DEBATE ON THE ADDRESS

HC Deb 03 November 1977 vol 938 cc10-135

[FIRST DAY]

Mr. Speaker

Before I call the mover and seconder of the Address, it may help the House if I announce the subjects which I understand are suggested for the various days' debates:

Friday 4th November—Education and Social Services.

Monday 7th November—Prevention of crime.

Tuesday 8th November—Industry and commerce.

Wednesday 9th November—Employment.

2.47 p.m.

Mr. Tom Bradley (Leicester, East)

I beg to move, That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer out humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament. First, I should like to say how much I appreciate the honour paid to my constituents and myself in being asked to move the Address today, especially in Jubilee Year.

I am sure that the House would wish to join me in paying tribute and offering our congratulations and gratitude to Her Majesty on the many visits and tours that she has undertaken this year and also to pay our regard to her for the gracious way in which she has conducted the arduous affairs of her office in the past quarter of a century.

I am glad that Leicester has received this recognition today, for some historians have it that the first form of parliamentary discussion took place in Leicester Castle in December 1264 when the first Earl of Leicester, Simon de Montfort, called a meeting of barons and county leaders to discuss the consequences of his quarrel with Henry III. I should not wish to suggest that that was a gathering of Fabians or even of the Bow Groupers, and most probably it was before the Monday Club effort, but it was certainly the first time in the history of Britain that different sections of the community had been brought together to review their relationship with the monarchy and to discuss the future course and conduct of the nation. The foundations of constitutional government, albeit undemocratic, had been laid, as this House recognised when it noted the 700th anniversary of Simon de Montfort's Parliament in 1965.

It is traditional on these occasions to talk a little of one's constituency. Mine comprises one-third of the city of Leicester, which has a total population of almost 300,000 people and is the industrial, commercial and administrative centre of the county. The economy of the city is reliant upon three types of manufacturing—textiles, mechanical engineering and footwear—which have all been particularly susceptible to trade fluctuations in recent years.

In the case of footwear, employment has declined by 58 per cent. since 1955 and much of this can be attributed to the massive inflow of imports from low-cost sources. I immediately enter a plea to the Government to introduce corrective action for the footwear industry in the same way as they have done recently, and so successfully, for the textile industry. Happily, unemployment generally in the city has now begun to fall and is once again below the national average. This improvement is mainly due, however, to job opportunities occurring in service industries rather than in manufacturing, and that remains the core of the problem.

Leicester was traditionally the home of small businesses and it still retains many of them. The tax reliefs announced by my right hon. Friend the Chancellor of the Exchequer last week have been well received in the city and widely welcomed by local traders. They will be further encouraged by the mention in the Gracious Speech that the Government intend to consider the provision of even more help.

In the 15½ years that I have had the privilege of serving the city as one of its Members of Parliament, I have been much impressed by the technical quality of the work force and the general excellence of management-trade union relation- ships. There have been few major industrial disputes in the city. The people on both sides of the negotiation table bargain, as all sensible people should, on the basis of logic and reason rather than by wielding the big stick. There is a great deal more that can be done to improve industrial relations and industrial organisation nationally, and I am glad that the Government will continue consultations on the Bullock Report rather than rush into legislation.

The trade union movement is far from unanimous on the subject of working structures, and many of us who have served a long time in the trade union movement believe that it is the job of management to manage and that the trade unions have a separate, but equally responsible, function. There are other ways to improve the status of workers in industry, and I hope that the further consultations that the Government will have with the TUC in the forthcoming months will be fruitful for us all.

The Gracious Speech today referred to inner city problems and it promises that there will be legislation. Like all large cities, Leicester is not immune from these problems. One aspect is the way in which inner zones become recipient areas for immigrants. For the past 50 years Leicester has received waves of Continental Jewish, East European and West Indian migrants, and since 1971 it has become the home of many thousands of Ugandan Asians. While these industrious people are making a full contribution to the local economy, their arrival has produced great and grave immediate problems in the form of pressures on housing, health and education services. Local government officers, teachers and community workers have coped magnificently with the physical strains imposed on their limited resources. To their lasting credit, the great majority of Leicester citizens have received the newcomers with understanding and compassion and have rejected the septic propaganda of the racially prejudiced. However, certainly in terms of scale, variety of problems and speed of change, the inner city of Leicester has a justifiable claim on part of whatever extra resources the Government may make available in future.

I suppose that the most depressed area in the city of Leicester is in Filbert Street, the location of the City Football Club, and that is understandable. However, not far away is the headquarters of another unhappy organisation, the Leicestershire Area Health Authority, which is the most deprived authority in the entire Trent Region—a region that itself receives National Health Service resources way below the national average. The recent postponement of the opening of the new 400-bed development at the Leicester Royal Infirmary has caused widespread disappointment throughout the city and its environs.

On the other hand, it would be churlish of me not to mention and to pay tribute to the new medical centre attached to the thriving university which has already attracted some first-class consultants. There is no doubt that that provision will raise the level of medical manpower and standards of efficiency and care in the future and that it will help to redress the past neglect.

The Gracious Speech also presents us with a prospect of two measures of devolution for Scotland and Wales. I confess to no deep feeling about this subject either way, but I recognise that there is a serious and sincere ground swell of opinion in those countries that wants an acceptable form of internal self-government. I also acknowledge that the Government and the Labour Party in the last General Election manifesto promised that this would be fulfilled. Therefore, the Government's intention in this respect—to provide a measure of devolution for these two countries—commands my support. However, what interests me more is the developments that I hope will stem from the consultative document produced by the Department of the Environment entitled "Devolution: the English Dimension" in so far as we might expect some organic change in local government, especially as it affects the major cities in shire counties.

The 1974 reorganisation of local government took account of the needs and problems of the metropolitan districts but not of those of free-standing cities, such as Leicester, which have little in common with the surrounding rural areas. The time has arrived to return to such large cities direct responsibility for the majority of local government services and investment decisions. It is now a matter of regret that so much money was expended on management structures, leading to duplication, that might instead have been devoted to classrooms or spent on the elderly and handicapped persons.

Therefore, I cannot miss this opportunity of urging the Government to act on the views expressed by the Secretary of State for the Environment at a conference in Harrogate in January 1977 and to take advantage of their promise in the penultimate sentence of the Queen's Speech that Other measures will be laid before you to introduce a measure of limited reform during this Session that will enable our former county boroughs to regain control over education and social services and to free them from county control over planning and highways.

As a member of the European Movement and a consistent advocate of this country's membership of the European Economic Community, I naturally welcome the Government's intention to reintroduce the Bill, to provide for direct elections to the European Parliament—a principle which was endorsed by a majority of nearly three to one in this House on 7th July this year.

Let us remind ourselves that Britain is in the Community. There is a treaty commitment to direct elections. [HON. MEMBERS: "No."] That is beyond peradventure. I am quite clear about it even if some hon. Members are not. A Community Act has been signed by all nine Governments to implement direct elections.

Mr. Dennis Skinner (Bolsover)

I have not signed it.

Mr. Bradley

We have a moral, legal and political obligation to provide for direct elections. I hope that the House passes the Bill in time for us to achieve the target date. That would do much to re-establish our reputation among our European partners who expect us, as Western Europe's oldest democracy, to play a positive rôle in Community affairs.

The past year has seen considerable change in our economic fortunes, especially on the external balance. The pound is stronger, our reserves are at a record level, the balance of payments is improving, interest rates have fallen and we are winning the battle against inflation. All this stands to the credit of the Government, but the problems of strengthening our manufacturing base and achieving economic growth persist.

Low investment and unemployment remain a constant threat to progress, This is no time for complacency. I hope that the forthcoming Session will enable us to devote more time to the consideration of these matters which are so vital to the future well-being of us all.

3.3 p.m.

Mr. Robin Corbett (Hemel Hempstead)

I am proud on behalf of my constituency to be asked to second the motion that my hon. Friend the Member for Leicester, East (Mr. Bradley) has moved in such a lively and able way. He brings live and long experience of the trade union movement to this House.

The heart of the Hemel Hempstead constituency is a bustling new town. It has given a new and better life to thousands of families who came from London about 25 years ago and, now, to their children. It is appropriate that in this new Session we shall see control of the housing and related assets of our new town pass from the unelected hands of the Commission for the New Towns into those of the elected Dacorum District Council—though I might have wished that the temporary recipient were of a different political persuasion. However, what matters is that the long-standing pledge to make control of our new towns more democratic will soon be achieved. I wish here to pay tribute to the staff of the former Development Corporation and then the Commission who were responsible for our splendid development.

Hemel Hempstead was given a charter by Henry VIII. It is believed locally that this was because on his way to hunt in Ashridge Forest—and the deer are still there despite him—he courted the ill-fated Anne Boleyn in a quiet garden at the back of St. Mary's Church. Today his head—or rather a replica of it—is nailed to the wall of our civic centre and the spot where he and Anne Boleyn courted is overlooked by a well-used old people's day centre.

The new town includes one of the major paper, board and stationery producers in Britain, the headquarters of one of the world's camera giants, skilled engineer- ing factories serving the motor car and aircraft industries, companies harnessing new technology to the exciting North Sea developments and a range of lusty and enterprising small firms, especially in the computer and associated industries. Many sell well over half their output abroad and several have won the Queen's Award for export achievement—and Hemel Hempstead is still noted for the quality of its watercress.

The new town is a lively success, but I must tell hon. Members that if they have to be ill they should not choose to do it in Hemel Hempstead—despite the devotion of a caring hospital staff at all levels. We have passed the stage where the care and devotion of those working in the National Health Service can mask the inadequacies of our hospital. The main building is just 100 years old. The event was celebrated the other night with some trepidation because many of us believed that only a sense of history keeps large parts of the hospital fabric standing.

An official report by the Hertfordshire Area Health Authority spoke of buildings of poor quality and unsuitable for extension or adaptation. It said that even the newest buildings are becoming inadequate for present needs ". The main operating theatre won the award of being not acceptable by modern standards. The out-patients' department was described as deficient in both quantity and quality and the casualty department—in a town with lots of heavy and dangerous jobs—was described as "unacceptable".

That inventory is the argument for a new hospital—and that is what we want and what we are determined to achieve. We swim in a sea of sympathy. The sympathisers include the Prime Minister and the Secretary of State for Social Services. That is comforting, but, please, may we have that sympathy matched with the action that our area needs?

Earlier this year, 10,000 caring people took unpaid time off work to demonstrate their concern that the hospital was threatened with closure. Inadequate as it is, we preferred the hospital to the medicine chest with which it was proposed to leave us. If, as I believe, the measure of a hospital is the regard in which it is held by the local community, we have more than demonstrated our concern in Hemel Hempstead.

The House will understand my concern if I mention that one lovely lady in a local factory was unable to take part in the demonstration because she had a bad leg. She clocked herself off from work and sat in the factory canteen until the demonstrators returned. That is why we can no longer tolerate the relative squalor of our hospital amid all that is new in our new town.

Outside the new town are towns and villages, such as King's Langley, Berkhamsted, Tring and Markyate, that are only a few miles along or across the Chiltern Valleys but are strongly independent, with strong local communities and an arm's-length relationship with their noisy, urban, new town neighbours.

There are enough concerned people outside the new town to ensure that our lovely countryside is not smothered in concrete. That is why there is such united local opposition to any expansion of activity from Luton Airport—surely the most badly-sited airport in Britain—which generates such noise and disturbance on our north-eastern flank. At a time when regional airports are wanting more traffic and the regions are wanting the jobs that this would bring, it would be folly to allow Luton to expand.

As one who had his feet—and more—in both agriculture and industry before coming here, I could not have chosen a better constituency to seek to represent, though I am bound to reflect that it took three attempts before I was handed the key. On the other hand, there is a tradition in the constituency of long-serving Members, which it is only right that I should seek to follow.

The mix of urban and rural, of terraced new town streets and narrow country lanes, brings me in touch with a cross-section of problems that must be Britain in miniature. There is great family strength in the villages. Often mothers and grandparents live only doors away, which is valuable when trouble calls. That is not so in the new town, where youngsters, coping with the start of married life, jobs and children, are away from their families and feel isolated. Much is done to hold out a welcoming hand, but that can never be a substitute for the family and it brings a sense of loneliness and isolation that too often we believe affects only those who are older.

I welcome the pledge in the Gracious Speech that the Goverment will continue to take action to reduce high unemployment through manpower measures and to promote industrial training. We need not only people at work but people with higher skills to aid productivity. We are all properly concerned with the high rate of joblessness, especially among young people who are without the experience of life to cope with it. They face problems over the next few years that are more daunting than they have been for a long while. Whatever the cost of counter-measures, they are nothing compared with the social risks of not taking whatever action we can. There are those among us who will try to feed on this problem unless we are seen to be dealing with it.

I hope that the Government will stand firm on the need to preserve and encourage local involvement in anti-unemployment measures. The success and low administrative cost of the job creation programme has been largely because local people have been involved in taking local decisions. That is something that we should seek to extend and encourage rather than try to cement it into more rigid and less local structures.

I know that the whole House will welcome the Government's determination to enable the agriculture industry to meet a greater proportion of our national needs from United Kingdom agriculture. Britain's farmers stand ready and are able to provide more of the food that we eat. As the largest single industry in Britain—it has a productivity record that others would do well to follow—it is able to produce more and set the pace for a positive policy of import substitution.

I know that thousands will welcome the pledge to provide assistance for first-time home buyers. They are by no means all young, although many are. I believe that we have a responsibility better to assist those who want to get their foot on the first rung of the housing ladder, while at the same time ensuring that we meet the needs of those whose jobs and wages will never enable them to achieve that.

I finish with the undertaking that Further progress will be made with my Government's programme of law reform. One topic of law reform that demands our attention is animal welfare. From a position of once literally worshipping animals, we are now more often seen to misuse and abuse them, whether with the export of live animals for slaughter or the indignity imposed by way of so-called experiments. Thousands of concerned people expect the House to attend to these matters, and we must respond. One of the tests of a compassionate society must be the way in which it treats animals, and our collective record in that regard is not one that commands much public acclaim.

This Parliament has some daunting jobs before it, but I believe that we shall be collectively judged not so much by the way in which we lecture but more by the way in which we listen and respond.

3.14 p.m.

Mrs. Margaret Thatcher (Finchley)

For many years it has been the custom and privilege of the Leader of the Opposition to offer warm congratulations to the mover and seconder of the Loyal Address. This year I do so with great pleasure.

The hon. Member for Leicester, East (Mr. Bradley) is a highly respected Member. Perhaps we do not hear from him quite often enough. We were all impressed today by the courageous and sometimes combative way in which he introduced his ideas. I hasten to say that at certain points he was combating not us but some of his hon. Friends. I know that the hon. Gentleman has more interesting things in his personal political history than he mentioned. I think that he blazed the trail for one young Tory this year. I know from his own history that the hon. Gentleman made a famous speech at the age of 17 years. This year young Tories have gone one better and have started at the age of 16 years. I think that they will be very reassured that they, too, may find a place in the House.

I also know that the mood of the hon. Gentleman is determined by what Kettering Town Football Club does on a Satur- day. I understand that if it wins he is optimistic during the following week and that if it loses he is pessimistic. Unlike many of us, the hon. Gentleman must have enjoyed the great length of the Summer Recess. I know that one of his great hobbies is the cultivation of daisies and chrysanthemums. However, many of us think that the recess was a bit too long for Parliament to exert its proper control over the Executive.

As the hon. Gentleman reminded us, Leicester was associated with the formation of the earliest Parliament, whose task was to take away power from the then Executive and restore some of it to the people.

I also congratulate with great pleasure the hon. Member for Hemel Hempstead (Mr. Corbett) on his contribution. I am sure that he will understand that when one gropes for his Christian name the name "Ronnie" comes frequently to mind, but there the resemblance ends, because the other one is really rather small. I think that the hon. Gentleman will agree with me that the other one earns a far higher income. However, perhaps the other one does not have an index-proofed pension, which we are fortunate in having.

It struck me forcibly that both the mover and seconder had rather a lot of complaints to make against their own Government, especially about hospitals. It is perhaps noteworthy that in the Gracious Speech the subject of health is scarcely mentioned, except for one small Bill about the General Medical Council.

Following the congratulations that I have just made it has been the custom for the Leader of the Opposition to make some remarks before the Prime Minister speaks in reply to the Gracious Speech. This year I have a feeling that I think must be shared by many, namely, that whether we look at the background or the remarks in the Gracious Speech, somehow we have been here before and we are going round the same course again.

We have been here before when we consider the background of strikes and problems of that sort. It was perhaps somewhat ironic that in this Jubilee year the people were not able to see the television show of the opening of Parliament. It is also interesting that we have just received the strike figures for the first nine months of this year up to and including the end of September. The figures, which give the working days lost, show that we have lost many more days this year than in the same period during 1973. In 1973 we lost 5½ million working days, whereas in 1977 'he lost 6,366,000. Some of the problems that many believed to be solved are now rearing their heads again in an even more acute form. We are back to being offered candles and power cuts, which again we have had before.

One other background measure in respect of which the comment can be made "We have been here before" is the mini-Budget. I make just two comments about it. The Chancellor has introduced something that is totally new, which I believe is not an advance but a retrograde step. During my lifetime in Parliament—and I believe longer—whenever we have had changes in Budgets—and we have had changes from time to time, although never as many as the present Chancellor has introduced—we have never had major changes in the rates of income tax or the personal allowances during the year. I think that the Chancellor has done a. disservice to himself and all future Chancellors by laying himself open to having repeated changes in income tax rates during the year. He will never be able to resist another change.

In the past we have always had Chancellors of the Exchequer who have been expected to make up their minds about the rate of income tax once a year and stick to it. Indirect taxes have been used as regulators. When are we to get the next reduction in income tax? There is nothing now to stop the rate of income tax being reduced more than once a year.

I turn to the exchange rate. Our part of Leeds makes a speech on a Friday and the Government's part of Leeds follows the advice the following Monday. That is what happened with the exchange rate. The Chancellor was right in what he said about the exchange rate.

I shall comment on the criticisms that have been made about the effect of the exchange rate on exports. If one could achieve a successful export record purely by means of an exchange rate policy we should now have an export boom. That is because when the Chancellor took over the Exchequer the exchange rate was $2.30 to the pound. It is now $1.85 to the pound.

One really cannot gear the whole of the exchange rate to marginal exports because of the secondary effect that the exchange rate has. The real reason for poor exports is not the exchange rate but the underlying circumstances which may affect a particular firm. These matters must be tackled.

I turn to the contents of the Gracious Speech. The feeling that we have been here before applies to the legislative provisions. The hon. Member for Leicester, East was candid about devolution. Hon. Members will notice the difference in the way in which devolution and direct elections are dealt with in the Queen's Speech. On devolution it states: My Government remain firmly committed to establishing directly elected Assemblies for Scotland and Wales. On direct elections it states: Legislation providing for the election of United Kingdom members of the European Assembly will be re-introduced. Apparently, the Government are not firmly committed to direct elections. If by any chance that Bill does not get through in time for direct elections in Europe the fault will be the Government's.

Both these measures appeared in the Gracious Speech last year. Legislation for direct elections was not introduced in time for it to have a chance to be passed. It will have little chance of getting through in time for direct elections this time. In that event the fault will rest with the Government.

We, like the hon. Member for Leicester, East, have noticed the differences between the references to industrial democracy in the last Gracious Speech and those in this Gracious Speech. We agree with the hon. Member's comments.

We also notice that there is no reference to an Education Bill in the Gracious Speech. We were hoping and expecting a Bill to give parents a greater choice of schools. In so far as we now have more schools of the same kind it is even more important to give parents a greater choice and say in the running of schools, both in terms of the curriculum and by becoming governors.

There are certain similarities between this Gracious Speech and last year's Gracious Speech in the language used in connection with economic provisions. There is always a reference to unemployment. Last year the Gracious Speech stated: …My Government remain firmly committed" to "a lasting reduction in the present level of unemployment ".—[Official Report, 24th November 1976 ; Vol. 921, c. 5.] This year the Gracious Speech states: My Government's main objectives are the speediest possible return to full employment and a sustained growth of output. The same phrases are trotted out each year. There has been an increase in un-employment between last year and this but the same phrases are trotted out and the fundamental deterioration has continued.

In the present economic situation the only hope that the Government have is from North Sea oil. Without it the economy would be running at an even lower level of activity. In the past, trading difficulties have been sorted out in balance of payments terms by running the country into deeper recession. The Government have already put the country in a recession that is deeper than at any time in the post-war period.

One way of judging how badly the Government have done is to imagine what the position would be without the prospect of North Sea oil. The exchange rate would be far lower, and unemployment would probably stand at 2 million. The rate of inflation would have little prospect of being reduced. That is a correct judgment of the way in which the Government have run the nation's affairs. They have neither policy nor strategy. They are running industry into decline, hoping that North Sea oil will rescue them.

We hear ritual phrases about the need for extra investment, but we do not get the policies to encourage it. The solution is to enable industry to run its affairs in order to make a good return on capital. Investment will flow from that. That is the only way to run an enterprise economy, but the Government have forsaken that path and show no signs of returning to it.

We still have some economic problems. I recall a programme on Weekend World last week which showed that North Sea oil can lead to serious consequences unless the proceeds from it are put to good effect and not used in the way in which they were used in Holland, when they went on extra public expenditure and extra public services, rather than on strengthening industry. Although the Prime Minister says that he wants that, I do not think that North Sea oil will be used to strengthen industry. The Government are using it merely as a rescue operation to get them out of their troubles.

I turn to what the Gracious Speech states on defence. It is clear that those who write the Gracious Speech have again paid little regard to events in the intervening year. Last year the Gracious Speech stated: My Government will continue to contribute modern and effective forces to the North Atlantic Treaty Organisation."—[Official Report, 24th November 1976 ; Vol. 921, c. 4.] This year the Speech states that the Government: will continue to contribute modern and effective forces to the North Atlantic Treaty Organisation The words are almost the same. There is no regard to the fact that communiques were signed in the North Atlantic Council stating that the Government would spend 3 per cent. more in real terms on defence. We have had a letter from Dr. Luns castigating us for the successive cuts that we have made and stating that It is therefore a cause for disappointment that the United Kingdom Authorities felt obliged to take steps which will have a direct or indirect adverse impact on the United Kingdom front-line forces. There have been severe criticisms from NATO. Representatives of the Government cheerfully put their signatures to an agreement for increasing defence expenditure in real terms. Shortly after that happened the Government made more cuts. Britain's prestige in NATO could not be lower, nor could the morale of our forces about their pay and conditions of service. I hope that the Government will quickly give attention to this urgent matter.

Finally, I refer to a point that the hon. Member for Leicester, East mentioned at the beginning of his speech. It relates to the first sentence in the Gracious Speech. On behalf of my right hon. and hon. Friends, I should like to add to the hon. Gentleman's tribute. I hope that the Prime Minister will give to the Queen our loyal and affectionate congratulations on the matchless and flawless way in which she has carried out all the Jubilee events. It has been both a triumph and an example.

3.30 p.m.

The Prime Minister (Mr. James Callaghan)

I join the Leader of the Opposition in paying tribute to the agreeable manner in which both the mover and seconder of the Loyal Address, my hon. Friends the Members for Leicester, East (Mr. Bradley) and Hemel Hempstead (Mr. Corbett), performed their tasks.

My hon. Friend the Member for Leicester, East lived up to our expectations. He was well informed and combative. He has a distinguished trade union record in his own union, of which he has been President for 13 years. He has done a remarkable job there, on which all members of the Transport and Salaried Staffs' Association have congratulated him. He is very well known for his work in international transport and, as the right hon. Lady the Leader of the Opposition said, he is Chairman of Kettering Town Football Club. We all know my hon. Friend's disposition. I do not know how he survives now that the club has been top of the Southern League for so long. It must be a most depressing thought for him. Perhaps Mr. Ron Greenwood, the England manager, would like to have my hon. Friend's telephone number. He might be able to do something with it.

As the right hon. Lady said, both my hon. Friend the Member for Leicester, East and my hon. Friend the Member for Hemel Hempstead referred to complaints against the Government. But what were they complaining about? They were complaining about inadequate public expenditure. They were complaining that their hospitals were not being modernised, as I know from correspondence that I have received.

The right hon. Lady cannot have the arguments both ways. She will try, but I do not think that the attempt will carry much conviction. Does she believe that we should immediately meet the complaints of both my hon. Friends in these matters of public expenditure? She asked us to do so in the matter of Forces' pay, to which I shall refer a little later. It does not lie in the mouth of the right hon. Lady to pick up that kind of complaint, which I dare say will be used time after time in the country by the Conservative Party, and pretend that there is a painless way to reduce public expenditure. There is not. When it is reduced, people suffer and services go under.

I congratulate both my hon. Friends on the way in which they represent their constituencies. They are basically both good constituency Members, and I congratulate them on that.

