a subsidiary of Midland Bank. Although it operates a telephone banking service, it still needs counters. That would be an obvious area of opportunity for sub-post offices. It would provide the

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counter service to complement the electronic banking service available over the telephone and through computer links.

5.42 pm

Mr. Bill Etherington (Sunderland, North) : Perhaps the first thing that the Leader of the House might consider is introducing a Bill to limit the length of time that hon. Members can speak in debates such as this. The hon. Member for Gravesham (Mr. Arnold) should not be able to drift in and out of the Chamber as and when it suits him and then take up the time of the House with a long speech.

Mr. Jacques Arnold : Will the hon. Gentleman give way?

Mr. Etherington : No, the hon. Gentleman has had long enough.

Mr. Arnold : On a point of order, Madam Deputy Speaker. The hon. Gentleman's remarks are a slur. You can testify that I have been here throughout the debate.

Mr. Etherington : I shall not take back what I said about the length of time the hon. Gentleman spoke. I shall try to be brief, although I want to cover a number of issues.

Five hon. Members have already referred to the imposition of value added tax on fuel. I want to talk not about the effect of that on pensioners and other poor people, but about the effect that it will have on charities. They have already received one body blow because of the effect that the Finance Bill will have on their investments. In recent years, the Government have made charities an important aspect of society by hiving off many activities to them. If some of the charities go under, it would be the last fragmentation of society as we know it, especially for the old. As more than half the charities deal with old people, they will lose out through VAT on heating bills and in many other ways. The Government should think about that. I hope that we can debate the issue more fully and not deal just with the financial aspects.

Hon. Members on both sides of the House have referred to law and order. One of the problems is the relationship between the police and the public. I am surprised to be able to stand here and say that I have spoken to the recently retired commander of the region in which I live, to the current commander and to the Police Federation and have found them as one : they are all concerned about the lack of confidence and trust that the public have in the police. I am not saying what has brought that about, but if we are to prevent crime and, indeed, correct the effects of crime, the public must be able to have confidence in the police and be prepared to work with them, rather than viewing them as an alien force to be treated with suspicion.

There is also the continuing scandal that, after 14 years of Conservative administration, an increasing number of people still suffer from low pay. Perhaps the Leader of the House will consider the deleterious effect of that on the economy at a time when stringent efforts are being made to improve it.

One of the main problems that I come across in my constituency is that of housing. For many years, my constituency had a wonderful public housing record. However, the council has lost more than one third of its housing stock, so families who need housing or rehousing find themselves in difficulty because there is a diminishing housing stock. The Government need to think hard about

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that, because the housing position is probably worse than at any time in the past 20 years. It is no good the Prime Minister saying, "We are providing the homeless with new cardboard boxes"--we need something definite and effective.

There is also the problem of an aging population--and that, too, is not being dealt with properly. As time goes on, there will be more and more old people and they will be living longer. There is no sign of a concerted effort to try to alleviate the problems before they fully arise. I am thinking of preventive medicine rather than running repairs, which unfortunately is the way the national health service now operates.

The next problem relates to the future education of our children. The Government wax eloquent about the benefits of grant-maintained schools, but they have never fully explained to the House what effect that policy has on local authorities which have to deal with children with special needs. That problem must be dealt with urgently. Like everyone else, I am pleased that the recession appears to be coming to an end, but there still remains the problem of unemployment. We could spend many weeks debating that subject in this House, because even during the relatively prosperous late 1980s unemployment was still rising. Within that increasing unemployment, there are horrendous regional variations. We are told that currently male unemployment is 14.1 per cent.--that has led to many screams from prosperous areas--but in my constituency male unemployment has stood at more than 21 per cent. for the past 15 years.

No one in the Government has said how, at the end of the recession and with the increasing prosperity that we all hope to achieve, we can get rid of the regional variations. Until something is done about that, there will be a self-perpetuating system of deprivation in certain areas. The country will never be united under those circumstances.

