Commons Sitting of 1 March 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  LOCAL GOVERNMENT

    Water Supplies (Essex)
    Mr. Braineasked the Minister of Housing and Local Government what steps he is taking to remedy the shortage of water supplies in Essex; and whether he will make a statement.
    Mr. Ridsdaleasked the Minister of Housing and Local Government what steps he is taking to remedy the shortage of water supplies in north-east Essex; and whether he will make a statement.
    The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): The Essex water undertakers are doing all they can to develop local resources, but the remedy can come only partly from Essex. The Water Resources Board is now concluding an inquiry into water supplies throughout south-east England and will soon put forward recommendations for bringing water to Essex from elsewhere.
    Mr. Braine: Is the hon. Gentleman aware that the situation in south-east Essex will be grave by 1969 unless a new source of supply is found by 1972? This means that a start must be made now. In view of this, why is it that the water undertakers who have their plans all ready for this new source of supply have been told by the hon. Gentleman's Department to wait until the survey for the South-East is completed? Can the hon Gentleman say when the survey for the South-East will be completed?
    Mr. MacColl: I think certainly in time to meet the understandable doubts of the Southend company.
    Mr. Ridsdale: Will the hon. Gentleman give all the support he can to the Tendring Hundred Water Company and the other local authorities in the plan they have brought out which should go a long way towards meeting the requirements in north-east Essex?
    Mr. MacColl: The Water Resources Board and river authority will look at all the schemes.
    Mr. Eldon Griffiths: Will the Parliamentary Secretary bear in mind that proposals to take water for north-east Essex from the county of west Suffolk is causing acute concern among farmers who are already paying a very high price for their water?
    Mr. MacColl: That is why we have to have something like the Water Resources Board to arbitrate between the conflicting claims.

    Planning Permission (Time Limits)
    Mr. Allasonasked the Minister of Housing and Local Government whether he will take steps to authorise time limits on the grant of planning permission so that such permission should lapse if not used within a certain period.
    Mr. MacColl: Planning authorities already have power to do this in individual cases. My right hon. Friend is, however, considering whether any amendment of the law would be desirable so as to standardise practice.
    Mr. Allason: Has the Parliamentary Secretary noted that his right hon. Friend the Minister of Land and Natural Resources advocated this at a town planning meeting in January? How is it that that Minister announces this policy rather than the Minister of Housing and Local Government?
    Mr. MacColl: I do not think that there is any difference of opinion about this. In some cases, particularly where the proposal is unique, there is a strong case for having time limits. On the other hand, a difficulty in other cases is that it simply encourages token development to keep the planning permission alive, which does not help anyone.

    Rates
    Mr. Allasonasked the Minister of Housing and Local Government the average sum paid by a domestic ratepayer in England and Wales in 1951–52

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    and in 1964–65, and the average percentage annual increase at compound interest over this period.
    The Minister of Housing and Local Government (Mr. Richard Crossman):The average rate payment per domestic hereditament in 1951–52 was approximately £16 8s. and in 1964–65 £32 8s. 5d. The average annual increase at compound interest over this period is about 5·4 per cent.
    Mr. Allason: Will the Minister give widespread publicity to that reply in view of the misleading statements which are circulating from some of his hon. Friends and candidates in order to make sure that people get the figures right?
    Mr. Crossman: These figures from 1951 are interesting in themselves, but I do not think they are very important. The important figure, if one is serious, would be after revaluation, because they cannot be judged before then. I warn the hon. Member that if we were to take the figures from 1957 onwards the result of compound interest would show a considerable increase.
    Mr. Well belovedasked the Minister of Housing and Local Government if he will give a general estimate of the impact on rates in the Greater London area due to the effect of the London Government Act.
    The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish): The average increase in rates in Greater London this year was 20 per cent., but my right hon. Friend cannot say exactly how much of this was due to reorganisation. Rising standards of service and some over-estimating were probably contributory factors.
    Mr. Wellbeloved: Is my hon. Friend aware that the London Government Act, forced through by the Conservative Adminstration, has had a disastrous effect upon the ratepayers of London?
    Mr. Mellish: The whole working of the London Government Act is, of course, being watched by the present Government. It is much too early to commit the Minister to any change in the actual structure. It may well be that a future Government will have to look at the question of functions.
    Mr. Lipton: Has not the time already come for the Government to stop watching and to do something about London government? One or two undesirable features have already manifested themselves, and, although we know they will be dealt with after the election, may we have an assurance that they will be dealt with after the election?
    Mr. Mellish: Yes, but the Government came into power only in October 1964 and already the London Government Act had been implemented to the extent that the London boroughs had been constituted and elections had taken place. The Government felt, and rightly so, that it was quite impossible once again to change this enormous structure. It would be most unfortunate to London if any question were now to be bandied about that somehow the whole of London Government would be put into chaos.
    Mr. Ridsdaleasked the Minister of Housing and Local Government what action he now proposes to take to alleviate the burden of rate increases which threaten householders.
    Mr. Gresham Cookeasked the Minister of Housing and Local Government whether he will now take steps, by legislation or otherwise, to increase the general grant to local authorities so as to reduce the burden of rates.
    Mr. Bostonasked the Minister of Housing and Local Government when he will publish his further proposals on rating reform; when the proposed legislation will be introduced; and if he will make a statement.
    Mr. Crossman: I would refer the hon. Members to the White Paper presented last Friday.
    Mr. Ridsdale: Is the Minister aware how delighted we are that he has given in to the pressure of myself and some of my hon. Friends? What is the cost of his proposals? Will he say when he would be prepared to receive a deputation from my constituency concerning rating, about which I wrote to him some time ago?
    Mr. Crossman: I am always delighted to give pleasure to the hon. Member, even when the pleasure is caused by my implementing my own ideas. I will certainly consider receiving a deputation

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    from him, although I should like notice of what particularly this one will be about.
    Mr. Blenkinsop: Is my right hon. Friend aware that in a constituency like South Shields some 3,000 households are likely to benefit from his rent rebate scheme and that we are delighted about it?
    Mr. Crossman: Yes. I am aware that now that the rent rebate scheme has been explained its importance is seen. Two million families are benefiting, 75 per cent. of them pensioners. I am also aware that people feel that to pay 25 per cent. of the cost is a burden. That is why we had our second Bill, under which we are derating the domestic ratepayer to the extent of half the annual increase from the rates.
    Mr. Boyd-Carpenterasked the Minister of Housing and Local Government if he will give details of the steps he is taking to alleviate the general increase this year in the burden of local rates.
    Mr. Dudley Smithasked the Minister of Housing and Local Government what action he proposes to take to help ratepayers unaffected by, and outside the scope of, the Bill now before Parliament, who will be hit by rate rises this spring.
    Mr. Crossman: Proposals for four major alleviations of the rating system are on their way to the Statute Book. First, domestic ratepayers are to be derated to the extent on average of about half the usual annual increase in rates. Second, empty property is to be rated. Third, all domestic ratepayers will be able to pay their rates by instalments. Fourth, rate rebates are being provided for 2 million ratepayers of limited means at a cost to the Exchequer of £22 million.
    Mr. Boyd-Carpenter: Will the Minister appreciate that in answering Question No. 15 he is being asked what alleviation it is proposed to grant this year? Does not his Answer, in fact, amount to nothing?
    Mr. Crossman: No, it does not. I am curious to notice how the right hon. Gentleman now cannot even listen. This year, from April next, provided that the
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    other place is convenient, there will be in force the Bill to operate the rate rebate scheme, which will give £22 million of Exchequer money distributed to 2 million families This is infinitely more than everything put together that was done during the previous 13 years.
    Mr. Braine: Is the Minister aware that his colleague the Minister of Agriculture is seeking to force upon the Essex local authorities a higher proportion of the cost of flood prevention, which will have to be borne by the rates? This is in conflict with everything that the right hon. Gentleman has said. I do not expect him to give an answer now, but would he care to look into this matter?
    Mr. Crossman: I regard that as a different question, but if it is put down I will certainly look into it.

    Alexandra Park and Palace (Administration)
    Mrs. Joyce Butlerasked the Minister of Housing and Local Government on what factors he based his decision to discard the public trustee system in the administration of Alexandra Park and Palace, in view of the successful operation of this system by the local authorities concerned over many years.
    Mr. Crossman: I cannot agree that the administration has been successful. The efforts of the trustees have been severely hampered by limitations in their powers and by lack of funds, and it has long been clear that it was impossible to get the maximum benefit from the Park and Palace under the present system. In deciding to entrust control to the Greater London Council, I am convinced that I have achieved the essential basis—unified control and availability of capital—for the development, frustrated for so many years, of this superb 220-acre site for the good of London and of the whole nation
    Mrs. Butler: In view of the general concern about the rate burden, is it not a retrograde step to transfer the Palace from a local authority trust which, whatever my right hon. Friend may say, has administered it successfully for more than 60 years without any call whatever on the rates? Is it not a discourtesy and most unfair to the borough of Haringey, which has the Palace wholly within its

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    area, to deprive it of any say in its future control?
    Mr. Crossman: In reply to the last point, my hon. Friend already knows, I think, that the Greater London Council has given an express assurance that Haringey will be represented on the managing committee. As for the question of whether keeping within the rates is the sole test of the use of this magnificent site, I have visited it and walked round with the manager, who told me that the revenue with which he was provided by the trustees was not sufficient even to do one coat of paint on the inside. He had a £6,000 revenue subvention each year, two-thirds of it from Middlesex. This was not sufficient, and I felt, therefore, that the chance should be given to the Greater London Council.
    Mr. Boyd-Carpenter: For what purpose does the Minister contemplate that the Greater London Council will use the site?
    Mr. Crossman: If one looked at the site and then went across to Crystal Palace and saw the difference in the development of that other park site, one would see the kind of thing that the Greater London Council would do.

    Land Requirements
    Mr. Boyd-Carpenterasked the Minister of Housing and Local Government whether he is now prepared to grant loan sanction to local authorities for the purchase of land for future requirements; and what limit he intends to impose on the total expenditure for this purpose which he will authorise in the coming financial year.
    Mr. Crossman: I am prepared to authorise purchase of land in advance of requirements only where there is special need. I cannot say what total expenditure will be authorised for this purpose in the coming year.
    Mr. Boyd-Carpenter: Does not the restriction to cases of special need to local authorities go very ill with the intention to provide £45 million for the Land Commission to use for the same purpose? Would it not be better to apply this money to the existing and perfectly competent local authorities?
    Mr. Crossman: Certainly we are applying it through the local authorities, but the right hon. Gentleman will appreciate that even when we do this we must take care to ensure that it is wisely used. The particular source—purchases under benefit and improvement—have risen from £8 million to £21 million per annum in three years, and we felt that it was time to look very carefully at this matter.

    Planning Bulletin (Parking in Town Centres)
    Mr. R. W. Elliottasked the Minister of Housing and Local Government if he is satisfied with the interpretation which local authorities are making of Planning Bulletin No. 7, entitled "Parking in Town Centres", and if he will make a statement.
    Mr. MacColl: Yes, in general; but the Bulletin covers many aspects of parking and if the hon. Member has any particular difficulty in mind I will look into it.
    Mr. Elliott: Is the hon. Gentleman aware that the general suggestion that when a developer is not allowed car parking space outside the property concerned he should make a subscription for general car parks when he has no priority in them, leads to an unfortunate atmosphere between the planning authority and the developer?
    Mr. MacColl: I think these schemes can be done by voluntary arrangement, and I see no objection to that.

    Derelict Vehicles
    Mr. Gibson-Wattasked the Minister of Housing and Local Government what further steps he is taking to solve the problem of the dumping of derelict vehicles.
    Mr. Longdenasked the Minister of Housing and Local Government what results have accrued as a result of his Circular 8/65 concerning the disposal of abandoned motor vehicles.
    Mr. MacColl: Since the issue of Circular 8/65 the Department have continued joint discussions with trade and local authority organisations. Many local authorities have acted on the advice in the circular or are considering how best

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    to do so. The scrap metal and car-breaking trades are interested in extending their activities and there is now better contact between them and local authorities. The situation is constantly under review but the progress already made is encouraging.
    Mr. Gibson-Watt: While thanking the hon. Gentleman for his Answer, may I ask if he will tell the House what he is going to do about the derelict junk on his own Front Bench?
    Mr. Manuel: That question was a waste of time.
    Mr. MacColl: I think the derelict junk on the Front Bench will thrive and blossom between now and 31st March.
    Mr. Longden: Can the Minister tell us what results have actually accrued as the result of his circular, particularly in Hertfordshire?
    Mr. MacColl: I think that most authorities which have a problem of any size are having discussions, as they are having in Hertfordshire, either for a joint effort, to have common services and sharing them between them, or by agreements with scrap merchants, where that can be done.

    Aldermanic System
    Mr. Shepherdasked the Minister of Housing and Local Government whether, in view of the unsatisfactory nature of the aldermanic system, he will introduce legislation to bring it to an end.
    Mr. Crossman: There are arguments for and against the aldermanic system, but more against in my own personal view. The subject is one that the Maud Committee on People in Local Government are looking into, and it is undoubtedly one for the Royal Commission.
    Mr. Shepherd: Must this not be the most indecisive Government in human history? Is not every issue, however trivial, shifted off to somebody else's responsibility?
    Mr. Crossman: The hon. Member should recall that the decision to study the aldermanic system was taken by my predecessor, who set up the Maud Committee over two years ago.

    Swindon
    Mr. Francis Noel-Bakerasked the Minister of Housing and Local Government if he will now make a statement on the proposed further expansion of Swindon.
    Mr. Crossman: The consultants' report on the Newbury-Swindon area will be published next week. I will make a statement then.

    Seaside Resorts (Life-Saving Equipment)
    Mr. Cordleasked the Minister of Housing and Local Government whether he will introduce legislation to make the provision of approved life-saving equipment at seaside resorts a statutory obligation on local authorities and to require notices stating the site and use of such equipment to be prominently displayed.
    Mr. MacColl: Local authorities have power under the Public Health Act, 1936, to provide life-saving appliances. The number of appliances required and their type and siting must differ from place to place; and it would be difficult to prescribe minimum standards. My right hon. Friend thinks it is best left to the authorities themselves to decide what is needed in their areas.
    Mr. Cordle: Yes, but what action does the Minister propose to take to satisfy himself that local authorities carry out the review under Circular 52/65, and will he set up some system whereby there is periodical inspection of safety precautions?
    Mr. MacColl: My right hon. Friend would not wish to force local authorities in this matter. He has no evidence that they are not carrying out their duties in the matter as one would expect them to. If the hon. Gentleman has other evidence I shall certainly be glad to look into it.

    Sewage Disposal Scheme, Stockbridge
    Rear-Admiral Morgan Gilesasked the Minister of Housing and Local Government (1) when he expects to give his decision concerning the confirmation of a compulsory purchase order for the site for the sewage disposal works in Stockbridge, Hampshire;
    (2) when he expects to give his decision concerning the proposal to provide a sewerage and sewage disposal scheme for Stockbridge, Hampshire.
    Mr. MacColl: The compulsory purchase order was confirmed, and approval given to the sewerage and sewage disposal scheme, on 21st February.
    Rear-Admiral Morgan Giles: While thanking the hon. Gentleman for that encouraging reply, may I ask whether he can give an assurance that this scheme, which has been outstanding since 1936, will not be further delayed by any cuts imposed by his right hon. Friend the Chancellor of the Exchequer during the short time available to him?
    Mr. MacColl: Yes.

    Beaches (Oil Pollution)
    Mr. Braineasked the Minister of Housing and Local Government what progress he is making in co-ordinating action with other Government departments with a view to devising a method of helping local authorities who suffer financial hardship from having to clean beaches polluted by the discharge of oil at sea and in the estuaries.
    Mr. MacColl: My right hon. Friend is proposing to discuss with the local authority associations certain aspects of the problem of oil pollution. But he has at present no evidence that expenditure on cleaning polluted beaches is imposing financial hardship on local authorities and he can hold out no hope of direct Exchequer assistance for this purpose.
    Mr. Braine: But surely the Joint Parliamentary Secretary knows that a proposal has already been made to his Department on this subject by one local authority in my constituency, and it has been told that his Department agreed to co-ordinate action on this? As the Reply seems to contradict this, can he say what progress has been made?
    Mr. MacColl: I think it was told that my Department would co-ordinate views. The Department did not pledge itself to any action.
    Mr. Wingfield Digby: Is the hon. Gentleman aware that this contamination is now reaching the beaches of West Dorset. Everything is getting more and more oily? Why?
    Mr. Manuel: Is my hon. Friend aware that many beaches are becoming polluted because of the discharge of oil too near to shores and that, because of the inordinate expense that it would take to clean them up, local authorities are not able to do so, and many bathing facilities are being lost?
    Mr. Braine—
    Mr. Speaker: Order. No hon. Gentleman has a prescriptive right to be called. Mr. MacColl.
    Mr. MacColl: My right hon. Friend is aware of the problems. He is also drawing the attention of local authorities to the offer of the Institute of Petrôleum to put their research facilities to the benefit of local authorities on the problem. It is not confined to oil tankers, nor to ships which are coming into port.

    Rural Areas (Agricultural Development)
    Mr. Bishopasked the Minister of Housing and Local Government if he is aware of the concern of many who live in rural areas and whose interests are adversely affected by agricultural development possible under existing planning legislation; and if he will review such legislation with a view to protecting the rights of those thus affected.
    Mr. MacColl: My right hon. Friend is aware of the concern felt about the erection of conspicuous agricultural buildings, and he is reviewing, in consultation with his right hon. Friend the Minister of Agriculture, Fisheries and Food, the provisions which enable some farm buildings to be erected without the need to apply to the local planning authority for permission.
    Mr. Bishop: Is my hon. Friend aware that in Nottinghamshire and other county areas grain stores and other large developments can take place agriculturally, much to the objection of other local residents and outside present planning controls, and will he act as soon as possible after his return following the General Election?
    Mr. MacColl: My right hon. Friend appreciates that one new and difficult problem is that of the height of silos and grain driers, and he is looking into the point.

    Spoil Heaps (Durham)
    Mr. Shinwellasked the Minister of Housing and Local Government what progress has been made in the clearance of derelict pitheaps in the county of Durham; why Government grants are con fined to schemes exclusively planned for industrial development; and whether it is intended to extend the scheme beyond 1967.
    Mr. MacColl: So far 27 schemes for treating spoil heaps covering about 509 acres in Co. Durham have been approved for grant under the provisions of the Local Employment Act, 1960. Grant is payable for the clearance of land whether for industrial or other purposes where my right hon. Friend the President of the Board of Trade is satisfied that schemes will enhance employment prospects. As announced in the recent White Paper "Investment Incentives", the power to pay grant will be renewed by fresh legislation when the Act expires.
    Mr. Shinwell: As these are only schemes, can my hon. Friend give any estimate of when they are likely to be completed? Is it not very important to make the county more attractive to industrial development, and would not these monuments to capitalism be better removed?
    Mr. MacColl: On my last visit to Durham, I was impressed with the work the local authorities are doing in dealing with spoil heaps, and I think that progress is reasonable.
    Mr. Urwin: Can my hon. Friend give an indication to the House of how soon we can anticipate the introduction of amending legislation which will carry grants beyond 1st April, 1967, under the present legislation?
    Mr. MacColl: I cannot anticipate the precise date of any piece of legislation, but it is the intention both to extend the present scheme and, as mentioned in the White Paper on Local Government Finance, to have a new grant of 50 per cent. not linked to employment.

    Poole (County Borough Status)
    Mr. Murtonasked the Minister of Housing and Local Government in view of the new Government policy on local
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    government reorganisation, what is his policy regarding the present claims of Poole for county borough status.
    Mr. Crossman: Consideration of the future status of Poole must await the findings of the Royal Commission to be set up to make a comprehensive review of local government in England.
    Mr. Murton: Does the right hon. Gentleman not realise that as long ago as 1947 a Local Government Boundary Commission recommended certain improvements in the status of Poole, that his predecessor gave certain assurances in 1955, and that the people of Poole will regard the present decision with astonishment and disgust?
    Mr. Crossman: I am aware that Poole is a very hard case because of the fact the hon. Gentleman mentioned about the assurances given some years ago. However, I would point out that the time that it would take under our present procedure would mean that Poole could not hope to get any change of status until well into the '70s if I had left the Boundary Commission still functioning.
    Sir J. Eden: Would not the right hon. Gentleman agree that there might possibly be something to be said for creating a single urban authority to include Bournemouth, Poole and Christchurch?
    Mr. Crossman: There is something to be said for that, and it is doubtless something which the Royal Commission will look at carefully when drawing up its final plans.