Before I proceed with a discussion of the Queen's Speech, I should like to refer to the statement that President Brezhnev made yesterday to the Joint Session of the Supreme Soviet and the Central Committee. As the House will know, President Carter, President Brezhnev and I agreed that negotiations would begin last July on the question of trying to bring about a comprehensive test ban treaty. I have said in the House on a number of occasions that there was a serious and businesslike atmosphere about these discussions, but we were held up because the Soviet Union genuinely advanced the view that peaceful nuclear explosions could be delineated separately from other nuclear explosions. We do not accept this view. We did not see how it could be so. The discussion proceeded in a very orderly way.

The statement that President Brezhnev made yesterday, in which he said, as I understand it, that he was prepared to reach agreement on a moratorium covering peaceful nuclear explosions along with a ban on all nuclear weapon tests, is a most significant development of Soviet policy. It is something that I welcome very much. I would say that it is a signal—a signal to the West that the Soviet leadership are in earnest about the policy of detente. If they had merely been negotiating on the basis of propaganda, they would not have come to this decision, which is something that we should very much welcome.

On the question of defence, I would only say to the right hon. Lady that it every other NATO country spent the same proportion of its gross national product as we spend on defence, the troubles of NATO would have been over long since. I seem to remember that whereas we cut about £200 million off our defence budget in the last round of public expenditure reductions—[Interruption.] I do not carry the exact figures in my head. I believe that I am right, but I am ready to be corrected in the House. I believe that if every other country spent the same proportion of GNP as we do, it would be worth about $21 billion to NATO. Therefore, let some other people also consider where their responsibilities lie.

Mr. Norman Tebbit (Chingford) rose—

The Prime Minister

I shall not give way now. I have only just started my speech.

Mr. Tebbit rose—

Mr. Speaker

Order. It looks as though the Prime Minister is not giving way.

The Prime Minister

We are only at the beginning of the Session. I have a feeling that I shall have enough of the hon. Gentleman before it finishes.

The proposals in the Queen's Speech constitute a full programme for a normal Session. The three major Bills—on devolution to Scotland and to Wales and to provide for direct elections to the European Assembly—will take up a substantial part of the available parliamentary time. In addition, there will be the usual essential Bills and some highly desirable Bills that we should like to introduce if time becomes available without putting too much pressure on hon. Members. The Bills falling in this category include the Bill to improve safety and discipline at sea and a Bill to bring the industrial rights of Post Office workers into line with those of other workers.

As always, there are a number of measures that my hon. Friends have told me that they would like to see, and I have no doubt that there are Bills that Opposition Members will say they would like to see. Therefore, I should like to give an indication of other matters which are becoming ripe for legislation but which will depend on the parliamentary time we have available. There is a possible Bill to implement a European convention on the suppression of terrorism; and a Bill to establish new bodies to be responsible for professional standards in nursing and midwifery; and there are measures of consumer protection and cooperation, including legislation to establish a Co-operative Development Agency; and there is a measure to protect small depositors.

The right hon. Lady spoke of the need for an education Bill. There is a prospect, although I put it no higher, of such a Bill, dealing with school management and parents' wishes in the allocation of schools. There is a growing need to reorganise the higher courts in Northern Ireland. We shall take any suitable opportunity to begin legislation on one or more of these matters, although I repeat that at the beginning of the Session there seems unlikely to be much spare parliamentary time.

My right hon. Friend the Leader of the House will bring forward the usual proposals on Private Members' time. The allocation of Supply time provided by the Standing Order will apply, and the Leader of the Opposition will no doubt wish to discuss with the other parties what Supply Days should be allocated to them.

Hon. Members will see that there is no likelihood of Parliament's being short of work. Indeed, there seems enough work already not only for this Session but also for a full and fruitful Session in 1978–79. But perhaps we had better wait and see how things develop.

Mr. Gordon Wilson (Dundee, East) rose—

The Prime Minister

I shall come to the hon. Gentleman's troubles a little later, if that is agreeable.

Obviously, the fact that the Government are in a minority in the House makes the task of legislation more difficult. It does not impede the Government on administrative matters, except where the administrative decisions need later to be submitted to Parliament, and then we tend to get into trouble. [Interruption.] Of course, there are certain administrative decisions that a Government can take. There are others that need to be submitted to Parliament. I am not stating any novel constitutional principle. On the whole, despite one or two mishaps, I think that we have managed rather well so far.

Here I should like to refer to the decision of the Liberal Party to enter into a working arrangement with the Government. By doing so, whilst preserving their full independence as a party, the Liberals ensured—this, of course, is why the Opposition are so angry with the Liberal Party —a measure of political stability at a time when the country was passing through a period of economic and financial difficulties last spring. The decision of the Liberal Party gave greater certainty to the Government that we could pursue with steadiness the policies that are now being seen to provide results, and the Liberal Party is entitled to full credit for that and for its decision.

But the Opposition never allow us to forget that the Government are still a minority in the House, although it is becoming more of a moot point whether we are in a minority in the country. I say this because we have an important legislative programme to carry through. I would not want to see the major items in that programme either mutilated or prevented from being brought to a conclusion.

In the last Session we had to endure being held up on the Scotland and Wales Bill for reasons chat are now largely removed.

In short, I see no need for an election. The Government, with Liberal support, have a working majority and I hope that hon. Members in the Scottish National Party and Plaid Cymru agree that it would be a disservice to the people of Scotland and Wales if the two Bills were not brought to a conclusion, so that Scotland and Wales can then vote on the issue in the referendum on the specific question of whether they want to see these Assembles brought into being. The passage of these two Bills is a major issue for the Government.

Mr. Gordon Wilson

If the Prime Minister is soliciting support in the House, would it not be better if he were to revise fundamentally the terms of the Scotland Bill as announced in July and give the Scottish Assembly not only powers to provide employment and to run the economy but Scotland's oil wealth, which the right hon. Gentleman's Government are presently stealing?

The Prime Minister

I was coming to some of the changes we have made. I never hoped to satisfy the Scottish National Party, but I hope to satisfy the Scottish people.

As a result of discussions that my right hon. Friend the Lord President has had during the summer months, we have agreed to introduce separate Bills for Scotland and Wales, and I hope that that meets the criticism that was being made last Session. In addition, there are new proposals for a referendum and improvements in the procedures when disputes arise on the interpretation or application of the devolution statute for Scotland. The revised Bills will not seek to regulate in so much detail as before the way in which the Assemblies arrange and conduct their business. The Scottish Assembly itself will be able to determine the time of its own dissolution. The Government's powers to override the actions of the devolved Administrations are more closely defined. These are changes that were pressed upon us and they go a long way to meet criticisms that were uttered. In all this the protection of flatters essential to the unity of the United Kingdom will remain assured.

I would like to confirm that the passage of each Bill has an equal importance in the eyes of the Government.

Mr. Gwynfor Evans (Carmarthen)

Will the Prime Minister inform the House of the timing and the order of these two measures?

The Prime Minister

I think that my right hon. Friend the Leader of the House should make the normal business reply in due course. I think that even the hon. Member for Carmarthen (Mr. Evans) will understand that it is not possible to be running two Bills in the same afternoon in the same debating chamber, but I want to make clear to him—[Interruption.] I am glad to see that there is a new-found enthusiasm by the Opposition in this matter. My right hon. Friend the Leader of the House will make an announcement on this very quickly. I want to assure the hon. Gentleman that the passage of both Bills has equal importance in the eyes of the Government.

For reasons that have never been made clear, but which we can all suspect, I think that we know somehow that the Conservative Party is still opposed to coming to conclusions on these matters. What they want is a never-ending round of talk and talk and talk. That was all I could make out of what the right hon. Member for Cambridgeshire (Mr. Pym) wanted.

I remind the right hon. Gentleman that it is now nearly nine years since the Kilbrandon Commission was set up and discussions have been proceeding ever since. How can we bring it to a considered conclusion if the Opposition call for talks and talks and talks? Experience going back some years shows that it is always possible for the talkers to prevent the passage of measures of this kind unless there is a timetable. We believe that a fixed amount of time should be allocated to these Bills and we shall ask the House to agree to a timetable that will provide for systematic discussion and a proper conclusion.

Mr. Tam Dalyell (West Lothian)

Under the new Bill, shall I still be able to vote on many matters in relation to West Bromwich but not West Lothian, as I was under the last Bill, and will my right hon. Friend be able to vote on many matters in relation to Carlisle but not Cardiff?

The Prime Minister

If my hon. Friend the Member for West Lothian (Mr. Dalyell) does not vote for the Bill he will not be able to vote for anything much else. It will not be me who will deal with him.

The policy of the Government is to play a strong and positive part in the development of the European Community. We shall again present to Parliament a Bill to provide for direct elections to the European Assembly. Our purpose is to strengthen unity and democracy in Europe.

This will be done with two conditions in mind. First, the authority of national Government and parliaments must be maintained and, second, we must ensure that the common policies followed by the Community do not impede national Governments in attaining their economic, industrial and regional objectives. In that context we shall continue to work for changes in the common agricultural policy.

In the formulation of new Community policies, we shall work for real agreement and co-ordination among the members without any reserve. But we shall also inject a full measure of realism and we shall ensure that full account is taken of our needs, for example in such an important matter as the common fisheries policy. It would be interesting to know where the Conservative Party stands in its attitude to some of these Community matters. I read the speech of the right hon. Member for Yeovil (Mr. Peyton) agreeing with the Commission that it would be a very good thing to get rid of the so-called green pound no matter that it would raise food prices substantially, without any compensation, as far as I could see. Surely the Conservative Party should make clear whether it supports, without reservation, and on every issue put forward by the Community, the line adopted by the Community. Surely the Conservative Party can support the Community in general without lying down in front of it on every single issue.

Mr. Peter Tapsell (Horncastle)

Does not the Prime Minister realise that it has been the collapse in the value of sterling which has created all the problems with the green pound?

The Prime Minister

The hon. Member for Horncastle (Mr. Tapsell) knows much better than that. He knows the history of the green pound. It came into operation long before there was any question of the problem of sterling at all. The conflict arose because of German agricultural problems.

The Bill to provide for direct elections is substantially the same Bill as that to which the House gave a Second Reading last Session. Judging by the interruptions that are being made, it is likely to be the cause of some difficulties inside the parties. At its conference the Labour Party declared itself against the whole concept of these elections, and I have taken full account of that and also of the fact that my hon. Friend the Member for Bolsover (Mr. Skinner) did not sign the treaty. I fear that there is a difference of opinion between us. The Government's opinion is that we are bound by the obligations undertaken when Britain entered the Community, that those obligations have been subsequently reinforced by the undertakings we have given to other European countries and that therefore we must proceed. The House gave the Bill a Second Reading last Session.

There will be a free vote for Government supporters on the method of voting and the House will be able to make a choice between voting for a list of candidates or voting to elect a single Member by a simple majority. I notice the right hon. Lady's early attempt to get an alibi on the subject. The system that will be chosen will be important because the choice of system will determine the date of the first elections. With the list system the elections can take place in 1978, whereas with the traditional first-past-the-post system the elections could not be held until 1979. [HON. MEMBERS: "Why not? ] That will have to be discussed when the Bill comes before the House, but it is basically because of the difficulties of delimiting constituencies in accordance with the practices and traditions laid down by the House. [Interruption]. I hear hon. Members saying that the delay has been our fault, but whatever the cause of the delay the simple fact is that we shall not have these elections until 1979 unless we choose the list system.

Mr. Michael English (Nottingham, West)

It may be that it is due to the opposite side of the House that my right hon. Friend is enforced to make this statement. Is he aware, however, that for centuries constituencies in this country were changed by being scheduled to the Act of Parliament concerned? It would be possible to do that if we so wished.

The Prime Minister

Of course that would be possible if the House wished to do it, but I should like to hear what the constituencies ad to say about that kind of practice. I think that my hon. Friend would find a great deal of difficulty if he proposed such an action without going through all the usual procedures.

The Government will accept whatever decision the House arrives at on this matter. In order to reassure the right hon. Lady, I can say that our intention is to bring the Bill in on 10th November.

I refer once again—and I think the House will be with me—to the continuing agony in Northern Ireland. Every year we return to this matter and each year there seems to be a growing understanding that the overwhelming majority of the people of the Province are totally opposed to the continuation of violence that has brought and will bring no political result but will lead only to death, maiming and destruction. The lawless- ness continues. Murderous attacks are still frequent. However, in the last year there has been a progressive reduction in the level of violence, and the House will congratulate the security forces on their increased success in apprehending those responsible for such crimes. The House will pay tribute to the Royal Ulster Constabulary, the Army and the Ulster Defence Regiment for the way in which they are carrying out their duties.

I believe that it is a common objective in the House to see a system of devolved government introduced in which all the community can participate and which would command widespread acceptance within the Province. My right hon. Friend the Secretary of State for Northern Ireland continues to seek sufficient common ground for this purpose among the Northern Ireland parties and will be prepared to consider a limited interim step if this seems more likely to be acceptable.

However, direct rule must continue for the time being, and it must be as fair and as sensitive to the feelings of the community as possible. You, Mr. Speaker, have been good enough to say that you will be willing to continue with the conference under your chairmanship to consider the prospects of increased representation in Northern Ireland in this House.

I place on record the deep respect of the whole House for the endurance and courage of people in all parts of Northern Ireland. We ask them to give no comfort to the men of violence, but to continue and increase their support for the forces that alone can bring security and quiet to the Province and enable the people there to live in peace.

Mr. Churchill (Stretford)

Does the Prime Minister not agree that it is a scandal that the Armed Forces of the Crown serving in Northern Ireland are earning half the wages of the average Grunwick worker, and will the right hon. Gentleman do something about that?

The Prime Minister

These matters will be discussed later. We all want to do the best we can for the Forces. There is no party issue between us on that. The hon. Gentleman knows, as do others, of the difficulties here. My right hon. Friend the Secretary of State for Defence is considering all these matters to see what help can be given.

Perhaps I may here refer to the remarks of my hon. Friend the Member for Leicester, East on the problems of mixed communities and of the problems being caused in Leicester. I hope that the House will permit me to turn aside before passing on to other matters to comment on the disgraceful scenes that we witnessed during the recess in the attempts to foment racial discord.

There could be few people of whatever party who did not feel a shaft of anger at the scenes at Lewisham and Lady-wood where ill-disposed people misused our democratic practices to create tension and raise up hatred and violence between black and white. I should like to offer a suggestion at the beginning of this Session which I hope the House will take in the spirit in which it is put forward. There may be some differences between the parties on how these matters should be handled, but for the sake of peace in our large cities I urge that we should not enlarge any differences which exist. The menace of the National Front is to all parties, and the methods of those who oppose the National Front by violence are equally unacceptable.

The House has a responsibility through its attitudes on these matters when they are under discussion to foster harmony between all people living in these islands. We should have full and open discussions in the hope of coming to a common point of view so that on this, perhaps the most grave of issues, the House can act as a Council of State, giving a lead to the nation in creating a valuable cohesion in our society. We begin from the principle that all men and women, whatever their colour, who are citizens of this country should have equal rights under the law.

I come to some of the other legislation. The purpose of the shipbuilding Bill will be to provide for a redundancy scheme for employees of British Shipbuilders and Harland and Wolff, which have been badly hit by the recession in shipbuilding throughout the world. The trade unions and British Shipbuilders have been consulted about the proposals and are participating in drawing up a scheme which will alleviate hardship on redundancy. This will be placed before the House in due course.

Mr. Eric S. Heller (Liverpool, Walton)

Will the National Enterprise Board be asked to seek out alternative employment in the areas concerned, since those areas are the worst hit by unemployment and just cannot tolerate more unemployment, even with redundancy payments?

The Prime Minister

My hon. Friend is quite right. Perhaps this matter can be raised again in the debate on trade and industry early next week. I shall see that my right hon. Friend the Secretary of State for Industry is informed about my hon. Friend's point.

On the new scheme to give help to people on the first occasions when they buy their own homes, there has been an improvement in the general situation because the mortgage interest rate is now down to 9½ per cent. That is saving many people a lot of money or is shortening the period of repayment. But we can now go further. Finding the deposit is often the first and biggest hurdle to jump. More than 40 per cent. of first-time buyers put down less than £1,000 as a deposit. We are therefore discussing with representative bodies the prospect of giving to young couples and others a loan of up to £500 which would be interest-free for the first five years. This would mean that their savings would be matched pound for pound up to the first £500 of savings. I am sure that this would be a very great boon.

The purpose of the legislation on inner cities will be to give local authorities greater powers to help those who live and work there by means of direct financial assistance to industry to help with the conversion and improvement of old industrial premises, to give 100 per cent. grants in London to clear derelict land, and to subsidise rents and aid the preparation of sites.

For the rural areas, a new transport Bill will remove restrictions which now make it illegal for car owners to make a charge when they give lifts, and it will also enable community buses to operate in areas that the ordinary bus service does not reach.

We shall also need to reserve space in the legislative programme for legislation on Rhodesia, whose future the House will have the opportunity to discuss more fully next week during the debate on the renewal of the Southern Rhodesia Act. Therefore, perhaps the House will excuse me if I do not go into that in more detail now.

With regard to our financial and economic position, we begin the parliamentary year at a time when Britain's financial and economic position is improving, but the world climate has worsened. In the first half of this year world trade has been static. Only in the United States of America has there been a sustained expansion, but growth has slowed during the summer. In many countries like our own, unemployment has risen until total unemployment in the industrialised world now stands at no less a figure than 16 million—many of them young people.

Nor do the latest forecasts for world economic growth and trade show much improvement next year, I regret to say. Some of the countries to which we were looking for growth in their economies will not be able to meet the targets that they had set for themselves. In an attempt to offset the shortfall both the German and the Japanese Governments announced measures to stimulate their economies.

Nor have we solved the serious problems caused by the imbalance and mal-distribution of the world's massive payments, surpluses and deficiencies since the rise in the price of oil. I remind the right hon. Lady that it is an important factor in considering how well off, or how much better off, we might have been if there had not been that increase. The right hon. Lady is right: one of our great hopes is North Sea oil. But she might put the other factor into the balance sheet when trying to draw up a fair assessment.

I thought that it was untypical of the right hon. and learned Member for Huntingdonshire (Sir D. Renton) to be so ungenerous last week on the matter of overseas aid. The problems being posed for many of these developing countries are greater than they have ever known. The hardship is there, but it is not only a question of hardship. There is also the question of healthy growth. It seems to be both the path of wisdom and to have, I hope, some measure of idealism about it if, at a time when our financial situation is improving, we can set aside what, heaven knows, is only a small sum to help them towards a healthy world economy and a healthy position themselves.

Sir David Renton (Huntingdonshire)

I think that the right hon. Gentleman cannot be aware of the hardship that is being suffered through the National Health Service being made short of funds, as was mentioned by both the mover and the seconder of the Address, and by the serious cuts in education, upon which so much of the future of this country depends in those counties where the rate support grant has been cut. The right hon. Gentleman must be rather more sensitive. He should bear in mind, for example, that our people do not take kindly in such circumstances, to £5 million being paid to Communist guerrillas in Mozam-bique.

The Prime Minister

The right hon and learned Gentleman is being typical. Perhaps I have mistaken him all these years. He totally misrepresents the position on these matters. I think that in relation to Mozambique and in relation to cur general aid programme, what we do in the world is wise and sensible for a country such as Britain. I think that if Conservative Members were in Government they would take a view different from that which they now take. To encourage this shortsighted view among many people in Britain who are ready to believe the worst does no credit to the Conservative Party.

The biggest problem of all is how to induce a large and sustained growth in the world economies, because without that world unemployment will not go down, nor will investment or world trade grow sufficiently. Britain is enjoying the agreeable experience of a massive improvement in our financial position. The exchange reserves are at record levels. Short-term interest rates have improved to the point that they are now about 5 per cent., against about 15 per cent. a year ago—much lower than when the Conservative Party was in power. Longer-term interest rates have come down significantly. Let us take credit for this. Let industry take credit for this: with encouragement from the Government the volume of our exports has increased by about 10 per cent., despite the depressed level of world trade. Let us not discourage our exporters by saying that they have not done anything. They have done a good job.

The most significant measure of Britain's success has been the continuing reduction month by month in the rate of inflation. Thanks to the co-operation of the trade unions and their members during the last two years we are now experiencing a most dramatic improvement in the rate of price increases. The sacrifices of the last two years have been worth while, and every family in the country will feel the benefit increasingly in the years and months ahead both through tax reductions and through less frequent price rises.

Let us consider these tax reductions. I do not think that we should be deterred from making substantial changes in the rate because of the bureaucratic mind of the right hon. Lady. Incidentally, the right hon. Lady's history is not right, but I shall not go into that.

The tax on a single man or woman earning £40 a week this year will be £84 less than it was last year. In other words, this year's reduction will be worth two weeks' wages. A family man, with two children, earning £60 a week gets a reduction in his tax bill this year, by comparison with last year, of £106. If one goes to the other end of the scale, one finds that a family man, with two children, earning £10,000 a year gets a reduction of £478. That is actual money in his pocket. He will pay £478 less than he did a year ago. That is equal to a fortnight's salary or wages.

Those are significant tax reductions, whatever qualification anybody might care to make. I shall have another opportunity to demonstrate this, but what is clear is that the burden of total tax and benefits is no greater today than it was when the Conservative Government left office.

Mr. Tebbit rose—

Mr. Speaker

Order. We cannot have two hon. Members on their feet at the same time.

The Prime Minister

I rarely get any courtesy from the hon. Member for Ching- ford, and I ought not to turn the other cheek, but I give way to him.

Mr. Tebbit

I am grateful to the Prime Minister for giving way, and I shall extend the other cheek to him as well and give him the opportunity to tell the House whether that £60-a-week man on average industrial earnings, with two young children, will be as well off now as he was at the time of the last General Election.

The Prime Minister

The answer is "Yes ", in terms of tax deductions. What I am saying is that the average—[Interruption.] Let us have this argument on another day—[Interruption.] Very well, let us do it now, but I ask hon. Members not to complain if I take a long time, because I still have other things to say.

In 1973–74, the average earnings of a married man with two children under 11 was £44.80 a week. In 1977–78, it is £80 a week. [Interruption.] The hon. Member for Chingford put his question, and he is getting a jolly good reply. The figures that I have given show that that man is earning £36 a week more now. If we take into account child benefits and family allowances, the tax and national insurance paid by the average family man is in real terms the same this year as it was in 1973–74.

Let us continue with this argument because I shall relish it. We shall destroy the Conservative Party with regard to this matter before we have finished with it. I advise Conservative Members to check their figures very carefully. I am sure that they will try to find a lot of excuses. I have no doubt about that.

Inflation is being conquered.

Mr. Terence Higgins (Worthing) rose—

The Prime Minister

No.

Mr. Speaker

Order. It is quite clear that the Prime Minister is not giving way.

The Prime Minister

On the contrary, Mr. Speaker. I have given way a very great deal. However, I must proceed to the end of my speech. There are some things that I want to say with which the House will disagree but I hope that hon. Members will listen to them.

Mr. Churchill

On a point of order, Mr. Speaker. The Prime Minister indicated that he would make some reference to industrial production. Would it be in order for him to do so?

Mr. Speaker

That is not a point of order. The House takes very great care to ensure that I am not allowed to decide the contents of speeches.

The Prime Minister

If the hon. Member for Stretford (Mr. Churchill) can only contain himself, I shall come to that question.

I ask the House to consider whether it is possible to consolidate the substantial improvement in the rate of inflation next year. My own answer is a qualified one. It is this: yes, we can if there is moderation in wage settlements. We have asked that the increases in national earnings during the next 12 months should be kept within a limit of 10 per cent. Let me say straight away that there is nothing mean or petty for a person earning £70 a week—which is now a little below the average—to earn another £7 a week. We should not treat that as though it is small beer or petty feed. It is a substantial sum.

Some groups of workers, through their trade unions, have already shown that they are willing to settle within these limits. I thank them for it because they are acting in their own best interests.

Another powerful instrument is the 12 months' interval between settlements, which the TUC entered into voluntarily without any pressure. It undertook this itself as a means of securing an orderly return to collective bargaining.

But I confess that I am concerned about some of the trends at the present time. I do not intend to discuss any particular claims this afternoon, but I want to leave no one in any doubt about what the Government are trying to do and why they are: trying to do it. This will mean repeating myself, but I must continue to drive it home.

First, let me say what the struggle is about. We are not fighting against anyone. We are not trying to teach anyone a lesson—either any group of workers or any trade union. No. What we are fighting against is rising prices and rising unemployment. What we are fighting for is a moderate increase in pay in order to get more jobs, faster growth and steadier prices. All this can be got and, indeed, is now being got. The measures that the Chancellor has introduced will, if they are carried through, ensure a faster rate of growth next year than we have had for some years past. That is the Government's policy. That is our responsibility and determination.