My hon. Friend the Member for Ogmore (Mr. Powell) did not please me too much with the length of his speech, but he pleased me with the efforts that he is making to get rid of one of the biggest scandals in Britain : the Government's continuing failure to deal with large firms which break the law on Sunday trading. Whatever people's views on my hon. Friend's Bill, at least he is trying to deal with the problem--which is more than the Government are doing.

There have been years and years of law breaking by those firms, with no prospect of that being put right in the foreseeable future. I cannot help but think that, if those companies were not pouring vast sums of money into Conservative party coffers, the Government might take a different attitude. If a trade union or a Labour council was breaking the law, the Government would act within minutes, never mind years. It is a disgrace, and something must be done about it. I have greatly admired the Government's stance during recent talks on whaling. They have done what I believe the majority of people in this country wanted them to do, which is to act in a humane and responsible manner. However, it would be better if the Government were to allow hon. Members to decide properly, and without obstruction, whether they want to put an end once and for all to the barbaric so-called sport of hunting. Any country

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which hunts down animals in the way Britain does can never expect to have the respect of the rest of the world as a decent and good nation. The same applies to the unnecessary vivisection which continues in Britain.

I have not tried to deal with the items on my list in order of merit, and I have missed out one or two to save time, but I come now to the last one and I declare a personal interest. Having waited for more than a year for a hernia to be put right, I cannot help but wonder about those who are suffering more pain and serious injury than I am and who might have had to wait a similar length of time. Recently I noted that the Northern regional health authority was vociferous about how it had cut waiting lists of those waiting for more than a year and for more than two years, but in the past 12 months the overall waiting list of hospitals in the nrothern region has risen by 10.3 per cent. At that rate, we can expect them to double in the next seven years. Instead of spending so much time on public relations exercises and putting out glossy brochures explaining how good hospital trusts are, if some of that money had been spent trying to put people right I am sure that everyone concerned would feel much happier.

That brings me to my conclusion. I have not spoken for so long as some hon. Members and I have tried to say what little I had to say in as succinct a manner as possible. As I said at the outset, I hope that the Government will consider introducing legislation to ensure that no one speaks for longer than 10 minutes in the House at any time, thus giving everyone else a chance.

5.51 pm

Mr. Paul Tyler (North Cornwall) : Thank you, Madam Deputy Speaker, for letting me catch your eye. I want to concentrate briefly on one issue. I want to draw the attention of the Leader of the House and his colleagues to the IACS fiasco--the integrated administration and control system. For those hon. Members who do not have farmers in their constituency, I have in my hand the sort of material that has landed on the kitchen table of farmers all over the country. That is the wodge of material that they now have to wade through to qualify for important support.

The so-called integrated administration and control system has become an essential component for a large majority of British farmers to enable them to obtain area aid and arable, beef and suckler cow support. As the hon. Member for Taunton (Mr. Nicholson) has already said, there is widespread dismay at the way in which, as usual, the British version seems to be worse than that of any other EC member state.

The Library made a simple analysis for me of the sort of forms and explanatory booklets that were provided for farmers in other states. I take two examples. Denmark had an eight-page explanatory booklet, a four-page form and a four-page additional advice leaflet. France, which we sometimes think is very bureaucratic, had an eight-page explanatory booklet and a four-page form.

In Scotland, I am given to understand, not only was the documentation available earlier than it was in England and Wales, but the booklet of explanation was shorter. There is a persistent rumour that the difference between England and Wales on the one hand and Scotland on the other is that the Minister himself insisted on simplifying the explanatory booklet for England and Wales, with the result that it was issued several weeks late to farmers and

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it was several pages longer. As a result, farmers in England and Wales were faced with an extraordinary booklet 79 pages long and 12-plus pages of forms. A new verb has been added to the English language--to gummer. Farmers feel that they have been gummered by the bureaucracy.