    Derwent Reservoir (Sailing Facilities)
    Mr. Urwinasked the Minister of Housing and Local Government to what extent the Derwent Reservoir is likely to be used for the development of sailing facilities; and what restrictions will be imposed on this sport.
    Mr. Crossman: I am glad to learn that the water company and water board concerned have taken steps to find out the demand for sailing facilities; they would themselves be responsible for any restrictions to be imposed on the use of the Derwent reservoir for sailing.
    Mr. Urwin: I join with my right hon. Friend in congratulating the water

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    undertaking on its enterprise. Can he tell me when there is any possibility of a Government grant being made available for this development, and will he seek to ensure that there is not too much restriction placed on this large stretch of water for dinghy sailing, having regard to the limited facilities in the northern region?
    Mr. Crossman: It is a matter for the water board and the water company concerned to make their own rules. I am trying to encourage them now to use these reservoirs for amenity purposes so that the word "reservoir" is not an unpleasant word but a word that means real enjoyment in future.

    Footpath Survey (East Riding)
    Mr. James Johnsonasked the Minister of Housing and Local Government if he is aware that the East Riding County Council has not completed the draft map stage of the footpath survey; and whether he will now use his default powers under Section 37 of the National Parks Act 1949.
    Mr. MacColl: My right hon. Friend is considering whether to make a direction requiring the county council to prepare a provisional map and he is in correspondence with the Council about this.
    Mr. Johnson: Is the Minister aware that east Yorkshire is the only county which has not yet completed its survey? Is not action imperative, particularly in view of the White Paper issued yesterday by the Minister of Land and Natural Resources about access to the countryside?
    Mr. MacColl: My right hon. Friend shares the concern of my hon. Friend the Member for Kingston upon Hull, West (Mr. James Johnson) that there has been slowness in progress. That is why we are now in consultation with the county council on procedure, before issuing a directive, if necessary.

    Town Development Schemes (Finance)
    Sir D. Rentonasked the Minister of Housing and Local Government whether he is aware that local authorities operating town development schemes are finding that their rate burdens are substantially
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    increased thereby; and whether he will consider the financial position of such authorities, with a view to granting them special assistance with their town development schemes.
    Mr. Crossman: The Housing Subsidies Bill will substantially increase the financial assistance available for houses built under town development schemes. I think we should see the effect of these arrangements before considering further legislation.
    Sir D. Renton: Is the right hon. Gentleman aware that the Housing Subsidies Bill will help such local authorities only at some time in the future, whereas the present financial load, due to the existing town development which has been going on for several years, in some cases requires alleviation? Will the Minister look further into this problem?
    Mr. Crossman: I do not accept that from the right hon. and learned Gentleman, because, as he knows, in our new Amendment to the Bill we have given further assistance because overspill schemes related to exporting authorities will benefit by the arrangement under which houses completed and not merely approved after November will draw the subsidy—and, under these new arrangements, there is not only the basic subsidy which goes up from £24 to £67, but a £24 subsidy in addition, half from the exporting authority and half from me.
    Mr. Boyd-Carpenter: Is not the Bill on which the Minister relies for his answer one of the casualties of Dissolution? Would it not be better to provide extra money in this way for local authorities, rather than to provide £45 million for the Land Commission?
    Mr. Crossman: The right hon. Gentleman is ill advised to risk talking about casualties.

    Humberside
    Sir C. Osborneasked the Minister of Housing and Local Government, in view of the proposal to build a new city of 750,000 people on the south bank of the Humber in Lincolnshire, if he will suspend all local government boundary inquiries until a final decision on this major project is reached.
    Mr. Crossman: Local inquiries have already been held into objections to the proposals of the Local Government Commission for the extension of Kingston upon Hull and Grimsby county boroughs. The Commission made no further proposals for the Humberside area.
    Sir C. Osborne: Is the Minister aware of the ridiculous waste of time on the part of local government officials when they are asked to make inquiries into these proposed boundary alterations, when a much bigger scheme may be superimposed, making this work unnecessary?
    Mr. Crossman: We are extremely desirous that all the work which can be done by the Commission shall be implemented in the two or three years ahead. Therefore, I permitted these inquiries to take place.

    Grimsby and Cleethorpes
    Sir C. Osborneasked the Minister of Housing and Local Government, in view of his decision that local government boundary proposals on which decisions have not yet been taken will be considered on their merits in the light of the decision to appoint a Royal Commission, if the Grimsby-Cleethorpes proposals will not now be proceeded with until the Royal Commission has reported.
    Mr. Crossman: A public local inquiry was held last month into objections to the Local Government Commission's proposals for Grimsby and Cleethorpes. I will consider what action to take when I have received the Inspector's report of the inquiry.
    Sir C. Osborne: May we take it that that means that the decision, not having been taken, will be suspended until the Royal Commission has made its report?
    Mr. Crossman: No. I repeat what I said the last time I was asked about this matter. What we have decided, broadly speaking, is that in respect of those cases in which we have reached the inquiry stage and beyond, we shall examine their merits and try to complete them if possible.

  HOUSING

    East and West Ridings
    Mr. Duffyasked the Minister of Housing and Local Government how many houses were under construction by
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    local authorities in the East and West Ridings of Yorkshire at the end of 1965.
    Mr. Mellish: 16,640.
    Mr. Duffy: Is my hon. Friend quite satisfied that this figure even remotely corresponds to the need in the East and West Ridings? Is he aware that on page 173 of the National Plan housing conditions in that area in terms of quality are described as the worst in the country? Is he not also aware that from 1951 to 1964 only 5·2 houses per 1,000 estimated population were built in the East and West Ridings compared with the national figure of 5·8? Will my hon. Friend look at the figure again?
    Mr. Mellish: I undertake to do that on behalf of my hon. Friend. He will know that it is my Minister's policy to ensure that in future programming priority is given to areas where the need is greatest.

    Vacant Properties (Condition)
    Mr. Robert Howarthasked the Minister of Housing and Local Government if he is satisfied that local authorities have sufficient powers to ensure that houses which are left vacant and become a nuisance to adjoining properties and dangerous to children are made secure and weatherproof within a reasonable period of time; and if he will make a statement.
    Mr. Mellish: The powers in the Public Health Acts are generally sufficient to enable local authorities to deal with these houses. A few authorities have obtained, or are seeking, rather wider powers in local Acts. But my right hon. Friend is not aware that there is a problem which calls for general legislation.
    Mr. Howarth: Is my hon. Friend aware that in many towns such as Bolton this is an increasing problem and that they would like to have compulsory powers to enable them to force owners to seal up these houses before they become a danger to children and a dumping ground for all sorts of rubbish?
    Mr. Mellish: The Minister is open to persuasion on this, and if it can be shown to be a widespread problem he

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    is prepared to consider proposals for strengthening the powers of local authorities.
    Mr. Frank Allaun: Is my hon. Friend aware that if the Minister goes ahead with his proposal to rate empty properties it will help to end this nuisance, will relieve the rates, and will make property-owners who are holding out for a high price and keeping houses empty which are badly needed put them on the market?

    Building Programme
    Mr. Hamlingasked the Minister of Housing and Local Government when he anticipates reaching a target of 400,000 completed houses in one year.
    Mr. Crossman: This year.
    Mr. Hamling: Is my right hon. Friend aware that that reply will be received with great satisfaction—[HON. MEMBERS: "It is nonsense."]—not only on these benches but in the constituencies?
    Mr. Boyd-Carpenter: As the right hon. Gentleman failed to do it last year, what reason have we to believe he will be successful this?
    Mr. Crossman: Last year all we achieved—I have to repeat it—was to exceed the Tory record by 9,000. This year we shall build 400,000. In the public sector we shall go widely ahead, and the private sector, provided it can, as I think it will, recover from the slump, should do very well indeed.
    Mr. Lubbock: Is the right hon. Gentleman aware that the number of houses completed in January, 1966, was less than that completed in January, 1965? How does this square up with his claim to build more houses?
    Mr. Crossman: I would suggest to the hon. Gentleman that monthly comparisons can be extremely misleading.
    Mr. Rose: Can my right hon. Friend say what he anticipates the effects of the housing subsidies will be, particularly with regard to the large conurbations such as Manchester and Liverpool, where, as a result, these areas have fixed higher targets for next year?
    Mr. Crossman: We have set all the conurbations much higher targets, and
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    the housing subsidies create the financial possibility, and the only limitation is a limitation we ourselves imposed upon the authorities, because we have to ration them in terms of the public money available.

    Rent Assessment Committees (Fees)
    ). Mr. Arthur Lewisasked the Minister of Housing and Local Government (1) what criteria he used in fixing fees for part-time employment of 15 guineas a day for professional members, 12 guineas a day for lay members and 18 guineas a day for chairmen of the rent assessment committees;
    (2) what hours the professional and lay members of the rent assessment committees will have to work to receive their respective payments of 15 guineas and 12 guineas a day; if he will give similar details with regard to the chairmen for their 18 guineas; and whether any of these amounts are tax free.
    Mr. Crossman: I will, with permission answer this Question and Written Question No. 6 together.
    The fees were fixed in recognition of the importance of the work and in relation to the rate of payment for other quasi-judicial bodies. The hours of work are not prescribed for chairmen and members of rent assessment committees. The work will normally be programmed to occupy a full day, but the precise duration of a committee session will be determined largely by the complexity of the particular references heard on that day. The fees are not tax free.
    Mr. Lewis: Is the Minister aware of the fact that it is rather invidious—for busmen, for example, who cannot get a few shillings extra—to find that these people who very often have as many as four or five other sources of income can, for a relatively part-time appointment, receive such large sums? Did he consider referring this to the Prices and Incomes Board before making these appointments?
    Mr. Crossman: I would like my hon. Friend to realise that I was under great pressure—and rightly under great pressure—to ensure that we had qualified

    1087
    people for the rent assessment committees, and if we are to have qualified professional people doing our work we must pay the rate for the job to the qualified people.

    Crawley
    Mr. Hordernasked the Minister of Housing and Local Government whether, in view of the special housing needs in Crawley through the expansion of industry, he will announce plans for a large increase in the construction of houses through the agency of the New Towns Commission for Crawley.
    Mr. Mellish: My right hon. Friend hopes to agree a programme with all those concerned quite shortly. The problem is to increase the number of houses built by all agencies without prejudicing a decision on the future size of the town.
    Mr. Hordern: But is the hon. Gentleman aware that if industry is to function properly in Crawley another 5,000 houses at least will be required by 1970? Can he give no indication at this stage whether that target itself can be met?
    Mr. Mellish: The meeting with the agencies concerned took place yesterday. We are aware of the problem here, particularly with regard to the shortage of labour for industry. I think I can say to the hon. Gentleman that we shall do all we can to ensure that that problem is met.

    Greater London Council
    Mr. John Harveyasked the Minister of Housing and Local Government what discussions he has held with the Greater London Council on the basis of paragraph 41 of the Housing Programme 1965–70, Command Paper No. 2838.
    Mr. Mellish: None so far. My right hon. Friend intends to start discussions with the local authority associations and the Greater London Council shortly.
    Mr. Harvey: May I ask the hon. Gentleman to expedite these discussions in view of the seriousness of the matter?
    Mr. Mellish: We certainly will have discussions with them very soon.
    Mr. John Harveyasked the Minister of Housing and Local Govern-
    1088
    ment how the Greater London Council's rejection of the advice given in paragraph 41 of the Housing Programme 1965–1970. Command Paper No. 2838, will affect that programme, in view of the fact that the Council controls nearly a quarter of a million council dwellings.
    Mr. Mellish: My right hon. Friend is not aware that the G.L.C. has rejected his advice. In principle its social aid scheme is in line with the White Paper.
    Mr. Harvey: Will the hon. Gentleman at least make quite sure that what he thinks is the case is the case, because otherwise fewer houses are likely to be built, and would it not be true, therefore, that the necessity to cater for the real need would be diminished?
    Mr. Mellish: There is a fundamental difference of opinion between the two sides of the House. My right hon. Friend is determined that he will only have discussions with local authorities on the implementation of a rent rebate scheme. We are opposed to a differential rent scheme. The present scheme of the G.L.C. is a rent rebate scheme, and in that sense therefore we favour it.

    Housing Loans
    Mr. Frank Allaunasked the Minister of Housing and Local Government if, in view of the large unsatisfied demand for housing loans from councils, he will seek to fix a maximum limit on the amount local authorities can lend borrowers on any one house.
    Mr. Crossman: When I have completed my review of local authority lending arrangements, and the part which they should play in the financing of house purchase, I expect to issue further advice to local authorities which will cover this point.
    Mr. Allaun: Would it not be fairer if such councils as Kensington, instead of lending £20,000 to one individual who could get the money elsewhere, lent £2,000 each to ten individuals who cannot get the money elsewhere?
    Mr. Crossman: Yes. It is fair to say that the Kensington Council asserts that it did not exclude anyone else because of lending the £20,000. As I shall make clear in the directive that we give, my own view is that that scale of loan is out

    1089
    of key with local government lending and should be left to the proper people to do it.

    Rent Assessments
    Mr. Frank Allaunasked the Minister of Housing and Local Government when he expects the first decisions on rent reductions by a rent assessment committee will be reached and announced.
    Mr. Crossman: Rent assessment committees in Greater London, which is the first area to come into operation, are not likely to hear cases before the latter part of this month, but in the normal course their decision would be announced at the hearing, which can be attended by the Press.
    Mr. Allaun: Will the Minister note, I hope with pleasure, that some London landlords are now accepting rent reductions of up to £3 12s. per week without taking cases to the rent assessment committees, which suggests that they do not regard those reductions as unreasonable?
    Mr. Crossman: I am delighted to hear that news, particularly because the time taken by our rent officers is longer than we anticipated, and it is very important that people should read the cases that have now been published and draw their own conclusions about the kinds of agreements that can be reached between landlords and tenants.

    Flats, Sheffield (Condition)
    Mr. J. H. Osbornasked the Minister of Housing and Local Government (1) if he is aware of the deteriorating condition of flats in the Sheffield area, particularly Martin Street, due to cladesporium labatum;and what advice he is giving to local authorities to deal with such deterioration in new flats;
    (2) how many local authorities have given him details of deterioration in modern flats and buildings due to cladesporium labatum, dampness, and other similar causes; what information he has about the causes of this deterioration, construction techniques to prevent this in new buildings, and about techniques to cure buildings already affected; and if he will make a statement.
    Mr. Mellish: My right hon. Friend is aware of the difficulties in the Martin Street flats and elsewhere.
    1090
    Difficulties of this kind may appear in either old or modern buildings, and five local authorities have brought cases to my right hon. Friend's notice recently. There is a great body of knowledge to enable authorities to avoid these difficulties, or cure them if they arise, and I do not think further general advice would be of assistance, but in complex cases the Building Research Station and the Department will be very glad to help.
    Mr. Osborn: I acknowledge that reply, but does the Minister blame this on the quality of building construction or the lack of care by tenants in looking after the flats and houses they possess? Is he aware that this is a serious problem in many buildings throughout the country?
    Mr. Mellish: I am not putting the blame upon anybody in regard to these flats. I understand that cladesporium labatum is mildew, and that the trouble with these flats is due to the heating, or lack of heating, in some of them. If the hon. Member will refer this matter to the Building Research Station it will be glad to look into it.

  MOSCOW (PRIME MINISTER'S VISIT)
  Mr. Peter Blakerasked the Prime Minister if he will make a statement on his recent discussions with Soviet leaders.
  Mr. Martenasked the Prime Minister if he will make a statement on his visit to Moscow.
  Mr. Hamlingasked the Prime Minister what discussions he had with Soviet leaders during his Moscow visit on expanding Anglo-Soviet trade.
  Mr. William Hamiltonasked the Prime Minister what decisions were made during his Moscow visit on the purchase by the Union of Soviet Socialist Republics of additional consumer goods from the United Kingdom.
  Sir G. de Freitasasked the Prime Minister whether, during his visit to Moscow, he discussed the possibility of increasing exports of consumer goods from the United Kingdom to the Soviet Union; and whether he will make a statement.
  The Prime Minister (Mr. Harold Wilson): I would refer hon. Members

  1091
  to the Communique issued after my visit which, with permission, I will circulate in the OFFICIAL REPORT.
  Mr. Blaker: Was the Prime Minister absolutely frank with Mr. Kosygin? Did he tell him that he had already asked the Queen for a Dissolution and, therefore, might not be able to speak for Britain—[Interruption.]
  Mr. Speaker: Order. This is not the hustings.
  Mr. Blaker: Did the Prime Minister tell Mr. Kosygin that he had already asked the Queen for a Dissolution and, therefore, might not be able to speak for Britain for more than a few weeks?
  The Prime Minister: I would have considered it quite improper to have told Mr. Kosygin or anyone else in the Soviet Union what requests had been made of Her Majesty the Queen. I do not think that there was much doubt in Mr. Kosygin's mind about my ability to speak for this country, although I found one or two Russian officials rather interested in the smallness of our majority.
  Mr. Marten: Can the Prime Minister explain the rather curious omission of the Foreign Secretary from his party? Might not the negotiations have been more successful if he had been there? Secondly, can he say whether the question of the limitation of arms in the Middle East and the question of a nuclear guarantee to India were raised during the talks?
  The Prime Minister: The hon. Gentleman may have missed the fact that my right hon. Friend had a very extended visit to the Soviet Union just before Christmas. It was during that visit that my own visit was arranged. As for the other part of the supplementary question, although I do not wish to go into detail, I can confirm that both questions were raised by me.
  Mr. Hamling: Can my right hon. Friend tell the House what progress has been made in reversing the adverse balance of trade that we have with the Soviet Union?
  The Prime Minister: I went into this question at some length with Mr. Kosygin, and it was also discussed with other
  1092
  Ministers whom members of my party and I met. There is to be a meeting in May of trade representatives of both sides to—in the words of the communiqué—"discuss how we can widen and deepen the exchange of goods."
  Mr. William Hamilton: Can my right hon. Friend say whether—[HON. MEMBERS: "Speak up"] That is an unusual request. Can my right hon. Friend assure the House that he is optimistic about the outcome of these talks in May?
  The Prime Minister: Yes, I am hopeful of this. But this has been a continuing problem. I remember arguing on exactly the same problem and the same sort of gap as long ago as 1947. Right hon. Gentlemen opposite have taken this matter up on many occasions. We know what answer the Soviet authorities give. But I think that there is a willingness to do something about redressing the balance.
  Commander Courtney: Will the Prime Minister find time to mention to his Russian hosts that the vast majority of the civilised nations do not find it necessary, as does the Soviet Union, to demand an extraordinary degree of diplomatic immunity for their representatives in London?
  The Prime Minister: I did not discuss anything on that subject—or anything to do with the hon. and gallant Gentleman.
  Mr. Heath: The Prime Minister will be aware that in May, 1964, Mr. Patolichev signed a firm undertaking to the effect that Anglo-Soviet trade would be maintained in balance. Why is it that the Government, in their period in power, have done nothing to ensure that this undertaking was adhered to?
  The Prime Minister: Nothing was done by the previous Government, although a similar undertaking was given, I think, by Mr. Kabanov in 1957. Of course, the answer which is always given—I am sure that the right hon. Gentleman will recall this—is that many of the things which they would like to buy are at the wrong price or the wrong date of delivery. We do not accept that any more than his party did and we are seeking to widen the basis of the goods they buy.
  Mr. Heath: This was the first time that a written agreement had been signed by the Soviet Union to this effect and all the weapons are at hand to see that it is enforced, because of the quota system for operating Soviet trade. Why have the Government not taken action before this?
  The Prime Minister: Because we have preferred to deal with this on an expanding basis. It would be possible—if this is what the right hon. Gentleman has in mind—for example, to impose sharp quotas on Soviet soft wood to this country. We decided to have one more go at expanding our exports to them rather than taking the restrictive attitude which the right hon. Gentleman wants.
  Following is the Communiqué:
  Joint Anglo-Soviet Communiqué issued at the end of the official visit to the Soviet Union from the 21st to the 24th of February, 1966, of the Prime Minister of Great Britain.
  At the invitation of the Soviet Government the Prime Minister of Great Britain, the Right Honourable Harold Wilson, paid an official visit to the Soviet Union from the 21st to the 24th of February 1966.
  Mr. Wilson was accompanied by
  The Right Honourable Frank Cousins, Minister of Technology.
  The Right Honourable the Lord Chalfont, Minister of State for Foreign Affairs and
  Official advisers.
  During his stay in the Soviet Union Mr. Wilson had talks with L. I. Brezhnev, A. N. Kosygin and N. V. Podgorny. Mr. Wilson also paid a visit to A. I. Mikoyan and met other leading statesmen of the Soviet Union.
  The following took part in the conversations:
  On the Soviet side—
  the Deputy Chairman of the Council of Ministers of the U.S.S.R., V. A. Kirillin;
  the Minister of Foreign Affairs, A. A. Gromyko;
  the First Deputy Minister of Foreign Affairs of the U.S.S.R., V. V. Kuznetsov;
  the Ambassador of the U.S.S.R. in Great Britain, M. N. Smirnovsky;
  the Head of the Second European Department, A. A. Roshchin:
  On the British side—
  the Ambassador of Great Britain in Moscow, Sir Geoffrey Harrison;
  the Minister of State for Foreign Affairs, Lord Chalfont;
  the Secretary of the Cabinet, Sir Burke Trend and other officials.
  Mr. Cousins had meetings with
  the Deputy Chairman of the Council of Ministers of the U.S.S.R., V. A. Kirillin, and with Ministers N. S. Patolichev, and K. N. Rudnev.
  He visited the computing centre of the Scientific Research Institute of Complex Automation and the weaving factory of the Moscow Silk Combine named after Ya. M. Sverdlov. In the course of the discussions there was a full exchange of views on international problems and also on questions of Anglo-Soviet relations. The two sides declared their desire to make every effort to reduce tension, to improve the international situation, to avert the threat of nuclear war and to develop relations between the U.S.S.R. and the United Kingdom.
  The two sides set out with great frankness their respective points of view on the situation in Viet Nam.
  The sides discussed the problems of European security and of a German peace settlement. It was noted that the normalisation of the situation in Europe would be served by the creation of an atmosphere of confidence and of reduced tension and by the encouragement of efforts leading to the establishment of comprehensive co-operation between all the countries of Eastern and Western Europe.
  The British Government and the Government of the U.S.S.R. recognized the urgency of making arrangements to prevent the spread of nuclear weapons through the world and the necessity of achieving as quickly as possible an international agreement on this question.
  The sides concurred that the conclusion of an agreement about the non-dissemination of nuclear weapons would correspond with the interests of all peoples. They recognized as important that no activities should be undertaken in any part of the world which would be inconsistent with the purposes of such an agreement.
  The two sides also discussed other measures to reduce international tension and to promote general and complete disarmament. In this context they emphasised the special importance of taking steps to extend the 1963 test ban treaty to include underground tests.
  They also noted the important resolution of the General Assembly of the United Nations concerning the convening of a World Disarmament Conference with the participation of all countries.
  In the course of an exchange of views it was noted that the Tashkent declaration was an important step towards the establishment of good neighbourly relations between India and Pakistan. In the opinion of the sides, the carrying into effect of the Tashkent declaration created real conditions for the preservation and consolidation of peace in the sub-continent. For their part, they would help towards this in every possible way.
  Consideration was given to the state of relations between the U.S.S.R. and Great Britain and the prospects of their further