I know that we have the support of many trade unions and millions of trade unionists. I urge them to settle within the guidelines and I also urge employers to do the same. This may bring difficulties with some groups. Perhaps we shall have friction and withdrawals of labour. I regret this prospect, but I can assure the House that the Government will not seek to provoke a confrontation. We do not wish to see any particular group of workers suffer, but nor do we think it right that any group should secure advantages through their strength that others are ready to forgo.

It may be that this winter the British people will he asked to accept some dislocation and some inconvenience. Indeed, some is going on at the present time. The Government will do their best to minimise this, and as long as we have the support of the House of Commons and public opinion we shall continue to fight the battle for lower prices and lower unemployment.

The support of public opinion is vital to our success, It is upon the settled conviction of the British people that we must and do rely. We must win this battle for Britain, and I ask for the support of every man and woman in the land.

Mr. Victor Goodhew (St. Albans)

What did the right hon. Gentleman do in 1974?

The Prime Minister

I at last come to the hon. Member for Stretford. The improvement in our financial—

Mr. Goodhew

Sheer hypocrisy.

The Prime Minister

How dare the hon. Member for St. Albans (Mr. Good-hew) say that?

Mr. Goodhew

Of course I dare. Will the right hon. Gentleman give way?

The Prime Minister

I am not giving way to that. The improvement in our financial affairs and the slowing down of inflation has not been matched by equal successes in increasing production or employment. I hope that satisfies the hon. Gentleman.

Mr. Churchill

No, it does not.

The Prime Minister

There have been some successes, notably in increasing the volume of our export of manufactures. But that has been partially offset by increased imports of manufactures, although not to the same extent. As my hon. Friend the Member for Hemel Hempstead said, some of our most important industries, such as footwear, textiles, shipbuilding, steel and clothing, have been passing through a difficult time. Now we are in a position to go for growth. Now we have overcome the inflationary spiral, not a boom which will collapse—[Interruption.] It will continue for the next few months. I have always said that. I am saying nothing new about this. This speech is so old that it could have been written in the Book of Exodus.

I know that the right hon. Member for Lowestoft (Mr. Prior) has got to watch his back a little, but we shall look after him. He need not worry. I was trying to say that we are in a position to go for growth but not a boom which will collapse. We do not intend to do that and we shall not be pushed into that position. What we want is steady and sustained growth. [Interruption.] Is not that what the Opposition want, too? If they do, what are all the catcalls about?

Through the industrial strategy we are planning ahead for the growth of output, higher productivity and more employment. Our ultimate aim must be a high output, high wage economy. That is the objective. But to get it—I hope that I have the support of the Opposition—we must move out of the present situation in which the productivity of both labour and capital and, therefore, our level of wages are all lower than that of our main competitors. That is why we shall continue to develop an industrial strategy which brings management, unions and the Government together.

My hon. Friend the Member for Leicester, East referred to our commitment to a significant advance in industrial democracy so that workers should be able to serve on the boards of the firms and industries in which they work. Representation on the board must reflect the established methods and trade union procedures whereby workers' views are already represented to their employers. The TUC at Blackpool in September pointed to ways other than board representation in which workers could be more closely involved in decision taking in ways more directly related to collective bargaining procedures.

The Government welcome this development and when the discussions which we are now undertaking have been concluded we shall come forward with our own proposals. We aim to secure the widest possible consensus in the nationalised industries and we have already asked the chairmen to consult the unions with a view to making joint proposals for improvements in consultation and participation. They will be submitting interim reports on the progress that they have made by the end of the year.

Above all our objectives, we want to conquer unemployment, particularly among the young. This is a matter of the deepest concern to everyone, and we continue to believe that the best foundation for more jobs is a growing economy and a healthy economy. We do not underrate what has been done so far, nor the stimulus which the Chancellor has applied. By next September the new Youth Opportunities Programme will be in full swing. It will provide up to 230,000 young people a year with a range of courses and opportunities designed to meet their individual needs as they seek secure permanent employment. This is a big programme. We shall take whatever steps are necessary to improve it wherever we can. There will be an opportunity for the House to discuss these matters further next Wednesday.

Whilst we have wrestled with these intractable problems we have not forgotten our basic responsibilities to those without the strength to fight for themselves. Let us remember that in the week after next there will be a substantial increase in the retirement pension—to £17.50 for a single person and £.28 for a married couple. This will not simply restore the purchasing power of the pension but, with the decline in inflation which is taking place and will continue for some months, will raise it to a higher real value than ever before.

Next April the second stage of the child benefit comes into effect, with a significantly higher level of benefit for about 7 million families and a doubling of the benefit for a quarter of a million single-parent families, and from this month we shall be extending the new non-contributory benefits for the disabled to include married women of working age who are unable to do their own housework.

To conclude, the country is weathering the worst economic recession that the world has seen for over 40 years. We are giving protection to the victims of that recession. We stand in this country now at a point at which the real standard of life of our people is beginning to improve. We shall continue to improve it provided that we show restraint during the next year. Our added strength will enable Britain to play a larger part in the affairs of Europe and the world. We can truly say, as a result of a combination of circumstances well known to the House, that our destiny is now in our own hands, and it is for us to make of it what we will.

Several Hon. Members rose—

Mr. Speaker

I call the hon. Member for Colne Valley (Mr. Wainwright).

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

On a point of order, Mr. Speaker. May I ask you to consider a matter, not for an immediate response but, perhaps, for reply tomorrow or some other day? The Prime Minister has just told us that there is now a firm promise of Liberal support for the Session ahead of us. This, of course, was the case previously. However, now that this is institutionalised, so to speak, it would seem right that Liberal Members should he treated as Government supporters and that speakers should be called from the Labour Party and the Liberal Party, on the one hand, to support the Government, and, on the other hand, from the other parties on the Opposition side of the House that oppose the Government.

I do not think that you would disagree, Mr. Speaker, that the reason for calling hon. Members from either side of the House is to get a balanced debate of supporters and opposers. Now that it has been confirmed that the hon. Gentlemen who are Liberal Members are pledged to support the Government, it seems to me that the time is ripe to make this change in your procedure. After all, Liberal Members are firm believers in proportional representation, and I am sure that they would hate to be robbed of the opportunity of that in this matter. I feel sure that the whole House would deem it fairer. Indeed, Mr. Speaker, if you wished to go to extreme lengths, I am sure that we would accept that members of the Tribune Group could be called opposers by the Opposition, but perhaps that is taking the matter too far on this occasion. I believe, however, that it would be acceptable to Opposition Members if for the coming Session that were to be your procedure, Mr. Speaker.

Mr. Peter Rost (Derbyshire, South-East)

Further to that point of order, Mr. Speaker. Would it not facilitate your judgment of the selection of speeches if the Liberals were to sit on the Government Benches? You would then find it much easier not to get out of alignment in your selection of speakers for and against a particular motion.

Mr. Ian Gow (Eastbourne)

Further to that point of order, Mr. Speaker. This is an immediate matter. Before my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) raised his point of order, I distinctly heard you call the hon. Member for Colne Valley (Mr. Wainwright) to address the House. Clearly, if you had it in mind to call to speak after the Prime Minister a Member who is in fact a supporter of the Government, that is something I respectfully submit needs to be decided now. It would not commit you to putting every Liberal Member in the Government lobby, because the hon. Member for Rochdale (Mr. Smith) and the hon. Member for Truro (Mr. Penhaligon) could, I think, properly be described as being doubtful, and I would not even want to say that there is no doubt about some of the other hon. Members who sit on the Liberal Bench.

We think that this is a very serious matter. I hope that it will be possible for you to revise your suggested selection of the hon. Member for Colne Valley, because it seems to us extraordinary that another Government supporter should speak immediately after the Prime Minister.

Mr. Speaker

Order. I hope that we shall be able to get on with the debate I shall say merely this to the House: I try to see that every party within the House gets a fair chance to put forward its point of view.

4.25 p.m.

Mr. Richard Wainwright (Colne Valley)

It must be disappointing to many hon. Members that the great and superior educational advantages that have been available to most hon. Members of the Conservative sector of the Opposition have resulted in such scant knowledge of the parliamentary procedure in more civilised times, when party discipline was less binding. If they had been aware of the way in which procedure was carried on in those more civilised times we could have been spared these unfortunate interjections.

The Prime Minister has just given the House a full and thorough exposition of most of the measures in the Gracious Speech. This has been dealt with in an admirably full way. However, I hope that very soon—indeed, before the House has to tackle the two great constitutional measures—the Prime Minister will en- large somewhat on the very terse exposition of Labour Party disciplinary attitudes which he revealed in his sharp exchange with the hon. Member for West Lothian (Mr. Dalyell). The hon. Member for West Lothian is known in all parts of the House to hold deeply felt, clearly worked out and sincere views of his own about devolution. He was indicating his own attitude when the Prime Minister told him that if he did not vote for the two devolution measures he would not be able to vote for much else.

I for one would like to know from the Prime Minister more of what lies behind this, and particularly before we reach the Bill on direct elections. It is enlightenment that I seek. [Interruption.] T hope that the comments now being made by some hon. Members will not be justified and that I shall get enlightenment in the next few days, particularly on the point that if the discipline of the Labour Party, even on measures of fundamental constitutional importance, is as Draconian as the Prime Minister's terse phrase suggested, how is it that towards Back Benchers who are not even on his payroll he applies this strict lash of the whip, when we understand that even to members of his Government, who owe their places to his patronage and choice, he is not applying any discipline in the matter of important parts of the Bill on direct elections?

Mr. Nigel Spearing (Newham, South)

Has it not occurred to the hon. Member that there is a perfectly logical explanation for my right hon. Friend's remarks that has occurred to some of us? He was not referring in any sense to the discipline of the Labour Party; he was referring to his view of what the electorate of the seat of my hon. Friend the Member for West Lothian (Mr. Dalyell) would do. I do not think that I would agree with my right hon. Friend on this matter, but surely that is the explanation of those remarks?

Mr. Wainwright

I must not dwell on this matter at length but I have never known the Prime Minister to usurp the prerogative of the electorate. I should be very surprised if the Prime Minister were to prejudge the eventual votes of the electorate of West Lothian. Be that as it may—

Mr. Heffer

Will the hon. Gentleman give way on this point?

Mr. Wainwright

No.

In my view and in the view of my colleagues on the Liberal Bench, the Gracious Speech contains a wide variety of measures which, for the most part, will meet the very real needs of the great majority of our people, and, what is even more important, they will meet those needs in accordance with the people's wishes. This is very largely a consensus Gracious Speech, and it is very much the better for that in these times.

Mr. Heffer

Will the hon. Gentleman give way on this point?

Mr. Wainwright

All right.

Mr. Heffer

It is a matter of some importance. We read in the Press—I should like the hon. Gentleman now to explain this—that the Liberals were insisting that Members of the Labour Party must vote for a timetable motion in relation to the question of the devolution Bills, otherwise the Liberal Party would not give its support to the Government. I want to know whether that is or is not a condition of Liberal support. If it is the Liberal Party's condition for support, how does it square with the general principle of Liberalism that the Liberals have a conscience: position in relation to legislation?

Mr. Wainwright

The hon. Member for Liverpool, Walton (Mr. Heffer) is, for once, misinformed. I am rather surprised that he should suppose that we set about our negotiations in that fashion. I repeat, for the hon. Gentleman's intervention gives me the opportunity to do so, that I should like eventually to know the answer—I am sure that eventually I shall be given it—to the question why Labour Back Benchers should be subjected to such very strict discipline whereas Ministers on the pay-roll should apparently escape on a matter of great importance.

Turning again to the Gracious Speech, everybody in the House must have noticed that there is a welcome absence from it of sectarian doctrinaire items which we usually find, November by November, smuggled into the House under a specious doctrine of mandate without any evidence of general support for those specific measures. The electorate votes for a Government on wide considerations on matters prevailing at election day and then finds to its astonishment and dismay a few weeks afterwards that it is supposed to haw, given a mandate for all kinds of highly doctrinaire and dogmatic measures. This time there is no evidence of that unfortunate characteristic.

By the same token, there are other welcome omissions. Not even the most rigorous and pedantic Member of the Conservative sector of the Opposition can find any trace of Socialism in this Gracious Speech. In 1976, for instance, no fewer than four major industries were down for nationalisation. In three cases this was accomplished.

Mr. Cyril Smith (Rochdale)

They cannot think of any more.

Mr. Wainwright

In reply to my hon. Friend the Member for Rochdale (Mr. Smith) I would say' that if one studies the manifestos of various sections of the Labour Party on3 finds that there are plenty of other items for nationalisation. For all the faults of the Labour Party, it has not run out of items for nationalisation if it ever has a majority to carry out such a policy.

Further, the Speech is refreshingly free from any offensive promise of privileges for trade unions or, indeed, for any other special section of the population, whereas in 1976 the tone of the Gracious Speech was that the Labour Government were only waiting for Lord Bullock to sign his report and they would rush into the House with measures to implement his proposals. The Government also referred, then, in terms which must now seem almost nostalgic, to a rapid advance of the planning agreement system. That is something which they have not been able to proceed with and which would certainly be wholly unwelcome to my colleagues on the Liberal Bench.

There is also a notable absence from this Gracious Speech of the Government's intended measure to give trade unionists a highly privileged position, which we always regarded as totally unjustified, in the control of company pension schemes.

Indeed, all this has been summed up by no less an authority than Mr. Len Murray, speaking last night at the Sheffield Polytechnic. According to this morning's Daily Telegraph he concluded his speech with these remarkable words : It is sometimes much more difficult to influence Labour Governments than to influence Conservative Governments. This is borne out by many parts of this Gracious Speech.

There is, however, as far as I can tell with my limited knowledge of these things in the past, a small innovation in the Gracious Speech, in that usually it is confined to legislative horses which, if not already at the starting gate, have at least been saddled. However, this time there is a curious paragraph which can be read as confessing that it is not possible at present to saddle these particular horses but that the party that is actually in power remains committed to their support and that if some miracle occurs in the balance of parties in Parliament they may rapidly be rushed out of the stable.

I refer particularly to a Bill that is repugnant to my colleagues and myself, or that would be repugnant if it were ever printed and introduced, for enabling Post Office workers to strike with precisely the same privilege and freedom as the rest of the industrial population. I say that not out of any desire to deny Post Office workers a reasonable capability to defend their standard of living but simply because the Government, on their own admission, are not able to produce a legal provision that would distinguish sufficiently sharply between the general right to strike, on the one hand, and, on the other, the right to interfere with the mail selectively in pursuance of some political objective. So long as those two things cannot be distinguished in legislative form, we on the Liberal Bench are not prepared to entertain such a Bill.

It is plainly the duty of the House—it is acknowledged on both sides in varying degrees—to spend a great deal of time this Session on two major constitutional measures. Suffice it to say that we are gratified to have had an opportunity from this Bench, perhaps in the same way as other sections of the House and public opinion have had an opportunity, to make representations to the Government about the two devolution Bills and the Bill for direct elections.

There are also six specific items in the Gracious Speech which I welcome. First, there is the commitment that meaningful consultations will be held without delay with a view to encouraging profit-sharing through the tax system. Our ideas on this will be developed in the debates next week.

Secondly, we welcome the fact that further measures are under active consideration to assist small firms. As the House knows, we played some part in promoting the idea that the Chancellor of the Duchy of Lancaster should have special responsibility for bringing forward measures of this kind.

Thirdly, we greatly welcome the preparations that the Gracious Speech announces for streamlining the Monopolies Commission, the Office of Fair Trading and the Price Commission so as to sharpen fair competition policy throughout trade and industry. For generations the Liberal Party has been consistently opposed to monopoly, and we believe that at present monopoly is too much assisted by a cumbersome collection of ad hoc bodies which urgently need merging into one efficient institution.

Fourthly, we welcome the fact that there are to be interest-free loans to first-time buyers. We hope that agreement will rapidly be reached with the building societies and other institutions so that this can be brought into practice.

Fifthly, we welcome the reference to the further development of transport policy in rural areas and the specific measures that the Prime Minister announced to the House.

The sixth specific measure to which I wish to give a special welcome is the commitment to reform Section 2 of the Official Secrets Act ". We on this Bench will eagerly wait to see the first draft of the proposals, but we hope that it is to be a very far-reaching reform, which will prepare the way for a Freedom of Information Bill, which will eventually put the British citizen on a par with the citizens of many other European countries that have gone farther than we have.

The Prime Minister rightly dealt with the totally high priority which he and his Ministers accord to further reductions in the rate of inflation, especially by insisting upon the observance of the very reasonable, perhaps generous, guidelines of the current phase of pay policy. In that, the Government know that they have unqualified support from the Liberal Party. Indeed, we wish that it could all be tightened up a good deal so that there would be fewer anomalies.

I hope that what has been said today will be taken throughout industry as a declaration that the Government, with support from most, if not all, right hon. and hon. Members, will calmly, firmly and effectively use all their massive armament of measures to ensure compliance with pay guidelines in the public and private sectors. I am thinking here particularly of cash limits and, in private industry, of the availability of selective grants to industry. These are weapons which, in our view, it is entirely legitimate for the Government to use, and, indeed, we believe that they have a duty to do so and not to give way to any nit-picking about the use of administrative weapons which may come from other quarters.

In this connection, if I may for a moment be wholly topical, we are a little concerned that the Civil Aviation Authority, in its settlement with the air traffic control assistants, may already be over-trespassing. Since clearly the Government must have many means of bringing this body to heel, we hope that they will not hesitate to use them, even to the continued dislocation of air services, which, relatively speaking, is a minor hardship to suffer compared with the breakdown of the pay guidelines.

It is not exaggeration to claim that this Queen's Speech at least represents a modest start for a new style of government, promising the country the stability to which the Prime Minister referred in his speech, and, much more important, a general sense of co-operation from the people themselves. I am sure that most Members of this Rouse, wherever they sit, have long been aware that Acts of Parliament today are virtually useless, and sometimes counterproductive, unless they have behind them the support, even if it be tacit, of the great majority of our population, especially our working population. I believe that the measures that have been put before us today in the Gracious Speech contain greater promise of co-operation from the public than those in any Gracious Speech during the years since the war.

4.43 p.m.

Mr. Dennis Caravan (West Stirlingshire)

It is obvious that much of the time in this Session will be taken up by debate on major constitutional issues.

On the question of Common Market direct elections, I am afraid that I do not share the enthusiasm of my hon. Friend the Member for Leicester, East (Mr. Bradley) who moved the Address. It is my experience—I am sure that a great many of my constituents share my belief—that since our entry into the Common Market many people have felt more and more remote from the wheels of government. I believe that a directly-elected European Assembly will simply reinforce that remoteness. My hon. Friend, rather than paying so much attention to the Treaty of Rome, should pay more attention to last year's Labour Party Conference, of which he was the chairman, which passed a resolution against direct elections. I therefore hope that at least my right hon. and hon. Friends will remember that when they come to vote on this issue.

I have a great deal more enthusiasm for the Government's proposals on devolution. I see that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) is shaking his head but he should remember that the same Labour Party Conference which rejected direct elections to Europe came out with a very firm commitment in favour of devolution for Scotland and Wales. I therefore welcome the reaffirmation of that commitment in the Queen's Speech, because the trend of devolution is opposite to the trend towards over-centralisation in the Common Market. Devolution is a trend to bring government much closer to the people. It will improve democracy and help to meet the legitimate aspirations of the people of Scotland and Wales.

I was surprised that the Queen's Speech contained no particular reference to a referendum, though I am glad to hear from other sources that the Government are still committed to having one. I am not referring to the mad-hat idea of having a referendum on industrial relations which was put forward by the Leader of the Opposition during the recess. I do not know whether the right hon. Lady was serious about that. If she is serious at all, it is simply an attempt to divide the working class to bash the miners one week, to bash the power workers the next week and to bash the engineering workers another week and so on. This would lead inevitably to a whole series of referenda, which would be most inappropriate in such a delicate matter as industrial relations. But on constitutional issues I think that the referendum is a very useful democratic instrument.

As regards the referendum on the Scotland Bill, I go so far as to say that the question put to the Scottish people ought not to be confined simply to the subject of devolution, as proposed by the Government. I would give the people of Scotland the option of absolute separation or independence—call it what one will. The people of Scotland make up a nation, and I think that they have the right, as does any other nation, to as much self-determination or self-government as they wish and even to go as far as independence or complete separation, if they so wish.

I am not questioning the motives of all those who aspire to the latter, and I think that it would be foolish for any Government to refuse to respond to such a decision if it were clearly expressed in a referendum, but I believe that the vast majority of the people of Scotland draw a line between devolution and absolute separation and I am sure that that would be the result of such a referendum.

Mr. Heffer

Is my hon. Friend aware that, after this matter came before the last Scottish Labour Party Conference, when it came to the National Executive I supported it and suggested that the National Executive should recommend it to the Government, but I got only one other vote and it was turned down by the majority of our party's National Executive? So when my hon. Friend talks of my not being in favour of devolution, I must tell him that I am in favour of the Scottish people determining whether they want devolution, independence or no devolution at all. That has always been my position and is my position now. Unfortunately, my views have not prevailed within the party, but that does not stop me from still holding them.

Mr. Canavan

I am grateful to my hon. Friend for giving that explanation of his own position. He agrees with me that the Scottish people have a right to complete independence if they want it. The question is not whether they have a right to it; the question is whether it is wise for them to use that right. That is a different matter. The vast majority of the Scottish people want more say in running their own affairs, but they utterly reject the separatism of the Scottish National Party, which, I am sorry to note, is not represented in the Chamber now.

It is obvious that support for the SNP in Scotland is beginning to wane, particularly in constituencies such as my own, where we are putting forward constructive, radical Socialist policies rather than the narrow-minded Chauvinism which seems to have swept across certain parts of Scotland in the recent past. Only on Tuesday this week, in Banknock, in my constituency, in an important district council by-election, we not only beat the SNP—we thumped them. I am sure that there will be many more such victories if candidates put forward radical Socialist policies in Scotland instead of trying to appease the nationalists, who will never be appeased.

The Scottish people reject separatism, because they are not daft. They reject separatism because they see that it would lead to social and economic disruption in Scotland. The most recent example of that is seen in the Government's decision to bring forward the Drax B order, which involves not just many thousands of jobs in coal mining and the turbo-generating industry south of the border but thousands of jobs in the boiler-making industry, for example, in Babcock and Wilcox in the West of Scotland.

Here we have a typical example of Scottish workers depending for their jobs upon something that happens south of the border, namely, a contract awarded by the Central Electricity Generating Board. No one in his right senses could imagine that the Government could have used their influence to bring forward that order if it had not been for the political muscle of a united Labour movement north and south of the border and a united trade union movement. That is what it means to working people in terms of the integrated economy of the United Kingdom. Those are the advantages of an integrated Labour movement.

Important as these constitutional issues are, I sincerely hope that they do not distract the Government from what I see as their main task in economic terms, the provision of more jobs, more realistic wages and tackling the problem of rising prices. It is important that we defeat inflation but it is surely naive to imagine that we can do this by excessive wage restraint. The majority of workers have suffered excessive wage restraint for the past two years. It is time that we made a greater effort to return to free collective bargaining. The 12-month rule has been accepted by the TUC, so there is certainly a case for saying that the trade unions should support it. It is interesting to note that the 12-month rule for wages is not accompanied by a similar rule for prices. I hope that the Price Commission will be given more powers in that regard.

The 10 per cent. limit which is being encouraged by the Government is not in the same category as the 12-month rule, because it has not been agreed by the TUC. We have reached the ridiculous stage at which a Labour Government are threatening to use sanctions against companies, whether public or private, because they are committing the "heinous crime" of paying or intending to pay their workers too much in wages. I hope that the Government will re-think this. If we are to use sanctions we should use them against the companies making exorbitant profits and bumping up the prices which ordinary working families have to pay for essential goods and services. I hope that the Price Commission will be given powers to use sanctions as a means of price control rather than the Government unilaterally using them as an instrument for wage control.

We have 1½ million unemployed. That is an intolerable number. I hope that the Government will give urgent priority to dealing with this problem in this Session. What is especially intolerable is that there should be thousands of young people who have just left school with little if anything by way of job opportunity. The national figures are bad enough, but I can give figures for certain areas in my constituency, such as Kilsyth, where the male unemployment rate is as high as 21 per cent. That means that more than one in five of the males in the Kilsyth travel to-work area are denied the right to work. That is disgraceful. I know that the local authority, especially the Labour group on the district council, is making representations to the appropriate Government Departments and agencies to deal with this situation and I certainly support it on this.

The unemployment problem will not be solved by conventional means. In the past, companies have been lured into areas by incentives, Government handouts and subsidies in the form of regional employment premium, ready-made advance factories and so on. Some companies have come into places in my constituency, such as Denny and Kilsyth, stayed there for a relatively short time, and then done a moonlight flit.