The problem has been made a great deal worse by the tight timetable that farmers have had to meet to complete the forms. The deadline was last Saturday, 15 May. In the run-up to that deadline and over the weekend, quite rightly agricultural correspondents on the national newspapers drew attention to what was happening. The Daily Telegraph said :

"MAFF IACS CAP spell DISASTER".

The well-known and respected member of the political profession as well as of the journalistic profession, Mr. Bill Deedes, referred to "Mr. Gummer's 1lb sleeping pill".

The Guardian said :

"EC paperwork send farmers to the edge of sensibility". An interesting article based on some notes that were supplied to The Daily Telegraph was headed :

"Never trust those rude farmers, officials are told".

That concerned instructions to Ministry of Agriculture, Fisheries and Food officials for dealing with some of the farmers in our constituencies. Perhaps most significant of all was the diary of a farmer's wife in The Sunday Telegraph, headed :

"My sleepless nights over forms of torture".

Farmers all over the country have been faced with such appalling difficulties.

In the farming press, the comments have been even more earthy and it would not be appropriate to quote some of them here. However, I shall quote one or two of the most respectable. For example, Farming News said :

"Will Europe sleep while Britain fills in form?"

Farmers' Weekly said :

"Now comes map muck-up in the IACS saga".

Best of all, Farmers' Weekly said :

"Caught napping from mapping".

The farmers themselves--some of us have had much correspondence with them-- are outraged by the extent to which the demands for information have come at such a busy time of the year. I quote from a letter, typical of many, from a farmer in my constituency. It states :

"Our forms were received on 8th April for completion by May 15th, (5 weeks). We then had to apply for the Arable Area Payments' Explanatory Booklet' (44 pages), and get to grips with CAP Reform in the Beef Sector' (24 pages), so that the options could be assessed within the context of the IACS booklet (79 pages) ; ie, the maze and then the minefield. We attended NFU advice meeting for 2 hours. We queued for maps, (costing £130), for 6 hours in Exeter, (a round trip of 100 miles). We found the maps incomplete (still costing £18.50 each) ; old versions with the measurements and grid reference numbers but the survey 40 years out of date ; new versions resurveyed but giving no measurements or grid references. We had to have fields measured on one map where hedges had been removed nearly 40 years ago ; we had to have one new map measured where the re-survey had created different boundaries. Finally when we had done our best we queued for three hours in Launceston for MAFF to check and advise on our completed efforts.

We have actually incurred the loss of a full working week at a most hectic time in the farming year, in an effort to piece together the information required from ill-conceived and ill-prepared material. I am then obliged to listen to the arrogance and self-righteous conceit of our farm minister, who imputes that problems arising are the farmers' fault, and that they will be heavily penalised for any mistakes that occur".

My constituent concludes :

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"Farming has become a computer-game, floundering in a quagmire of new strictures and technologically derived directives, and I just hope that IACS does not prove to be the ultimate virus of lunacy totally to undermine, (rather than under-pin), the CAP."

That is typical of, but rather more articulate than, many of the letters that I am sure Conservative Members have been receiving from their farming constituents.

Hon. Members may say and Ministers may attempt to excuse the situation by saying that there was plenty of warning. But I was promised from the Dispatch Box on 25 March that the documentation would be in the hands of farmers on 2 April--the actual date was given--so that they would have more than six weeks to meet the deadline of 15 May. In fact, a sizeable number received their documentation 10 or 14 days after that date, breaking that promise, so they had fewer than six weeks to assemble information and obtain the supporting material, especially accurate maps from Ordnance Survey.