  1095
  development were discussed. The sides confirmed their intention to work for the improvement of Anglo-Soviet relations in all fields in the interests of the peoples of both countries and of the reduction of international tension.
  Both sides agreed to study both short and long-term measures to widen the basis and to develop a high level of trade in both directions. They also undertook to appoint their representatives to discuss the possibility of concluding a navigation agreement between the U.S.S.R. and Great Britain.
  The sides agreed to hold discussions on the possibility of expanding air traffic.
  The sides noted with satisfaction the development of relations in the fields of science, technology, education and culture and recognised that the further development of these relations should be encouraged.
  The Prime Minister of Great Britain, Mr. Wilson, invited the Chairman of the Council of Ministers of the U.S.S.R. to pay an official visit to Great Britain. A. N. Kosygin accepted this invitation with gratitude. The date of the visit will be agreed subsequently.
  Both Governments agreed that the discussions and personal meetings which had taken place during Mr. Wilson's visit to Moscow, had been useful and constructive. They reaffirmed their desire to hold periodical meetings and consultations at all levels for the improvement of relations between the two countries, for the reduction of international tensions and for the consolidation of peace.

  OIL TANKERS (MOZAMBIQUE)
  Mr. Biggs-Davisonasked the Prime Minister what authority has been given for the interception by Her Majesty's ships and aircraft of oil tankers or other vessels approaching the Portuguese province of Mozambique; what vessels have been intercepted, and with what result; and what diplomatic action followed.
  The Prime Minister: The answer to the three parts of the Question is none, Sir, none, Sir, and none, Sir.
  Mr. Biggs-Davison: Is this not a surprising answer, if the Prime Minister is serious about oil sanctions—[Laughter.] This is not a very cheerful subject. Is not the dangerous logic of this dangerous policy the extension of oil sanctions to South Africa and Portuguese territory? Will the Prime Minister resist any temptation to internationalise this conflict, contrary to British interests and those of world peace?
  The Prime Minister: I am very glad that the hon. Gentleman is beginning to
  1096
  realise the dangers of this being internationalised. He does not appear to have realised it up to now. He will remember that when this was debated just before Christmas I made it plain that we had no intention or idea of trying to settle these matters by force. If he quarrels with the sanctions policy, he should remember that it has been supported throughout by the Leader and the Front Bench of his party.

  NATIONAL BUILDING REGULATIONS (MINISTERIAL RESPONSIBILITY)
  Mrs. Renée Shortasked the Prime Minister if he will transfer the administration of the National Building Regulations from the Ministry of Public Building and Works to the Ministry of Housing and Local Government.
  The Prime Minister: Not at this stage, Sir.
  Mrs. Short: Could I ask my right hon. Friend whether, at some time when he is not too occupied, he will perhaps look at this again, bearing in mind that the Ministry of Housing and Local Government have the machinery and contacts with local authorities?
  The Prime Minister: This has been a contentious issue for many years. This particular topic was the responsibility of the Ministry of Housing and Local Government and was transferred to the Ministry of Public Building and Works as recently, I think, as 1964. The argument for this—I think it was a good one—was that the Building Regulations cover not only housing but other forms of buildings.
  Mr. Chichester-Clark: While I welcome the amending Regulations from the Ministry of Public Building and Works, is the Prime Minister aware that they appear to have been made without consultation with the appropriate Committee and that the Government are statutorily bound to have that consulation? Will he ask the Minister concerned to make a statement to clear up any doubt which may have arisen in the industry over these Regulations?
  The Prime Minister: I will certainly put that to my right hon. Friend. There

  1097
  are Government discussions at the moment about changes in the Building Regulations. I was asked about where it should be. There is a case for housing, because of local authorities, but, on the whole, I support the 1964 decision.

  BUSINESS FIRMS (QUESTIONNAIRES)
  Sir W. Bromley-Davenportasked the Prime Minister if he is aware of the number of questionnaires which are being sent by Departments to business firms inviting them to fill them in, and that in one case this form filling occupied two clerks for a week; whether he is satisfied that such form filling is necessary, having regard to the time involved for firms and for civil servants in analysing the forms, in view of present labour shortages; and if he will make a statement.
  The Prime Minister: I am aware that industry in general is being very co-operative in providing information essential to the proper conduct of the nation's business. As to the particular case mentioned by the hon. Member, if he would care to send me details I will have them looked into.
  Sir W. Bromley-Davenport: Is the Prime Minister aware that digging up all this information and filling up all these forms is a very expensive operation? Under the circumstances, would Her Majesty's Government—[Interruption.] Hon. Members will make me forget what I was going to say. As this is such an expensive business, would Her Majesty's Government consider paying for this operation, which is costing industry rather a lot of money, especially as some cannot afford it?
  The Prime Minister: I had some difficulty in hearing the hon. and gallant Gentleman. He referred three times to "this information", but he has not told the House what it is. I invite him to let me know which information he is talking about, and I will look into it.
  Sir A. V. Harvey: On a point of order. I distinctly heard an hon. Member opposite refer to the constituents of my hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport) as "digging him up"—
  Mr. Speaker: Order. The Chair deprecates the calling to the attention of the Chair by hon. Members of random remarks which the Chair is fortunate enough not to have heard.

  ZAMBIA (MILITARY MISSION)
  Sir Richard Glynasked the Prime Minister what exchanges he has had with the Government of Zambia about the presence there of a military mission from the Organisation of African Unity to study the possibilities of launching an attack against Rhodesia from Zambia.
  The Prime Minister: None, Sir.
  Sir Richard Glyn: Is the Prime Minister aware that statements concerning the alleged exchanges have been repeatedly attributed to official spokesmen of the Zambia Government? If these allegations are without foundation, is it not unfortunate that they have not been repudiated until this moment?
  The Prime Minister: If the exchanges to which the hon. Gentleman refers are supposed to be exchanges between the Zambia Government and Her Majesty's Government, I have just given my answer. There have, of course, been exchanges between the Zambia Government and some of the representatives of the O.A.U. countries. This took place from 6th to 11th February, but we have had no exchanges about it.

  CHANCELLOR OF THE EXCHEQUER (SPEECH)
  Mr. Boxasked the Prime Minister whether the Chancellor of the Exchequer's public speech to the Cardiff Fabian Society on Friday, 14th January, 1966, about the import surcharge, represents the policy of Her Majesty's Government.
  The Prime Minister: Yes, Sir
  Mr. Box: Does this mean that the Government have abandoned their warnings that the so-called "temporary" surcharge should not be used as a protective tariff by industry in the future?
  The Prime Minister: My right hon. Friend's speech was mainly about the interesting subject of leasehold, but he referred in the course of the speech to

  1099
  one Cardiff firm which had shown great success in building up its efficiency which would enable it to compete without the help of the surcharge. Like my right hon. Friend—indeed, I said this when the surcharges were imposed—I believed that there always was a danger that some people would regard this as "feather bedding". I think that my right hon. Friend's example was a good one—that of somebody being enterprising about it.

  VIETNAM (COMMONWEALTH PEACE MISSION)
  Mr. Onslowasked the Prime Minister what recent action he has taken to keep the Commonwealth Peace Mission to Vietnam in being.
  The Prime Minister: Because of the North Vietnamese opposition to negotiations since the Commonwealth Peace Mission was first proposed in June I have no early hopes that either the Commonwealth Mission or any other peace mission is likely to be received in Hanoi.
  Mr. Onslow: Quite apart from the fact that this does not answer the Question, since the right hon. Gentleman is now so anxious to be frank, fair and honest with the whole House, will he now admit that this Mission was never anything more than a publicity stunt?
  The Prime Minister: I am surprised that any hon. Member should suggest this. This was supported by 20 out of 21 Commonwealth Prime Ministers. Sir Robert Menzies, the Prime Ministers of New Zealand, Canada and so on, were hardly likely to go in for this as a publicity stunt. It was because we knew that we had to make an approach to Hanoi in some form if there was to be peace. I am disappointed at the result, and I am surprised that hon. Members opposite are not disappointed as well.
  Mr. Lubbock: How does the Prime Minister think he will have any influence on the situation in Vietnam when his attitude is one of unthinking support for everything which President Johnson does?
  The Prime Minister: We have debated this on five or six occasions and, if the hon. Member had been present, he would have heard the very deep amount of thought which went into this question and the reasons we gave, at the greatest
  1100
  length, why we have supported the American action in Vietnam. I have given these reasons many times, but the reason that we cannot get the Peace Mission moving is that, as we found again last week, the Hanoi Government are not prepared to discuss peace except on the basis of the four Dan Pham Dong conditions.

  E.F.T.A. AND EUROPEAN ECONOMIC COMMUNITY
  Mr. Ian Lloydasked the Prime Minister what further steps he has taken to bring about the partnership between the European Free Trade Association and the Common Market; and what direct bilateral arrangements have now been worked out other than in the field of aviation.
  The Prime Minister: At its meeting at Copenhagen in October the European Free Trade Association Ministerial Council reaffirmed its desire for a dialogue with the European Economic Community, on these matters, and we hope that the Community will soon be in a position to reply. It is our policy to develop technical co-operation with other European countries over as wide a range as possible. We have already made an encouraging start on a number of specific projects.
  Mr. Lloyd: Would the Prime Minister not concede that the time for dialogue has passed? Would he, perhaps, include himself among that small band of hon. Members who have been abroad giving advice to good Europeans and their Governments to the effect that no real progress is likely to be made unless there is a change of Government in this country?
  The Prime Minister: I thought that hon. Members in all parts of the House felt that it would be useful for E.F.T.A. and the E.E.C. to get together. The only reason why we have not is the difficulty, which we understand, in the E.E.C., which has prevented the E.E.C. so far from responding to the initiative taken by E.F.T.A.

  WINTER FUEL EMERGENCIES
  Mr. Bryanasked the Prime Minister if he will appoint a special interdepartmental committee to deal with winter fuel emergencies.
  The Prime Minister: I did so some time ago, Sir.
  Mr. Bryan: Does the right hon. Gentleman recall the statement of 17th November last to the effect that this Committee was to deal with any fuel emergency that might arise? What steps did it take in the Midlands fuel emergency of 25th January or thereabouts? Is it not significant that the publicity routine allotted to this particular non-event was exactly the same as that allotted to a number of White Papers—the University of the Air and so on which have come out in this pre-election week?
  The Prime Minister: My advice to the hon. Gentleman is that he should not try to fire off his limited shots too early. There is a month to go yet. [Interruption.] In any case, he has only a limited armoury. Of course, nobody expected this Committee to be physically mending broken valves or dealing with goods which, when they were supplied, were not doing the job they were expected to do. The Committee's job was, as I explained then, to deal with anything that needed to be done in co-operation; for example, if there was a severe winter and coal trains could not be got through to power stations and so on. Its job would be to co-ordinate these things as well as such matters as getting helicopters to villages which were cut off. However, it could not be expected to make up the deficiencies for which right hon. Gentlemen opposite failed to plan.
  Mr. Heath: If it was not expected to mend broken valves, was it at least expected to make an attempt to mend broken promises?
  The Prime Minister: I do not think that we had ever given a promise that the calculations of hon. and right hon. Gentlemen opposite in relation to the supply of gas and coal to the Midlands were accurate. It was the job of this Committee to see that everything that could humanly be done in a severe winter was done, but it could not deal with promises and other things—[Interruption]—mentioned by the right hon. Gentleman.
  Mr. Lipton: Should not the Opposition be more concerned with the very
  1102
  cold air currents which will blow their way at the end of this month?
  The Prime Minister: I think that one or two right hon. Gentlemen opposite, particularly the Leader of the Opposition, are, in golfing terms, pressing too hard and therefore losing both length and direction.

BUSINESS OF THE HOUSE
3.33 p.m.
The Lord President of the Council (Mr. Herbert Bowden): With permission, Mr. Speaker, I should like to make a short business statement, giving the topics for WEDNESDAY, 2ND MARCH.

BUSINESS OF THE HOUSE

  SUPPLY [8TH ALLOTTED DAY]: COMMITTEE.
  If the Committee approves, its business will be taken formally to allow discussion, until about seven o'clock, of an Opposition Motion on the Decision of the Minister of Housing and Local Government on the Packington Estate.
  Afterwards, a debate on Comprehensive Schools, on a Motion for the Adjournment of the House.

BALLOTS FOR NOTICES OF MOTIONS
Mr. Speaker: Under the Order of the House of 11th November last, Ballots are to be held today for Private Members' Motions on Thursday, 17th March, and tomorrow for Private Members' Motions on Friday, 18th March.
In view of the announcement that Parliament will be dissolved on 10th March I have a proposal to make on which I would like to know the pleasure of the House.
I would, if the House allowed, propose to cancel the arrangements for tomorrow's Ballot which fall to be made under my authority, that is to say, the placing of the book for signatures in the No Lobby, and the placing of notices about the House.
I take it that hon. Members have no objection to that.
Hon. Members: Hear, hear.

BALLOTS FOR NOTICES OF MOTIONS
  Management—Labour Co-operation
  Sir W. Robson Brown: I beg to give notice that on Thursday, 17th March—[Laughter.]—Hon. Gentlemen opposite should hear what I have to say before they laugh—I shall call attention to the need to improve management-labour co-operation, and move a Resolution.
  Prime Minister (Pledges)
  Sir M. Redmayne: I beg to give notice that on Thursday, 17th March, I shall call attention to the inaccuracies of certain pledges made by the Prime Minister, and move a Resolution.
  Impending Change of Government
  Mr. van Straubenzee: I beg to give notice that on Thursday, 17th March, I shall call attention to the impending change of Government, and move a resolution.

ECONOMIC SITUATION
3.35 p.m.
The Chancellor of the Exchequer (Mr. James Callaghan): I beg to move,
That this House supports the Government's determination to strengthen the balance of payments; to achieve an effective policy for raising productivity, holding down prices and increasing the real value of incomes; to plan more rapid economic growth and a better balance between the Regions; to secure greater social justice; and congratulates them on the notable progress they have made towards these ends.
I am glad of the opportunity to tell the House and the country, as far as I can at this stage in the year, the Government's view of our economic situation. During the coming weeks we will concentrate the nation's attention upon our policies to enable Britain to pay her way. Unless we earn our living in the world, freely and competitively, none of our other hopes will succeed.
We shall, therefore, state clearly how we are encouraging the modernisation of industry and, without fear or favour, what more needs to be done by both sides of industry to achieve greater efficiency and output. We will explain that the steady pursuit of a fair incomes policy is the best means of keeping prices under control; and in this speech I will also say something about the Budget, and endeavour to present a balanced account of the nation's economic position to avoid raising either false hopes or false fears.
The Government's intention is that the election should be fought with the country having before it a true understanding of our situation. I preface my remarks by reminding the House that in the early days of the Government's life we had to determine what our general policy should be to overcome the grave deficit in the balance of payments. On previous occasions, and notably in 1961—when, I may add, the deficit was not nearly as serious as it was in 1964—the chosen course of the then Government was that of a violent and sudden deflation of the economy. It worked, but at a heavy cost.
After 1961, as after 1957, the balance of payments certainly improved; but it is now generally agreed that the results of