It is time that we stopped these inadequate attempts to disperse industry. It is time we stopped a regional policy based simply on State handouts. It may attract jobs for a short time, but we want industries to come to areas and stay there. That is why I welcomed the announcements by the Chancellor of the Exchequer and the Secretary of State for Scotland last week that more money is to be given to the Scottish Development Agency. If public money is to be spent to attract industry into an area there must be a reciprocal amount of public accountability. One way of achieving that is to use the public enterprise role of the SDA to take over companies. If it does not take them completely into public ownership immediately, certainly a public stake is demanded when public money is spent. I hope that the SDA will be given every encouragement in this respect.

Scottish Timber Products, in Cowie in my constituency, has recently gone into receivership. There is still hope that the SDA will come to its rescue. I sincerely hope that the Government will bear in mind the urgency of the situation. Time is running out for the workers there, and their families. I hope that the Government will bring pressure to bear on the SDA to reach a solution as soon as possible. Part of the reason why the company has gone into receivership has to do with its previous financial structure. We would be able to restructure our economy in a more democratic and Socialist manner if we had more public ownership and public participation in the ownership of industry. I hope that some of the extra money for the SDA will be used in that way to help to restructure companies such as Scottish Timber Products, thus making them more viable and more accountable.

The Chancellor was mildly reflationary with his mini-Budget last week. I hope that we shall see much more reflation of the economy. It is not a mini-Budget that we need, but maxi measures to reflate the economy sufficiently to cure the unemployment problems referred to in the Gracious Speech. The Leader of the Opposition is a well-known critic of public ownership and public expenditure. She is always talking about the growth of the corporate State and the erosion of individual freedom to which that growth inevitably leads. Recently she has been joined by another ally, one of the biggest recipients of public expenditure in the country, namely, the Duke of Edinburgh. It is about time we in the Labour movement stood up against those who are attacking public ownership and public expenditure and who are not qualified to talk about individual freedoms, liberties and opportunities for ordinary people.

For the people I represent the fact is that if it were not for the present level of public expenditure and public ownership, more than 50 per cent. would be without a job. If it were not for public ownership and public expenditure, 70 per cent. of the people of Scotland would be without a house, more than 95 per cent. of the children of Scotland would be deprived of educational opportunity and virtually 100 per cent. of the people of Scotland would be deprived of an adequate health service. That is why we believe in public ownership and public expenditure—because it means more freedom, not less. It means more freedom and more opportunity particularly for deprived and needy people whom we were elected to represent. I hope that the Leader of the Opposition and Prince Philip, the Duke of Edinburgh, will bear that in mind before they open their mouths again.

5.0 p.m.

Mr. Gwynfor Evans (Carmarthen)

There was a time when this House—particularly Labour Members—had a lively interest in the affairs of Spain. During the early decades of the Franco régime they showed great concern and sympathy for the people of Catalonia and the Basque country, in particular. I wish that interest had continued and the Government had seen fit to send a message of congratulations to Senor Taradellas, the President of the Generalitat—the Catalonian Parliament which has just been restored—and to wish the Basques a speedy achievement of self-government, which is essential to a democratic system.

There is an urgent need for the Welsh people to have this power to control their national life and for immediate measures to be taken on some matters. Centralist control has proved as great an abomination in Wales as it has in Catalonia. Erosion of the economy and devastation of national life and culture have been greater in Wales than in Catalonia. My theme will be the need for full national status for Wales, and I shall illustrate it with a number of examples.

The Labour Party, which won a General Election on the theme "Back to Work with Labour ", sees its Government presiding complacently over the worst unemployment situation in Wales since the terrible 1930s. The situation in Wales then was worse than it was anywhere else in the United Kingdom, and hundreds of thousands of people had to leave their land, mostly for England, to find work which awaited them there. The Government appear to have abandoned even their regional policy, inefficient as it was, in Wales and abandoned all attempts to develop the Welsh economy as a national economy. Wales needs as many as 200,000 jobs in the next seven years merely to give work to the unemployed and to raise the level of the Welsh employment activity rate to that of England. But unemployment in Wales is likely to increase, particularly with the decline in the steel industry.

The development of the economy in Wales has never been taken seriously by any Government. That is illustrated by the absence of a development plan for our country. A development plan is absolutely essential to the full and balanced development of our economy, and the lack of a plan underlines the Government's lack of seriousness. Basic to an economic plan would be the creation of an adequate infrastructure, including housing and transport, both of which are in a deplorable state in Wales.

"Crisis" would not be too strong a word to describe the housing situation in Wales. Forty-five per cent. of the houses were built before the war, compared with one-third in England, and 100,000 Welsh houses have been condemned as unfit for human habitation. Over 60,000 families are still on the waiting lists for council houses. The Government seem to have no idea of the magnitude of the housing crisis in our country. If they know about it, they do not seem to care. Although at least a threefold increase in expenditure on housing is needed, there has been a greater cut in housing than in almost any other public service. This situation would never have arisen for Wales if she had had her own Government.

I wish to draw particular attention to the question of transport and to press for effective control as soon as possible. For scores of years we have campaigned for a far better road programme in Wales. In the early 1960s I earned the soubriquet of "Gwynfor dual carriageways" because I pressed so hard for them. We all know the value of a good road for industrial development. It has been illustrated recently by the decision to establish the Ford plant near Bridgend. The major reason for the decision was that before long there will be a motorway in the area. If Clwyd, in the North-East of Wales, had a motorway, the Ford works might have gone to Clwyd. Roads are as important as that. Their importance applies throughout the country—to valley roads in the industrial South and the principal roads in the North. When will something be done about the A55 and the rural roads throughout the country?

Despite the huge leeway to be made up in Wales, my province of Dyfed this year is to suffer a further cut of £1,372,000 in its road allocation, in addition to the £1 million which it has to pay, but which the Government should be paying, in interest on the Cleddau bridge costs.

Unless something is done about the unclassified roads in many parts of Wales, a considerable number of farmers will have to go out of dairy farming, because the bulk tankers cannot travel along the very narrow roads in some districts. The poor quality of the roads inhibits development of the sort of industry that we need, especially in the West. A group of industrialists from that part of Wales told me recently that the inferior roads were the main hindrance to expansion of their factories and new development.

The Government have never accepted the need for a major highway running from north to south in Wales, although the Labour Party promised it is its programme in Wales in 1945. On a map of major highways of the United Kingdom most of Wales appears as a blank. The Government's contention has been that the lack of industry there makes a major highway unnecessary. Fortunately for Italy, a contrasting view was taken there. In building the Autostrada del Sole it was argued that because there was no industry for hundreds of miles there was need for a major road to attract it. A Welsh Government would have taken a similar view and built a spine road through Wales. Industry and commerce follow roads and efficient lines of communication as surely as trade follows the creation of a Government. That is as true of railways as it is of roads.

The southern part of Wales is probably still the most busy railway region in the United Kingdom, outside London. For years it was the most prosperous railway region in the Western Region, and the Western Region was the most prosperous of all the regions. But in the Beeching era there were closures which decimated the railways in much of Wales. In the early 'sixties the railways in Southern Wales were making handsome gross profits, and 84 per cent. of the income came from the carriage of freight. Much of the income still comes from the carriage of freight. Nevertheless, the lines were decimated.

That is a striking example of the injury caused by remote centralised control. Looked at from London, where the decisions are made, a railway system serving 5 per cent. of the people of the United Kingdom—the 5 per cent. who live in Wales—seems small, boring and unimportant, but looked at from Wales it seems very important. The people who had responsibility in Wales for the railways and the buses had no heart in the matter, because they had been brought in from outside and frequently knew nothing of Wales and little of local conditions. To say that they cared passionately for the welfare of Wales would be an overstatement. Posting to Wales was for them as often as not just a step in their careers on the way to better jobs in England. Neither in London nor in Wales have we had people with their hearts in the job of building a flourishing Welsh transport system.

A highly placed official in the British Transport Docks Board told me recently that the only people he had ever known to canvass him for traffic for the railways were trade union officials. In every fight for the defence of Welsh railways it is the trade union officials who are in the forefront. But for them, the position would be worse. However, even they have not succeeded in persuading the Government to invest in the electrification of Welsh railways. In England, 2,000 miles of the railways are electrified. There is not a yard of electrified railway in Wales. Among countries which are not exporters of electricity, as Wales is, in France 27 per cent. of the railways are electrified ; in West Germany the figure is 30 per cent.; in Japan, 33 per cent.; in Norway, 58 per cent.; and in Sweden 62 per cent. Self-government for Wales would have meant electrification and modernisation of the railways.

The few paragraphs about Wales in last year's transport consultative document do nothing to increase our confidence in the future. The problem was simply shunted to the devolved Welsh Assembly—which the Government then betrayed—and to the county councils. The stay on investment renewed fears about some of the remaining lines in Wales. In the document, lines were noted as "national" lines when they were in England. There were only a few miles of "national" lines in Wales. The rest were demoted to local lines in a most arrogant way. It must be insisted that there should be no further closures in Wales until we have our National Assembly and that Assembly has examined the situation in depth. In the meantime, the remaining part of the network should be developed with determination, and the policy of transferring at least heavy freight to rail followed with enthusiasm.

London's attitude to the rail system is typical of the attitude towards every aspect of Welsh transport. For example, the Government have spent tens of millions of pounds on airport development in England and Scotland but none on airport development in Wales, yet Cardiff-Rhoose Airport should have been developed as the national Welsh airport. Again, in addition to its rail responsibilities, British Rail is responsible for some Welsh ports, including Holyhead, where the position contrasts very much with that of Fishguard. At Fishguard, British Rail's unhelpful attitude to Wales has been illustrated by the decision to close the ferry service to Waterford from Fishguard, which employs a substantial number of men. The Irish authorities were more co-operative than was British Rail, which from the outset showed determination to close this service, as it had already closed the Fishguard-Cork ferry service.

The story of the Fishguard-Cork service is most interesting. When British Rail decided to close it, the Irish authorities acted for themselves. They found the money to create a roll-on/roll-off system in both Cork and Swansea. Then they borrowed money in Germany to build a fine new boat, which now plies with great success between Swansea and Cork. But it is second best. It takes five hours more to go from Swansea to Cork than to go from Fishguard to Cork—very often, five hours more of seasickness. If it had had genuine concern for Fishguard and the lines west of Swansea, such initiative would have come from British Rail—and a Welsh Assembly would have assured that.

Then there are the Welsh ports which come under the British Transport Docks Board. Here again, we see underlined the need for autonomous Welsh control. All the Board's ports in the United Kingdom in 1976 made a total profit of £27½ million. Of this figure, £12¼ million was made by the minority of Welsh ports—that is to say, 45 per cent. of the profit was made by the few Welsh ports. Not one Welsh port, even the smallest river port, is losing money. Too much of the profit made in Wales in invested in English ports, whereas Welsh ports very often have to make do with second-best equipment. They do not get a fair crack of the whip.

Situated on the Severn estuary—the biggest estuary in Europe—the major ports in South Wales include six deep-water ports, and at least one of these would probably have developed into a Europort by now if we had had control in Wales. Milford Haven and the Swansea complex both have that capability, but Milford Haven has been all but ruined by oil development and has not developed as a general cargo port. The Government have handed out tens of millions of pounds to huge American companies disgracefully to ruin Milford Haven, but those companies would probably have been only too glad to be paid to develop that port if they had been given the chance.

We should still consider levying a halfpenny or a penny a gallon on the oil which comes in in such vast amounts to Milford Haven, and investing the money in an area which has tremendous unemployment.

As things are, Swansea and Port Talbot —the latter deals with ships of over 100,000 tons quite easily—provide the best site for a Europort. Here, industrial relations, as elsewhere in Welsh ports, are excellent —almost wholly strike-free—due largely to the quality of tie management. The Severn seaports are in a position superior to that of any ports on either side of the English Channel, one reason being that the journey to them from all parts of the world is shorter, but another more important reason being, of course, that the English Channel is so congested and dangerous. There are constant accidents and incidents in the English Channel, and the position will get worse as its traffic increases further.

What is needed is the further development of the land bridge between the Welsh ports and the industrial areas, up to and including London. There are still excellent rail services for freight and passengers—some of the heaviest freight carried in Britain is carried in Wales. I am told that the biggest trains in the United Kingdom operate four times a day from Port Talbot. There is plenty of land for industrial development, as, for example, in the 10,000 acres in my constituency known as Cydweli Flats, between Llanelli and Cydweli; and some of the most beautiful coastline and hill country is within half an hour's run.

Everyone I have spoken to who is involved in the running of these ports—fortunately, they are controlled mainly by Welshmen—agrees that there is the strongest possible case for autonomous Welsh control. The opportunities that exist are not being seized under the present centralised system. The need is for a decentralised system. The need is as great there as in every part of Welsh transport and Welsh life. Had we had control ourselves in Wales, these ports of ours would have been modernised and developed, together with other forms of transport, with great benefit to the whole life of the Welsh people. The whole way that Welsh life is run must be changed in the direction of Welsh autonomy. Not before that happens shall we really see the Welsh economy take off and develop.

5.16 p.m.

Mr. Jim Marshall (Leicester, South)

I hope that the hon. Member for Carmarthen (Mr. Evans) will forgive me if I do not follow him along the particularly hilly road in Wales that he has chosen to discuss. My intention, unremarkable as it may be, is to outline one or two dissatisfactions with the Gracious Speech and two matters which, in my view, require legislation which is not foreshadowed in the Gracious Speech.

The Gracious Speech this year is remarkable for the fact that it appears to leave out more than it includes. In my view, it leaves out important areas which require legislation while proposing to introduce legislation for matters which are not so urgent. For example, I regret that the Government are persisting in bringing forward a Bill for direct elections to the European Assembly.

I concede at the outset that I understand the Government's difficulties and their political reasons for bringing in such a Bill. One of these is the obligation that we have to the Liberal Party, amply represented at the moment by the hon. Member for Rochdale (Mr. Smith). Secondly, there is the fear that the Government may have of certain kamikaze-type pro-Europeans, particularly on this side of the House. I say to some of my pro-Europe colleagues who are leading this lemming-like dash to get us both into Europe and into direct elections, that such precipitate action is disgusting. They appear to be willing to forgo and give up any degree of our national sovereignty. I hope that we can still defeat the Bill for direct elections.

I should like to correct one of the many misinterpretations which my hon. Friend the Member for Leicester, East (Mr. Bradley)—and he is a personal friend as well—may have given. He said, quite correctly, that under the various treaties there is a commitment to direct elections to a European Assembly. But I remind him that nowhere in those treaties is there a commitment to direct elections in 1978, and if the truth could be known many of the founding fathers of the EEC would turn in their graves or in their prospective graves if they thought there were to be direct elections to a so-called European Parliament when there are no meaningful organisations—other than the disgraceful common agricultural policy—for it to oversee at present. No one can convince me that the commitment to direct elections, which does appear in various treaties, could have been conceived for the kind of Europe that we have at present.

My own view is that at this point in time direct elections are not only totally irrelevant but also highly dangerous. Until we have decided what kind of Europe we want, whether confederal or federal—the Prime Minister may have unwittingly set us on the right road in this regard—there is, in my view, no need at all for direct elections. That central question has not yet been decided, particularly in this House, which is the sole repository of the national interest of this country.

Mr. Nicholas Scott (Chelsea) rose—

Mr. Marshall

I shall give way to the hon. Gentleman shortly. One esteemed former Member of this House has already decided what his attitude will be in regard to the European Assembly. I should like to refer to The Guardian of 28th October 1977, in which the views of Mr. Roy Jenkins are set out. The House may like to be reminded that he is the President of the Common Market Commission. In one of his famous speeches, dealing with the need for a single European currency, he said, according to this article, that he was proposing a major step to the kind of federal State which is anathema to many of his former parliamentary colleagues, particularly those in the Labour Party. He said that monetary union would mean a transfer of important powers from national Governments to a new Common Market authority ". My view is that the opinion espoused by Roy Jenkins is not untypical of that shared by many of his colleagues in the Commission and also by many pro-Marketeers, both in this country and thoughout the other nine countries of the EEC.

Mr. Scott

I am a little confused, if I may say so, by what the hon. Gentleman has said. In the first place, he said that there are no institutions developed inside Europe that a directly elected Assembly would have to overlook. There are, indeed, some dozen directorates-general within the EEC Commission working busily and producing regulations and directives all the time. It seems to me to be essential that these are properly scrutinised, and only a Parliament can do that. Is the hon. Gentleman's point that we do not want a European Assembly at all or that we do not want a directly elected European Assembly? If he does not want a directly elected Assembly, people will still have to be chosen to go to Europe to supervise these things. If he does not want a European Assembly at all, who is to supervise the work that is being done?

Mr. Marshall

I understand the lion. Gentleman's point. If he will permit me to develop my argument a little further, I may be able in some small way to answer and refute it. If I recall correctly, what I said originally was not that there were not any European institutions. I said that there were no meaningful European institutions, particularly political, economic and social institutions, which would require legitimacy to be conferred upon a directly elected European Parliament to oversee them. I accept that there are institutions and that national politicians are needed from the nine member State to look after them. The question I am putting is whether there needs to be a directly elected Assembly, with the full stamp of legitimacy which universal elections would give to it, or whether there should be an indirectly elected Assembly, with this House sending representatives to it. That, in my view, is the basis of the argument whether we are to have a confederal or a federal Europe.

I was trying to make the point earlier that there are people in high positions in the Commission who have already made up their minds that they want to see a federal Europe. I quoted from The Guardian of 28th October 1977, in which Roy Jenkins, the President of the Commission, makes his position quite clear. As I said earlier, I believe that his view is shared by many of his colleagues in the Commission and by many pro-Marketeers, not only in this country but throughout the eight other EEC countries. I believe that they see direct elections as a means of pre-empting the discussion on whether we are to have a confederal or a federal Europe. I believe that they see direct elections as preempting the discussion in their favour. Once they have a directly elected Assembly—I refer particularly to the Commission and to the pro-Marketeers who favour a federal Europe—they will see it increasingly as a counterweight to the Council of Ministers. I believe that they will be tempted to get power away from the Council of Ministers to a directly elected European Assembly.

We must remember that at the present time the Council of Ministers represents the national interests of the nine member States of the EEC, and that if a British Minister makes concessions in the Council of Ministers he is responsible to this House. This House of Commons, in my view, is the only place which can determine the national interests of this country. Those interests cannot be determined by some European Assembly, whether directly or indirectly elected, meeting somewhere within Europe. I only hope that sufficient of my parliamentary colleagues will continue to oppose this piece of legislation at every conceivable opportunity.

I indicated at the outset that I should like to see the Government bring forward two pieces of legislation which are not at present included in the Gracious Speech. The first is concerned with home-working and out-working. I know that the hon. Member for Colne Valley (Mr. Wainwright), who spoke on behalf of the Liberal Party, also takes a close interest in this question. I believe that home-workers and out-workers represent a great pool of exploited labour, and very little is yet known about it. There have been surveys and some recent investigations, but it is still largely an unknown area. Local authorities are supposed to keep lists—and I presume they do—of the number of home-workers within their own local authority area, but there are inadequate inspection facilities and there is a lack of financial assistance to ensure that inspection is adequately carried out. No attempt at all has been made to collect statistics centrally on the number of home-workers and out-workers in this country.

In the main, these people work for very low wages, particularly here in London, with none of the advantages which accrue to factory workers, such as sickness and unemployment benefit and paid holidays. Their livelihood, if such it may be called, is dependent entirely on the whims and idiosyncrasies of the people who provide them with work to do. My own view—I hope that the Secretary of State for Employment can be persuaded to share it—is that the time has come to follow the excellent example of the Federal Republic of Germany, which has introduced the most radical legislation concerning home-working. The cornerstone of that legislation is to make the home-worker or out-worker the employee of the person providing the work. Once these workers are treated as employees they become eligible pro rata for the benefits which ordinary factory workers are eligible to claim. I hope that the Secretary of State for Employment and the Government will be encouraged to pursue vigorously the course of action and the type of legislation implemented by the Federal Republic of Germany.

The other area on which I shall comment was outlined earlier by my hon. Friend the Member for Leicester, East—namely the so-called flexible changes in local government structure—the so-called organic approach to changes in local government structure. The House may recall that this particular animal first reared its head as a result of the speech made by the Secretary of State for the Environment on 29th January this year. Basically, what is called for is a reallocation of functions between' the present non-metropolitan counties and some of the present non-metropolitan district councils, particularly those non-metropolitan district councils which were county boroughs prior to the reorganisation in 1974.

Whatever else we may agree upon tonight, I believe that there is a unanimous view in the House that the 1974 reorganisation was an utter disaster. It led, admittedly, to a bonanza for certain officers, but it also led to the reduction of certain services provided to all classes of ratepayers.

I quote from a letter dated 31st October 1977, from the Association of District Councils, which represents the 333 non-metropolitan district councils. The association says in the letter to all vice-presidents of the association in the House of Commons: The ADC is particularly concerned about the expense, waste, uncertainty and delay stemming from the present overlap and duplication of powers. That organisation might, in certain circumstances, be accused of beating the drum on behalf of its 333 members. However, in this case it is absolutely right. The reorganisation of 1974 has led to increased expenditure and a deterioration in the services provided for ratepayers.

Political opinion in this instance cuts across party lines. In my town of Leicester there is a unanimous view among both Labour and Tory politicians that there is a need to return powers, particularly in personal social services and education, to the town hall from the county hall.

This view is reflected in the nine or so other large non-metropolitan districts—districts such as Nottingham, Derby and Southampton in addition to Leicester. My view is that the case for the return of these powers is irrefutable. The non-metropolitan district councils are responsible primarily for housing. If one looks at the nine or 10 largest non-metropolitan district councils one sees that they provide directly upwards of 30 per cent. of the housing accommodation in their areas, and indirectly they affect housing needs and requirements of the remainder of the population.

It is silly to pretend that these councils can plan housing and determine housing needs without impinging directly on requirements in the fields of social services and education. If we are to have closer co-ordination and collaboration between housing, social services and education it is imperative that the powers for all these services should reside in the same hands. The best hands for this purpose are those of the town halls of the nine or 10 largest non-metropolitan district councils.

We were led to believe that proposals along these lines would be brought forward in the Queen's Speech, and many of us are extremely disappointed that they have not been included. We shall do our utmost to ensure that proposals along these lines are introduced as speedily as possible because this is the only way in which we can provide the kind of services to ratepayers, householders, receivers of social benefits and recipients of education to which they are entitled, and which local authorities have a duty to provide.

5.35 p.m.

Mr. Victor Goodhew (St. Albans)

It is inevitable that on this, the first day of the five-day debate on the Gracious Speech, hon. Members' contributions should seem somewhat disjointed as there is no common theme or special subject. Therefore, we are all tending to ride our own particular hobby horses around the Chamber. I hope that hon. Members who have spoken before me will not think me discourteous if I do not take up every point that has been raised.

The hon. Member for Colne Valley (Mr. Wainwright) attempted to justify the very peculiar stance of the Liberal Party. He said that he was very glad that there were not many immoderate things in the Queen's Speech, but he expressed concern about commitments for the future. If there is any risk of these commitments being carried out it will be only because the Liberal Party saved this Government from certain destruction at the polls earlier this year. Therefore, I do not see that he has any right to express concern about the risks that he and his party have incurred on behalf of the whole country, and for which they shall be held to blame if these commitments ever come about.

It is very tempting to talk about all the things that are worrying one's constituents in a debate such as this. I could talk about Luton airport, which is threatened with expansion and which is the cause of great discomfort and distress to my constituents. I could also talk about the toxic waste plant which has been allowed on appeal by the Secretary of State for the Environment who is supposed to be protecting the environment. Yet he has allowed this plant to be built in an area of natural beauty, the Ver Valley.

I could also talk about matters such as the Bedfordshire Structure Plan with an expansion to Luton, which is, an enclave in Hertfordshire, and in effect an extension to Harpenden—which is in my constituency—and which is separated from Luton by Luton Hoo. I could also discuss the rate support grants and the monkeying about by the Government, which has brought about an increase in rates in my constituency, and has resulted in the average householder paying higher rates than those applicable in London, where special relief is being provided.

Instead of discussing all those things I want to talk a pout something which affects the constituents of all hon. Members in this House. It is a matter which is referred to in the Queen's Speech—the conference in Belgrade which flows from the Helsinki Accord.

One of the subjects dealt with at Helsinki, to the reluctance of the Communist countries was the question of human rights. If we talk about human rights we must talk about protecting them throughout the world, and not just in particular places. There are pressure groups which spring up from time to time which mainly attack Right-wing Governments. We know that this is part of the propaganda war, and that is a war which we in the West seem quite happy to lose if necessary. I cannot think why.