Moreover, there were major mistakes and misprints in some of the documents, so it had to go back for checking. Despite months of warning, Ordnance Survey--an executive agency, after all--was caught totally unprepared. Increased staff at the Ministry of Agriculture, Fisheries and Food, a huge waste of effort and a huge diversion of precious time have been achieved, at huge cost, by the Minister. Conscious of the likelihood that there would be some late submissions--with all this muddle, there were bound to be honest mistakes by those completing the forms--hon. Members from other parties and I asked the Minister for some leniency and, crucially, for an independent appeals system. Those who had made genuine mistakes or who, because of the late arrival of forms, had been unable to make accurate submissions in time were entitled to some consideration. At Question Time on 29 April, the Minister dismissed that suggestion out of hand. In those circumstances, it is right that we should seek the support of the ombudsman, the Parliamentary Commissioner for Administration, with a view to having the role of MAFF and Ordnance Survey investigated.

I do not propose to deal at great length with the latest insult that has been added to this injury, as I raised the matter with Madam Speaker this afternoon. The fact that the Minister refused yesterday to give me figures in answer to a parliamentary question, despite being prepared to allow them to be given to outside bodies and the media, is outrageous and demonstrates contempt for the House. Specific figures were quoted in "Farming Today" this morning. It seems that, in England alone, up to one quarter--certainly one fifth--of all eligible farmers have submitted completed forms on time. Who can blame them, given the shambles that the Minister has allowed to develop? Yesterday's Western Morning News, under the headline "Farmers Could Lose Grants", made the point that the very livelihood of many farmers may be at stake as a result of this

maladministration. The National Farmers Union chairman in my county has drawn attention to the ridiculous fact that one of his fields features in 44 separate boxes in the documentation. That complexity makes it extremely difficult for farmers to complete forms on time. As we approach the Adjournment for the spring recess, many farmers all over the country are under a threatening cloud. They face not just difficulty, confusion and expenditure of time, but real loss. It is a penalty that could

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do great damage to their business at a time when they are coming out of the worst recession that the industry has known since the 1930s.

I hope that the Leader of the House will take account of the fact that this is an expensive and oppressive shambles. I hope that he will encourage his ministerial colleagues in the Ministry of Agriculture, Fisheries and Food to apologise not just to the farming community but also to the House for the way in which this system has been handled. They should demonstrate real remorse and proper recognition of the problems that have been caused. I hope that the Leader of the House will insist that the Minister of Agriculture, Fisheries and Food comes forward before the spring recess with a statement that he is prepared to set up an independent appeals system.

6.3 pm

Dr. Robert Spink (Castle Point) : This House should not adjourn without debating education, which is one of the most important subjects with which politicians have to deal. Education is the means by which individuals succeed, and the means by which we shall succeed as a nation. If we get it right, we shall resolve all our problems of wealth creation, the care of pensioners and the provision of a better health service ; if we do not get it right, we shall never be able to make proper provision in those areas.

The most important part of education is the primary sector. That is where the three essential lessons are learned of disciplines, skills and enthusiasm for education, yet it is at that level that funding is most scarce. I want to draw attention to the discrepancy, in this regard, between the primary sector and the secondary sector. The Select Committee on Education has chosen this subject for a major inquiry, which is to commence quite soon. I hope that that inquiry will be a means of directing the attention of the House to this subject.

The Leader of the House, who is listening very carefully to my remarks, is an Essex Member of Parliament, so I shall refer to the funding split between primary education and secondary education in Essex, which has quite simply got it wrong. The local management of schools formula, by which funds are distributed between those sectors, is wrong. The age-weighted pupil unit in the secondary sector is quite generous, but at the expense of the age-weighted pupil unit in the primary sector.

Statistics produced by the Chartered Institute of Public Finance and Accountancy, which are available in the Library, show that, during the last year whose figures I have analysed, Essex paid about £80 a year below the comparable shire county average for each primary pupil. In my constituency, that means about £20,000 a year per primary school. Thus, we ed, I want the nation--to look at the funding disparity between primary education and secondary education, so that we may get the balance right. It is at the primary level that the essential lessons are learned.