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the deflation were disastrous. New investment in industry was halted and there was a heavy increase in unemployment, especially in Scotland, Wales and the outer regions. Clearly, the nation did not elect a new Government in 1964 to return to these old and discredited recipes.
We therefore chose a new path, namely, a direct attack on the overseas deficit, on both trading and capital account, coupled with a redeployment of men and resources between industries and between regions. We backed this up with a long-term policy to foster the growth of the economy, with steps to make price increases harder to get and to relate earnings and other incomes, so far as possible, to the increase in productivity.
These new methods naturally bring difficulties and resistance at first. Some have been very successful while others have you to make their full impact. But events are proving that these policies can and will work. The balance of payments is improving without our having taken a sledgehammer to cripple the rest of the economy. During the last 16 months the nation has made a substantial breakthrough in the post-war handling of our balance-of-payments problem; but I must emphasise that major problems still remain. There is still a long haul before us. We have yet to close the gap in the external balance, to repay debt, and to get productivity—output per man hour—advancing at a high rate.
I should like, first of all, to discuss the balance of payments. Our aim is to achieve external balance over a two-year period—that is, by the end of 1966. That still remains our target, and we are well on the way to achieving it. I shall not be able to give a precise total for the balance in the fourth quarter of last year, or for the balance for the year as a whole until the figures are completed and published towards the end of the month; but it is already plain from provisional figures that there was a great recovery in the fourth quarter compared with the third quarter.
Over the last three months of 1965 the deficit was probably very small, so the year as a whole should show a most striking improvement. As is well known, the deficit on current and long-term capital transactions in 1964 was well over
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£750 million. In 1965, the latest estimate we have is that it will have been reduced to a figure within a fairly narrow range round £350 million—
Sir Cyril Osborne Sir Cyril Osborne (Louth) rose—
Mr. Callaghan: No. We have plenty of time to debate these matters, and I am in doubt whether the hon. Member seeks to deal with a matter of fact or a question of opinion.
On the alternative measure, the balance of monetary movements, the reduction was even more. In round terms the improvement amounted to about £400 million—over 1 billion dollars—that is well over 1 per cent. of the national income.
At a time when the Government are asking for greater effort from the nation, it is worth while to stand back for a moment to observe how much real progress has already been made. The trade deficit was cut in half between 1964 and 1965. With the help of the temporary import charge and the measures we took to moderate the growth of demand, the growth of imports was markedly checked. Whereas the value of imports as measured by the trade accounts had risen by 14 per cent. in 1964, in 1965 the rise was 1 per cent. Finished manufactures, which are mostly subject to the charge, showed a big difference between the movement of imports of capital goods, which rose by 14 per cent. and the movement of imports of consumer goods, which fell by 11 per cent. This reflects the strength both of fixed investment at home and the effect of the Government's measures to restrain the growth of consumption, about which I shall have something to say later. It was a movement away from what the Prime Minister always calls the candy floss economy.
On the other side, exports—already benefiting from the many measures we have taken to promote overseas sales—went ahead well. They rose by 7 per cent. in value and 5 per cent. in volume, rates of increase substantially above the average for the last few years. There was a most significant increase in sales to North America, which rose by 18 per cent. Exports of aircraft and aero-engines rose encouragingly, and so did orders for ships—aircraft that we can sell, not those that we have to give away—
Mr. Victor Goodhew Mr. Victor Goodhew (St. Albans) rose—
Mr. Callaghan: On invisible account, the provisional figures suggest that there was, on balance, little change between 1964 and 1965; but on capital account the measures I announced in April and July to limit investment abroad produced a marked effect. Although the measures were put into effect only during the year, and we had some adverse developments to contend with, the net outflow of all long-term capital was substantially reduced—by perhaps £100 million or more.
I see, Mr. Speaker, that discussion of the Government's attitude towards overseas investment remains a topic of lively interest, and I hope that it will. I should, therefore, emphasise that the over-riding task before us is to achieve a current surplus, and the first claim on that surplus is the repayment of the large debts to the International Monetary Fund which have been incurred during the period of deficit. That being so, it is our firm policy to contain overseas investment so that it does not add to our immediate burdens. We give first priority to domestic investment which will strengthen the competitive position of British industry. That will help us to achieve the current surplus we need and which is the prerequisite of a more liberal policy towards overseas investment in the long run.
So far, I have compared the provisional results for the whole year 1965 with the position in 1964, but I draw special attention to the improvement which took place during the year. There are inevitably ups and downs from month to month and it is wrong to pay too much attention to one month's figures, but it is significant that in the last three months, which include the less satisfactory figures for January, the trade deficit was less than the average for 1965 and only about one-third of the rate prevailing in the months before we came into office.
On capital account, too, the figures fluctuate considerably from quarter to quarter, but here, too, we have to look to further improvement as the measures introduced in 1965 have their full impact. The year 1965 was a buoyant year for world production and trade, and in this an important factor was the faster rate
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of expansion in the United States economy. This year, with the prospect of a resurgence in France, Italy and Japan, and further strong growth in the United States and Germany, world trade in many manufactures is likely to go on expanding vigorously, perhaps at a rate scarcely different from the average of the last five years.
I should like to thank British exporters—and I am sure that I carry the whole House with me in saying this—for their efforts in 1965; achieved sometimes at little immediate profit to themselves despite the export rebate, but at great profit to the nation as a whole. I must ask them to make another big effort in 1966. There are plenty of sales to be made, especially in North America, the E.F.T.A. countries and, this year, in the Common Market, too.
The record so far, therefore, is one of achievement and progress, in overcoming the overseas deficit. We intend to continue and to press home the range of policies that are enabling us to win the battle for solvency. As the House knows, the sustained improvement in our payments position, together with the recognition of the Government's determination to maintain the value of the pound, has been reflected in international confidence in sterling since last summer.
Figures for the end-February gold and dollar reserves would normally be announced tomorrow, but I think that it would be for the convenience of the House if I were to give them today, as it enables me, at the same time, to give an explanation to the House of certain details on which hon. Members have questioned me in recent months and about which I have sometimes been rather evasive.
First, I deal with the swap with the Federal Reserve Bank of New York. Under this arrangement, short-term accommodation had been made available to us, beginning in the late summer of 1964. By the end of August, 1965, we had drawn the full 750 million dollars of the swap, together with an addition amount of 140 million dollars, making 890 million dollars in all. Observers have commented on the small rise in our published reserves in recent months on the ground that the rise did not seem to them to tally with the known strength

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of sterling in that period. The observers were right.
The reason is that we have been repaying, month by month, the borrowings. I am glad to tell the House that during February we repaid 290 million dollars, or £103 million, and have thus completed the repayment since last autumn of the total of 890 million dollars—or £318 million. Now that the process of repayment has been completed, I have decided to bring into the reserves the liquid portion of the Treasury dollar portfolio. This totals £316 million. The net result of these developments, together with the ordinary flow of payments and receipts in February, is that Britain's gold and dollar reserves at the close of business yesterday amounted to £1,303 million, an increase of £225 million on the previous month.
To complete the picture, I should say that in addition to the £1,303 million now in the reserves we still have in the portfolio securities the value of which has recently averaged about £180 million. By way of further support for sterling if required, the whole of the F.R.B. swap of 750 million dollars is now available to us once more, as is the Export-Import Bank loan of 250 million dollars—making a further 1 billion dollars. The present position is that Britain now has reserves and credit facilities available for use totalling over £1,800 million—5 billion dollars. Moreover, there are the Central Bank arrangements made last September, which also stand in reserve if and when required.
Mr. Edward Heath: Will the Chancellor clarify one point on the figures that he has given about the movement of the liquid portfolio and retaining half of it? It would appear that there was a drop in real reserves in the month of about £11 million. Is that right?
Mr. Callaghan: Not, I think, £11 million. There was a small drop; but we repaid £103 million during the course of the month. I am sure that hon. Members on both sides of the House want to display to the world at large the reserves that Britain has. I wish to give the complete picture. Therefore, if hon. Members will allow me to continue, I remind the House that by December, 1967, we
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shall need to repay £385 million which the International Monetary Fund and the Swiss lent us in November, 1964. Unless other arrangements have been made in the meantime, a further £514 million will be due to the I.M.F. and the Swiss by May, 1970.
From this picture the House will see that there is a difficult but by no means impossible task ahead of us. We have incurred these debts in financing the deficits. They have started to be paid off. They can be paid off; and no one in the House or outside should think that it is not possible to do this job—it is possible. I believe that hon. Members on both sides of the House will say to the world that this is so.
We have made great progress since the autumn and we must keep it up. Putting the position in another way—I think that this will make it entirely clear—we have repaid £318 million of debt since last August and, in addition, we have increased our reserves by £64 million, excluding the transfer from the portfolio. That is to say, the real improvement since last August is over £380 million. There has also been a great reduction in forward liabilities to the market, a process which was continued in February.
Altogether, February was a reasonably good month, although, for two reasons, it was not as good as the preceding months. The first reason was the fear of a rail strike. When that was removed on 12th February there arose great uncertainty about the possibility of a General Election. My right hon. Friend the Prime Minister has now put an end to that. A majority of three is not good for sterling either at home or abroad. There is no doubt that the exchange markets and the country as a whole will benefit enormously from the period of strong and stable government we can look forward to after 31st March.
Now for developments in the domestic position. These have been much affected over the last 16 months by policy measures called for by the balance of payments situation: measures to regulate demand in the short term. But before I deal with those developments I want to deal with an equally, indeed more, important set of Government policies that have been put into effect. I refer to policies not to regulate demand but

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to increase supply, policies concerned not with the economy in the short term, but with its performance in the long term. My immediate business as Chancellor has been to cut the coat according to the cloth, but my task will be much easier when there is more cloth to cut.
Some of our industries are still not fully capable of meeting demands, whether from home or overseas markets, for modern manufactures. A number of countries can sell some of their products here more cheaply than we can. They can also undersell us in overseas markets. This is because they are more efficient and their unit costs are lower. The responsibility for this lies fairly and squarely on the shoulders of those managements and workers who are deaf to new ideas. The writing is on the wall for them. But in many quarters there is a growing determination, a new professionalism, a willingness to take up modern techniques in management, production and labour relations. At best, these are as good as they are anywhere in the world; but a great effort is needed to spread these new ideas far more widely and far more rapidly.
We need to employ every measure available. We must encourage the setting up of joint production committees to which my right hon. Friend the Prime Minister has given prominence. It is a favourite peroration of many of us to say that higher production is the key to the nation's lasting economic recovery, but it remains a hard and indisputable fact.
Under the leadership of the Department of Economic Affairs the Government are pursuing a much more active policy than has been attempted at any time previously for getting detailed co-operation with industry to improve efficiency. A tremendous amount of work has been done by the economic development committees and my right hon. Friend the First Secretary of State and Secretary of State for Economic Affairs to overcome the weaknesses which have led to an inadequate export performance and an excessive dependence on imports of manufactured goods. The National Board for Prices and Incomes is playing a very constructive part by addressing its reports not merely to problems of
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wages and prices, but also to the possibilities of increasing productivity.
I shall not attempt to cover the whole ground of the National Plan, but I will pick out three areas in which the Government have taken action; helping labour to become more mobile, tapping wasted resources in the regions, and giving new incentives to investment. We have brought in a number of measures which assist the transfer of men to better jobs by improving their financial position in between jobs, by providing better arrangements when they become redundant, and by extending training arrangements so that they can acquire new skills. This is good economics, sound sense, and socially just.
Regional economic planning has been vastly extended in the last year; and the balance between regions has been improved by exempting the development areas from general economic restraints, by giving them particular advantages and by tightening the Industrial Development Certificate control in congested areas. Through a policy of deliberate discrimination in favour of development areas, we have brought into use regional resources of manpower that were wasted and untapped in earlier years, so strengthening the industrial base of our economy. Hence the major reason for the recent decline of unemployment is that more men and women are at work in Scotland, the North-West, and the North-East. Of the drop of 29,000 in the number unemployed in the year to February, 28,000 were in these three regions.
Thirdly, the taxation system has been recast as it affects industrial investment. The introduction of Corporation Tax encourages the ploughing back of profits and discourages their distribution in dividends, while the cash grants give a more effective and selective inducement in new plant and machinery. With these and other measures the Government have played their part in securing a faster growing and more competitive economy.
Meanwhile, what can industry do in 1966? First, the most important task is that the policy agreed to by leaders on both sides of industry on productivity, prices, and incomes, should be seen to be working. Next, the Government would like to propose two things which will

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help—one to those in the boardrooms, the other to those on the factory floor. First, to management: they can help immediately if everyone will make it his personal responsibility to conduct a searching review, or, if one has been made recently, to check what has been done following the review, to improve design, to overcome bottlenecks in production, to improve marketing, factory organisation and layout. I ask them when they do this to carry their employees with them at every stage, and to make them feel that this is a joint venture to secure improved efficiency, higher productivity, and therefore better conditions.
As for those on the factory floor, I recall that the season of trade union conferences is about to begin. Like many of my colleagues, especially on this side of the House, I have attended many of them in my time. I know how easy it is to put forward a motion proposing that a wage claim shall be lodged immediately; and that the delegates need no urging to vote for it unanimously and to mandate the executive committee to get results—or else. We have seen the process many times; but this year I ask the delegates at the forthcoming conferences to do something new. When they are considering adopting these resolutions, will they recall what I have said today about our balance of payments and the need for national solvency, and, when they do, will they agree to give their executive committees a free hand not to press for more than a 3½ per cent. increase in 1966? Further than this, will they bend their energies at the annual conferences to seeing how productivity can be increased, so that money increases will become real increases in the value of their earnings?
Some people will say that this is asking too much. I do not believe it. If I were able, and I think if many of us were able, to visit every trade union conference and listen to the debates and hear the speeches of the delegates, we would know the problems which confront them, and we could tell the delegates that such an approach as this would transform our economic prospects in 1966. It would give the country a breathing space. It would lift some of the pressure for higher prices. It would keep our export prices more competitive, and it would result in a great improvement in our balance of payments position. Surely a prize like
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that is worth a little patience. Let 1966 be the year of the voluntary efficiency audit for all of us.
I now come to the balance of the domestic economy, and it is here that short-term considerations are uppermost. These have meant some restraint on consumption and a temporary slackening in the general rate of expansion which had been driven up at a pace which manifestly could not be sustained. Our purpose and our achievement have been to shift resources to assist the balance of payments and in favour of investment. I am glad to say that no less than one-third of the total increase in output between 1964 and 1965 went into exports. Long may that trend continue.
To achieve this shift in the use of resources over the past year I have made use of the fiscal instrument, the monetary instrument, and the regulation of public expenditure. In using these instruments I have tried to be moderate and selective: to check less essential forms of expenditure without damaging industrial investment or confidence in long-term growth, and to reduce pressure in the economy as a whole without depressing those regions which stand in need of development.
The April Budget last year increased certain taxes on consumption, and shortly afterwards it was necessary to put a ceiling on the growth of bank advances, which the banks have carefully respected. They have also followed the guidance given to them on the direction of their lending, that is, favouring borrowing for exports first, then borrowing in certain of the regions, and, thirdly, borrowing by manufacturing industry. Later in the year and early this year again hire-purchase controls were stiffened.
All those measures were intended to bear mainly on consumption. They give the critics a handle, especially at election time, and I have no doubt that it will be pumped pretty vigorously in the weeks that lie ahead. But if something has to be slowed down—and such a large deficit as we took over cannot be eliminated without making something give—I would rather moderate the present growth of private consumption than investment for the future. A moderate sacrifice in consumption in 1966 will make possible greater consumption in the years ahead,

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and I believe that the country understands this far better than some people think.
The other main area for restraining growth has been public expenditure; and here again I have distinguished carefully between priorities. I explained to the House last Wednesday the new system of planning and control of public expenditure. The Vote on Account makes plain that it is firmly under control, while the White Paper on Public Expenditure shows that we have reshaped the pattern of spending in a constructive manner. We are holding defence expenditure at constant prices to the level of 1964–65 Estimates, while planning annual increases for roads, expenditure on industrial modernisation, hospitals, education and housing. All of those increase.
I now come to the Budget judgment. Against this background, we shall approach the Budget in due course having made substantial savings in public expenditure following a very thorough review; but we shall still face a formidable total. Other factors which will influence the Budget judgment are that exports have risen strongly and should continue to do so, and fixed investment, having risen rapidly, is likely to continue upwards, though at a more moderate rate. Here I interpose that I am watching that the restraints on credit do not reach the point where they begin to have an impact on industrial investment, and on exports, too.
On the other hand, there is continued pressure on manpower, especially skilled manpower, and the shortage has been accentuated by the reduction of the standard working week from 42 to 40 hours, a change which has been taking place rapidly, and which should run its course in the months ahead. At the same time, incomes have continued to rise too fast. But there has been a narrowing of profit margins as a result of the slower growth in demand and slower growth in prices.
Those developments have, in turn, had their effect on demand, especially consumer demand, which recently showed signs of rising again at a rate inconsistent with the need to redeploy resource and contain the pressure on the economy. The Government therefore tightened hire-purchase terms, maintained the restraint of credit, and ensured that the
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deferment of public expenditure introduced last July was not followed by a rebound. It is too soon to estimate precisely the effect of these measures, but they can be relied upon over the months ahead to counteract the tendency for consumer spending to rise as real incomes grow.
To sum up, we know that Government expenditure will not make excessive new claims on the economy. We have acted within the last month to damp down the growth of private spending. The economy is, therefore, reasonably well-poised, and I shall watch and assess the effect of this latest batch of measures before reaching a considered Budget judgment. The best guidance that I can give the House, therefore, at this stage is that I do not foresee the need for severe increases in taxation. [HON. MEMBERS: "Severe?"] I hope that hon. Gentlemen opposite will make all that they can out of that assessment. But, subject to that qualification, I must keep the position open so that in two months' time any necessary changes can be made in order to keep the economy on its course of recovery.
Whatever happens, the Government intend to maintain a firm grip on the situation. There is a variety of instruments at our disposal and we shall use them as the need arises. That is a specific statement, and it was intended to be. I do not intend to fall into the trap of relieving people of taxation before an election in order to re-impose it afterwards, even though it would not be without precedent. Nevertheless, there are certain decisions which I can announce now. They are all of a social or modernising character. Taken together, they will not involve any additional net expenditure in the short run.
First, National Savings. The total sum remaining invested in National Savings at the end of 1965 was £8,350 million, a record end-year figure. Total balances in the Savings Banks increased over the previous year; and sales of Premium Bonds have continued to flourish. The new £25,000 prize is proving a very great attraction. [Laughter.] I would sooner invest in the chances of a prize on that than in the chances of victory for some other people in certain events in a few weeks' time. Great interest is being shown, too, in the

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impending investment accounts in the Post Office Savings Bank.
But the National Savings Certificate has run up against heavy competition recently from more attractive forms of investment. I know that many National Savings workers have found this disheartening, but from my contacts with them—and I thank them for all the work they do during the year—I believe they understood that I was reluctant to seem to be leading a pattern for higher interest rates. Nevertheless, I reached the conclusion at the end of last year that the time had come to introduce a more attractive certificate, and preparations have been going on.
The new certificates will reach Post Offices, banks and elsewhere during this month and will be on sale from 28th March. The purchase price will be 20s. and the certificate will grow to 25s. in five years. The rate of interest, if the certificate is held for the full five years, will be £4 11s. 3d. per cent. free of tax, which is equivalent to 7¾ per cent. if grossed up at the standard rate. I expect the certificate to be very popular, and I have set a maximum limit of 500 units for each individual holder. The current eleventh issue will remain on sale up to 28th March, so that any investor who has not reached the maximum holding of 600 units will still have an opportunity to do this before it is withdrawn on that date.
The National Savings Movement will now have a certificate for sale which yields a handsome return and will enable it to celebrate its golden jubilee with a full range of savings for everyone. The more savings I can secure, the less the tax that needs to be raised.
I turn now to owner-occupiers The Government propose to introduce legislation to give effect to their undertaking to help house purchasers by means of specially favourable rates of interest. Under our present tax system, the net cost of a given amount of mortgage interest is in most cases greater for a borrower with a small income than it is for a man with a larger income, since the man with the larger income gets tax relief at a higher rate of tax. When, formerly, part or all of the mortgage interest relief was offset by a Schedule A charge, the effect was less inequitable than it is now.
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It is contrary to the spirit of the Government's intention in helping house purchasers if the final result of giving an equal amount of relief is that the largest benefit goes to the man with the biggest income. In considering this matter, in conjunction with my right hon. Friends the Minister of Housing and Local Government and the Secretaries of State for Scotland and Wales, I have, naturally, had regard to the financial and economic implications of any concession.
The Government propose to make available a substantial measure of financial assistance to mortgagors who pay no Income Tax, or who pay Income Tax only at a low rate. For obvious reasons, it has not been possible to discuss the details of this scheme with the building societies and local authorities, but my right hon. Friend the Minister of Housing and Local Government will be having full discussions with them immediately.
The scheme will be on the following broad lines. Anyone taking out a loan on a house he occupies or intends to occupy will be given a choice between two kinds of loan. He will be able to do as he does now—take out an ordinary mortgage and claim Income Tax relief. Or, if he prefers, he will be able to take out a mortgage with the payments which would apply if his building society or local authority interest rate were 2½ per cent. less than the ruling rate, subject to a minimum of 4 per cent.
This is what I call an "option mortgage". Under the option mortgage the borrower will not be able to claim Income Tax relief on the interest payments. What this means is that, with an interest rate of 6¾ per cent., which is what most building societies are charging at present, a borrower who elects to take out an option mortgage will be making the same payments as if the building society rate were 4¼ per cent.: and the Government will reimburse the difference to the building society.
Option mortgages will be available to new borrowers as soon as the necessary legislation is enacted. The right to an option mortgage will apply to existing mortgagors as well as to new ones. Any mortgagor will be able to change his mortgage for one of the new kind. Equally, if he takes out an option mortgage he will be later able to change