This country should be consistent in condemning the denial of human rights wherever it occurs. One cannot be selective about this and remain credible. This House of Commons should set the example, and the Government should support the House. Unfortunately, together with the United States Government, and other Western Governments, the British Government have fallen into the trap of adopting double standards—no doubt learned at the United Nations.

We have a situation in the case of Rhodesia where the Government are attempting to impose a constitution which incorporates the kind of human rights which they would like to see. It is not a question of allowing the people of that country to decide as a matter of self-determination what their constitution will be, but an attempt to impose a constitution from outside. Pressure has been exerted on South Africa, despite the fact that they were invited to go into Angola by the United States Government to try to prevent the Cubans from imposing their influence but were told to get out again and were then attacked for their internal policies. There is constant pressure on South Africa and there have been threats of sanctions on arms supplies and even attempts at economic sanctions all round, with no strong objection from our Foreign Secretary.

These are counter-productive measures. We have experienced a period of years when we have been applying sanctions in Rhodesia, but we have driven the Rhodesians into more and more extreme positions. The Conservative Party has always said that that would be the result, and that is what has happened. If the Government think that they have been acting cleverly, I invite Labour Members to go to Rhodesia. They will find that the Rhodesian dollar which was set at 10 shillings—a unit selected when we went decimal—now costs one pound. In other words, one has to pay twice as much for a Rhodesian dollar as one would normally expect. If that is not an indication that we have failed to ruin the Rhodesian economy—and certainly an indication that the Labour Government have succeeded in ruining ours—I do not know what is.

There has been reaction in South Africa to recent statements by the United States Government and also by our Labour Government. The South Africans have reacted in an entirely different manner from that which any of us would wish them to react. We have driven the South Africans to take the view "If the world is against us, we shall do our damnedest". That is not the right way to go about matters.

When the Foreign Secretary recently visited Moscow did he threaten Mr. Brezhnev and say" We will stop our credit to you and will ask the United Nations to introduce economic sanctions against you unless you agree at once to demolish the Berlin Wall and destroy the Death Strip which divides East and West Germany and which is a direct violations of human rights "? The Foreign Secretary did not do so, and we know why. He feels strong enough to bully Rhodesia and South Africa, but he would not dare to take the same course with Soviet Russia. It is blatant hypocrisy of the worst possible kind. I accused the Prime Minister of hypocrisy on other lines this afternoon, and he shouted "How dare you do so?" However, when I tried to get him to give way to ask him a question, he would not dare to do so. He is well aware that there is much hypocrisy in these days.

I accept that a good case can be made for trading with all countries and for having cultural exchanges, combined with the use of secret diplomacy which can result in a much better situation because pressure can be applied behind the scenes. For my part, I think that there is much greater scope for influence in this way than by public posturing and demonstrations. But if this is accepted by the Government as being the better way of dealing with the Kremlin, why is it not used in the cases of Rhodesia and South Africa? We know why. It happens because there is pressure from front-line Presidents and other Governments in Africa, backed in turn by Communist Governments. But are we so certain in giving way to that pressure that basic human rights are protected by those Governments who are virtually blackmailing us into actions which are not supported by the majority of our citizens?

On the contrary, we know that the vast majority of the countries whose Governments put pressure on us and blackmail us into this situation are countries in which human rights do not enter into the thinking of Governments. In the main, they are one-party States or dictatorships where almost invariably power is put into the hands of ruthless men, and human rights suffer accordingly. We protest about President Amin, but we support President Machel in Mozambique and we send him £5 million to allow him a little more money to spare to arm terrorists who murder black and white people in Rhodesia. We ignore the civil war in Angola, and we also ignore mass murder in Cambodia.

We make no protest about events in Vietnam, and no Foreign Secretary has gone to the United Nations to move motions on that score. We make no protest about the plight of the people of Vietnam who come swarming out of that country whenever they can get on a boat, however small and overcrowded it may be.

Compassion cannot be selective, and it is no good pretending that it can be. We in this country should be saying firmly, even if we cannot convince the United States and others, that we will not be selective with compassion because it is impossible to be so. We either believe in human rights or we do not.

The worst aspect of Her Majesty's Government's position is that they are being pressurised by our potential enemies into attacking our friends. Thus, they are seen to be hypocritical and also so weak that they are prepared to undermine the security of the free world Appeasement has never paid, and we in this House, if nobody else, know that so well, but the Government have been led by the nose so far down this primrose path that the security of our country and everything for which we stand is already put at risk. It is high time that Her Majesty's Government realised this and pulled back from this dangerous course before it is too late.

5.47 p.m.

Mr. Cyril Smith (Rochdale)

I believe that it is some years since a Back-Bench Member of the Liberal Party has addressed the House of Commons. I am delighted that Mr. Speaker took the view that a Back-Bench Member of my party —or, to put it another way, an unofficial spokesman—should be invited to address the House rather than what are described as official spokesmen. I make that point because I understand that representations were made to Mr. Speaker by my party that official spokesmen of the party were the people who should be called to speak on its behalf today. [HON. MEMBERS:" Gag."] The effect of that representation would have been effectively to muzzle me. That may be what some of my colleagues desire, and I am glad that Mr. Speaker took the view that he had a responsibility to protect all Back Benchers.

I am pleased to be able to address the House today, first, because I want to say one or two things about Liberal influence, or lack of it, on the Queen's Speech and secondly because it is five years since I took my seat—or seats—in this House. Indeed, it is also five years since I made my maiden speech, and things have not changed, because the speech I made on that occasion I could very well repeat today.

In that maiden speech I dealt particularly with two subjects. One was the plight of the textile industry, and the other was the issue of television licences for old-age pensioners. Both those problems still exist today, and in the light of that experience one could question the effectiveness of the House of Commons itself, and of Back-Bench influence within the house of Commons. I regret that the Queen's Speech contained no mention of any reform of the House and the way in which it carries on its proceedings or of the committee system in Departments and so on.

There was reference in the Gracious Speech to unemployment and the desire of the Government to reduce the level of unemployment in this country. In that respect, I regret that the Gracious Speech made no particular reference to the textile industry. Of course, that hardly surprises me because this Government like previous Governments—have ratted on the textile workers of Lancashire and, indeed, on all the textile workers in this country. If the Government were as concerned about jobs in the textile industry as they apparently are about jobs in the car industry, the textile industry would be in a much better position than it now is. All that the textile industry has sought from the Government—as it has from previous Governments—is a fair deal.

The textile industry is a good one with modern equipment. It is not afraid of competition, but it seeks fair competition. I hope, at any rate, that the Government will stick to their guns in the last stages of the current Multi-Fibre Arrangement negotiations During the recess, the Government declined to give any extension to the temporary employment subsidy for the spinning section of the industry or financial assistance to help with stock holding in the textile industry, and refused to do anything about curbing imports.

The Government have talked about sanctions on various parts of industry to help to contain wages and, therefore, inflation and so to do something about reducing the level of unemployment. However, the Government should also consider applying those sanctions to sections of industry that may be deliberately causing unemployment in this country. I understand that 400 redundancies are pending in the textile industry in Lancashire during the next five weeks because of the policy of the Goodyear Tyre and Rubber Company which has decided to purchase tyre fabric from Luxembourg. As a consequence, three mills in the North—one of them in my constituency—are likely to be faced with extremely serious problems.

I understand that the reason that Goodyear has decided to purchase from Luxembourg tray be that Luxembourg was producing for America but the American Government objected, so it therefore decided to produce for this country instead. Certainly, orders for tyre fabric that were being placed by Goodyear with British companies are now ceasing. In two cases they have already ceased and are about to do so in a third. Four hundred jobs are at stake. Goodyear supplies many Government contracts—for example, tyres for various army trucks—and I hope that just as the Government have been willing to use sanctions against companies that break the pay code, they will consider using them against companies that deliberately, as a matter of policy, create unemployment in this country.

I noticed also in the Gracious Speech that the Government will give the highest priority to further reductions in the rate of inflation ". It may be that one of the best ways to do that is to suspend the sitting of the House for a long time because the economy of this country semed to take an upturn while the House was not in Session and it did a jolly sight better in the last three months when we were not here than it did when we were making speeches about inflation. It may be that one way to assist further the reduction in the rate of inflation is to extend the length of the recess.

Something that has intrigued me during the last three months—particularly in relation to some of the speeches of the economic spokesman of my own party —has been the way that we seem to have moved away from talking about a 10 per cent. increase in earnings to talking about a 10 per cent. increase in wages as the norm. Three months ago I was told by our economic spokesman that a 10 per cent. increase in wages represented more than that on earnings, and so I am intrigued that a 10 per cent. increase in wages now appears to be acceptable. I hope that the Government will take note that some of us are not unaware of the shift in emphasis from wages to earnings or that a 10 per cent. increase in earnings means a 6 to 7 per cent. increase in wages. We should find it difficult to accept in the months to come that the Government have been able to contain the wage increase at the level that they told us was necessary for containing inflation.

In my maiden speech I also referred to the need to do something for pensioners. I particularly mentioned television licences and the fees that pensioners paid for them. I regret that there was nothing in the Gracious Speech about that ploblem. Age is a growing problem in this country. I said in Committee before the recess that the Government are not grappling the growing problem of age. I am speaking not in economic terms, but in terms of loneliness. Senior citizens are now living to greater ages. Most if not all of us welcome that, but because people are living to greater ages—and this is particularly true of women—the problem of lonelines is growing. I have always advocated the need for television licence fees to be reduced for pensioners, not on the basis of economy for pensioners but because of their loneliness and the ability of television to combat it.

During the last seven days, I have spent a considerable amount of time on the problems of old people and loneliness in Rochdale. Some of that loneliness has been caused by the Government's economic policy. During the last two weeks, hospitals in my constituency have been pushing people out into the community because they were not in need of surgical care and were therefore the responsibility of the community. However, the social services departments of local authorities do not have facilities to deal with the influx of cases with which they have found themselves confronted. During the last 10 days in my constituency I have seen, and been involved with, elderly people who have been put out of hospitals, and for whom the social services department do not have facilities available and with whom they are totally incapable of dealing. I hope that something can be done during this Session to give serious consideration to the problems arising from age—outside the economic sphere—and to deal with the social problem.

Mr. Gow

I am most interested in this. Does the hon. Member for Rochdale (Mr. Smith) know what proportion of retirement pensioners who do not now have television sets might have them if their licence was free?

Mr. Smith

I do not know, but I suspect that the number would be a reason- able proportion. One of the problems is not merely the number that do not have sets but, equally important, that some of the people who do have sets pay a reduced fee while others do not. That gross unfairness causes problems.

There was a reference in the Gracious Speech to nursing, and the Prime Minister referred to it this afternoon. I hope that when the Government consider nursing they will not overlook district nurses and the need for some kind of statutory training for them in dealing with the problems that they encounter with elderly people.

Frankly, the Gracious Speech was nothing to get worked up about. As an hon. Member said earlier, it is notable not for what is in it but for what is not in it.

The House will have noticed that I have said nothing about the Liberal influence in the Queen's Speech. That is hardly surprising, because I do not think that the Tribune Group has much to get worked up about. It is difficult to say "owt about nowt". When I read the Gracious Speech for the first time, I was intrigued to try to discern what influence my colleagues had exercised over its preparation.

Let us examine some Liberal proposals and how they appear in the Queen's Speech. We are promised devolution Bills for Wales and Scotland. I accept that this is good Liberal policy, but I suspect that the Bills have been included for the benefit more of the Labour Party than of the Liberal Party.

We go along with direct elections to the European Parliament, but they were promised in the last Session and a Bill was introduced before my colleagues decided to extend the present basis of agreement. We cannot claim that the extension of the agreement had any influence in that respect, though I accept that the original agreement did have some influence.

There is a reference in the Queen's Speech to profit sharing. That is excellent, but what is to be done about it? We are to talk about it. That is all. There is a reference to industrial democracy. That is another Liberal policy, but what are we to do about that'? We are to have "further consultation". There is a reference to small firms. They are another concern of the Liberals, but what is to be done here? "Further measures" are to be considered.

There is a reference to help for "first-time home buyers ", but although we may have had some influence on the way in which that help is to be given, the decision was announced originally by the Minister for Housing and Construction before the Summer Recess. It is difficult to believe that we had any influence in getting this provision into the Queen's Speech.

It is true that there is no extremist and no very socialist measures planned for this Session, but I have a feeling that this not so much because of the Lib-Lab pact as because of the mathematics of the House of Commons. It may be that not merely the Liberals have told the Government that they do not want certain things included. No doubt the Government understand that if they tried to introduce them, they would rot get a majority in the House.

I concede that the Liberals have had some influence, but it is only in persuading the Government to talk to them. Though I shall not be sharing it, I shall watch with interest as my colleagues approach their task of exerting influence on the Government in their talks. However, if I were my colleagues, I should not spend much time trying to influence the Government in the talks because I believe that much of the Queen's Speech is academic since the Government will call—not necessarily by choice—a General Election during this Session. Much of the legislation and the talks will be academic because the Government will pull the rug from under my colleagues and go to the country to seek a mandate to continue with a clear majority.

6.4 p.m.

Mr. William Hamilton (Fife, Central)

The views of the hon. Member for Rochdale (Mr. Smith) on the pact between the Liberal Party and the Labour Party are well known and, in some ways, I share them. I welcome the pact about as much as he does, but if it ensures the Government's survival for another 12 or 18 months or, preferably, two years, the national interest will be well served by that. Whatever the hon. Gentleman's views on the pact, I think that he would agree with that proposition. One has only to look at and, still worse, listen to the alternative Government to realise that, however bad the present Government may be, the alternative is a damn sight worse.

The speech of the right hon. Member for Finchley (Mrs. Thatcher) was indicative of this fact. It was an extremely low-key and thin speech and it conveyed nothing about what the Conservatives would do if they were faced with the problems and challenges facing the Government. It was a boring start to what may, I fear, be an extremely boring Session.

To some extent, the Queen's Speech has been overshadowed by outside events that seem to suggest that the Government's most formidable enemies are within the Labour movement. These events have threatened to destroy in a few short weeks all that has been so painfully achieved in the last 12 months.

A few days ago, the Government's grave appeared to have been dug by the miners' ballot. As soon as the grave seemed to have been dug, Maggie was the eager undertaker with her pall bearers Geoffrey, Jim, Keith and Willie. One prop was missing from that grisly scenario—there was no body. On the contrary, the patient was alive and well and showing remarkable signs of a willingness and ability to survive and prosper.

The Prime Minister earlier gave an indication of the yardsticks by which we measure national recovery. Month by month, almost day by day, we get stronger and stronger, almost to the point of embarrassment because this growing strength creates its own problems. Of course, however promising certain indications appear to be, we are a long way from being out of the wood. Frightening and serious problems remain. Inflation is still too high, unemployment is obscenely high and low productivity and low investment are long-standing problems. None of these began when this Government came to power.

Health matters were referred to in the opening speeches and all the social services have been starved of resources. I believe that at the next General Election, whenever it comes, the people will decide which of the two main parties is best able and best equipped with the policies and persons to solve these problems and I have no doubt about what the answer of the miners and, I suspect, the great majority of the electorate will be.

I wish to say a little about the miners' pay claim and I speak as one who was born and bred in a mining community. My father was a miner, so I know a little of what I am talking about. The archenemy of mining communities throughout Britain in the past two centuries has been the Tory Party and the system that it has stood for. In my native Durham it was, and probably still is, more respectable to be a prostitute or a money lender than to be a Tory and the same could probably be said of South Wales, the Midlands, Yorkshire and Scotland. The loyalty of mining communities to the Labour Party has never been in question.

The frustration of the miners over the past year or two is understandable. We all realise the problem with wages, but I say to them that they are a special case in regard to wages. They always have been—but so, too, are our nurses, of whom I have spoken often enough in the House —so, too, are our firemen, so, too, are our farm workers and so, too, are the police, not forgetting hard-pressed minorities such as old-age pensioners, widows, one-parent families and countless others. The only democratic body that can decide between one and the other of those categories is the elected Government. No union and no pressure group inside or outside the House can determine those priorities. Rightly or wrongly, we have a democratically elected Government to do the job.

I continue to say to the miners that they deserve £135 gross a week or more. That or some higher figure should be the target. Indeed, their conference resolution said precisely that. If any Tory Members doubt the reasonableness of that claim, I issue an invitation—it is issued especially to Tory lady Members because with one or two exceptions they are probably the most reactionary body in the House. I will gladly arrange a trip down a coal mine, preferably the Seafield Colliery that runs under the Firth of Forth, which is north of Edinburgh, where there are gradients of about one in two. Imagine working on such a gradient with a ceiling of three feet and taking home, if one is lucky, about £50 quid a week.

Mr. Nicholas Winterton (Macclesfield)

Is it economic?

Mr. Hamilton

Yes, it is economic, but there is blood on it. If Tory Members want to go to a pit in Durham or under the North Sea, I can arrange that, too.

When my father worked in the pits I used to go to get his pay, and very often there were fewer than two pound notes in the pay packet. My father was working in a seam 17 inches high for eight hours a day. We have progressed since then, but it is still not a bed of roses. If Tory Members doubt the validity of these arguments, let them go and see before they talk about the men and the industry in the manner that they so often adopt.

Mr. Patrick McNair-Wilson (New Forest)

I cannot claim to be a coal miner but I have studied the industry with some attention for 20 years and I have been down a number of pits. Nobody doubts the difficulty and danger of the work that is done by coal miners. I should like to see them earn whatever they can consistent with the price of energy and productivity. Is the hon Gentleman saying that the special case to which he refers means that above all the others that he has mentioned the miners should have their pay and that the others will have to watch the queue being jumped?

Mr. Hamilton

I thought that I had covered that point. I hope that the hon. Gentleman reads what I have already said. I shall answer his question further in my later remarks.

I shall try to assess the present position consequent on the ballot. The Prime Minister was very firm this afternoon and he met with considerable support in all parts of the House. I hope that he does not foresee—I do not think he does—the sort of confrontation that we had in 1974. In my view the present situation is very different from that that prevailed in 1974. First, the miners do not want to get rid of this Government as they did of the Conservative Government; that is for sure. Secondly, the present Prime Minister is a much more flexible being and is far more understanding of the miners' problems than the rigid Tory Prime Minister of 1974. Thirdly, and overwhelmingly, public opinion is seen to be and is known to be on the side of the Government in what they are seeking to achieve in the round.

I believe that a compromise can be worked out. To some extent the compromise has been underlined by the statement issued in the past 24 hours by the leaders of the National Union of Mineworkers in calling on their members throughout the coalfields for the increased productivity to which reference has been made. The Government's present incomes policy specifically states that if the productivity comes the 10 per cent., 6 per cent., or 5 per cent., whatever it is, goes by the board. If we can increase productivity so that increased wages can be matched by the product produced, so much the better. There is no doubt that if that happens the interests of the miners, of the Government and of the nation will be served. I believe that it can be done.

We have workable coal sufficient to last for about the next 300 years. There has been, and continues to be, massive public investment in this highly successful nationalised industry. The coal industry can and must be a massive foundation on which the future prosperity of the nation can be based. It is far more important in the long term than whatever oil and gas is likely to be found in the North Sea.

The Government are rightly desperately anxious that there should be some considerable restraint in wage demands. So far as I can read what has been happening, it seems that they have had limited success to date. One of the weaknesses is a certain degree of inconsistency in the approach to respective claims. I contrast the jack-boot approach, if I ma call it that, to the small firm in Northern Ireland with the velvet-glove approach to Fords. The different approach may have something to do with the investment that is about to take place in South Wales. I do not know whether that is so, but there is the suspicion that that sort of influence might be determining Government policy. I hope that that is not so.

I refer to a subject that is not disagreeable to me although it may be to some Opposition Members—namely, the Royal annuities. Recently we were subjected to a commercial radio recorded broadcast by the Duke of Edinburgh. It was a broadcast that made the Leader of the Opposition sound like a radical Marxist. It could have beer prepared by Tory Central Office—indeed, it probably was. It foresaw the day when every need of every person would be provided by the State. The Duke should know all about that. Every need of every member of his family has been provided by the State from birth to death.

The Duke referred, for example, to the erosion of individual freedom of choice in education and health. There has been no such erosion of his freedom in the past 30 years. In 1975 he was in receipt, in his own right, of a salary of £65,000 a year. If my arithmetic is right, that is £1,250 a week, or about £150 a day, Saturdays and Sundays included, almost all tax free. However, in 1976, in the height of incomes policy restraint, the Government decided that he could not manage on £65,000 and that the sum had to be increased to £85,000—in other words, from about £150 a day to about £205 a day.

When I asked the Chancellor of the Exchequer whether that conformed to incomes policy his answer was a cryptic "Yes ", that it did.

Mr. Nicholas Winterton

It was the productivity.

Mr. Hamilton

The whole family has been treated with similar incomprehensible generosity.

In 1975 Princess Margaret was struggling along on £35,000 a year, tax free. My Government increased that to £50,000 or nearly £1,000 a week so that she could spend most of her time on Mustique in the Caribbean. Princess Anne received £35,000 a year in 1975 and the Government increased it to £45,000. These figures make the miners' claim look small beer.

I do not often issue warnings, but I warn my Government about this. If they dare to touch these annuities this year they cannot count on my vote on any of the critical votes that will come up in the next 12 months.

We are sick of the political activities of the Duke of Edinburgh which culminated in his recent broadcast. He is not paid by us to do that. The Chancellor of the Exchequer should gently take him by the scruff of the neck and tell him so.

The nation is facing great challenges. Nobody inside nor outside the House can pretend that the solution to our problems will be short-term, easy or painless. All we can do is to say that we shall face them, that we shall operate a sense of social justice, and that we shall tell the truth and be firm and consistent with everyone. If we do that I think that we shall win through.

6.23 p.m.

Mr. Michael Clark Hutchison (Edinburgh, South)

I am always interested in the speeches of the hon. Member for Fife, Central (Mr. Hamilton). I cannot follow him, because I am not well up in mining. Perhaps the hon. Member will not object if I direct the attention of the House to another group of people who are far removed from both our constituencies. I refer to the people who inhabit the Falkland Islands.

I am sorry that in the Gracious Speech there was no mention of the islands and their future. As hon. Members will know, these islands were discovered by a British captain. Since 1833 they have been inhabited by British people. From time to time Argentina has laid claim to them, but it has never pressed that claim in the international court at The Hague or elsewhere.

Argentina has not pressed the matter, because its case is weak in fact and in law and because it knows full well, as we do, that the people of the Falkland Islands wish to remain British. Nevertheless, in New York at the end of this month there are to be talks with Argentina about the islands. I view that development with supicion and distaste. These talks are unnecessary. However, if they are to take place, I urge the Government to ensure that representatives of the Falkland Islands Government attend the talks, that they have full status, that their voice is heard and that their standing is equal to that of any officials or ministers from this country. That is fair, because the future of these islanders is to be discussed. I am sure that hon. Members will agree with that view.

Two difficulties face the islanders. First, they rely on wool, and that is about all. The wool comes to this country and earns us about £2 million a year in hard currency. The islanders wish to diversify. That is their right.

Secondly, the islanders have communications difficulties. In these days few ships sail the South Atlantic. That means that air travel is almost the only way of reaching the islands. This involves going via Argentina and relying entirely on Argentinian services. A communications agreement exists between the United Kingdom and Argentina, but many clauses in that agreement have been broken or ignored. The situation is unsatisfactory and should not be tolerated any longer. I view the situation with great concern.

A new permanent airfield is being built but, believe it or not, it is too short. It will not be able to take aircraft that can fly to North America, Africa or more distant countries. Argentinian control will therefore, continue. All that is needed is to extend the airfield by 1,000 yards. There is plenty of space. Independence in communications would be assured if the airfield were brought up to full international standards. I urge the Government to take action. So far we have had only mismanagement and deaf ears in the Foreign and Commonwealth Office.

Hon. Members will know of the splendid report produced by Lord Shackleton and his able team. Among other things, the report urged that the airfield be extended. The report was detailed and imaginative. It contained many practical suggestions for the development of the islands. So far none of these suggestions has been acted upon. I should like to know why.

The Minister of State, Foreign and Commonwealth Office, the hon. Member for Merthyr Tydfil (Mr. Rowlands), has his heart in the right place on this matter. By and large his views on the future of the islands are sound. I assure him that he will have support from all sides of the House if he stands firm, refuses to play with any idea of a transfer of sovereignty and has no truck with anyone who wants to take over the islands. I urge the Minister to act with courage and conviction and to brush aside all timid or tortuous advice from any quarter here or abroad.

The Western world is running out of seaweed, which is an important substance. It is used by all kinds of industry. Supplies of seaweed in the Falkland Islands could be exploited.