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6.6 pm

Mr. David Hanson (Delyn) : The remarks I should like to make would take much longer than the four minutes that remain for this debate. I wish to focus on an issue that gives rise to great concern in my constituency-- local government reorganisation in Wales. On 1 March, the Secretary of State for Wales made proposals which, because they are fundamentally flawed, must be drawn to the attention of the House before it goes into recess on 27 May. The proposals are flawed in many respects, but I should like to deal with four problems. First, what is proposed continues the Government's privatisation plans, which represent dogma of the highest order and ought to be resisted by people in my constituency. Secondly, the proposals will result in reduced representation in the new authorities. A major gap is the complete absence of plans for a Welsh assembly. The Welsh Office spends £6,000 million a year, and an army of quangos runs Wales. So much for democratic account-ability. Those bodies are accountable entirely to three Ministers, who put forward their views without any reference to the people of Wales, who elected 27 Labour Members of Parliament on 9 April last year.

In my constituency, the most pressing question is boundaries. Delyn borough council, in conjunction with Alyn and Deeside district council, advanced consensus proposals for a merger of the two authorities. The Alyn and Deeside council is Labour-controlled, whereas the Delyn council is not. Despite that fact, one of my abiding memories is of the leaders of the two councils shaking hands and agreeing that the best thing for my constituency was a consensus authority.

Despite the agreement among councillors in the area, the Secretary of State has proposed a new Flintshire authority and a new Denbighshire authority, which would be responsible for half of the area of the current Delyn borough council. This has provoked a response--letters, representations, petitions--such as I have not had previously since my election to this House.

The communities of Whitford, Gwernaffield, Gwernymynydd, Halkyn, Mostyn, Llanasa, Nercwys, Cilcain, Nannerch, Yscefiog and Caerwys have all said very clearly that they wish to be part of the Flintshire authority. It is a matter of history, of geography, of just belonging, but, most of all, of the delivery of services. The main towns of Flint, Holywell and Mold in my constituency will be divorced from the rural hinterland that surrounds them. A whole list of services, such as libraries, schools, housing, leisure centres and transport will be in one authority. The 16,000 people who will be in the proposed Denbighshire authority will be divorced from their libraries, their transport, their leisure services and their community housing.

Denbighshire will be a 71,000 authority if the 16,000 people whom I wish to see in Flintshire are put into it. I urge the Secretary of State for Wales to take on board the strong feelings of my community for self- determination, and I urge that the 16,000 residents in my constituency who look to Flintshire and to the towns of Flint, Holywell and Mold for their public services get them. Before the recess begins, I urge the Secretary of State, in preparing his local government Bill, which will be introduced after the

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recess, to do so on the basis of the wishes of my local community. I urge him to include a Welsh Assembly and fair representation--a basic good deal for my constituents.

6.10 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East) : My hon. Friend the Member for Delyn (Mr. Hanson) has made a powerful and able contribution to the debate, as have other members of the parliamentary Labour party. I thank them for their contribution. The parliamentary Labour party believes that the House should not adjourn until the industrial crisis facing Tyneside has been discussed here. So that such a discussion is better informed, I shall place on the record some points about the helicopter carrier and about the events that led up to the decision on the contract.

Swan Hunter and Vickers Shipbuilding and Engineering Ltd. submitted bids for the landing platform helicopter vessel last autumn. Swan Hunter's bid was for a purpose-built warship ; VSEL's bid was for what was essentially a merchant vessel with a flat top which would be built at Govan and would go to Barrow-in-Furness for armaments to be added and for outfitting. Contrary to popular belief, there was not much difference in price between the two initial submissions. As I understand it, Swan Hunter's bid was about £174 million and VSEL's bid was £165 million, leaving a difference between the two of about £9 million. That sum would have been more than covered by the difference in costs to the Ministry of Defence of supervising the Govan-VSEL bid in the different yards. I accept that that would not have been an insuperable obstacle. My point is that last autumn the two bids were similar.