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to an ordinary one, claiming tax relief. But only one switch will be allowed. This part of the scheme—the right to switch—will not begin to take effect until early next year.
A scheme on these lines will benefit mainly those with small incomes, especially those with family responsibilities, who at present feel the full, or nearly the full, weight of the interest rate. It will bring immediate help to half a million householders in this category and will bring owner-occupation within the reach of many who cannot at present afford it. It will also give some benefit, but not as much, at once, and more substantial benefit over the years, to the three-quarters of a million mortgagors paying tax at the higher of the two reduced rates, who already get a useful benefit from the tax relief.
The Government hope to have the co-operation of the building society movement and of local authorities in operating the scheme. Societies and authorities will be invited to enter into agreement with the Government for the purpose. For practical reasons, it will not be possible to invite all lending institutions to participate; but it is hoped that all lending for house purchase on any scale will come in, including, perhaps, some other than building societies and local authorities.
Meanwhile, no one need defer purchasing a house until the new scheme is operative. Because people will be allowed to switch on one occasion to the new mortgages, a would-be purchaser will not lose his chance of getting an option mortgage by going ahead with his purchase in the ordinary way.
In addition to reducing the cost of mortgages for people of modest means, the Government intend to help them to get loans representing a higher proportion of the valuation of a house than they would normally be able to obtain. Many local authorities are prepared to lend up to 100 per cent. of the valuation on purchase of a low-priced house; and for those who take out an option mortgage the reduced rate of interest will be available for the whole of the loan. But the Government now propose to discuss with the building societies arrangements for guaranteeing the last
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slice of the mortgages where these represent an exceptionally large proportion of the valuation of the house and where they are taken out by people of modest means. [An HON. MEMBER: "What about the cost?"] I shall come back to the cost.
I turn now to another historic subject. I wish to announce a momentous and an historic decision, namely, that the Government have decided to adopt a decimal currency. The essential features of our currency have remained unaltered for many centuries. Records show that a silver penny was first struck in Kent as long ago as A.D. 770 and that pounds, shillings and pence were used for reckoning as long ago as the twelfth century. In 1841, a Royal Commission first pointed out the advantages of a decimal currency and, since then, although Britain has remained aloof, the decimalisation of the currencies of the world proceeded apace in the second half of the nineteenth century. The Commonwealth countries were the latest to adopt the new system. Australia decimalised last month. New Zealand will go decimal next year.
It is the Government's conclusion, shared, I know, by large sections of industry, commerce, science and banking that the change to a decimal coinage will bring considerable benefit to the economy at large. The Government have further decided—I believe that this, too, will receive widespread agreement—that we should retain the pound as the major unit of the new decimal currency. It will be divided into 100 units and I expect that there will be keen discussion publicly about what these minor units should be called.
The obvious choices are either the new penny or the cent, though public opinion, as my researches have shown, has a way of fastening its own name on to a coin, as witness the Victorian double florin which was universally known as the "barmaid's grief", because it so closely resembled the crown and barmaids, I think, used to be handed it in change.
Preparations for the changeover will begin at once. A Decimal Currency Bill will be introduced which, among other things, will set up a Decimal Currency Board whose function will be to examine in detail, with the institutions concerned, the problems of the changeover, to organise a programme of guidance to the

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public and to do everything necessary to promote a speedy and efficient transition. It is important that the preparations should be thorough so that the changeover may be as smooth as possible. New coins will have to be minted and business machines adapted or new ones, including perhaps dual-purpose machines, manufactured.
For these reasons, the Government have decided in favour of a five-year period of preparation, and we propose that the changeover should come in February, 1971. [Laughter.] There is a sensible reason for doing this. The Australians' experience, when they tried to do it in a period of three years, has shown that that period is, perhaps, a little too short. Five years will be nearer to what is required and, I think, will be more in accordance with the needs of industry as they have been expressed to me. Perhaps those hon. Members opposite who laugh will consult their friends in industry to see whether they want a shorter period.
A preliminary estimate of the cost to the economy in real resources was about £120 million spread over a period, but more recent experience, especially in Australia, coupled with our longer period of preparation, throws considerable doubts on that figure, which may well prove too high. Including tax relief, about half of the eventual cost will fall upon the Exchequer, but the benefit to the economy at large will be considerable. The longer we leave a decision, the higher the cost will be.
The other feature of the change on which I wish to announce the Government's decision is the cost incurred in conversion and replacement of machines. The organisations which will have to incur substantial costs are those which stand to benefit most from the change Moreover, the expenditure incurred will qualify for tax relief in the ordinary way. Our preliminary view, therefore, is that compensation as a general principle is not acceptable; but, if it can be shown to the Decimal Currency Board that there are some special categories in which there are good grounds for giving some assistance, I shall, naturally, be prepared to consider the Board's recommendations. But my expectation is that any such cases will be very much the exception.
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We shall be giving up our ancient coinage which has served us well through many centuries, but the gains are manifest and will benefit the nation for centuries to come.
On fiscal measures, in my Budget statement last April I referred specifically to two taxation measures I was considering. They were a differential duty on motor cars and a tax on betting and other forms of gambling. In view of the specific references which I made to those two taxes, I think it right to inform the House and the country what my conclusions are.
As regards motor cars, I have had a number of discussions with the industry about a differential duty. My studies show that there are considerable problems which would have to be overcome. I have, therefore, decided not to introduce a differential duty in 1966.
I do, however, intend to introduce a general tax on betting and gaming in the Budget which will follow the election. My impression is that public opinion would welcome some move on my part against this growing expenditure. Fiscal measures are not in themselves best suited to solve social problems, and, as the House knows, the Home Secretary is considering what changes in the Betting, Gaming and Lotteries Act, 1963, experience has shown to have become desirable. Nevertheless, there are sound social reasons for a tax on betting and gaming. The important question is how to devise a structure which is effective, fair and reasonably watertight. This is quite a difficult operation, as my predecessors discovered.
Moreover, investigation shows that there is not as much money for the Exchequer to be obtained from a tax on gambling—not as money for the Exchequer is measured these days anyhow—as is generally believed. But every little helps, and so I propose to tax organised gambling, both betting and gaming, generally. The plan will cover all betting, both on the course and off, on horse racing and on other events. Some forms of betting are, of course, already taxed. Football pools and fixed-odds football coupon betting are liable to duty at 25 per cent. of the stake money. I do not propose to make any change there. For all other betting I

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propose a duty of 2½ per cent. of the stake money.
The incidence of a general tax on betting covering forms of gambling where there is frequent restaking of winnings is, of course, quite different from that on forms such as football pools. At dog race courses, the new duty will replace the existing duty on totalisator betting and the licence duty on bookmakers. The bookmaker or the totalisator operator, as the case may be, will be the person responsible for paying the duty.
It will not be practicable for the duty to be brought into operation until the flat-racing season is nearly over. It will have to await the passing of the Finance Act, and work has to be done in setting up the machinery of the duty. I estimate that it will produce £11 million in a full year. In the first year the yield will be about £2 million.
Turning to gaming, I intend to cover the casinos, which seem to be growing in number to the great profit of the promoters. Bingo will be brought in where promoted as an organised means of gambling, subject to what I shall have to say in a moment. Fruit machines will be included. I know that that will meet the wishes of some hon. Members who have been pressing this upon me. If the House will permit this aside, I find it interesting to note, when I read the letters which arrive during a pre-Budget period, that there are more letters suggesting a tax on fruit machines than anything else.
I have come to the conclusion that, while in the case of betting a tax on stakes is feasible, this is not so in the case of gaming. In this field, I prefer a system of annual licence duties as the practical approach, and I propose to bring these licence duties into operation on 1st October, 1966.
I shall, of course, exclude small-scale gaming at entertainments not promoted for private gain, or when organised as amusements with modest prizes at amusement arcades or fairs. These exclusions will be defined by reference to corresponding provisions in the Betting, Gaming and Lotteries Act 1963. I shall also exclude bingo where there is no payment to take part—as distinct from the
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stake money—or where the payment does not exceed 6d. a head.
For coin-operated gaming machines I propose an annual licence duty of £75 for each machine operated by the insertion of 6d., with a lower rate of £37 10s. for machines which are operated with coins of less value than 6d. The person making the machine available for play, if he is himself the owner, will be liable for the duty; if he is not the owner, the person who hires the machine to him will be liable. The duty is estimated to yield £3½ million in the first year and also in a full year.
The term "casino gaming" will need to be defined and I propose to cover the playing of roulette, chemin-de-fer, blackjack, baccarat and dicing, together with similar games called by other names. [An HON. MEMBER: "The Stock Exchange?"] My hon. Friend should not anticipate the result of the latest inquiries into bond washing.
I do not propose to bring in bridge or, to demonstrate my freedom from class bias, dominoes. For bingo and casino gaming a flat rate of licence duty will not do, because of the great variation between the larger and the smaller premises. I propose a licence duty graded in a simple way by relation to the rateable value of the premises in which the gaming takes place. For bingo the annual rate of licence duty will be £100 where the rateable value is not above £1,000. The duty will be £1,000 where the rateable value exceeds £1,000.
For casino gaming, the duty will be £500 where the rateable value is not above £1,000, and the duty will be £5,000 where the rateable value is between £1,000 and £3,000. Where the rateable value is above £3,000 the duty payable will be £50,000 a year. The person making the premises available for play will be liable to pay the licence duty.
At these rates the estimated yield is £2½ million in the first year and the same amount in a full year. I estimate that the total revenue from taxation on gambling—that is, taking into account the existing duty and adding on the new duties which I now propose—will be more than £50 million in a full year.
I am reminded that when my distinguished predecessor. Sir Winston

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Churchill, introduced an earlier betting duty in 1926, he said:
"I am not looking for trouble, I am looking for revenue."—[OFFICIAL REPORT, 26th April, 1926; Vol. 194, c. 1706.]
That duty ran into plenty of trouble due mainly to the position of the law and practice of betting as it then was. Circumstances are very different now and I think it right to tax this range of inessential expenditure. I think that it can be taxed effectively and the rates of duty that I have proposed are chosen to produce a reliable and continuing yield. I believe that the levels at which I have fixed them will ensure that betting and other gambling are not driven underground, with still greater social problems in consequence. What I propose will be a start in the right direction.
There is one further consideration. The revenue from these new duties on betting and gaming will enable me to help owner-occupiers in the ways I have announced at no net cost to the Exchequer.
I have stated our policies. I have referred to our achievements, and stated some of the major problems that still lie ahead of us. They are reflected in the Motion on the Order Paper. I am surprised that the Opposition have not put down an Amendment to the Motion. After all, it was the right hon. Member for Enfield, West (Mr. Iain Macleod) who originally asked for this general economic debate. What does the silence portend? At the moment, the Leader of the Opposition seems to be giving the impression that he is opposed to everything we do, no matter what it is. Is he finding that total opposition to the Government is the best way of covering up total confusion and disarray in his own ranks?
I want to address myself for a moment to the Leader of the Opposition, who is about to speak. He is about to speak for a party that is loud in its censure of the Government for proposing to withdraw from Aden, where our presence costs us £36 million a year. The Opposition criticise us heavily for phasing out the aircraft carrier programme at an average saving of £65 million a year over the next 10 years. They censure us for cancelling some of the most expensive aircraft ever designed—but never built—despite the saving of many millions each year. Every-
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thing that they have said so far shows that they would return to the defence programme of £2,400 million, at 1964 prices, that we inherited and which we have pruned.
That is not the end of the story. My right hon. Friends and I propose a modest measure of relief to the ratepayer—£30 million in 1967–68, £60 million in the following year, and £90 million in the third year—prudent figures that can be contained within the limits of public expenditure that I have set. But what is the attitude of the Leader of the Opposition. "Small beer," he says. He says that £100 million should be transferred to the central Exchequer forthwith. He did not make it clear whether it was once-for-all or every year, but in his present mood it could be either. Yet, at the same time, this is the party whose financial spokesman is promising tax cuts. There was a headline in the Sunday newspapers:
"How I would cut taxation".
I have read the cuttings.
The Leader of the Opposition is either more cautious or more muddled—I am not sure which. In December, when he was interviewed on television, he answered a specific question as to whether it was responsible for him to promise to reduce taxation in our present economic position: he said "Yes". But 10 days or so ago he back-pedalled and warned us most solemnly that it would be wrong to promise immediate tax reductions: Dr. Jeykll struggling with Mr. Hyde.
Mr. Heath: No.
Mr. Callaghan: On 15th December, Mr. Reginald Bosanquet asked the right hon. Gentleman whether he thought it was responsible to promise that in present circumstances, and the right hon. Gentleman said, "Yes". Then he went on to say, "We will get higher production, and then we can reduce taxation."
Mr. Heath: Read on.
Mr. Callaghan: The impression was clearly left—it was the impression that was intended to be left—that it would be possible to cut taxation in existing circumstances. I much prefer the right hon. Gentleman's second speech, because that is near the truth. It would be wrong in present circumstances to cut taxation,

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and I suggest that the right hon. Gentleman tells his party's financial spokesman so. To undertake to add hundreds of millions of pounds to expenditure, which is what the party opposite wants to do, especially on defence and rate relief, and, at the same time, to promise tax reductions shows that the Conservative Party is as irresponsible in opposition as it was feckless in Government.
I have heard only two major suggestions from the Opposition as to where the money is to come from: prescription charges, they say, and a pet nostrum of the right hon. Member for Enfield, West—transfer more of the cost of the social services from the Exchequer to employers. As for these prescription charges, there seems to be a great deal of competition for them. The modest sum that we are to save when we make people pay for their drugs again will finance our troops in Aden, build the universities, maintain a large carrier force and construct several new hospitals.
As to the proposal to transfer more of the social service costs from the Exchequer to the employer, I should like to see this argued out more fully. I think that it is well worthy of debate. But, quite apart from the social consequences, which were debated last week, I would remind the right hon. Gentleman that the economic consequences of what he is proposing to do are almost wholly adverse to the economy. The effect of transferring those costs—because indirect taxation of this nature inevitably goes into higher prices—would be to raise British prices—they are always passed on in higher prices, including higher export prices—in relation to foreign prices, and to damage the balance of payments on both the export and the import side. I fully agree that this proposal would benefit the wealthy minority at the expense of everyone else, who would have to pay for it through higher prices. Socially and economically it would have most damaging effects.
The only conclusion that I can come to is that on this, as on a great many other topics, the Conservatives' new thinking is muddled, incomplete, irresponsible and downright wrong. The best help I can give them is to recommend a further period of intense study—in opposition.
4.40 p.m.
Mr. Edward Heath: This is the second of the great debates on the affairs of the nation in which the House has been engaged and in which the whole country is now to be engaged. It started as a solemn and serious debate with the Chancellor of the Exchequer speaking about the state of the economy, international trade and our balance of payments. I hope that he will forgive me if I express the opinion, which is quite obviously that of the whole House, that as he got towards the end of his proposals his speech deteriorated into an uproarious farce. He has allowed himself to be used as the simple tool of the Prime Minister's decision to cash in on a General Election.
It must be one of the most astonishing performances that the House has ever seen for a Chancellor of the Exchequer to come before it, without presenting hon. Members with any of the normal factual statistics in the acknowledged form and without having any of the normal arrangements for presenting a Budget, and make the statement which the right hon. Gentleman has made this afternoon. The country will judge the Chancellor on this.
Last week, we had a debate on social policy. The Government then showed themselves sterile in action, bereft of ideas, backward looking and fuddy duddy. It was an attitude amply typified by the Chancellor of the Duchy of Lancaster, nice man though he is. This afternoon we discovered why it was such a sterile debate—because neither the wretched Minister of Housing and Local Government nor the Chancellor of the Duchy was allowed to say the things which the Chancellor of the Exchequer was keeping for himself after the announcement of the date of the election.
In his proposals for owner-occupiers, the Chancellor is, of course, taking approximately one-third of the proposals which I put forward quite clearly in my Hammersmith speech—
Hon. Members: Oh.
Mr. Speaker: The chief characteristic of the House is fair play. It has heard one side in comparative silence. It must hear the other side in the same comparative silence.
Mr. Heath: Mr. Speaker, I admire your optimism.

1129
There was one difference—the Chancellor has not discussed it with the building societies and we have had the opportunity to discuss it with the building societies. When the right hon. Gentleman says that he proposes to have 2½ per cent., could he not have spared his right hon. Friend the First Secretary that humiliation and just made it 3 per cent?
The important question of policy is this: if the Chancellor is putting forward a proposal, then he has also to demonstrate that his right hon. Friend the Minister of Housing and Local Government can, in fact, produce the supply of houses to meet the proposals, because all he will ensure otherwise is constant increases in prices. If he is not prepared to accept the proposal that, as alternatives or additions, there should be help for those who are building up their own deposits, or help for the building societies with the pre-1919 houses, the Government will be lacking.
In this debate on economic policy today, in addition to the Chancellor, we have the second team in the Chief Secretary to the Treasury. Last week, too, we had the second team. Where is the First Secretary today? Why is he not taking part in this debate? The reason is very clear from the Chancellor's statement, for he said at the beginning that incomes were rising too fast, blaming his right hon. Friend the First Secretary, who has divided his own party with the Prices and Incomes Bill to the extent that the Prime Minister has to have an election. The striking thing is that in the whole of the Motion there is no mention of an incomes policy—so much for the First Secretary with his policy, on which he has based everything, not even being mentioned.
But the greatest mystery of all is why the Minister of Technology is not taking part in the debate. He is not even in the House. The Prime Minister always said that the key to industrial expansion was technology and he appointed the Minister of Technology. But the right hon. Gentleman's name does not appear on the Prices and Incomes Bill, the most important Measure which the Government were to introduce. Nor is his name on today's Motion. The plain fact is that the right hon. Gentleman is utterly opposed to everything which the First Secretary is doing and is demonstrating
1130
it again quite clearly. [Interruption.] I will deal with this in my own way.
Mr. Speaker: Order. The Chair does not want to have to call the attention of the House to any individual hon. Member. Hon. Members must conduct themselves reasonably.
Mr. Heath: Once again, having paid lip service at the beginning of his speech to his ideals, the Chancellor has shown that the Government are quite incapable of matching up to the real needs of the people of Britain today.
What Britain needs is to tackle vigorously the fundamental weaknesses of the economic system, and these I propose to examine one by one. What people need is to take the decisions, some of them very hard indeed, which are necessary for our survival and to have the spirit to carry them through. Our task ought to be to create that determination and arouse that spirit. [Interruption.] Hon. Members opposite know that they have no chance of doing it and have not done it during the last 17 months.
Today, we have had the Chancellor's fifth and final Budget, the fifth in 500 days. One hundred days a Budget is not bad going; in fact, hard pounding as the equestrian Prime Minister would say. How often have we heard the Chancellor say, "I cannot anticipate my Budget statement"? Not from this Chancellor, of course, not if it is a question of winning an election by hook or by crook.
All the statements—that he does not see any need for any severe increase in taxation, that we are to move to a decimal currency in 1971—and he should have seen the look on the faces of his right hon. and hon. Friends—are they a movement towards Europe, to be a good European, or are they a movement to the Commonwealth to demonstrate at last some consideration for the Commonwealth? There seems to be nothing like the announcement of an election to clarify the minds of the present Government.
Then there is the tax on betting. Good luck to the Chancellor of the Exchequer, but I know that my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) would be far more capable than the Chancellor of putting it into effect.
The purpose of this Budget statement is quite clear. It is to try to get the noose

1131
off the Prime Minister's neck, that he is running away from a Budget by having an election. That is the whole purpose. If the Chancellor's job was to reassure the country, and he has not done that very successfully, then what is the purpose of having the election now instead of waiting until after the Budget? The doubts still remain.
I believe that the Chancellor, in all seriousness, has been trying to reassure people about sterling; and in that I not only sympathise with him, I agree with him. But what he is up against is what the Prime Minister said in New York in April, which is now being repeated by every banker in America and Europe. The Prime Minister said that it is the day after returning to power that a Government consider devaluation. That is what the Chancellor is up against and the Prime Minister—
The Prime Minister (Mr. Harold Wilson): I hope that the right hon. Gentleman will not bring sterling through this campaign. He has made some irresponsible statements recently and I want him now to say exactly what I said in New York. I said that there was a temptation to an incoming Government, after an election, to devalue and blame their predecessors. What he is now trying to stir up in people's minds has no relevance to the election we are now in, because we are coming back.
Mr. Heath: What I am stating is the truth and the Prime Minister knows the truth. This has been said everywhere in America and Europe. People will ask what the Chancellor's statements are worth compared with what he has been saying recently. I will quote the Chancellor's words about his economic policy. [Interruption.] The Prime Minister wants words quoted about economic policy. I will give them to him in order to deal with the whole situation of the Government over these past 17 months, apart from the fine words that we have been hearing from the Chancellor this afternoon. On the 21st January the Prime Minister told his own party that the economic crisis, with the unpopular measures demanded was now virtually over. We now turn to the events which followed that.
The Chancellor of the Exchequer said on 7th June:
1132
"I think we are round the corner, or at least turning the corner."
We know what measures he took after that. Then he came on to the Third Reading of the Finance Bill and said:
"There is a temptation to assume that because the effects of these measures are not immediately obvious we should rush into further measures which have the effect of restraining the economy even more.
"This would be an unfortunate thing to do and I am resisting the temptation to do it."—[OFFICIAL REPORT, 15th July, 1965; Vol. 716, c. 911.]
We know the measures he took after that, in the fourth Budget. This is the whole history of the Government and it is time that it was said publicly.
The Prime Minister: The right hon. Gentleman has misquoted what I said in New York, and with very devastating effects on sterling if anybody listens to him. I want him now to quote what I actually said, or to withdraw his statement. Further, because I hope that we all want to keep sterling out of this campaign, and because there are some people abroad who think that his side may win, I want him to give a categorical assurance that if by any chance he did win, his party would not devalue sterling, but would follow the path we followed when we came into office.
Mr. Heath: I have told the Chancellor throughout the whole of last summer that—[HON. MEMBERS: "Answer."] I supported sterling on every occasion and the Chancellor, at any rate, was fair enough to acknowledge that, although his right hon. Friend the Prime Minister never did. I repeat now that if we are elected we shall in all circumstances, support sterling. That is a categorical assurance which I give. [HON. MEMBERS: "Withdraw."] There is nothing whatever to withdraw.
I have been back over this Government's record, which the Chancellor skipped in his speech, in order to produce a bevy of what he thought were attractive proposals for the electorate. This goes back fundamentally to that original statement in the White Paper which the First Secretary produced on 26th October, 1964, in which he said:
"The Government further examined the domestic economic situation. Apart from special problems of individual areas and a limited number of industries, there is no undue pressure on resources calling for action."