At home and in Europe there is trouble over fishing. There have been quarrels, and it appears that supplies will diminish. There are shoals of fish around the Falkland Islands. There are herring, hake, blue whiting, oysters and krill—every type of fish imaginable. The Japanese, Russians and Germans are already fishing there. Why are we not? There is a tremendous future there.

There is almost certainly oil. Many companies are anxious to obtain concessions to explore, but no move has been made. All these developments are retarded for two reasons—lack of will to take a strong line on the political issue and lack of a proper airfield. I may be asked what costs are involved. My reply is that it would cost less than £4 million to have the airfield put into a proper state. We give considerable overseas aid, and it is to be stepped up. I do not quarrel with that, but why cannot the Falklands have some of it? If concessions were granted for oil exploration, there could be a condition that the companies concerned must make the airfield a proper size. That would not put them off at all, and it would provide an immediate solution. The companies would be only too keen to co-operate.

We should do well to remember that the Falklands played their part in two world wars. In the present troubled times, with uncertainty in South Africa and increasing Soviet strength, the South Atlantic is becoming ever more important. I hope that by the time of the next Gracious Speech the situation will have been transformed.

I have faith in the future of the islands. All that is needed is political will and some boldness. We must not break faith with our own people in those islands.

6.32 p.m.

Mr. John Parker (Dagenham)

As a Socialist and an internationalist, I do not have much sympathy with the nationalist views expressed on both sides of the House in the debate so far. I continue to be a sceptic about the whole question of devolution. I do not see how it can improve the position, of one-parent families, the unemployed or any of the worse-off sections of our copulation. I believe that it will only increase the amount of bureacracy and unnecessary government that we are likely to have.

I am glad that the Government have at least agreed with the idea of having referendums. In those referendums the people of Scotland and Wales should have put before them the three issues—separa- tion, the status quo and whatever the Government devolution scheme is. The Government should go ahead with the referendums before the Bills are taken in the House. They should publish the Bills and then let the people choose whether the devolution schemes in them should be voted on in the House. Then, if the schemes are turned down, we shall not have wasted time, but can go on to the other proposals in the Gracious Speech.

I should like to say a few words in reply to the hon. Member for Carmar-then (Mr. Evans). I am partly Welsh. I was born in Bristol. The Bristol Channel area is one economic unit. There is continual rivalry between the ports of Cardiff and Bristol to obtain the trade from the Midlands. In the past the Great Western Railway favoured Cardiff and the old Midland Railway favoured Bristol.

It is widely said in Bristol that because my right hon. Friend the Prime Minister is a Cardiff Member, Cardiff is favoured over Bristol. I believe that that argument is incorrect. In East London we had a big argument advanced against us when the Labour Government transferred the Royal Mint from the Tower to Llantrisant. That could not have been done by a Welsh Government, but only by a United Kingdom Government. The great asset of that plant went to Wales because it was part of the United Kingdom. Many people in my constituency say that the Ford plant at Dagenham would have been enlarged but for Government pressure on Ford to establish a factory in South Wales. It will employ about 3,000 workers, which will mean a reduction in the number of jobs in Dagenham, if the scheme goes ahead as proposed.

As a young man I lived in Liverpool, which is the "capital" of North Wales. People go there to shop, and many people from Lancashire take their holidays in North Wales. Wales is economically bound to England. I believe that in a referendum the Welsh people will show that they do not want to separate themselves from this country.

I also believe that the vote by the Scottish people against changing the status quo will he much larger than many people think. Certainly I believe that there will be a strong vote against separation. I should not be opposed to an Assembly in Scotland dealing with the kind of matters that are now dealt with by the Scottish Grand Committee and questions where Scottish law and tradition are different from those of this country, but Welsh law is almost the same as ours and the only areas in which there is much difference are areas such as religion, which is now less significant than in the days when the chapels were more important.

The Government are right to insist that the economic unity of the United Kingdom should be maintained and that the nationalised industries should remain united. However, I quarrel with them over two exceptions to that policy. The first is forestry, which is centred mainly in Scotland and has its headquarters there. Under the proposed scheme, the Forestry Commission is to remain in existence but is to be financed separately, with money going from Westminster to the English part, from Edinburgh to the Scottish part and from Cardiff to the Welsh part. How can the Commission organise its activities if it does not know what its financial resources will be for the whole United Kingdom, if it has to go to different bodies to obtain those resources for different parts of its activities?

The same problems apply to the inland waterways, most of which are in England, with odd bits running into Wales which would be unviable if they were detached from the English waterways. The Scottish waterways, such as the Caledonian and Crinan Canals, could be detached. There are a few other small canals. They are all physically detached, but they are not large enough to justify a separate organisation.

All concerned with forestry and inland waterways, not only in the Departments but in the industries, are against any kind of devolution for those industries. They want them to remain United Kingdom bodies.

I regret that we have not yet had a full discussion to agree between both sides of the House a comprehensive forestry policy for the next 50 years. There will be a shortage of timber. The Government are rightly spending a great deal of money on Culham, by agreement with the EEC. The benefits that will come to this country as a result are very much in the future. The same is true of forestry. Trees take a long time to grow. We import 90 per cent. of our timber. In future our suppliers—Russia, Sweden, Finland and so on—will prefer to send us the finished products, furniture, paper and chipboard, etc., rather than the raw materials, because it is more profitable for them to do so. Our furniture, paper and chipboard industries will find it difficult to obtain raw materials. Therefore, we should be thinking ahead to the provision of our own raw materials as far as possible.

Fortunately, as a result of the planting in the years since the First World War we now produce more timber every year, but we need a much bigger planting programme, which should not be interrupted by changes of Government. Them should be agreement between the parties on a programme for at least 50 years ahead, so that the Forestry Commission and private forestry together can produce timber to meet the needs of the nation as a whole.

I turn now to a completely different problem, that of the construction industry, which is in a very serious and difficult state. There is great lack of confidence in the industry and its achievements in recent years and there has been much criticism and discontent due to the remarkably large number of failures in buildings erected in the past 20 years It is remarkable that building after building has turned out to be faulty. This seems to have been due partly to the inadequacy of the architects who prepared the plans and partly to the lack of skilled workers to carry out the plans. This succession of faults in the industry has aroused a good deal of criticism outside the industry as well as inside it.

It is estimated that at present £4,000 million is needed to put right defects in buildings put up in the last 20 years. That is an extraordinarily large sum, which shows a lack of satisfactory organisation and effectiveness in this industry. All sections of the building trade agree that there are plenty of unskilled men working in the industry but there is a shortage of skilled craftsmen of all kinds, especially to do the remedial work which the Government are encouraging local authorities to carry out on old estates, and for modernising and converting many older buildings. It is important to have men who can do that work adequately.

How are we going to get the skilled men necessary in the industry? Apprenticeship schemes have largely been dropped or are being phased out by private employers who are not anxious to carry youngsters for two years while the youngsters are not any great use to them. Therefore we cannot depend on private employers to supply the skilled workers needed in the industry. That job has already largely been taken over by local authority direct labour departments, in association with the Training Services Agency. The most important of these in London is the GLC's direct labour department, the most successful one in the country, but there are many other successful direct labour departments throughout the country

It is interesting to see that according to the accountants in the case of the GLC's direct Iabour department about £8 million a year is being saved on maintenance alone by using the direct labour department rather than accepting the lowest estimates submitted by outside contractors. Unfortunately, the new Tory GLC has decided to cat short the direct labour department and has already sacked 400 men. It should be realised that it is not only local authorities which have their own direct labour departments. Large organ isations such as ICI have similar departments to do similar maintenance work. At the moment the GLC direct labour department is training 300 apprentices. It has also been found that many of the skilled craftsmen coming into the department are not skilled in some parts of the work which they have to do, therefore the department is training skilled craftsmen with new skills so that they can do a wider variety of work on GLC estates.

Private firms find it toe expensive to train or retrain existing craftsmen in this way. At the moment throughout the building trade there are shortages of bricklayers, plasterers, skilled carpenters to do joinery work, skilled plumbers able to carry out gas and heating work, and painters to act as paper-hangers, and all these are being trained by the GLC direct labour department. Other London boroughs and authorities such as Eastbourne are sending people there to be trained. The department was expanding rapidly until the change in the composition of the council at County Hall, and now the expansion of the work has been stopped.

It is not good enough for the Government to set up a special large department to do retraining. This is something with which the Department of the Environment should concern itself, because it is probably the best body to do so. The Department should co-ordinate the activity of the existing training schemes such as that operated by the GLC direct labour department and others elsewhere so that we get the skilled craftsmen to do the necessary building work now and who will be available when the expansion in building comes in a year or so's time. It is very important that this work should be done. The existing Training Services Agency, direct labour departments and any other bodies concerned with training should be mobilised by the Department of the Environment. The Department should take charge and build up the necessary organisation using local people who do not want to see a large new deparment of civil servants that has been suggested, centralised in London It would be much better to use existing services and enlarge them and bring them together to fill in the gaps to obtain effective organisation of training in this area.

I turn now to another area. I am a member of the Historic Buildings Council and I am an elected member of the executive of the National Trust. Both these bodies require skilled workers—sometimes highly skilled or exceptionally skilled men.

In the Historic Buildings Council, for example, we are occasionally asked what we were going to do about people who wanted to renew the thatch on the roofs of their buildings. Training schemes have been set up to create thatchers. Plenty of young people want to be thatchers, because this is the kind of job that people enjoy doing. There is reed thatch in Norfolk and wheat thatch elsewhere. We were faced with opposition from existing thatchers, who are earning such good money from their work, so it takes at least two or three years to get a house thatched. The existing thatchers do not want apprentices coming in and possibly cutting their earning capacity.

This sort of question requires careful handling, to get a succession of young people coming in to carry on an old craft. Take a huge building such as York Minster, for example, which has its own masonry staff and is always training young masons. Keeping that building going is a continual process. Some time ago I visited the school of glaziers there. York Minster has a wonderful amount of stained glass. The school also does work for all sorts of other organisations. It had one man aged 19, one aged 35, one aged 50 and one about to retire. When the oldest retires the school always brings in a new worker to keep the team going for the future.

A body such as York Minster can establish an organisation of this kind, but the Department of the Environment also requires many skilled people to look after its properties. The shortage of such people creates problems, in that a carpenter, for example, may be working on one building and will have to be moved to do another job before he has finished. The Department therefore needs to collaborate with the Historic Buildings Council and the National Trust to produce skilled workers to cope with the work that is coming along in the years ahead. I hope that if the Department sets up some such organisation as I suggest it will include someone from the Historic Buildings Council or National Trust to give the benefit of his experience.

The Under-Secretary of State for the Environment (Mr. Kenneth Marks)

The Government's Property Services Agency, which is responsible for the maintenance of Government buildings, has a great deal to do with the maintenance of historic buildings in Government care. Like the direct labour authorities, it has an excellent apprenticeship scheme which is an example to private enterprise, but an example which is not followed.

Mr. Parker

I am pleased to hear that. Now that there is talk of an expansion of the construction industry it is particularly important that the Department, not just for itself and not just for historic buildings, but for all the renovation work to be undertaken by local authorities and for the increased work that unfortunately will arise on many recent build- ings, should co-ordinate training. It should provide one well-organised body to turn out the skilled workers who are required in all sectors of the industry. Historic buildings require specialist tradesmen, but shortages of all skilled workers are widespread in the building trade generally.

The Government have said that they will spend an extra £400 million on the construction industry, but the building industry does not have the skilled workers it needs. There are plenty of unskilled workers. This therefore is the right time for the Government to take a lead and set up this sort of organisation.

I turn now to the Becontree estate, which is the largest in the country, and was built between 1926 and 1933. Most of it is in my constituency. After the last war everyone came to look at it to see how not to build a new town. It had no shopping facilities. The council has now agreed that a new shopping precinct shall be provided at the Heathway.

Most of the houses stood up very well to the bombing of the war, but they are now out of date. They require modern amenities. One-third of them have been passed over to the local council and I understand that the GLC is likely to hand over the rest in 1979. In the meantime there is a standstill. The GLC is doing no building in our area. It is concentrating on the centre of London instead. A lot of sites have been cleared, but they have not been built upon. These sites have loose bricks, and so on, lying around, and they are used for vandalism by the children. The Government should put pressure on the GLC to hand these sites over to the local council so that it can get on with the necessary redevelopment.

Our area is short of housing. It has a long housing waiting list. It is therefore ridiculous that these sites should remain derelict, the buildings on them having been demolished, until 1979. It is disastrous that the new Conservative GLC should try to cut £100 million off its new housing in the current year. It has also cut £1.4 million off expenditure on the rehabilitation of existing council houses. The sooner it hands over these derelict sites to the Barking Council the better.

6.55 p.m.

Mr. Nicholas Scott (Chelsea)

There is a no doubt apocryphal story of Mr. Harold Macmillan being offered criticism of some undertaking or another and of his replying that he did not want constructive criticism, he wanted praise. I hope that Ministers will understand that although there may be some aspects of the Gracious Speech which merit praise, I shall concentrate my remarks on constructive criticism not so much of the contents of the Queen's Speech as of three aspects which it does not include and which I had hoped it would.

However, first, I must tell my hon. Friend the Member for Edinburgh, South (Mr. Hutchison) that I and, I believe, the majority of hon. Members give the case of the Falkland Islanders overwhelming support. I hope that in the negotiations or talks upon which the Government embark they will bear in mind that overwhelming preponderance of opinion.

I am sorry that the hon. Member for Fife, Central (Mr. Hamilton) is not present, since I have one or two remarks to make on the contents of his speech. I have a great deal of admiration of much of the work and approach of the hon. Gentleman, but I have a decreasing amount of patience with his continued attack in this House on members of the Royal Family. Were his views to be put to the test in this country I believe that they would be overwhelmingly repudiated. The way in which he repeats them is little short of disgraceful.

My second point concerns the hon. Member's unwarranted slur on a large number of people from his native county of Durham. He said that it was less respectable to be a Tory than to be a prostitute in that county. I make allowances for the hon. Gentleman's rhetoric, but there are about 180,000 people in County Durham who vote Conservative at election after election. I hope that they will remember the unwarranted slur of a distinguished Member of the Labour Party on them and that it will rebound upon the Labour Party, as did the postwar slur about vermin.

This leads me to one of the three aspects omitted from the Queen's Speech. Although those people in Durham vote Conservative they never manage to elect a Conservative MP. They are no more successful than the tens of thousands of Labour supporters in Sussex who hardly ever succeed in electing a Labour Member of Parliament. Although I had precious little hope of such a provision being included in this Queen's Speech—or, for that matter, in a manifesto produced by my party—I hope the day will come when the Gracious Speech includes a provision to legislate for proportional representation for this Parliament at Westminster.

With the exception of France—and it has a run-off provision in its constitution —we are the only member of the EEC without some form of proportional representation for the election of the national Parliament. Sooner or later we shall tread that road and when we do it will provide fairer, better and more representative government. The sooner that day comes the better.

Another omission in the Gracious Speech was a matter upon which the outgoing Conservative Government in 1974 already had a draft measure ready. That measure would have done something about the pollution of areas of many of our large cities, particularly parts of London, by indecent and offensive displays. I do not favour censorship as a general rule. I prefer to see as little of it as possible. However, I believe that the continued offensive nature of many of the displays of bookshops and cinemas in London, which make it impossible for people, without great difficulty and offence, to take their families out in some of those places, is something that we should all deplore.

The problem should be tackled not by means of censorship but by passing a law about offensive displays. It would be easy to enforce. The draft work has already been done and the Government would be well advised to bring these proposals forward.

I want to devote the main section of my remarks to a question of which no specific mention is made in the Gracious Speech and to which only lip service is generally paid, that is, the question of unemployment among young people, which I believe has now reached crisis proportions.

In the last five years, I believe, we have seen not just a growth in unemployment due to cyclical matters but a new pattern of unemployment emerging. It has been emerging for a number of different reasons and has many different aspects—the difficulty that people over 50 who are made redundant have in regaining employment, the increasing difficulty for immigrant and immigrant-descended youngsters in obtaining employment, and the difficulty for women and girls in obtaining employment, a difficulty which they did not experience before. All these are serious, and merit serious attention, but undoubtedly the question of unemployment among young people should exercise our minds to the greatest extent. It has risen three times as fast over these five years as has unemployment generally.

In 1976 there were about 800,000 young people between the ages of 16 and 19 registered at some point during the year, and, at a conservative estimate, between 80,000 and 100,000 who never registered but were unemployed. Every year there are 250,000 to 300,000 young people leaving school, and up to one-third are leaving with no qualifications to fit them for any place in the employment market.

In my view, Britain is failing its younger generation by being unable to provide them with jobs and by having failed to provide them with an education and the basic training to enable them to compete in the market for jobs. The blame for this must be widespread. Politicians must certainly take their share, as must parents, teachers, the young themselves and the planners who have done so much, in replanning our inner cities, to drive out the small businesses, small workshops and small factories which used to provide employment for young people, as well as those trade union leaders who have been more concerned with job protection than with job creation.

All of these have a share in the blame, but we must recognise that we face an underlying situation in which large-scale capital investment, particularly in modern technologically-based industries, no longer provides extra jobs but actually destroys jobs and make matters less easy.

The large firm faced with the question of running down a work force has an answer—we all know what it is—wastage. It says "We will not sack any- body. We will not recruit anybody for the next year, two years or three years while we are running down our labour force." That makes it more difficult for young people to obtain jobs.

This is not a problem confined to Britain, but I believe that it has been made more acute and more noticeable in Britain because of our relative economic failure over the past few years. However, it is something which underneath will affect, and is affecting, the economies of all the Western countries. I believe that if we are able to do something about it in an imaginative and constructive way, in a few years we may well be the envy of other Western economies.

Youth unemployment is not just a matter of school leavers not getting jobs ; it is also about 19-and 20-year-olds who have gone into dead-end jobs on leaving school, who find that they cannot keep those jobs, become bored, and then find that there is no other choice open to them because they have no skills and no basis upon which to acquire skills to obtain other jobs.

Youth unemployment is at its highest level since the war. In certain parts of London and the big cities in particular, especially among West Indians, it has become almost total, or certainly up to 65 per cent. or 70 per cent. in some parts.

We can all—or, if we cannot, we should certainly try to imagine—the psychological effect and the frustration that that causes to the individual youngster, but we should be desperately concerned also about the prospect of a long-term growth of unemployment among young people and about the implications that that has for our political system and for social peace in our cities. We must recognise the attractions of the National Front, the Socialist Workers' Party and others on either side which will claim to provide some simple solution to the problem of unemployment of young people, or the growth of football hooliganism or the punk rocker syndrome which we have seen in my constituency, for example. All these things will grow and flourish unless we are seen to be doing something constructive.

There is no magic wand to solve this problem, but it has to be attacked on a number of fronts. Broadly, we reed a new approach 10 training and education and to the transition from school to work, particularly for the less dole of our youngsters. We next need a package of particular employment measures designed to help solve the problem, and then rather more general economic and strategic steps which we might be able to take. I shall deal briefly with those in turn.

First, it is, surely, paradoxical that while the most able of our young people are able to continue their education until well after they are 20 years of age, the less able still see it effectively end at the age of 15. Of course, we have ROSLA, and in theory the school 1:aving age is 16, but all of us, especially those who wanted to see the raising of the school leaving age, must accept that that last year has so far been a disappointment. It has led some people to say that it is a waste of time trying to educate the less able children for that extra year. That is a view that I reject entirely, but in many parts of the country we have gone about that last year of education in the wrong way, and we should move on to another course. I am not saying that I want to abolish examinations, or any of that nonsense, but we need to be less obsessed with 'technological and academic qualifications at this level.

Perhaps I may branch off to illustrate one other aspect of the obsession with qualifications and some of its bad effects. At the moment, because of the high level of unemployment and the difficulty of getting jobs, craft apprenticeships are going to a much more highly qualified group of youngsters than they were several years ago. I do not believe that these academically better qualified young people plan in the long term to practice those crafts. It is the only thing that they can get. They are well qualified, they are able to get the apprenticeships, but really see them as a stepping stone on to administration or to management and developing their careers in another way. This will mean that as we begin to expand the economy again these young people will be attracted into managerial and administrative jobs which become available and we shall then have a bottleneck in the supply of the skilled workers which we think we have been providing for during this time. We must think very' carefully about the sort of people who are obtaining apprenticeships and how the apprenticeships are shared out.

I return to the main issue of what we do about our less able youngsters from 15 to 18 and 19 years of age and how we fit them for a happy, profitable and successful life in employment. We must, I suggest, look at the period between the ages of 15 and 19 as a time during which, while some, the most able, children, can be trained academically, with a middle band perhaps able to get craft apprenticeships or specific vocational training, there is another band of children, the least or less able, who will need non-vocational training or what some call multi-choice vocational training. In other words, they need to be fitted in such a way by our education-training system that they will be able to make a number of different choices in due course about the life that they are to follow. If they get into one job which proves to be a dead end, they will at least have the basic skills and training to do other things.

There are a number of small schemes in operation in Birmingham and elsewhere which involve taking youngsters and putting them into a small workshop, not trying to teach them engineering skills but exposing them to engineering practice and letting them work alongside those involved in engineering. When they have completed a year or two years in the workshop they will at least know the sort of opportunities open to them. If they are not literate or numerate when they go to the workshop they will be taught those skills, and they will then have a basis on which to launch some sort of career.

We also need many of the measures outlined by my right hon. Friend the Member for Worcester (Mr. Walker) in his letter to the Prime Minister during the summer. There has been the announcement concerning the construction industry and the concentration of extra help on the inner city. I hope that these measures will be able to make their contribution to the employment of young people. We need much more of this.

I am deputy chairman of a new organisation which is under the chairmanship of the hon. Member for The Wrekin (Mr. Fowler), called Youth Aid. This is trying to develop new ideas to deal with unemployment among young people. It is researching what is being done in this country and elsewhere and learning what are the best practices. I hope that we shall be able to persuade the Government of the need to take urgent action. I recognise that they are doing something. I am frightened at the moment that they be about to go down a wrong turning. In August the Manpower Services Commission published "The Next Steps ". I thought then that we were in danger of going down an excessively bureaucratic and over-centralised road with our measures against youth unemployment. Everything that I have heard since about the plans of the Commission leads me to suppose that I may have been right to have such fears.

I do not want us setting up great area boards employing civil servants, trying to co-ordinate and plan and initiate everything on the basis of an area 20 or 30 times the size of a parliamentary constituency. That will take ages to get off the ground. The problem is urgent. We want to be answering the problems of youth unemployment, within which there are two key aspects. First, there are the local authorities who can do something and who have some resources which they are prepared to use in solving the problem locally. However, they will be much more reluctant to cooperate if they are part of some great conglomerate. The other factor concerns the young themselves. Many of the youngsters we want to involve in our schemes are people who, to an extent at least, have rejected what the educational system has had to offer them. We do not want them to feel part of some monolithic organisation. We want them to be involved in a small workshop or a small scheme on a scale that they can understand.

We do not have to look very far for the type of pattern that we ought to follow. Until recently I was chairman of a local housing association. I had held that position for eight years. The idea of the housing association is admirable, in that it brings in members of the community, attracts money from local authorities and the Government, and meets a need within the community. That is precisely the pattern that we ought to try to follow when tackling the problem of youth unemployment. We should have local committees and local citizens helping, together with local authorities, churches, industry and trade unions. These groups should then be supported with money from local and national funds, so that they can get schemes off the ground to meet needs close at home.

We hear much about the right to work. Alas, there is no such right to work. There is an opportunity for us, as a country, to create more jobs and to make employment available to more of our people, especially young people. We shall not do that by sloganising and chanting about the right to work. Jobs that are created must be long-term and in areas where there is a demand for the services provided. Unless we do that we shall be using employment as an extension of the social services, and that will not work in the long term.

I am glad to see that, following some prompting, there is in the Gracious Speech mention of the importance of small businesses. There is no doubt in my mind that one of the greatest contributions that can be made towards the solution of unemployment among young people is the creation of vigorous small businesses, a thriving small enterprise section of our economy. Small businesses have been battered by taxation, by the need for form-filling, and by employment laws. I hope that what we see in the Gracious Speech, which is no more than a promise of consideration of the role of small businesses, will be turned into something that will enable us to see them once again as a vigorous and prosperous section of the economy. The solution of our youth unemployment problem depends on the health of small businesses as much as it does on any other initiative.

7.15 p.m.

Mr. John Lee (Birmingham. Handsworth)

The hon. Member for Chelsea (Mr. Scott) has a civilised approach to a lot of things and there is a great deal of what he has said which would commend itself across the House. He showed a sensitive and thoughtful approach. As one who represents an area which is, I suspect—I say this in no party spirit—more deprived and more acutely ridden with problems than his, I echo a great deal of what he has said about the problems of youth unemployment.