From then on, the Ministry of Defence entered clarification discussions with Swan Hunter and with VSEL to talk about the designs and especially to talk about additional equipment and changes that it required to be made. The crucial point is that it was the Ministry of Defence that required additional changes to the vessel. Swan Hunter is a management buy-out company ; it has no large financial reserves. Additional equipment going into the vessel means an addition to the price. On the reasonable and logical assumption that VSEL was being asked to make the same changes, it would know the cost of those changes and would know within reason how that movement would be reflected in Swan Hunter's price.

Unlike Swan Hunter, VSEL has massive financial resources, which have been built up on the profits of the Trident submarine contract. That contract is essentially a cost-plus contract which has left VSEL with a large financial surplus. As well as adding £12.5 million to the contract to raise the standard of weapons systems from the initial bid, the Ministry of Defence altered the specifications for the carrier to require a further £13 million of work to be added to the original Swan Hunter bid. That, with other positive and negative adjustments, took Swan Hunter's price to between £195 million and £200 million.

It is important to emphasise that that price reflects the real cost of changes demanded by the Ministry of Defence. It does not reflect any new adjustments of profitability on the contract, as alleged in the local press by another Member of Parliament. The Sunday Sun, the local Sunday newspaper on Tyneside, carried the story under the headline :

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"A bid too far by debt-hit Swan's Cash crisis forced yard to jack up offer says MP".

That is not true. At no time, as I understand it, did the Ministry of Defence suggest to Swan Hunter that the cost of making the changes and additions that the Ministry required should be borne by the company. Nor was it suggested that the company's costs were unreasonable.

As a result of the size of the order and of the relative weakness of Swan Hunter's financial base, the company has been talking to other major British companies with defence industry interests with a view to a closer association. There is obvious logic to that and I was not, and still am not, opposed to that.

I now understand that the talks have been going on for far longer than I realised, certainly since the latter half of last year. The Ministry of Defence was not only aware of the talks, but apparently took the view that the LPH order would be placed at Swan Hunter only if the company was taken over by a major defence industry contractor, almost certainly GEC. My personal view is that a lot of good could have come to Tyneside from a GEC takeover of Swan Hunter, going beyond the narrow question of the LPH order.

It is important for the House to know, however, that the pressure on the directors of Swan Hunter was ultimately not commercially driven, but came directly from the Ministry of Defence. As the final bids for the LPH were submitted on 22 April this year, the Swan Hunter bid moved from about £200 million, give or take £5 million. A more pessimistic view was taken collectively of the overheads that had to be applied to the bid, moving the price up to the £210 million figure that is already in the public domain. That last-minute change was the result of a pessimistic view about other work coming into the yard to cover some of the overheads before work started on the LPH. The Ministry of Defence did not ask for the last item to be revised downwards.

VSEL was in a different commercial position and could take a different view of the charging of overheads. VSEL would know that with Swan Hunter running out of work, the directors had no alternative but to carry the bulk of the overhead costs on the LPH contract. With the Trident programme still in progress at Barrow-in-Furness, no such problem faced the directors of VSEL. The £50 million price difference that the Ministry of Defence is ruthlessly briefing as the real gap in price between the Swan Hunter and VSEL bids means that the VSEL price must have stayed at its original £165 million or thereabouts.

I believe that I heard the Secretary of State for Defence mention £160 million on BBC radio last Thursday. In other words, the additional work that the Ministry required Swan Hunter to do and which had to be paid for in the Swan Hunter contract has been absorbed into the VSEL contract, underpinned by the company's enormous profits on Trident. Clearly the Ministry of Defence would know all those facts.

In the number of different warring factions that make up the Ministry, there are those--essentially in the Royal Navy--who believe in amphibiosity and the helicopter carrier. Others would prefer the amphibious programme to be delayed, if not actually scrapped. Such issues justify the Labour party in its call for a defence review. Conservative Defence Ministers scoff at the call for a defence review. What is not so well known is that the Ministry is carrying out such a review on the quiet. A group of senior officials and one politician in the

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