1133
That was the Government's considered judgment at that time. Since then we have had one continuous stream of misjudgments of the economic situation. This is the situation in which we now find that the Prime Minister has called this election. It is not for any of the reasons which he has stated. We all know that, and we would respect him more if he came out frankly and said what his real reason was. Only a fortnight ago he was in Birmingham, making a solemn declaration, in a righteous tone, of the only national circumstances in which he would call an election.
The Prime Minister: Hear, hear.
Mr. Heath: The right hon. Gentleman says "Hear, hear", but he had already decided to call an election. He said that if it was impossible to get legislation through the House then he might have to do it. What difficulties has he encountered in the last fortnight? Only his Prices and Incomes Bill. He is asking now for a mandate for a larger majority. Why? To force it down the throats of his own party.
The right hon. Gentleman talks about tomfoolery from the Opposition. What did the Chancellor say at the end of the Finance Bill? Of course, the Prime Minister was not present. He said:
"It would be wrong of me to go along the Opposition Front Bench, but I think that it has done a first-class job on the Bill…we have had a series of excellent debates on a high level, certainly as high as I can remember during my membership of the House of Commons."—[OFFICIAL REPORT, 15th July, 1965; Vol. 716, c. 910.]
There was one hour in which the Chancellor was ragged. He will remember it very well, because he got a bit tetchy. That was only an hour, but there were five hours of filibuster from the right hon. Gentleman the Paymaster-General to stop the Bill of my hon. Friend the Member for Abingdon (Mr. AireyNeave), to help those outside the National Insurance Provisions. That is the only sort of tomfoolery which this House has seen; and if the Prime Minister wants to get rid of it, he can get rid of the Paymaster-General. Last night, the Prime Minister said, on television, that he found that Ministers were useless after their days debating the Finance Bill. He really cannot blame that on the Finance Bill. They have been useless all the time. Then, with a blinding
1134
flash, which came at the same time as the Kingston upon Hull, North by-election, he decided that Members were under a strain—or was it the blinding flash which came with the latest Gallup Poll?
The right hon. Gentleman said that he must be able to speak for Britain. Is he blaming the House for the fact that he came back empty-handed from Moscow as he has come back from so many foreign initiatives? He did not take the Foreign Secretary with him. No, he took party officials, because it was perhaps really a party trip and not a serious negotiation. Perhaps it was a party trip after all and not a serious negotiation. We know the real reason—he just wants to cash in.
The Chancellor of the Exchequer ought to have gone through the Motion and dealt bit by bit with the specific parts in it. [Interruption.] I will deal with each part, because they are all very important parts of the Motion. The first part refers to
"the Government's determination to strengthen the balance of payments".
The whole House wants to do this. What did the Government say when they came to power? The White Paper of 26th October, 1964, about the balance of payments says:
"In 1965, if there were no change in policy, the estimate is that, although there should be a considerable improvement, the deficit would still be at an unacceptable level."
The Chancellor says that the balance is likely to be £350 million in deficit. Would he tell the House what advice he received when he went to the Treasury as to what the figure would be without any changes in policy? Perhaps he would not. It was about £350 million. Therefore, we have gone through the whole of this dreary rigmarôle, without any real change in the figure which has emerged from 1965.
The Chancellor of the Exchequer was not prepared to say anything about the explanation of what has helped the balance of payments in 1965 or what the real reasons were in 1964. He gave us the figure for the amount of the Federal reserve swop which has been paid back. That illustrates the intense seriousness of the crisis which developed under him and his colleagues by August last year, running all the way through

1135
the first part of that year because they had not taken measures with conviction in the first nine months which would have avoided it. The right hon. Gentleman seems to forget that he was Chancellor from October, 1964.
What the right hon. Gentleman has done is to move part of the liquid resources which we have in the United States—he has been liquefying them since he became Chancellor of the Exchequer—into the reserves. What he must realise, and what he should have said frankly to the House, is that there will be a great loss of earning power as a result of this and a loss of appreciation in the value of the securities which have been mounting ever since the war years.
Mr. Callaghan: Clearly, if they are invested in long-term common stocks there is more capital appreciation. They continue to draw income because a great deal of this amount is invested in short-term securities easily liquefiable. But—and as the right hon. Gentleman asks me to be fair, I hope that he will be fair—a great proportion of this liquefaction, and, therefore, the losses resulting from lack of capital appreciation, was due to the right hon. Member for Barnet (Mr. Maudling).
Mr. Heath: What the right hon. Gentleman must say is what he means by saying that he is now putting this into the reserves. Is he changing the substance of this arrangement or not? He has not made that plain.
Mr. Callaghan: I apologise if I have not made it plain; I intended to do so. It has not been the practice, although these assets have remained in their liquid form, to show them in the reserves. I am now doing so in response to a great many proposals made in this direction. This gives a better picture, especially to those who are uninitiated, than the picture which was given before. This, I think, is of extreme importance. But it is not open to the right hon. Gentleman to criticise me for continuing the policy of his right hon. Friend the Member for Barnet. What I have done is to carry it to its logical conclusion and show the securities in the reserves.
Mr. Heath: What I am pointing out is that from the national point of view
1136
this means a certain loss in earning power and—[Interruption.] By transferring those equities into ordinary short-term securities the Government will be losing some of their earning power and some appreciation. If the First Secretary of State would like to deal with this when he winds up, all well and good. But this is not a matter to be lightly taken as an achievement of the Government to go the whole logical course. It is a serious matter.
The Chancellor of the Exchequer spoke about the defence situation. Let him not forget the burden which he has accepted on the balance of payments for the purchase of the F.111 on credit terms from 1970, according to the White Paper. That has to be offset against the whole of his policy. [Interruption.] Yes, but there is no guarantee of sale. There is an opportunity to tender, and that is quite a different matter.
The Chancellor of the Exchequer has not been prepared to acknowledge the £385 million of stock piling which went on, the £351 million of overseas investment and the fact that import prices were against us to the tune of £220 million. That was the situation in 1964. This year he has had the advantages of the stock piling done in 1964 which has been used by industry. He has had the terms of trade his own way by approximately £150 million, as I understand it, and there has been a reduction in overseas investment and sales import folio securities. All these things have contributed to the situation which the Chancellor of the Exchequer described today.
I come to the part of the Motion referring to
"an effective policy for raising productivity, holding down prices and increasing the real value of incomes."
In 1965 industrial production was stagnant; the Chancellor did not deal with that this afternoon. He said that there might possibly be a 2 per cent. growth overall—"possibly"; he does not know yet. But the numbers in civil employment have increased and therefore productivity may very well have been stagnant. If the figures are different, the right hon. Gentleman can deal with them, but I believe that these are the reliable figures. So when the Government congratulate themselves on their notable

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achievements in increasing productivity, it should be understood that that is the real situation since they have been in power—stagnant production.
Now the question of holding down prices. Since the Government took office until December, 1965, there was the biggest rise in the cost of living for any comparable period. In this the Government's policies have been a major factor. Rises in earnings are bound to be reflected later because we can squeeze profits for a time—that is what the First Secretary has been doing—but if it goes on for too long there is a fall-off in investment. All prices are bound to come back more quickly. That is the choice before us in the economy.
I come to the question of planning a more rapid economic growth. The National Plan, as the First Secretary keeps on telling us, is the guide line. It is an attempt, although a poor attempt, at indicative planning. It does not use modern techniques of indicative planning. It is not enough just to produce a plan. The dynamic to carry it through must be created. If we want to criticise the Plan, we have to look no further than the hon. Member for Poplar (Mr. Mikardo), who said as recently as 20th February:
"It isn't a plan at all, it's a set of pious hopes; keep your fingers crossed and hope for the best."
He went on to say:
"When I read what"—
Mr. George Brown's—
"article says about consultation between management and workers I wonder whether Brother George Brown has ever seen the inside of a factory."
That is the amount of support which the right hon. Gentleman has had from his own side of the House.
Then there is the question of a better balance between the regions. The Chancellor of the Exchequer spoke about this today. He referred to the increase in employment. What has happened is the result of our own policies. There has not been time to complete new factories under licences granted by the present Government in order to provide additional employment. Ask the President of the Board of Trade about the advance factories that he is building. He is continuing our policies. There has not been
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time to get the results on which the Chancellor of the Exchequer was congratulating himself. The plain fact is that the momentum behind regional development is dying down because the First Secretary has not the time to devote to this all-important subject.
We have had the reports on the North-East and the West Midlands. They have not been implemented. The South-East Study, which was finished and about which discussions were going on when we left office, has been taken over bit by bit by the Minister of Housing and Local Government. But it has taken the First Secretary—I am sorry that he has left the Chamber—17 months to appoint the chairman of the South-East Regional Council. This shows the importance which the Government attach to regional development. As an article in the Scotsman said on 7th February, business men in Scotland will receive less assistance under the new arrangements than they received under the Conservative Government.
The Government have abandoned the idea of the growth zone. This is one of the most retrograde steps that they have taken. They may think that it is politically more popular to spread what is available over the whole of Scotland and the North-East—it saves political difficulties—but it does not produce modern industrial growth, and that is what the country wants. Industry will not be efficient and modern unless there are growth points and growth zones. This was a major step forward after the Toothill Report.
We all agree with the aim to secure greater social justice, but, as we learned last week, the Government have no proposals to bring about the reforms in the social services which are necessary 25 years after the Beveridge Report was completed. They are still looking backwards and their promises have still not been carried out—the minimum income guarantee, half pay on retirement. Already we have come to the second round of promises from the Government. The first, given at the last election but abandoned during 17 months in power, are now being brought forward again. How soon, if they have the chance, will they be abandoned? They will not have the chance.

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The Government have failed to tackle the problems of the country. They have failed to tackle competitiveness by imposing the 10 per cent. surcharge. They have removed the pressure to competitiveness. In the nationalised industries, we now hear about transport integration. This means that any attempt to make the railways more efficient is also abandoned and subsidies are being run up, which the Chancellor must admit. The same applies to the National Coal Board. The Report of the Prices and Incomes Board shows the way in which the Coal Board deficits will be run up. Again, the policy of the Government is to remove competitiveness.
In investment, we have seen competitiveness damaged through the Corporation Tax. We now see it in investment allowances, which are unsatisfactory for industry. The more that industry looks at them, the more it dislikes them. They were devalued through the Corporation Tax. There was uncertainty for a year and now there are cash benefits, which, we learn today from the Confederation of British Industry, are providing the utmost difficulty in working out and cannot possibly be available for six months, even if they are available then. They are almost impossible to administer. They are applied quite irrationally to some industries and not to others, oblivious of the fact that what we need is competitiveness and efficiency in all industries, whether distribution, construction, transport or whatever it may be, because where we can save labour we can make better use of our resources.
The Government have failed to tackle restrictive practices on the shop floor. They have failed to do more to improve the quality of management or to make the incomes policy work. The Chancellor confirmed this today. The First Secretary boasts of success. It is his job. Let him claim success, but if there is this success, which the Chancellor denies, why is the Prices and Incomes Bill necessary? It is a confession of failure. Thus, the Government are drifting further and further towards compulsory powers and towards a controlled economy. When that happens, we shall have less reward for initiative and enterprise and we shall fall further and further behind in the race.
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The Government's policy has failed because none of the measures which the Chancellor has taken in this long series has carried conviction. That has affected the whole climate of the economy. It has affected wage demands, prices, productivity, the balance of payments and confidence overseas. As The Times rightly said, none of these measures has carried conviction.
Secondly, the Government have introduced no new techniques for dealing with our economic problems. This is in many ways the most astonishing thing of all about the Government. When one looks back at their last manifesto, at the Swansea speech of the Prime Minister and all the work which they were supposed to be doing during 13 years, one sees that they have not introduced any new technique for handling the economy.
The Government have, in fact, abandoned some of the techniques which we were developing. They have abandoned, for example, our discrimination between regions with free depreciation, and so on. [AN HON. MEMBER: "When did the Tories do that?"] We developed free depreciation in 1962. Industry would like it to be developed, and not wiped out as the Chancellor has done. All that he has done is to use the old techniques, and to use them ineffectively. This is not only the most astonishing, but the most damning thing of all of his Administration.
The Chancellor asked again what exactly we would do. Constantly when standing at the Box, he cannot even at this stage remember that he is the Government and it is supposed to be his task to act, instead of talking as he does in that way.
Mr. Ivor Richard Mr. Ivor Richard (Barons Court) rose—
Mr. Heath: The Chancellor's techniques are well known. With the arm round the shoulder, "What exactly do you think I should do" are his words. That is all right in private and around these buildings, but not in the House of Commons, where he is supposed to be the Government and telling the country what it ought to do.
We will tell the Chancellor very clearly now. The first thing that ought to be done is to have one Department in control of the economy. The Chancellor should not be

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faced with the dichotomy which he has had all the way through and which today has been abandoned because his right hon. Friend the First Secretary is not allowed to take part. The second thing to be done is to provide a Government who believe in free enterprise and do not try to hamstring it, as hon. Members opposite always do. Thirdly, the economy should be stimulated deliberately by more competition and not by cosseting it, as the Chancellor and his colleagues are always doing in the way I have described.
The Government should deal with restrictive practices in industry and not produce a half-baked Bill which tackles only the restrictive practices of management. They should tackle restrictive practices on the workshop floor and use the tariff system in the case of firms and industries which refuse to become competitive under their protection.
We should make the nationalised industries efficient and stop them running up the subsidies as they are doing now, for which, as the Chancellor knows, all his right hon. and hon. Friends are pressing. We have to recognise that to do this means hard work and requires the individual efforts of men and women. The tax arrangements should be altered to give them that inducement and not, as the Government did in their long Finance Bill last year, damage incentive and initiative the whole time.
The Government should provide sensible investment incentives for industry—not those which have just been produced—and legislate for trade union reform. We put forward specific proposals and we stand by them. The Government should pursue an incomes policy which is part of the whole economic policy of the Government. It is all very well for the Chancellor or the First Secretary to try to sneer. The plain fact is that where the Government have gone wrong is to insist that the incomes policy is the be-all and end-all. It is not. It is only part of an economic policy. The Chancellor is responsible not for that, but for setting the major context in which the incomes policy can work.
We ought to have the objective not of creating the psychological climate of restraint the whole time and constantly bludgeoning people, but we should move towards an economic psychology of a
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high-wage economy with low cost because restrictive practices are abandoned. This is the fundamental task which the Government have refused to tackle. The purpose of an incomes policy must be to secure price stabilisation. It is not an end in itself. It is the removal of inflation, with all its effects, both at home and overseas, and the stabilisation of prices which is really required.
Other organisations have a part to play in this. We created "Neddy". It is a very limited form of "Neddy" which the Government have. It is useful for indicative planning. The many "Neddies" are useful for the exchange of information, and the Prices and Incomes Board is doing much of its useful work in dealing with restrictive practices and limitations on growth. There is every reason why it should go on.
None of these things, however, is a substitute for firm and effective Government action dealing with demand, and this the Chancellor knows. It is his responsibility. When one looks back on the long series of measures which he has taken, it is fundamentally a confession of failure every time that he has not been able to deal with demand. Today we are told that the Chancellor does not foresee any need for severe taxation in the next Budget, but what will he say—if he has the chance—by the time he gets to the next Budget? We simply cannot tell, because always we have had misjudgement.
I said last week that the Welfare State was only part of a modern Britain. It is not an end, but a means to a better life for the people of Britain. Everything—the Welfare State, defence, however much one decides to spend on it, and our aid overseas—depends upon the economy. More than that, the standard of living of all our people depends upon it. Our influence in the world and indeed our independence depend upon it.
We have got to hold out to the people the vision of what this country can be like and what all their lives can be like when we devote all our efforts to these ends. We have to show them how we can achieve it, how we can remove the frustrations of daily life in their homes, on the roads and at work, where restrictions do not allow them to put forward the effort which many of them would like

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to do, and how we can remove the frustration of seeing the country in the indebtedness which the Chancellor has described and of seeing our influence overseas less.
I do not believe that the Government can do that. They had their chance, because they came in with a great mass of support in the country, and from business and industry. They have lost it. They have forfeited it.
This Motion was summed up by the Daily Mirror—not a paper which is commonly thought to support the Tory Party—yesterday in these words:
"If this motion means exactly what it says it simply shows that the Government has a monopoly of satisfaction about the situation. Its joy is singular. Its self-congratulation is premature. Is this the new political line—that you congratulate yourself on what you have not yet done and trust that the fervour of the self-applause will hypnotise the onlookers?"
That is what we have had from the Prime Minister and the Government for far too long, and the Chancellor need not think that the fervour of the applause which he received when he sat down this afternoon is going to hypnotise the electorate, because it is not.
There is no longer in this country time for words. What we want is action—from a new, a Conservative Government.
5.21 p.m.
Mr. Robert Woof: It is with some diffidence that I rise to speak in this debate, because I cannot follow the right hon. Gentleman the Leader of the Opposition in all that he has said in his more controversial remarks. I was, however, very delighted to listen to the speech of my right hon. Friend the Chancellor, and his exposition of the improvement of the economy, particularly the proposed measures to assist those bedevilled with mortgages, along with the suggested Budget measures to keep the economy on the right course.
On that aspect of the matter I should like to make a comment to the effect that economic affairs are concerned with explanations and solutions. The degree in which they exist influences the action of people. I have always thought that economic system resemble individuals. They are growths apparently possessing definite laws of
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development in which the law of life has been the same since the beginning—a ceaseless and inevitable struggle in progress and competition. Out of this root have grown the attributes of form, strength and courage in the teeming world of life around us.
However well-intentioned individuals are in the struggle, however high or exemplary in their works they are, or their wishes may be, many cannot contract out of the economic mould simply because they are in it for life. It is along that path which tends to bring into ever-increasing prominence that I also believe this interplay between economic and other motives must be kept constantly in view.
It would, therefore, be convenient to emphasise that financial problems are becoming ever more important because the functions of Government have grown tremendously in importance and in number, on account of our industrial, commercial and social organisation having become more and more complex. Falling short of the facts of life and society, it is plain that every economic decision is a choice between alternatives. We know that the modern world is based on speculation, especially in all matters dealing with monetary transactions in the various activities of the Government. Since the Government took office they can easily be classified according to the degree of common and special benefits conferred upon the general public. Such a classification is helpful in seeing the relation of things.
But I do not want to weary the House with what it already knows. I want to apply my mind to some economic features with the sole object of arriving at a better understanding. I make no claim to a monopoly of wisdom; I can only speak, plain and straightforward, as the tangle of present affairs allows.
To set about this, I think the House will be interested to know that in the early part of this century a famous Russian revolutionary, historian, geographer, and fugitive from the tyrannical rule of the Czar, spent much of his time in Blaydon, in my constituency, being none other than Peter Alexivich Kropotkin. It so happened that, through unusual circumstances decreed by the hand of fate, he established a firm rock of cherished friendship with Sir Joseph