The hon. Member for Chelsea will forgive me if I do not follow him in his argument because this day of the debate in particular is one when we raise all sorts of matters and there is inevitably a degree of discontinuity about it. I wish to refer briefly to the speech of the hon. Member for Edinburgh, South (Mr. Hutchison), who devoted all his remarks to the Falkland Islands. I would like him to know, if he reads Hansard tomorrow, that there is at least one hon. Member-4 think there are many others —who agreed with everything he said. I do not think there is anyone who would wish to hand over the Falkland Islands or allow them, by default, to be taken over by the Government of Argentina. I share the bewilderment and apprehension that many have expressed about these extraordinary talks concerning the Falkland Islands. If they are to continue, it seems only right that the people most concerned should be there to take part in them.

The Falkland Islands are not the only small island community threatened with ill fortune. I have raised before and I raise again, although only by way of a passing reference, the position of the Banabans, who have been seeking for so many years to reclaim their territory of Ocean Island and who have been thwarted at every turn by one Government after another. If necessary I shall raise this matter again—and there will be plenty of opportunities for obstruction this coming Session. There are many constitutional measures on which many people will talk. If I reach the conclusion that the Government will not play fair by the people of Ocean Island, I shall exercise my right to speak on many occasions. I shall do that anyway in relation to the European Communities Bill, in company, I have no doubt, with the hon. Member for Edinburgh, South and others who are determined that this Bill shall not pass.

My hon. Friend the Member for Fife, Central (Mr. Hamilton) raised, in his characteristically vituperative way, the behaviour of one member of the Royal Family and went on to enlarge the subject, to warm to his favourite theme. I do not share my hon. Friend's views in large measure, but I want to say this, in what I hope will be regarded as being un-polemic terms: I cannot think it is wise, and it may well not be constitutionally proper, for the Sovereign's Consort to make speeches that are open to the construction that they are directed to the support of one political ideology rather than another. It may be that the speech uttered was not so intended. It may be that it is part of the general informalising of the royal role to which His Royal Highness the Duke of Edinburgh has directed himself on a number of occasions, maybe to good purpose. All I say is that it is a speech which, on reflection, he may wish that he had not uttered, certainly not in the terms in which it was uttered.

I say no more on that aspect of the monarchy although there are one or two other things of an entirely different nature which I wish to raise. The stabilising influence, the purpose of monarchy, can function properly only if it is, and can be regarded by people over a wide spectrum of opinion as being, above the battle. The kind of speech to which my hon. Friend referred tended, perhaps incorrectly, to create an impression which was contrary to the impartiality which one expects.

I wish to raise another aspect of the Royal Family of an entirely different kind, and perhaps it will surprise the House coming from a member of the Tribune Group. I hope that I shall not be ruled out of order. It is time that the Government, perhaps in consultation with the Opposition, came to a definitive arrangement about the limits, status and character of the monarchy. It has been the practice for centuries for younger members of the Royal Family, and certainly the unitary family, although it has extended beyond that, to be created hereditary peers, invariably of senior rank. It has been the practice for centuries for younger sons to be made Royal dukes. Because of the failure of heirs, the dukedom of York has been created and recreated no fewer than, I think, nine times since the Middle Ages.

It has been the practice for the consorts of Royal Princesses, if not already peers, to be ennobled, the reasoning being that if there is a hereditary headship of State it is right that the rest of the immediate entourage of the Royal Family should accept the hereditary principle. Many of us want to know whether that practice is to be followed in view of the impending Royal birth for Princess Anne.

A curious situation arises. If the practice of the past is to continue, given that there are apparently to be no more hereditary peers, an extraordinary situation will gradually develop as each generation of the Royal Family grows up: the number of dukes and earls will increase while the rest of the peerage will diminish with the extinction of the lines, there having been no hereditary creations since 1964. If, on the other hand, the practice of the past is not to continue, a profound change will have taken place in the character of the monarchy—and that without a word of debate in the House.

This being Jubilee Year, I sought some months ago to table a Question asking what was to be the future of Royal peerages, whether more were to be created and, if so, of what kind, only to be told, no doubt correctly, that such Questions were out of order. As that may be correct, this seems at be the only opportunity for one to ask, out of curiosity—it is a not unimportant matter—whether somebody will oblige us with a reply. If I may be tendentious for a moment, while we are a monarchy, I should not wish us to be as drearily petty bourgeois as the Conservative Party leadership since 1965.

I turn to less arcane matters. As one who did not vote for the present Prime Minister to be Leader of the Labour Party at any stage of the ballot, who disagrees with him on many matters and who will cease to be a Member when this Parliament ends, I think that I am in a position, without being accused of being sycophantic, to say that the Labour Party has an authentic leader for the first time since the spring of 1951 when Clem Attlee fell ill at the time of Aneurin Bevan's fateful resignation, from which so many of our problems have flowed. I say nothing about the Prime Minister's two predecessors. It is kindest to pass over them both in silence

The Prime Minister has a stature about him. He has grown in stature. He has had the unique advantage in modern times of occupying every major office of state before becoming Prime Minister which, no doubt, has helped him. His leadership will be severely tested in the next few months because of the impending industrial situation. I have the feeling that he will deal with it, not by splashing round In all directions and indulging in intricate manipulation of a kind which we have known in the past, when nobody knew what had been decided and very little was decided, but, I hope, fairly, I think sensibly, and, though it may not be altogether the right answer, firmly.

One of the awkward signs that I see in the present situation relates to the rather strange economic events of the past few days when the pound has been allowed to float upwards. Although it may be an interesting and satisfying situation compared with the events of only a year ago, let alone other times, when the pound is so strong, and although I am not insensitive to the electoral attractions of the turnabout in the situation—nor, I hope, will the Prime Minister forgo taking advantage of it in the fullness of time—there are dangers in what is happening.

We have already allowed a lot of hot money into the country. I know that the Chancellor of the Exchequer is aware of it, but I do not know that he places as much emphasis as he might on the danger that we may price ourselves out of markets at the very time when we should be expanding, and that having lowered interest rates a good deal—perhaps there is a little more to go, but I should not think much more—we may be unable to take full advantage of it and then, lo and behold, something goes badly wrong in the industrial situation and, in spite of North Sea oil, a lot of holders of short-call sterling, hot money, get cold feet and start withdrawing and we shall be in deep trouble again.

It is a matter of fine judgment and I know that the Chancellor of the Exchequer will bear that matter in mind. However, the Government are in some danger of yielding to the attractions of short-term and medium-term advantage when we all know that no amount of financial manipulation, however ingeniously devised by the Chancellor of the Duchy of Lancaster, is an adequate substitute for a long and sustained successful export drive. That long and sustained export drive has eluded us so many times since the war that I do not want it to slip out of our grasp again.

7.28 p.m.

Mr. David Knox (Leek)

I do not intend to take up the remarks of the hon. Member for Birmingham, Hands-worth (Mr. Lee) about the Royal Family, but he raised certain important issues about the peerage, some of which should be considered later.

I should like to join in the tribute paid by the Prime Minister and the Leader of the Opposition to the Queen for the magnificent way in which she has conducted herself and made herself available, both at home and in the Commonwealth, during this Jubilee Year. I, too, should like to say how much I agree with what my hon. Friend the Member for Edinburgh, South (Mr. Hutchison) said about the Falkland Islands.

It will not surprise the House when I say that I agree with and endorse the remarks of my hon. Friend the Member for Chelsea (Mr. Scott) about youth unemployment and electoral reform. Like my hon. Friend, I regret the omission of a reference to youth unemployment in the Gracious Speech. As he pointed out, this has reached crisis proportions. It is not just that too many young people are out of work. What is so bad is that so many young coloured people are unemployed. Undoubtedly the effect of their failure to find work will alienate them from the society in which they live and create social divisions of a profound nature which are and will be problems for many years to come. This is a very urgent matter, and I hope that the Government will address themselves to it very seriously.

I also agree with my hon. Friend's references to electoral reform. Whatever the arguments about this may have been in the past, it is clear, on the basis of the last few General Election results in this country, that the present system is grossly unfair. It would have been quite wrong if the Conservative Party had had enough seats to form a Government in February 1974 on the basis of 38 per cent. of the popular vote. It is equally wrong for the present Government to have gained a majority of seats in October 1974 on the basis of 39 per cent. of the popular vote.

I do not think that we can carry on this way. The three constitutional measures to come before the House this Session will provide us with an excellent opportunity to introduce electoral reform. I number myself among those who would eventually like to see it introduced for this House as well.

This Session will be judged by the general public, as most Sessions are, on the basis of Britain's economic performance. Over the past few months, a wave of euphoria about the economy has swept the country, encouraged by the Government for political reasons. To the extent that there has been a great improvement in the balance of payments—due almost entirely to North Sea oil—the British economy is undoubtedly stronger than it was 12 months ago, but real and lasting economic strength depends on a strong industrial structure, and, when we look at the other economic indicators, it is obvious that we do not have a strong industrial structure.

Output is lower than at the time of the three-day week, three and a half years ago; investment, not surprisingly in view of the level of output, is much lower than it was three and a half years ago; unemployment is over 1½ million, almost thrice what it was three and a half years ago; prices are still rising at a faster rate than they were three and a half years ago, and faster than in most of the other advanced industrial countries.

As a consequence of all these factors, the living standards of the ordinary people have fallen in the three and a half years since the present Government took office. The truth is that, the balance of payments apart, we are no nearer a solution to our other economic problems than we were three, six or 12 months ago. Indeed, we may be further away than ever from a solution in certain respects, and even the healthiest balance of payments surplus, if it is not backed by a strong competitive economy, can disappear as quickly as it first appeared.

I have said that we may be further away than ever from a solution to some of our economic problems. I believe that that is particularly true of prices and jobs, although in the short term the rate of inflation will probably slow down. The reason for this deterioration in the medium and long term is that we are embarking on an upsurge in wage and salary increases. This was true even before the result of the miners' ballot became known. I hope that nothing I shall say can be construed as conflicting with the sentiments of the hon. Member for Fife, Central (Mr. Hamilton) about the miners. During the recess, I made my first visit to a coal mine in my constituency, and I confirm exactly what the hon. Gentleman said about the conditions under which people work in the mines. They are deplorable. The miners should be highly paid. They are certainly a special case. But I agree very much with the hon. Gentleman that their current claim should be treated as a target towards which they move over a period and not as something capable of immediate realisation.

Even before the result of the miners' ballot became known, it was obvious that things were slipping on the wages and salaries front. Already the Government's 10 per cent. ceiling has become a minimum for basic wage-rate increases, with hardly anyone settling for less. If the Government's real aim of containing increases in earnings within a 10 per cent. ceiling is to be achieved, basic wage rates must rise by no more than 6 per cent. With everyone getting 10 per cent. increases in basic wages so far, and some a little more, this means that earnings are going up at a rate of about 15 to 20 per cent. In the wake of the miners' ballot, increases are likely to drift up further, and the possibility of another wage and salary explosion becomes more real with, inevitably, higher inflation and higher unemployment.

Of course, this should not surprise any of us. We have been here before all too often. When the 1966–69 incomes policy ended, there was an incomes explosion and inevitably, after a time-lag, prices moved up fast and unemployment rose. When the 1972–74 incomes policy ended, there was another incomes explosion and. equally inevitably, after a time-lag, prices moved up, although this time much more quickly, and unemployment rose to a totally unacceptable level—the sort of level that we had not experienced in this country since the 1930s.

The 1975–76 incomes policy was ended this summer. What is now happening is what we should have known would happen—the incomes explosion has started already. After a time-lag, prices will start to rocket up again, maybe even faster than in 1975–76, and unemployment will move up to even higher levels than now. As the Chancellor of the Exchequer said in Nottingham on 4th June: If on the other hand we were daft enough to go hack to the sort of wage explosion we had two years ago,…it is certain that unemployment would be rising to new heights…the pound would plummet down again, pushing up the price of everything we have to buy from abroad. So we would get soaring inflation and soaring unemployment. You don't have to look into the crystal when you can read the book. We have already seen it happen…the sort of collective insanity we had two years ago. We are not quite there yet, but we are moving very fast again in the direction of what the Chancellor called the collective insanity we had two years ago.

What is happening now is the inevitable consequence of the abandonment by the Government of their incomes policy earlier this summer. Of course, there is a myth abroad that all incomes policies end in disaster. It is not true. It is what has followed that has been disastrous, not incomes policies themselves. Incomes policies, whether of Conservative or Labour Governments, have worked. Of course they have not worked perfectly—nothing ever does in this world—but they have worked to the extent that they have kept the rate of inflation lower than it would otherwise have been—indeed, substantially lower.

This is true of the 1966–69 and 1975–76 incomes policies of Labour Governments. It is equally true of the 1972–74 incomes policy of the Conservative Government. There is, however, a great deal of evidence that the abandonment of an incomes policy leads to an incomes explosion. Some people use this as an argument for not having an incomes policy at all, but surely it is an argument for not abandoning an incomes policy.

The fact is that the one certain consequence of the Government's abandonment of their incomes policy this summer and their replacement of it by something so flexible as to be meaningless is an incomes explosion. Why, then, have the Government done this? It was very regrettable that the TUC was not willing to agree another phase of incomes policy with the Government, but the failure of the TUC to agree with the Government is not a reason for the Government to abdicate responsibility.

The Government, after all, are supposed to govern, and, as the hon. Member for Fife, Central suggested, this is the most democratic assembly in the country. No one tried harder than my right hon. Friend the Member for Sidcup (Mr. Heath) to get an agreed incomes policy in the 1972–74 period. No one negotiated longer or harder with the Trades Union Congress. But when he failed to get agreement he did not hold up his hands in dismay. His Government did not immediately abdicate all responsibility for the situation. He showed that he intended to govern and he introduced a statutory incomes policy. With the notable exception of the dispute with the miners in late 1973 and early 1974, that statutory incomes policy worked.

I do not want to underplay the importance or the significance of the miners' dispute, although I am bound to point out that even without a statutory incomes policy, we appear to be getting into the same sort of position today. But, the miners' dispute apart, the fact of the matter is that the Tory Government's statutory incomes policy was a great success. It held internally generated inflation at a lower level than in any of the other OECD countries. It seems to me, therefore, that if the present Labour Government really had the will to govern, they should have done this summer exactly what my right hon. Friend the Member for Sidcup did in 1972. They should have introduced a statutory incomes policy.

Such a policy would, of course, have the defects of inflexibility, of narrowing differentials, and so on. Some trade union leaders might not have liked the policy very much but, as we have seen again and again, statutory incomes policies are popular with the public, because they appear to be rather fairer and are rather fairer than the law of the jungle which is the reality of so-called free collective bargaining.

The Government's failure to introduce such a policy will inevitably mean higher inflation than is otherwise necessary. It will also inevitably mean a substantial increase in the level of unemployment in the months and perhaps years ahead. These are very heavy prices which the British people will have to pay for the failure of the Government.

I am afraid, therefore, that the euphoria of the past three months concerning the economy will soon be replaced by a wage and salary explosion. That, inevitably, will be followed by the consequent prices and unemployment explosion, and this is not a very pleasant prospect for the people of this country. One wonders whether in Britain we shall ever learn from our mistakes. We have been taught so many lessons on this score that we seem to be totally unwilling to learn from them.

I turn to the legislative content of the Gracious Speech. The Session ahead will inevitably be dominated by the direct elections Bill, by the Scottish devolution Bill and by the Welsh devolution Bill. If there are clear majorities for these measures, I think it is important that they should reach the statute book, because the public of this country are becoming increasingly disillusioned with a parliamentary system which appears to be increasingly unable to effect constitutional reforms, even when a majority of the Members of this House favour the proposals.

Some 10 years ago there was a substantial majority for the reform of the House of Lords—a measure, let me say, which is long overdue—but this was blocked by what most people would call an abuse of parliamentary procedure. I appreciate that some people would describe it differently and, of course, no rules were actually contravened. Last year the Bill to give devolution to Scotland and Wales received a substantial majority on Second Reading. Once again there was what most people would call an abuse of parliamentary procedure. Let me confess that I am rather ashamed to admit that I was one of those who blocked this much-needed reform.

In my view, if parliamentary democracy is to survive in this country, Parliament will have to ensure that when it wills an end it also wills the means of achieving that end. I have little doubt that on a cross-party basis there is a majority in this House for at least two, and probably all three, of the constitutional measures which we shall consider this Session. If Parliament is to avoid bringing itself into contempt, the Bills that enjoy majority support must become law this Session. This almost certainly means that they will have to be time-tabled to prevent their progress being halted, not by a majority but by a minority taking advantage of present parliamentary procedures.

Furthermore, it seems to me that it would do this House a great deal of good if all the political parties allowed free votes on all three constitutional measures at all stages of their passage through the House of Commons, including the timetable motions. This would enable the true will of the House to be expressed. It would be in the interests of the House that this should happen. It would help to raise the reputation of this House in public esteem, for ordinary people find it very difficult to understand why constitutional measures in particular, where there are wide divergencies of view within political parties, should be party political issues and subject to party Whips. Few things have done this House more damage in recent years than the attitude of the Labour Party towards the Common Market in opposition in the 1971–74 period. All politicial parties in this House have an opportunity to undo some of that damage in the coming Session, although I must confess that I say all this more in hope than in confidence.

7.46 p.m.

Dr. Alan Glyn (Windsor and Maidenhead)

I pay tribute to my hon. Friend the Member for Leek (Mr. Knox) for his speech, with much of which I agree.

Turning to the wider issue, I ask why this document is being presented. The answer is that a Socialist measure is being presented simply because the Liberal Party has gone into co-operation with the Government in the Lib-Lab pact. That is what enables it to be presented, otherwise we should undoubtedly have had a General Election and the return of a Conservative Government. I say quite clearly to the Liberals that every single thing that happens as a result of the pact is their responsibility—including unemployment —because they are keeping the Government in office. When the General Election comes I shall simply say that a vote for the Liberals is a vote for Socialism, because that is exactly what it is.

I suggest to the hon. Member for Fife, Central (Mr. Hamilton) that this is not the time when the Civil List should be discussed. I felt that many of his words were unworthy of a Member of this House, and quite uncalled for.

The hon. Member for Birmingham, Handsworth (Mr. Lee) asked about the creation of titles. That is a prerogative of the Monarch, who may give and take as she wishes. The conferring of honours and the creation of peerages is the Monarch's absolute right, whether a hereditary peerage or a life peerage is created. It is the Monarch's absolute prerogative.

My hon. Friend the Member for St. Albans (Mr. Goodhew) said that this Friday was the day when we could discuss the Queen's Speech in its entirety. That is one of the great advantages of speaking on the first day, but I do not think that it is quite the occasion for the discussion of constituency matters, such as, for example, hospital facilities in Maidenhead or the Windsor Pop Festival. We ought to look upon this as an opportunity to discuss what is in the Gracious Speech, or what has been omitted by the Government. Those are the lines that I should prefer to take.

Earlier this afternoon my right hon. Friend the Leader of the Opposition mentioned the "Two Ronnies". I think that we have to discuss the "Two Ds ", because the main issues are devolution and direct elections.

I believe that the hon. Member for Dagenham (Mr. Parker) was right, in speaking about devolution, when he said that the referendum should come first, before the measure is brought before Parliament. The excuse last time for not doing this was that the Bill was not sufficiently well known. We have now debated the Bill, it is well known, and it would be very much better to have the referendum first. Then, if the referendum is affirmative, let us have the Bill put before the House. We shall otherwise go through months and months of argument, which will be a waste of time. Perhaps that is what the Government want. But I support what the hon. Member for Dagenham said on this issue.

We must obviously have direct elections, but I prefer first-past-the-post, because that is well understood by the electorate. At a later date, no doubt, we shall be obliged anyway to conform to the method of election in the other parts of the Community. For the first election, therefore, I believe that it would be much better to stick to the first-past-the-post system. I am very glad to hear that we are to be given an opportunity to vote on the particular form of the election. I would be very reluctant to support the measure if we were not allowed to vote on the way in which members were to be elected to the European Assembly.

The first thing I noticed about the Queen's Speech—and which I was glad to see—was that defence was at the top of the list. However, when I looked into it I was not so pleased. While we all want to see detênte working, I, for one, am very suspicious of it. The Soviet Government have agreed to a test ban on nuclear weapons. Let us be frank and ask why they have done so.

There are two possible reasons—that they have completed all the tests they want, or, on the other hand, that they know very well that they have an enormous superiority in conventional weapons which we cannot match in any way. That is possibly the reason behind their decision. One only has to look at the Mediterranean in particular and other parts of the world in general to see that the Soviet Union is building up its forces. I cannot believe that it is doing so only for its own defence.

The most important duty of any Government is to see that the country is adequately defended, and it is perfectly clear that our forces in Europe are below par, as Dr. Luns said recently. It is no good the Prime Minister's saying that we are spending more of our GNP on defence than anyone else is. The fact is that we are duty bound to our electorate to provide adequate defence, and to be criticised internationally for not doing so is a sad reflection on this Government and their defence cuts.

I believe that with the enormous conventional forces that the Soviet Union and its satellites have at their disposal, we are entirely dependent for our defence ultimately on the nuclear deterrent. What will we do when Polaris is phased out? There has been no announcement about this, and as these things take many years we must think about it now and decide what the replacements will be and the best strategy to follow. Perhaps the Americans cannot supply us with spares, and they do not want to give us Poseidon. Therefore we have to produce something fairly soon, and the Government must think clearly about this. This is one of the most important issues facing the Government, and I hope that we shall have an answer soon.

Considerable concern has been expressed about Vietnam, Laos and other South-East Asian countries, particularly Cambodia, all of which I know very well. But it is impossible, sitting here in London, to recognise the enormous casualties and mass murders that have been suffered in these countries all of which have been Communist inspired. After all, the war there is against the Communists. We should all take this matter very seriously. I realise that the Under-Secretary has been very good about this and I am grateful for what he has done about the King of Laos. He has done everything he can in the circumstances.

I turn to the question of North Sea oil. My right hon. Friend the Leader of the Opposition has asked what we would do without North Sea oil. The answer is that the situation would be very serious indeed. It is serious enough anyway. This is not a short-term policy and we should not be using the money from the oil revenues as day-to-day expenditure. First of all we should make sure that we pay for our debts—a comparatively small amount compared with the incoming revenue over the years. Secondly, we should spend the money by investing and trying to get higher production.

I welcome the Government's concession to small businesses. However, if one looks at the number of bankruptcies in small businesses recently—I have just been consulting the figures—one sees that they have reached a record since the war. While we all recognise that the Government's concession will be a help, I believe that this measure is too little, too late. It certainly will not help those businesses that have gone bankrupt. The Government are beginning to realise that this section of industry is vital to our survival. [ welcome this measure and hope that the Government will give even more concessions. We shall have an opportunity of debating this later. It is curious that this measure was introduced in this way. I suggest that it was an insurance policy by the Government against a snap election in the near future. They would have offered a bribe to the electorate before the election.

I have read the passage on Northern Ireland very carefully, especially the part about "pursuing through the courts". I believe that this sort of terrorist action should be subject to capital punishment and I have put a motion on the Order Paper to that effect.

We all welcome the references in the Queen's Speech to first-time house purchase, and the fact that the Government are at last turning their attention to in creasing agricultural production.

Finally, I take this occasion to pay a personal tribute to my constituency. The Queen's Silver Jubilee celebrations started in my constituency—the first celebration was held there—and we have also celebrated the 700th anniversary of the grant of the charter to Windsor. I should like to thank the Queen and Prince Philip for what they have done in the 25 years of their reign and the tremendous encouragement they have given to my constituency, where the Queen now spends most of her time. On normal occasions one must not mention the Sovereign in debates, but on this special occasion I join with the Prime Minister in thanking her and Prince Philip for their devoted service in the past 25 years.

7.57 p.m.

Mr. Tim Rathbone (Lewes)

This Queen's Speech is peculiarly thin, but it has been well and cannily analysed by my hon. Friend the Member for Windsor and Maidenhead (Dr. Glyn). The speech is something of a menu of hors d'oeuvres for the forthcoming general election. While it is spiced with enough references for "enough work for a normal Session I believe that that is merely part of the Prime Minister's camouflage

Like any plate of hors d'oeuvres, some bits of the speech look good, some look bad and some one cannot tell until one has a chance to test them. Into this latter category come most of the references to foreign affairs in the Queen's Speech.

I welcome the recommitment to détente with Russia and the Eastern bloc, but like my hon. Friend for the Member for Windsor and Maidenhead, I, too, am worried by the Prime Minister's naïvete in concluding that a willingness to circumscribe nuclear testing by the Soviet Union is a desire for détente. Whether the Prime Minister is collect or not, it is a fact of concern to everybody in the United Kingdom and in NATO as well that Russian ground naval and air forces arc stronger than ever before.

Just as this has come about, our Government are committeed to a continuing programme of cuts in defence expendi- ture to the extent of seriously undermining our operational viability, to say nothing of our back-up support without which one cannot promise an effective contribution to NATO. To do so is to whistle into the eastern wind and deceive the people of this country.