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Cowen, who happened to be the leading citizen of Blaydon at the time.
The reason why I mention that anecdote as a memorial of the past is simply because Kropotkin was the author of a book of classic literature entitled "The Conquest of Bread". When I used to work for a living with a pick and shovel I treated that book as my political bible. In fact, under every phase of human activity and turmoil throughout the world, that is what the struggle is about. But, as the general mind is no longer engaged in past aspects, there is no absence of thought in striving thoroughly to understand the stress of economic forces. It is, therefore, incumbent upon me to affirm that the principle of the conquest of bread, which has always touched upon the question of human existence, must surely be allied to present-day restricted industrial development at Blaydon.
Stripped of its metaphysical character it does no harm to be conscious of the fact that the best faculty will always remain balanced without experience. I think that hon. Members will agree that there can be no subjective faculty unless there is something objective to be seen—one cannot have the faculty of vision without seeing things—but as this is combined by a multiple of facts I want to try to keep in practical step with all the consecutive forms of thoughtful observation that evoke the need to organise industrial development.
This needs to be backed up, in seeking to set about with all urgency what must be done. It is essential for far reaching measures as a means of providing further employment for the Blaydon area. I do not want to spread the idea of rattling old bones, or give a taste of repetition, but as there have been much speculation and many theories advanced at one time or another as to the causes for the fall of Rome it can be said that the disintegration of the mining industry in my constituency is caused both by economic forces and dwindling resources. This declining process has gone on for years, and the production of coal, like water flowing under the bridge, will never pass that way again.
The social and economic consequences that no doubt will spring from the discontinuity of employment are quite apparent. The plain fact is that circumstances not
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only demonstrate the distinctive interests of the mining communities but also show that much thought must be given to the non-mining population who are also victims of such drastic change.
It would take more time than I wish to take to explain in greater detail how the non-mining community makes up the majority; but its inclusion proves the true density. Many of their links with the past are a direct product of the conglomeration that were attracted to the mining areas many years ago. It may be taken as a rule that such communities have established a wide sphere of functions so as to be part of the national organism. They are covered by a network of fraternities and habits in all the daily intercourse. Therefore, it is easy to understand the part that altruistic feelings play, and allowances must be made in the conduct of social and recreational activities and religious associations.
I want to make it clear that they are not clinging to anything that prevents them moving on. But, when the wheels of industry stop for ever more, the dark shadow of permanent contraction illustrates that the scales are so heavily loaded to give these people legitimate grounds for anxiety, inevitably evolving on the basis of inadequate opportunity of acquiring employment in the area.
In the changed economic configuration, it is only natural that the sensitiveness of the individual mind always turns on the need for industrial development. But, just as man's belief in magic or in the divine right of kings has been changed, a concentrated effort must be made to change the course of many portentious trends on the quantity of employment to sustain the livelihood of the working population.
However, I appreciate very much that the Government have set themselves the task of tackling the problems of such a structural imbalance. I accept their determination to improve the inducements to create more employment. But, further to that, while they have promised special funds to accelerate the provision of alternative industrial development in areas affected by the acceleration of uneconomic pits, I am bound to say that no appreciable steps have been taken to foster it in the area that I represent. On the other hand, every passing day impresses

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me with the unremitting efforts of the local authorities to bring new ventures into the constituency. With a corporate sense of responsibility and loyalty to the whole effort, they are taking the initiative to adapt the area to change. That is deemed expedient, and I want to give some practical examples to show how they are endeavouring to meet the new circumstances, and what they have to face.
Ryton Urban District Council, which is by no means a wealthy authority, has had the complete satisfaction of spending over £10,000 on land which has now been completely developed as a small industrial estate. But much more remains to be done. A tremendous financial barrier remains to be surmounted. The council realises fully that the acquisition of land is a necessary accompaniment to the attraction of industry. But in close proximity to the industrial estate, the new Government advanced factory is nearing completion, and next to it is an area of 10½ acres of land which could be developed immediately for industry. The council looked upon that land with amorous expectation. Alas, as we are all aware of the racketeering and speculation in land, that area of 10½ acres was purchased by a speculator just over 12 months ago from Townely Estate. Having a gregarious eye on the likelihood of such land being needed for industrial development, its value has undoubtedly enhanced overnight; so much so that the speculator is now willing to sell it for anything over £4,000 an acre.
It reminds me of an effective passage from Henry George. Of man, he say:
"He is the only animal whose desires increase as they are fed, the only animal that is never satisfied. No sooner are his animal wants satisfied, than new wants arise."
I need not say more on that.
To some people, this may not be a large sum, but it becomes more progressively marked when we have to consider that the council is in direct negotiation with British Rail to purchase all the land known as the Addison marshalling yard. Whilst I should not expect British Rail to be as hard bargainers as private speculators, the council cannot afford to embark upon buying all the land that is
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needed without much more Government financial assistance.
The same standard of motives can equally be said of the neighbouring local authority, Blaydon Urban District Council. That, too, is in the throes of negotiating to purchase land for the purpose of industrial potential. The cost is in the region of £250,000 but, in addition, the council's desire to invite industry to Blaydon is very much characterised by having a deep interest in an area of land which covers the railway sidings at Blaydon. This is now coming on to the market. Its physical and geographical setting is ideal for industrial development, as the area is ideally suited for road, rail and sea transport. But, again, the cost remains of the greatest importance to the council.
This influences me to say that Government spending is now running at many millions of pounds to provide loans and other forms of assistance to enable industrialists to go to development areas. The new investment grant of 40 per cent. for plant, machinery and expansion of new projects is a welcome measure to promote industrial advance.
At the same time, it is known that grants of up to 80 per cent. are available for the reclamation of derelict land, such as pit heaps to be reclaimed for amenity purposes. But, in considering the cost to local authorities which are desirous of attracting industry, it is because of those considerations that I ask that a policy should be followed by the Government of more financial assistance to enable local authorities which on their own volition are trying to attract new industry at such great cost.
It is against that background and amongst the changing scene that I want to refer to a report of the North Regional Planning Committee on colliery closures in the North-East. I received the report from the legal adviser to the city council of Newcastle-upon-Tyne. With the greatest respect to that report and the time, patience and energy that has been spent by the Committee in drawing it up, there is nothing in it that has not been known now for years.
In speech after speech after speech in this Chamber, both in Government and in Opposition, I have called attention to

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the closure of collieries. I want to draw the attention of the House to the recommendation at the end of the Report which says:
"The North Regional Planning Committee should urge local M.P.s to press for the necessary Government finance and action."
That is precisely what I have tried to do. It is said that the longest way round is the sweetest way home. Nothing is easier than to show that people follow their interests in the sense in which they understand them, but I still hold rigidly to the dread of the great chasm that could be brought about by the convulsion of economic misfortune.
Opinions may differ, but now that the Government are in the twilight of their responsibilities—[HON. MEMBERS: "Hear, hear."] Wait for it. We now realise that it is not going to be a sweet and soothing hour of twilight, but when the political fermentation of the next few weeks is swept away and the Government are again returned to power I will deem it necessary to plead for greater exertion to introduce new industries, in line with the National Economic Plan, not only to give encouragement and to restore faith to those sections of the community of whom I have been speaking—whose skill and labour are the mainspring of our industrial effort—but also to create conditions which can add to the wealth of the nation.
5.42 p.m.
Mr. J. Grimond: The hon. Member for Blaydon (Mr. Woof) was right to draw attention to the human problems which result—especially in the old industrial areas—from the decline of one set of industries and the need to bring in others. I was glad to hear him quote Henry George, but until he spoke no one could be in any doubt that we are now faced with a General Election.
During the Prime Minister's term of office he has played many rôles. Sometimes he seems to have been cast in the rôle of a Labour Harold Macmillan; sometimes there has been a Churchillian ring in his speeches, as though he was appealing for blood, sweat and tears, but we are fairly confident now that during the election campaign he is to be the Father Christmas of his people. As for the Chancellor, if by any chance there
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should be a disaster from his point of view during the election, he convinced the House this afternoon that he has some wonderful alternative careers open to him. The way in which he built up the suspense of this great event which will happen in the 1970s would have endeared him as a conjuror in the music halls of any town in this country.
But at the end, what have we? We have a decimal system promised for 1970 or 1971. My hon. Friend the Member for Orpington (Mr. Lubbock) produced a Bill on the decimal system over a year ago. The Government might study it as a useful contribution to the argument. We see the reason for picking on the £ but there is a considerable saving if we maintain that curious object the many-sided threepenny bit, which is now the standard coin for telephone boxes. We are enabled to do that if we take the crown and not the £ as the main unit.
I was very interested to hear the Chancellor stealing the clothes of the Conservatives on behalf of the Labour Party. The betting tax and help to owner-occupiers come straight out of the Conservative stable, as do many other policies pursued by the Government. But my admiration reached its peak when he pointed out that he would be able to give large sums of money to owner-occupiers at no cost to the Exchequer.
What has not been sufficiently emphasised during the debate is the extremely serious position of this country, especially in relation to its foreign trade. I do not see how anyone could vote for the last sentence of the Government Motion, and if anyone has any doubts on that score he should look at yesterday's Daily Mirror.
The fact is that we are still in deficit. Although sometimes to hear Government spokesmen one would think that we were earning a surplus, we are in deficit to the tune of £350 million. This is after putting on the surcharge and after exercising all sorts of restraints, and after pushing up interest rates to a very high level. Therefore, before we become immersed in the counter-bribery of the Election, we should put it on record, for the benefit of the people, that we cannot congratulate ourselves on the notable progress that we have made towards the very desirable things set out in the earlier part of the Motion. We are in our

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present position against a declining demand for steel and a tailing off in the rise of orders for machine tools, and in spite of the slightly greater number of people at work productivity, both of men and machines, appears to be stagnant.
We should have three major aims in economic affairs. The first must be to hold back rising prices and inflation. The other things will work—if they work at all—only if we can succeed in checking ever-rising prices. The Leader of the Opposition said that we must check demand, but I did not hear him tell us how we were to do this. We must face the fact that in circumstances in which all economic policies are bedevilled by inflation; in which the manning of the public services is made difficult by the constant need to push up the rates of remuneration as other incomes rise, and in which the economy is distorted by constant inflation, it would be dishonest for any politician to go into this election saying that he could reduce everybody's taxation.
There is a case for reducing the incidence of taxation—for taking taxation off earnings to some extent—but if this is done that tax must probably be put on somewhere else. I regret that we do not have a turnover tax, or its equivalent. That would provide one of the best means of checking demand and overfull consumption. It can act fairly quickly. It is simple, and if it is evenly spread over most products, except food and similar essential articles, the economy is not distorted in a way that occurs when Income Tax is increased.
Secondly, we must provide reasons for working harder—what are called incentives. My criticism of this Government ever since they took office is that although we had to accept the need for controls and for drastic measures to deal with the situation which they inherited, they have never made it clear what they expect to be the driving force in the economy. I believe that to the great bulk of the economy the driving force must be linked to the profit or reward motive in one form or another, through salaries or profits. If we want the economy to improve by way of increased productivity we must give the people more to go for. That means taking some of the weight off direct taxation.
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The third thing that we must tackle far more drastically is the question of regionalism. It is impossible to run the economy when, if one has a sufficient amount of unused resources in the south-east of England, one is faced with unacceptable unemployment in other parts of the country. I give the Chancellor the point that he fairly made, that the recent rise in the employment figures has shown that a lot of unemployment in Scotland and Wales has been reduced. I fully admit that something has been done to right the imbalance between the south-east of England and the rest of the country.
But we must go much further if we are to have a change in the economy and move our resources round so that they can be used to the best advantage. We must accept some rate of at least seasonal or temporary unemployment. Everybody admits that. If we are to have movement we must have a certain degree of unused resources at any given moment. This constant overheating of the economy in the South-East imposes an intolerable burden on the rest of the country. I hope, therefore, that the Government will go further still in regionalism and introduce preferential rates of taxation with the idea of giving extra inducement to industry to get away from the over-employed parts of the country and go to those which still need more employment.
I should like to take a look at the prices and incomes policy. It is obvious that the prices part of the policy has met with some success. This is partly because in many fields, particularly those where there is a semi-monopoly position, one can bring pressure on the seller to hold back at least a rise in prices. One may pinch investment by so doing, but in some fields one is in a position to bring pressure on the seller not to put up his prices.
However, where there has not been so much success is in incomes. I wonder whether we should not first of all put far more stress than we have so far on the importance of getting productivity to rise. I know that the Government are doing something in that direction, but the very name of the Board is wrong; it should be a productivity board essentially. If new terms of reference were

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given, arbitrators could then do more of the Board's work.
We should do far more to encourage plant bargaining. In the rest of the economy, particularly those parts where there is not a semi-monopoly position, there is no question but that the best way to hold down prices and generally encourage efficiency is competition. I am not satisfied that the Prices and Incomes Board is sufficiently related either to the Monopolies Commission or to the Restrictive Practices Court.
I notice a very alarming passage in the early-warning Bill which seems to imply that if people abide by the recommendation of the First Secretary or the Prices and Incomes Board they will be excused from certain findings of the Restrictive Practices Court and enabled to continue with price agreements. This is entirely the wrong way round. One of the main functions of the Board should be to spy out those parts of the economy where there are unduly high prices or incomes and then see whether this is due to monopoly. If so, they should send these cases to whichever is appropriate—the Prices and Incomes Board or the Monopolies Commission—or recommend reduction in tariffs, but somehow they must bring in competition.
These should be the three functions of the Board: to pinpoint the parts of the economy which are running contrary to the general interest, either by pushing their prices too high or allowing earnings to rise, and then bring on them the force of competition, to engage in a long term campaign in educating people about the importance of not extracting the maximum money income which they can and, thirdly, in setting up standards so that we have some way to measure how people ought to be rewarded in the public service and other parts of the economy which are not and cannot be subject to the market.
Where the Government are going wrong over the Prices and Incomes Board is that they have apparently been pitchforked in to trying to stop the general price rise by holding down particular claims or prices here and there throughout the economy. This will not work. We shall never get the Board to work until it works with the main stream of the economic measures of the Government and not against them. If we are
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to have undue inflation in the economy, it is no good calling in the Board to stop it. Inflation must be reduced and then the Board may be able to single out certain areas in the economy where the measures are not taking full effect and it may also be able to link improved efficiency with higher wages.
This is a possible job, but at the moment it is in an impossible position, running counter to the main trend of the economy and to what the Government are doing in the economy. This is not a job which such a Board should be called upon to do.
I hoped to hear in the debate far more about the use which the Government are making of the time which they claim to have bought. When restrictionist measures were introduced when they came to office in 1964, they said that they were going to buy time. They said that the surcharge was a temporary measure, and that in the time they bought they would put the economy on a new path, sweep away restrictive practices and devise wholly new methods of handling it. There are no signs of this. If the stop-go policy has not worked as stop-go, it is not for want of trying by the Chancellor; it is that the Department of Economic Affairs has not tried.
There is no question but that the Chancellor's policy in 1964 was to stop. If the stopping has been slow, this is partly because people are now engaged on very long term investment programmes which they are not prepared to stop suddenly, and partly because the effect, to a great extent, of the prices and income policy has been to make people think that they are entitled to a 4 per cent. rise whatever happens—that this is not the average but the minimum, that everybody gets that and then argues about what more he should get. This is a dangerous psychological result of the Government's policy.
This year, 1966, is not the year of the crunch. I believe that next year may be. Next year we shall see whether investment is continuing or falling off. Next year we shall see whether the deficit is still running at anything like £350 million even after all the methods at the Government's disposal of stopping it has been used up. Next year, we shall know whether demand has got out of hand.

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At the moment, the Government are pledged to several aims which cannot be pursued together. I do not believe that the Government can abolish the surcharge, get a 4 per cent. growth rate, earn a surplus on the balance of payments, maintain the exchange rate of the £ and keep unemployment at its present level.
They have pledged themselves to all these things at different times, but they are not compatible. One of the arguments in this election should be which is the most important and which has to go. To me expansion is the most important thing for this country to try to achieve, but I fear that one thing which will go is expansion. I do not believe that we shall get a 4 per cent. growth rate; we are not getting it now, and I see little chance of getting it. We are losing our percentage of world trade, we are not increasing productivity, and efforts to improve industrial relations appear to have been played far too much off the cuff.
Supposing Fairfields had not gone bankrupt. No one knew that it would, but if not we should never have had a scheme for partnership with the unions. That may be a good scheme, we should go further in encouraging the unions to take a share in the decisions and actions which affect the economy. This was only thought up because Fairfields went bankrupt. There has been no general effort to get an advance throughout industry in industrial relations.
When the Prime Minister is touring the country he should bear in mind the notice which I understand Dr. Erhardt found written up over the entrance to a university during his election tour: "Self-praise stinks".
5.59 p.m.
Mr. Robert Sheldon: The right hon. Member for Orkney and Shetland (Mr. Grimond) said in his interesting speech that he was in favour of some form of taxation reform, because he felt that past systems of taxation have distorted the economy in some ways. He put in support of this view his desire for some form of turnover taxation.
In the past, there was great distortion of the economy because of this taxation
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system, but one of the measures of the last year which did so much to put right many of the wrongs inherent in our taxation structure was the Finance Bill. The taxation of capital gains, whereby one great loophole of avoiding completely all forms of taxation was stopped, was one of the measures by which the distortions inherent in taxation were removed.
The right hon. Member also mentioned as one of the important aspects of the Prices and Incomes Board its rôle in educating both employers and employees to the link between productivity and higher wages. I would accept—as, I am sure, all hon. Members on this side would—that the educational rôle of the Prices and Incomes Board, probably in the long run and because of the effect it can have in bringing about this link between productivity and higher wages, is one of its most important functions. We look forward to seeing this aim pursued with some success.
It was right that my right hon. Friend the Chancellor, in facing an election so near to what would normally be Budget day, should have given a close indication of the sort of measures he would be pursuing were this party returned to office. Those who have made cheap gibes and scorns have done my right hon. Friend an injustice. Any Chancellor, shortly before an election, must give an indication of how he would regard the economic situation and what measures he would need to deal with it. To do other than that would be to accept the taunt of running away.
In giving an account of how he viewed the economic situation and the sort of measures he would introduce with a larger majority in Parliament, my right hon. Friend mentioned some of the facts which had led him to those views. One of the most interesting aspects, which we should welcome, is his belief that there is no case for severe taxation. There have been some who, because of the lack of information in certain Treasury publications, had expected that the economic situation was rather worse than we have heard from my right hon. Friend. This indication of the lack of severe taxation will remove, during the election period, some of the uncertainty which hon. Gentlemen opposite might have otherwise