Equally it is a deception to pledge a continuing commitment to the European Community while the Government show such a sorry lack of co-operation with members of that Community for the good of the Community and this country. It was an ill-placed jibe that the Prime Minister flung at the Leader of the Opposition from the Dispatch Box. In any community of interest people have to operate to an acceptable principle of give and take. If that principle becomes unbalanced, as it will do if the Government operate their rôle of smash and grab, we shall in the end obtain less for ourselves and achieve less for anybody else.

Not least is this important in our relations with Southern Africa where we should strongly support EEC code of practice, which is now established, and work positively and persuasively towards the peaceful evolution of democratic States in that area. We must convert through such persuasion rather than attempt to bully into submission—an impossible task—through sanctions or any other such means. Our task must be to build bridges and not to burn them. Failure in this respect will be a failure for the Africans as well as for ourselves, and such failure can mean only a success for the Soviets.

Let us be wary of unthinking or unintended support for Soviet efforts to establish their influence in Southern Africa by extending loans such as the Labour Government have extended to Mozambique—a questionable loan which is not in the long-term interests of black Africa.

Nearer home our relations with the EEC can hardly be helped by the halfhearted commitment of this Government to direct elections to the European Assembly. The words of commitment are all there, but action has been lacking and now, as the Government have been warned over and over again for more than a year, the Government have run short of time. But is the Prime Minister being entirely straight when he claims that an election based on a first-past-the-post system is now impossible if we are to have elections in 1978?

I ask this question as one who would prefer a more proportionate system, but the House must be allowed to decide between the two systems without the duress of postponing elections for a whole year. All I have heard indicates that it would be possible to have elections in 1978 under either system. Therefore, I hope that the Prime Minister will clarify that point.

The Queen's Speech stresses the importance of increasing output and of reducing unemployment in the United Kingdom. But this raises the spectre of misjudged Government intervention as the method chosen to achieve these ends. The phrase "manpower measures" smacks of more and more bureaucracy, including more job centres which have created not one job in all their existence.

The Gracious Speech mentions "industrial training" which should surely at least be entitled "industrial retraining ". But help for small firms, as was mentioned by my hon. Friend the Member for Chelsea (Mr. Scott), is the best way to achieve an upsurge, and the report of the Chancellor of the Duchy of Lancaster cannot come too soon.

When I mention help for small firms I do not refer to Government intervention. Rather, I hope that the Government will take burdens off the small business man so that he can operate effectively on his own behalf, removing even more taxation on his endeavours, and also removing bureaucratic regulations which threaten to strangle his energies. They are very considerable energies indeed, because the small firms employ 1 million people, 30 per cent. of the work force of this country, and create 20 per cent. of the gross national product.

Therefore, as well as the tax concessions which were announced last week, I hope that the Government will consider further reductions in direct taxation on income, so that small businesses can take advantage of those, too. I hope that the Government will also consider a further reduction in capital transfer tax which, despite the reduction announced recently, is still two or three times the level obtaining in Germany. I also hope that the Government will consider remov- ing the deferred tax liability on stock appreciation. A tax of such a deferred nature is a major disincentive to investment.

I hope that the Government will consider some form of tax holiday for genuine newly-started businesses in the same way as is applied in other countries.

I would ask the Government what they intend to do to encourage private sources of finance, such as the banks provide, to take even greater commercial risks in granting loans to small businesses. Perhaps this could be done by guarantees or risk-sharing. Private sector lenders and small business borrowers would react with alacrity to such a positive and helpful initiative which, if structured correctly, could be done at no cost to the taxpayer.

But it still may be difficult for a business man to create more production lines or more jobs on existing lines if he is threatened with all the drawn-out difficulties which are inherent in the practice of the so-called Employment Protection Act. If the risks of industrial trouble from taking on new employees are increased by the operation of this Act, as many small businessmen claim, employers may not take on additional people. That does not bode well for the hundreds of thousands of unemployed people, particularly recent school-leavers looking to their first start in life. Amendment of the Employment Protection Act should rank at least equal in importance to the pursuit of industrial democracy, which might be better pursued through works councils rather than by symbolic representation on boards.

There are two specific matters on which I wish to touch. The first is education. There is no mention of an education Bill in the Speech as my right hon. Friend the Leader of the Opposition said, although the Prime Minister later referred to the possibility of a limited Bill of some sort. This Bill, however, sounded as though it could be too limited, containing no method of increasing parental choice and no establishment of basic minimum national standards of literacy, numeracy or writing. These are never more needed than now. Members may have read the recent survey of university students, among whom a quarter failed basic English tests, had weak spelling, and made innumerable grammatical mistakes. This evidence is borne out in conversations I have had with teachers at Sussex University and in my own experience of contacts with school-leavers applying for jobs. Young people are the seed corn of our future prosperity, and I believe they must be looked after in educational terms, as my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) emphasised.

The second specific is that of health. Mention has been made of the devolution of many powers to Wales and Scotland—a plan that draws little enthusiasm from me—but no mention has been made of the devolution of any powers from national to local government in England in regard to health authorities. I wonder why the Government have not considered devolution of control and influence of health authorities to local government which could then apply maximum discretion in exercising its functions within the broad framework of Government policy. This would create better health services and meet more accurately people's needs. It would create better government increasingly answerable to the people it should be designed to serve, and it would be more efficient and effective government as the bureaucratic overlap is eliminated.

I wonder, lastly, what will be the effect of the measures outlined in the Gracious Speech on British society as a whole. It appears that the Government have given too little thought to this aspect, even though the nature of our society must he one of the prime concerns of any Government.

Nothing is more important than the maintenance of order for everybody in our society. The Prime Minister mentioned the incidents at Lewisham and Ladywood and roundly condemned those insidious influences which brought them to pass. But he promised no action to reduce the risk of other similar events in the future. He indicated no interest in amending the Public Order Act, which is now 40 years old and in much need of revision. He indicated no additional help or encouragement for the police who bear the brunt of the violence in such events and of much public criticism if things go wrong.

In a less violent but more omnipresent type of disorder, that of vandalism, the Gracious Speech promised no action following the investigation set in train by the Home Secretary last February. Specifically, it contained no suggestion for any reduction of vandalism in schools or plans to make parents as responsible for their children's actions as they are for the actions of their dogs.

The Gracious Speech referred to constitutional reform and the Prime Minister mentioned Mr. Speaker's Conference and the investigation of improved representation here from Ulster.

But there was no mention in the Gracious Speech of a desire for action to improve methods and procedures of the House as may be recommended by the Committee that is presently investigating our affairs. Nor did the Gracious Speech make any suggestions for a Speakers' Conference or a Royal Commission to investigate the system of our own elections to the House, a matter that was touched upon by my hon. Friends the Members for Chelsea and Leek (Mr. Knox).

These omissions are all the more significant because the Prime Minister referred so specifically to "administrative matters" which his Government are dealing with increasingly without any reference to the House. It would be a sorry state of affairs if the Government Executive could call in support of its actions the political and moral legitimacy of a majority of the electorate and a majority of the House; but it could in fact call on neither. In those circumstances, where is the legitimacy of applying a guillotine on parliamentary debate on any subject, least of all such a constitutionally important subject as devolution of governmental powers to parts of the United Kingdom? Unlike my hon. Friend the Member for Leek. I believe that that is a complete negation of the democratic process. It is such action that underlies the description of the Government of Britain today as a Government of parliamentary dictatorship.

During the next year—as in the next 10 years—this constitutional problem will loom just as large as any other that we face. The Government have shown too little concern for it in the past and they show too little for it now, yet if we do not solve that problem all else achieved could crumble to nothing. This Government or the next one—soon may it come —cannot delay further in applying themselves to a solution. Our parliamentary democracy, founded after the Battle of Lewes, has served us well for centuries, but it is now at risk.

8.12 p.m.

Mr. Patrick McNair-Wilson (New Forest)

Before I start, I should like to point out that the digital clocks in the Chamber are two minutes slower than the other clocks. This may be because of the power cuts, but it could be confusing to hon. Members and it may be that we should switch them off during the power troubles. I have never thought that we needed them. We should rely on the clocks that we have survived with during all the years that I have been in the House until this year.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

It may be of help to the hon. Gentleman to learn that we are working on those clocks that he prefers.

Mr. McNair-Wilson

Enthusiasm for the Gracious Speech can be seen by looking at the Government Benches, where, with the exception of two genial Ministers and someone from the Whips' Office, hon. Members are a bit thin on the ground.

I wish to address my remarks to one omission from the Speech and to make one more general comment on the economic situation that was discussed by the Prime Minister today. I am sorry that the Under-Secretary of State for the Environment is not here as he was earlier, because the omission to which I refer is the failure to include in the Queen's Speech a reference to a review of the Mobile Homes Act 1975. This is an important measure, which is urgently required. A number of my constituents live in mobile homes. The House may recall that the legislation was introduced by my hon. Friend the Member for Bridgwater (Mr. King) but for a long time the Government have promised to strengthen the measure and to bring it into line with other legislation on housing.

As long ago as August, at the beginning of the recess, the Under-Secretary wrote to me saying that two of my constituents who had been unable to get proper agreements from site owners would be able to obtain proper justice following the review that his Department was undertaking. In a letter dated 23rd August 1977 the Under-Secretary said: Both cases—particularly that of Mr. Matthews—pinpoint precisely what I have always felt to be wrong with the Mobile Homes Act "— namely, that it was impossible for individuals to be assured of obtaining a proper agreement between themselves and the site owner. He went on : I hope it will nevertheless be of some comfort to Mr. Matthews to know that the Mobile Homes Review has now completed its work and has concluded that the Mobile Homes Act is not adequate to protect residents. Its report proposes the preparation of new legislation. My constituents will be bitterly disappointed to find that this Queen's Speech includes no mention of this legislation. Indeed, as my constituent bitterly pointed out after he had seen the review, in a letter of 9th August: I think that without wasting any public money the whole of this review could have been compiled by one man with the help of the Mobile Home Magazine and a few newspaper cuttings. I hope that the Government will not brush this matter aside, because many people in the Minister's constituency and in mine live in such accommodation. They are often those who are at the bottom of the salary scale and least able to help themselves. Mr. Matthews has spent more than £600 of his savings in trying to fight this matter through courts. It is quite wrong to expect people who are often of modest means to use their money in this way. There should be proper legislation to cover the point and I hope that the Minister now here will tell his colleague about this.

I now turn to a wider issue. At the time of the previous Queen's Speech I put down an amendment to the Loyal Address suggesting that there should be a referendum before any devolution legislation. I support hon. Members on both sides of the House who have suggested that a referendum would be sensible. I have a nasty feeling—even if the Government get the guillotine motion on all the Bills that they have promised—that we may find ourselves producing legislation that will not be acceptable or appropriate. I should have thought that a simple referendum before we go through the legislative process could save a lot of trouble and heartache. This year I have deliberately not put down such an amendment again because it is clearly too late. The Government have decided to press on and to hope for the best, but I am far from convinced that the answer produced will be the right one.

Much play has been made this afternoon, by the Prime Minister and by others, of the economic situation of the country, leading us to believe that the corner has been turned at last. Hon. Members and Ministers have been saying that the economy is growing stronger and that we can look forward to a sunshine future.

I want to examine the facts and to point to the most worrying aspect of the whole equation, namely, that world demand for a number of products that we in this country must sell to live is now beginning to fall. The Prime Minister has made predictions about the rate of inflation and, strangely enough, I tend to agree. Inflation has burned itself out for a number of reasons and we should be heading for a whole new economic position. This year will not be comparable to anything that we have seen before. I immediately declare an interest, in that I work for a large American corporation and, as the Government know, the United States of America is in a state of near-panic about what will happen to its economy. In Europe there is exactly the same great nervousness about the future. Why is this? It is because demand has disappeared and is far less than was predicted. There now exists vast over-capacity in many important areas. Why is this? There are those who say that when oil prices were raised in 1973 it was like cutting the economic and financial circulation of the world economy and that the money that should be flowing around the world is, in a sense, flowing into the sand. It has been suggested—even by my right hon. Friend the Member for Sidcup (Mr. Heath)— that the Arab nations should be considering providing massive loans to national Governments to stimulate demand.

Whatever the reasons, many major plants that were built and developed before 1973 to produce chemicals, steel, and so on, cannot now sell their products. In these circumstances, we find that in order to maintain their market share the owners of these plants are cutting their prices dramatically. Even in South America they are putting an embargo on the export of coffee, because it is hardly worth selling.

If the inflation with which we have lived for the past seven or eight years is to be replaced by falling world prices, a more frightening situation than anyone had imagined may emerge. Inflation, with all its problems, has, to a greater or lesser extent, been met by the continued use of the good old printing press to print money. In a different situation, we shall be able to compete only if we adopt very tough measures and hard surgery.

In Japan, the United States and West Germany, the economies that experts call the locomotive economies, because they are expected to pull the Western world through the recession, there are already fears that expansion will endanger their own economies. Far from expanding, they are putting up the shutters. We even hear complaints from the United States that British steel is being dumped there. Protectionism has become the" in" word in European industrial countries. Hon. Members should reflect on what that fact could mean for exporting industries.

The British steel industry, so beloved by the Labour Party as a commanding height of the economy, has now become a great dead weight around our necks. It is losing about £10 million a week and faces competition from other steel-producing nations whose manufacturing costs are only a fraction of ours. Only last week, the Chairman of the BSC, Sir Charles Villiers, was reported as saying: Our home market is threatened with hundreds of thousands of tons of good cheap steel from all over the globe. Our American market is threatened by anti-dumping charges In the United States, they have chopped 12,000 jobs off the Bethlehem steel plants in the steel-making areas all over the United States. I am sure that the Secretary of State for Industry recognises that pretty hard surgery will be required if the British steel industry is to be able to compete at all. I do not wish to anticipate the remarks of my hon. Friend the Member for Flint. West (Sir A. Meyer), who has the Shotton Works in his constituency. but it could be argued that if the industry is to survive in the sort of circumstances that I have described some fairly tough measures will be necessary.

Over-capacity exists in many other areas as well. I know of a number of plants that are going on to a four-day working week next month because there is no market for their products. The whole chemicals industry is glutted with products. Oil refineries are refining less because there is no demand for their products.

Against this background, it is foolhardy and complacent to be talking of having turned the corner. I am concerned that we may move into the sort of frightful price war that we saw in the 1930s. That would make it very hard for any inefficient organisation to compete.

A number of hon. Members have mentioned unemployment. It is enormously high, but is could be argued that we shall never again have the sort of full employment that we saw 20 years ago. It may be that it will not be necessary to have a labour force of that size at work. Machines are inevitably doing more than was done by individuals, and perhaps we should be addressing our minds to shorter working weeks and earlier retirement.

Whatever happens to unemployment, there is no doubt that productivity is in a horrible state. One reason is that many of the plants in which we produce our goods are out of date, under-capitalised and very old-fashioned. We are still using blast furnaces that were given to us as reparation by the Germans after the First World War. We have a worrying pattern of low productivity which must almost inevitably mean high-cost products.

Mention was also made, earlier, of the coal industry. I do not want to comment on negotiations that may take place over the NUM wage claim, but we should remember that we are now virtually unable to export British coal. I remember when we used to sell 15 million tons a year abroad. Now we are down to 1 million tons a year, and if what I have said about falling prices is correct it will be hard to retain even that market.

What is even more worrying is that the world is glutted with coal. We have an important coal industry and I have always been a strong supporter of it, but we should not be under any illusions. The bulk of the world's reserves of coal are behind the Iron Curtain. The Communist countries have 90 per cent. of the reserves.

Polish coal is the competitor to British coal in Europe. That is why we cannot sell so much abroad. The Polish coal miner is at the top of the wages tree. He earns £150 a month, which, although it would not satisfy many people in this country, is a fortune compared with the £38 a month earned by office workers. The export trade is vital for the coal industry, and if we are to compete in that market we shall have to watch our costs very carefully.

It is a tragedy that this year the industry will only just scrape over the 100 million tons production target. It is just as well that Lord Robens, who pinned his faith on 200 million tons' production for so many years, is not at the NCB to see current production levels. Productivity per man shift in the industry is desperately low. It will have to be raised. That is why I regret most strongly the result of the miners' ballot earlier this week.

The Prime Minister endeavoured to persuade us earlier that any economic successes that we might be enjoying were a result of the splendid management of the Government. I am a charitable man, but I find that claim beyond even my ability to swallow. Any success that we may enjoy in the short and medium term is based upon that miracle reserve—North Sea oil. It is a miracle that we found it, and we should not forget that it was found and developed by private enterprise. However, it will not last for ever. No one knows when it will run down. The big compressors are already being towed out to the southern gasfields of the North Sea in order to keep up the pressure so that we may bring in the last scraps of gas that we need.

There are varying predictions of how long we shall be totally self-sufficient. Even if we assume that the oil will last for 50 years, it is a finite resource that will disappear one day. However, we enjoy it now and we enjoy independence —real independence. We no longer have to go crawling to OPEC. We can stand on our own feet, and if we are wise we shall deplete the oil over a long period. What worries me is that we shall use the oil in the short term to try to create an illusion of success without tackling some of the serious problems to which I have referred.

It would be a disaster if we wasted the oil by trying to pretend to the nation that we have solved our economic ills. I am not trying to blame any particular Government. The story since the war has been one of economic problems. Those ills must be solved as nearly as is possible. There may even be an argument for putting back the corks into the wells and saying that we shall take out only enough for our needs, and that we shall deplete the oil very slowly.

We must not use the oil to create an artificial boom that will bounce back on us. If we do that, we shall merely find ourselves enjoying the same experience as the United States. In 1970 the United States was a net exporter of oil. It was the world's largest producer. It is now importing 50 per cent. of all the oil that it uses. It is totally dependent upon the Saudi Arabians for its economic success. It has virtually run out of natural gas owing to its pricing policy. As for President Carter's energy plans—well, we know about those from reading the papers.

We must not let the wonderful independence that we now enjoy be used for the wrong purposes. The most dangerous problem that we shall face in the years that lie ahead is complacency. We are suddenly in the presence of riches of which we never dreamed. We could become complacent and try to create a little oasis of success, which would be unreal. In the long term that would be damaging to the nation. We would be failing those whom we endeavour to serve and guaranteeing to those who will inherit from us an inheritance not worth inheriting.

8.32 p.m.

Sir Anthony Meyer (Flint, West)

I shall revert to the extremely interesing, thoughtful and provocative speech of my hon. Friend the Member for New Forest (Mr. McNair-Wilson), but I shall begin by expressing genuine pleasure at one item in the Gracious Speech—namely, the mention of completely new thinking on rural transport.

The Secretary of State for Transport is a Minister of whom we have come to expect a great deal. It seems as though he may well be fulfilling the expectations that we have of him. Bearing in mind the Prime Minister's remarks, it sounds as if at last there will be a genuine move towards a much freer use of all the facilities available for rural transport, if that approach is carried through, I hope that it will result in the nationalised bus companies being obliged to adopt a much more imaginative approach towards pricing and the provision of cheap off-peak fares than hitherto.

Rural transport as it now exists, and certainly in my constituency, imposes hardship on individuals and constitutes an obstacle to economic recovery. That is because of the enormously high prices that are charged for the shortest journeys and the unsatisfactory provision of transport.

The commitment in the Gracious Speech to Europe and to European elections seems as tepid as the Government's European commitment in general. One wonders exactly how Ministers will vote when we come to the direct elections Bill. I am surprised that the Liberal Party is so easily confessing itself sasisfied with the Government's half-hearted and inconclusive commitments.

As for devolution, at long last the Government have accepted what we have been urging upon them all along—namely, separate Bills for Wales and England. If they had listened to us in the first place, they might have saved themselves and the House a great deal of trouble. I hope that the courageous Labour opponents of Welsh devolution will continue to stand firm. There are some indications that suggest that they may not do so. Even if they do not, I have no doubt that the people of Wales will massively reject the proposals when they get their chance to do so in the referendum. All that leads one to suppose, as the hon. Member for Dagenham (Mr. Parker) said, that it would be far better to have the referendum before we progress beyond Second Reading. We should have Second Reading and then the referendum. Do not let us waste weeks of our time on something that the people of Wales at least will certainly reject.

The Gracious Speech constitutes a pre-electoral programme. It is therefore astonishing that it has so little that is constructive to say about the most worrying problem facing us at present—unemployment. It is instructive to listen to this debate with one speech after another from this side of the House referring to unemployment while there remains deafening silence from the other side. That is with the exception of the charming and eloquent speech on the interesting subjects of Royal dukes which did not seem to have much to contribute to the problems that a re before us. Nothing has been said from the Government side on this most worrying of problems—unemployment.

The problem of unemployment is particularly worrying for me in my constituency because the county for which I have the honour of being one of the four representatives has experienced one of the steepest rises in unemployment in the United Kingdom. Clwyd has the highest rate of unemployment in Wales and the third highest in the United Kingdom. Only the Western Isles and Merseyside have heavier unemployment than we. That does not take into account that in North Wales we have a lower level of family income because fewer women work.

Unemployment is the worst scourge, short of war. Youth unemployment is the worst scourge of all types of unemployment. I mean two things by that remark. I mean the inability of those who want work to find any work and the process of demoralisation which turns people who cannot find work into people who do not want to work. This evil, two-headed monster is a scourge that is worse than low pay, bad working conditions or even poor housing.

The right to work is far more important than, for example, the right to strike. My right hon. Friend the Member for Sidcup (Mr. Heath) is right to say that in this scourge of youth unemployment lies a danger to the whole of our democratic structure. If there are to be race riots in this country they will spring from that source.

My right hon. Friend is also right to suggest that the Government should make greater use of the EEC as a means of seeking a solution to this problem which goes wider than any national solution. Capitalism can make an important contribution towards easing the unemployment problem particularly through the encouragement of small businesses.

We need lower taxation with the provision of incentives and the removal of restrictions—and in that I include a number of measures which are no doubt well meant, such as the Employment Protection Act, which experience has shown has the effect of reducing employment rather than increasing it. All such measures could help. In order to achieve lower taxation, increase incentives and cut restrictions it will be necessary to pay price in terms of reduced standards and reduced social services. We must choose our priorities in this matter. For me, the top priority in internal affairs is to reduce youth unemployment.

Extreme Left-wing Socialism of the kind favoured by some members of the Tribune Group claims to have answers to the problem of unemployment. It claims that a policy of protection and of directing investment by nationalising insurance funds, the banks and so on, can produce jobs. That is a policy of hoisting oneself up by one's shoelaces, for it takes no account of the fact that, like it or not, the British economy is enmeshed in the world economy and that no amount of national Socialism can possibly isolate us from the world economy.

My hon. Friend the Member for New Forest has done a great service tonight in painting a clear and gloomy picture of the kind of world economic climate in which we shall operate. I listened with particular interest to what he said about the steel industry. It is still my position that the steelworks at Shotton has a continuing part to play in the British steel industry, but I believe that the whole conception of the British Steel Corporation is now vastly in excess of what the economy can reasonably be expected to sustain over the coming years. If we are to have a viable steel industry, it must be greatly reduced. If we scale it down we can make it competitive, and within those terms there is a place for the small integrated producer. However, I am prepared to argue that separately.

There are crazy ideas on the extreme Left which might make a contribution towards easing unemployment, but I do not think that they would work. There are ideas on the right, ideas of capitalism, which can make an effective contribution to easing unemployment, but the extent to which they can do so will always be limited by the existence of powerful trade union monopoly bargaining power, in particular the ability of the unions to maintain restrictive practices.

Finally, and most controversially, I wish to suggest that there is another family of ideas, whose natural home is probably on the political Left, which can make a real contribution to easing the problem of unemployment. I refer to the series of ideas mentioned by my hon. Friend the Member for New Forest, amongst others, relating to early retirement and work-sharing. There should be much more discussion of these ideas. It is all very well to throw them into the debate and to say that they can contribute to easing unemployment, but if they are put into effect in such a way as vastly to increase our costs we are back where we started from, with an uncompetitive national economy. However hard we juggle with the jobs available, if we are not competitive as a nation we shall not be able to provide jobs.

If we are to have work-sharing and earlier retirement, they must go hand in hand with much higher productivity and probably with the acceptance of lower wage levels for a long time. They will certainly have to go hand in hand with a readiness to work shift systems such as has not been evident throughout British industry in recent months. The Government have done little or nothing to put across to the working people the need for these shift systems.

I suppose that one should not have expected that this Government would have anything imaginative or bold to contribute to the debate on unemployment. This is a Government not renowned for their flexibility. It is a Government suffering from cerebral arthritis, a Government for whom early retirement seems to be the only useful course.

Debate adjourned.—[Mr. Bates.]

Debate to be resumed tomorrow.