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been successful during the election campaign in inculcating in some industrialists.
To me one of the most welcome parts of my right hon. Friend's speech was his account of the improved balance of payments situation, an improvement better than even he had thought would occur throughout last year and it was an improvement better than anyone could have foreseen—a reduction in the deficit from £750 million to £350 million. Anyone who had prophesied such a reduction would have been called an extreme optimist. It is certainly far beyond what I had hoped, in view of the figures which were available at the end of last year.
Mr. William Clark: Does the hon. Gentleman not recollect my right hon. Friend the Leader of the Opposition challenging the Chancellor of the Exchequer on this question of a reduction to £350 million and saying that he was basing his remarks on the advice given by the Treasury in the autumn of 1964?
Mr. Sheldon: I am referring to the whole of last year. The figures up to the third quarter did not suggest this reduction. If anybody thinks that the Treasury can predict the course of events without taking note of what a new incoming Chancellor will do is crystal-ball gazing. Such predictions have no relevance to the economic position. That he has been able to achieve, after only 17 months in office, this massive improvement, which will be of great benefit to the country as a whole, is a tribute to my right hon. Friend.
Mr. Nicholas Ridley: Would the hon. Gentleman agree that the deficit might have been smaller still had the Government not cancelled many chances to sell arms abroad, apart from buying a lot of arms abroad, and that had they not been the Government the deficit might be well below its present figure?
Mr. Sheldon: Had we carried out the economic policies of the previous Government the deficit would have been well above not only the present figure but above £750 million. It might have been £1,050 million or more. It is useless speculating about these things. The important point to remember is the splendid job which has been done by my right
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hon. Friend and which should earn him the tribute of the whole House.
The balance of payments is essential to the whole of our well-being. We must get the balance of payments right and keep it right. The difficulty is keeping it right and, at the same time, doing what the right hon. Member for Orkney and Shetland said—maintaining the economic growth which we also need. This has been the very essence of stop-go, because the more capably the balance of payments problem is solved the more impact that solution will have on our economic growth.
I also agree that this whole matter is something of a tussle. It is possible to have the one, a good balance of payments position, without the other, economic growth. The great difficulty in the last 10 or so years has been the conflict between the two. In the next few years we must try to get the balance of payments right as well as achieving investment because the latter will give us the economic growth we require. The equation for economic growth is a satisfactory balance of payments position and continued investment. In fact, that is what we are having because the success of the Government has been their ability to bring about the confidence of industry in the future—thus maintaining investment and at the same time slowly reducing the balance of payments deficit.
Concerning the problem of investment and the need to keep it at a high level, industrialists are not thinking so much of returns this year or next year because, for the first time for a number of years, they have sufficient confidence in their future ability to sell their goods at home and abroad. They know that the Government will give them support in the next few years. This is one of the most hopeful signs we have seen and it has been particularly in evidence in the last three to six months.
A pleasing part of my right hon. Friend's speech was his announcement of the reduction in the capital outflow. There are some problems here, concerning capital outflow to the sterling area, and these may have to be dealt with in the near future. I was also pleased to hear about the repayment of swap-credits. The Treasury has been secretive in this matter, possibly a little too secretive, although

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there were not many of us who suspected that the secrecy concealed figures as excellent as those we have been given. They went beyond my expectation, and probably beyond the expectations of many hon. Members.
I was glad of the announcement that steps are being taken to encourage National Savings. We have not done a particularly good job in this sphere in the last year or so, although it must not be assumed that this is too vital a matter. We must not get it out of proportion to its value, though the value of National Savings is considerable. Probably the most pleasing part of these savings arises from the activities of local committees, at which people meet and arrange social affairs and manage, as a by-product, to raise substantial sums of money. The savings are of great benefit to the country as a whole. It is a shame that they have not previously had quite the encouragement which my hon. Friend has now been able to give, and that encouragement will benefit the savings movement and the nation.
Sir Cyril Osborne: Does the hon. Gentleman think it fair to the voluntary workers that they should be asked to ask people to invest in National Savings when, in the first 15 months of this Government, those savings lost their value by Is. 6d. in the £ and when that inflation is likely to go on?
Mr. Sheldon: National Savings' rates of interest have been too low for some time. The very fact that they are now operating at a gross stock rate of 7¾ per cent. will, I think, meet the objections which many hon. Members, including the hon. Member for Louth (Sir C. Osborne) and I, have had. The 7¾ per cent. is a magnificent rate of interest, and it will be appreciated. I look forward to seeing the large sales of these certificates that I am quite sure will come about.
My right hon. Friend referred to other methods of saving. We have the Premium Bonds, and perhaps the time has gone when we could be too puritan about this issue and today accept rather happily any funds coming from sources even possibly as slightly tainted as they.
The one part of my right hon. Friend's speech that seemed to give offence to
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certain hon. Members opposite was the passage about option mortgages. I do not think that anyone thinking this over seriously could deny that a very real injustice looks like being corrected at last. The ability of people earning high incomes and, therefore, paying high rates of tax, and their consequent ability to get large rebates through their mortgages at the expense of someone else—because all remission of taxation is at the expense of someone else—has been a source of some unfairness, and I am glad to see that we are achieving some sort of bipartisanship over the position of the smaller owner-occupiers. I think that this announcement is of value and will be of great benefit to our housing needs—
Mr. Ian Lloyd: The hon. Gentleman has said that all remissions of taxation are made at the expense of someone else. Is not this an extraordinarily static view of the situation, and is it not wholly contrary to the professed policy of his own Government—who profess an incentive economy—to deprive owners or earners of incomes of whatever size of the only real incentive such an income has, which is the power to spend it?
Mr. Sheldon: I fail to see the logic of that sort of argument. These two negatives are sufficiently near to a positive to be indistinguishable. Anyone with a remission of taxation, provided expenditure remains approximately the same, has to be supported by the taxation of someone else.
Option mortgages will be of great value. We are now coming to a new field of encouragement of people who live in owner-occupied houses, or want to do so. This is something that over the years we may well encourage, and I think that it is the first of a number of measures that we shall find increasingly valuable.
I was not quite so happy about my right hon. Friend's statement on decimal currency. I agree, of course, as almost everyone here will, on the need for a decimal currency, but I should have thought that the arguments for a 10s. unit of currency were probably the most overwhelming because of its nearness in parity with the dollar in Australia and New Zealand. I should have thought

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that this mattered most, and that the argument in favour of the £, with its sentimental attachments, would have rather less weight and could be overruled in order to bring about this approximate alignment with the United States, Canada, Australia and New Zealand. I think that that would be rather more valuable, and perhaps even now may not be too late a stage for my right hon. Friend to give further consideration to the subject. Does the hon. Member for Esher (Sir W. Robson Brown) wish to intervene?
Sir William Robson Brown: It is only a political red herring. We should not waste time on it this afternoon. It is a good manoeuvre by the Chancellor to take people's minds away from the issues of the day.
Mr. Sheldon: I do not consider decimal currency a political red herring. It has a very important consequence. Hon. Members have introduced Private Member's Bills on this subject, and the consequence of the introduction of this currency will ultimately mean a saving of several hundred million pounds annually. It is not a red herring. My right hon. Friend is right to introduce it. I should have preferred it at an earlier stage, but any stage is good enough for the introduction of a Measure as valuable as this.
When my right hon. Friend turned to the new taxes on betting and gaming, the right hon. Gentleman the Leader of the Liberal Party must have been really delighted, and I thought that he might have spent rather longer on this aspect and on congratulating my right hon. Friend. I suppose everyone has been pushing such a tax, but we have all been aware of the very great difficulties in the way of a successful method of collecting it. Perhaps the Liberal Party has been a little more assiduous than most.
What we should admire is not the decision to introduce the tax—that decision could be taken by anyone; it was taken, as we know, 40 years ago—but the fact that those concerned believe that they have found a practical method of collecting it. Despite my right hon. Friend's professions, there are some social consequences, too. When we tax a casino at the rate of £50,000 we cannot avoid certain social consequences. I think that most of us would be quite ready to
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accept that proposition, and these consequences could well follow.
The Leader of the Opposition became rather pernickety in his handling of these very reasonable and radical announcements, these very valuable decisions. I shall not deal with all his comments, but he made one point which we have heard so often before that it is about time we had answers. What really constitutes the "very hard measures"—the right hon. Gentleman's words—that he would like to see carried out? Every hon. Member opposite talks of these very hard measures, but what is it they want? Do they want higher taxes? Do they want to lower pensions? There is some form of deceit in all this.
Possibly the nearest we get to it is in the article written by the hon. Member for Stratford-on-Avon (Mr. Maude) in the Spectator of 14th January. The hon. Member there wrote:
"Shall we say that the level and incidence of direct personal taxation are a disgrace and will be radically changed?
Shall we specify radical changes in the social services to meet the changed needs of a full-employment, high-wage society?"
A little further down, the hon. Gentleman states:
"There are plenty of other things, of course, but these will do for a start. If we really mean them, and sound as if we mean them, they are enough to win an election. They are enough to re-unite the Tories, too—left, right and centre. Finally, if we really mean them, we could actually do them. Which is quite a thought in itself."
We have those few paragraphs but no indication of what the party opposite would do. That is the trouble with the whole Opposition. They talk about these tough measures, but I cannot understand why they disposed of the services of the hon. Member for Stratford-on-Avon when they themselves have said no more; when they themselves also talk of these tough measures but do nothing about them. The only thing that the hon. Member said was that he disagreed with the Opposition and the leadership, but, at the same time, he was in favour of these tough measures which the Opposition themselves also profess, without enunciating or describing.
The announcements we have had this afternoon show that both at the beginning of this Parliament and at its end we have had Ministers prepared to speak vigorously and forthrightly. The fact that we

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possess such Ministers, and will possess them in the next Parliament, is some measure of the success of this one.
6.20 p.m.
Mr. Nigel Birch: I do not quite know what the hon. Member for Ashton-under-Lyne (Mr. Sheldon) was talking about, but he certainly had a great deal to say. I was able to pick out one or two points. He said that taxing casinos at the rate of £50,000 would produce a great social change. I presume he mant that they would move into lower-rated property. That is a change of sorts. A significant thing which he said was that what the Chancellor had said about taxation in the coming Budget would reassure people in the election. That is what it was designed to do, but my goodness if he wins the Election the Budget he will have to bring in will bear no relation whatever to what he said today.
I agreed with much of what the Leader of the Liberal Party said. I do not think he spoke with that brilliant dash and wit which he employed when he was known as the Rupert of debate; since his mother-in-law let him off the hook he has lost interest. It was certainly a good speech, and he was perfectly right to take up the point of the Daily Mirror, as did my right hon. Friend the Leader of the Opposition, that this Motion is a nonsense. The Chancellor, one of the more honest members of the Government Front Bench—that, of course, is relative—must have been ashamed at having to move such a ridiculous Motion.
If we look at the fundamentals of the situation, we find that they have not improved. They have worsened during his tenure of office. The most fundamental consideration of all is the costs per unit of output in this country compared with costs in the United States of America. In that the position has deteriorated almost disastrously since the present Government came in. The Chancellor keeps saying that we shall be paying our way by the end of this year. I know of no one whose judgment I respect who thinks there is a chance of that happening.
Exports are encouraging, and I think they will go on being quite reasonably good, but imports are not encouraging.
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With the absolutely brimful over-employment announced in February and with the vacancies higher than they have been practically ever at that time of the year, imports are absolutely bound to be sucked in. Last year the position of visible trade was better than it had been in the year before, for two reasons. One reason was that there was no stocking up as there had been in 1964. The other was that there was a sharp turn in our favour in the terms of trade. Nothing is more difficult to predict than stock building and the terms of trade, but it would be very remarkable if there were no stock building this year, and so far this year the terms of trade have turned sharply against us. So I do not rate the chances of our being in balance at the end of the year at all high. If the Chancellor is to introduce a soft Budget as he indicates, there is no chance whatever of us being in balance.
I wish to say something about sterling, not just on the main issue, but about some of the side-effects of the Rhodesian crisis. I ask the Financial Secretary to the Treasury to convey this view to the Chancellor. It is extraordinarily dangerous for the Government to be so cagey about what the costs to us of sanctions are and what the costs to us are of aid to Zambia. If the Government refuse to say anything, or if they give a few misleading titbits, every outside analyst starts totting up the cost for himself and the longer this goes on the higher the figures which are bandied about are likely to be. I do not know how big the figures are, but when they get into hundreds of millions the right thing to do is to come clean and say what the truth is.
There are two other effects of the Rhodesian crisis which I believe are, and will be for all time, damaging to this country. The first was the nabbing of the assets of the Rhodesian Reserve Bank. I do not think that did any harm to Smith. It gave him a perfect excuse for cutting off all payments to us, and on invisible account we are large creditors of the Rhodesians. Probably it actually helped him. What about the legal regimes of other countries such a Uganda, Nigeria, Ghana and so on? No one wants a banker who blocks one's balances because he does not like one's politics. What I believe will happen is what has been happening for some time—more and

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more countries in the sterling area will try to build up a little reserve of gold and currencies other than sterling. I believe the return in the last quarter of sterling balances was far less than previous withdrawals and far less than one might have expected.
The other side effect, again damaging for all lime, was that of forcing Lloyd's to dishonour their contracts. Lloyd's has helped our foreign exchange for centuries and has made the American insurance industry very jealous of us. The Americans never lose an opportunity of trying to muscle in on Lloyd's territory and to get the business. This gives them a perfect chance. It does not do any harm to Smith at all. It makes no difference to him, but it makes a grave difference to Lloyd's. Already South Africa wants to insist on Lloyd's maintaining balances there to cover their liabilities. Lloyd's does not have to do that everywhere, and if it does so there it will have to hold balances in other currencies. Nothing could be more damaging to our balance of payments.
The present sterling crisis has been different from any other since the war for the reason that it has lasted so much longer. I have tried to analyse previous sterling crises. The period they have lasted in acute form has been on average five and a quarter months. When talking about a crisis in an acute form, I mean the time from when there has been a run on sterling till the time when people say it is over and money comes back in a flood. This crisis has been going on for 15 months.
The Chancellor, giving some figures today, said that something has come back. I think the major speculative open position has been closed and some of the leads and lags have been allowed to run off, but there has been no general increase in confidence and the money has not come flooding back. It is now beginning to go out again. I cannot help feeling that the Treasury must be slightly shocked at some of the ways in which the Chancellor presents his figures. I cannot help feeling that, listening to what he said today, most of his hearers would think that reserves in February had increased, whereas they actually decreased. The position is beginning to turn sour again.
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I do not think this has anything to do with the election, but it has something to do with what the Prime Minister said. This is not the quotation which my right hon. Friend the Leader of the Opposition made, but something the Prime Minister said at the dinner of the Bankers Club on 8th February this year. He was doing his usual act there, beating his little chest-wig and saying how tough he was. To illustrate this, he said that in September we were absolutely "bust" and used all the loans we could get and pledged all our assets. That is perfectly true, but the point is that at that time the authorities were representing this as a move from strength. If one does that sort of thing, how can one expect anyone to believe one again?
My right hon. and learned Friend the Member for St. Marylebone (Mr. Hogg) quoted some remarks the other day of the Minister of Housing and Local Government. He said that it was all right for politicians to tell lies and even to be caught red-handed, but the dotty thing to do is to catch oneself red-handed. That is precisely what the right hon. Gentleman has done.
Before returning to the main topic, I want to say something about the backwash of the two tax changes in the last Budget—the Corporation Tax and the Capital Gains Tax. I do not believe that the Chancellor of the Exchequer would have introduced either of these taxes if he had been given the chance to think about them. As the House will remember, they were put into the "Brown Paper" almost as soon as the Government came to power. These two taxes were advocated by the First Secretary of State on the grounds that they would help with his wages policy. People who think like that obviously do not know where to turn. When buffoonery reaches that level it becomes positively morally oblique.
These taxes were also advocated by the Hungarian Mafia. What their motives were I do not know, but they said it was for simplification.
Let us look at the effects of the Corporation Tax on the rate of interest. This is the point we made over and over again in Committee on the Finance Bill. Towards the end of our debates I think the Chancellor of the Exchequer hoisted it in. This was bound to have the effect

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of forcing up long-term rates of interest, because it forces industrial companies to raise their capital by depentures rather than by shares. We have got to the stage where first-class companies with first-class credit have had to pay 7½ per cent. for their money on debentures.
This raises costs, but it does not stop there. It pulls down prices and puts up the yields of Government and local government securities. There was a perfect example last week, when the Greater London Council put a loan out to tender at 6¾ per cent. at 98½. Fifty per cent. of it was left with the underwriters, and now any hon. Gentleman opposite who wants to make a safe loan will be able to buy a few millions at a discount. Not long ago the L.C.C. was lending money on mortgage at 6¾ per cent. and below on house mortages. If the G.L.C. must borrow at 6⅞ per cent. it will not be able to do much on that.
It is all very well having concessions such as that announced in regard to mortgages, but that will not alter the fact that it is more than likely that building societies themselves, as they have said, will have to put up their rates above 6¾ per cent. After all, it is anomalous that a building society should be lending money at a cheaper rate to the ordinary borrower than the rate at which the G.L.C. can borrow.
It has had its effect on National Savings and turned them into a negative quantity. The Chancellor of the Exchequer has been forced against his will to bid up the rate of interest. Meanwhile, as National Savings have been turned into a negative quantity it means that more taxation will have to be raised, for the simple reason that the Chancellor of the Exchequer cannot rely upon part of his borrowing requirements being filled by National Savings.
Then there is the effect on the Public Works Loan Board. As local authorities cannot borrow on the market, they are coming more and more to the Board. Already lendings by the Board are about £70 million more than the Budget estimate for the whole year. That would not matter if the Government could sell Government securities against these lendings to genuine savers, but the Government have not been able to do any genuine selling at all for months. The
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gilt-edge market is dead. All this is adding to taxation, adding to rates, adding to costs, and it all comes about through a completely misconceived tax.
The real difficulty about the Capital Gains Tax is its appalling complexity. Mr. Harold Wincott has written some admirable articles about this. He gave an instance of a woman who bought 50 shares seven or eight years ago in an ordinary company and who sells them now. The question is—what tax is she liable for? Mr. Wincott got two first-class accountants to try to work it out. They put wet towels round their heads and came back a week later with different answers. I am told that if different tax offices are asked the same question they give different answers. Most tax offices when asked a really interesting question simply say, "We cannot possibly know the answer to that until there has been a case in the courts". That is the state we have now reached. The British people have been the most docile taxpayers in the world. They have put up with murder for years. The way to bring the whole tax system into disrepute is to introduce a tax under which nobody knows where they are and when they cannot even get professional advice to tell them.
I believe that the tax offices are very busy recruiting as many people as they can. They are faced with appalling complex problems, often involving very small amounts of money. These problems are bound to stuff the tax offices up. They are bound to delay the collection of taxes. They are bound to have a bad effect The only thing to do with the Capital Gains Tax is to simplify it drastically, reduce it to 20 per cent., on the American lines, and have a de minimis clause. We cannot go on like this. I am told that the Treasury already has 400 Amendments on the Corporation Tax and the Capital Gains Tax waiting for the next Finance Bill.
I return to the main economic situation. The trouble is soaring incomes and stagnant production. Much the most interesting article I have read on this for some time was one by Professor Paish in the Daily Telegraph on 16th February. He predicted a very heavy increase in taxation in the Budget, a continuing balance of payments crisis, and rising prices. The most interesting thing he predicted—I am sure correctly—was that

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as a result of the way the Government have played their hand, we are likely to have stagnation for at least for another two years.
Shades of the last election! Then Britain's Osagyefo said that he had the modern philosopher's stone and that he alone knew the secret of perpetual growth without inflation. What has happened is that nobody has been running the economy. And "Ossie", like his African counterpart, has been swanning round the world, the most fatuous visit of all being the last one to Moscow. His one claim to fame in regard to that visit is that poor Lord Chalfont was insulted in the North Vietnamese Embassy. What he has done is simply to leave the economic policy to be fought out between the First Secretary of State and the Chancellor of the Exchequer.
And a fight they have had. As has been pointed out, no kind of wages policy can be pursued if the number of unfilled vacancies is immensely greater than the number of unemployed. Everybody knows that, but still it seems to me that the First Secretary has made a pretty good mess of it. What is the point of fighting the Chancellor of the Exchequer? The Chancellor orders gas boards to raise their tariffs. The First Secretary orders them not to and refers the matter to the National Board for Prices and Incomes. The tariffs go up. We all know they will do that, anyway. Meanwhile, the Treasury has had to print money which it would not otherwise have had to do.
Again, what could be the point of referring the price of coal to the National Board for Prices and Incomes? The National Coal Board has had its £80 million increase. Three things could be done about coal. The Government could sack Lord Robens and get on with it; they could put up the price of coal, or they could find the money out of taxation. All these are Government decisions. They are not decisions for Mr. Jones. The Government are simply wasting his time.
Take Forces' pay. The Government obviously thought that an increase of £55 million was pretty desperate and they did not want to face it. On the other hand, they did not quite like to refuse it themselves. They tried to use the unfortunate Jones as a living shield,
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rather like mobs in Cairo drive the women and children in front of them. Mr. Jones had the sense not to be caught.
But something can be done by the Prices and Incomes Board. It depends on referring only key issues to it and taking its view on those key issues. If we clog it up we shall never get anywhere at all. What has really happened is this. When the First Secretary wakes up in the morning and seizes the papers, he refers to the Board anything which has most annoyed him when he has read the papers. Are laundry prices a key issue? What is the good of clogging up the machine by making the Board look at laundry prices? The whole thing has been hopelessly run.
Turning to the Chancellor's side of things, in preparing this speech I have looked back, tedious though it was, at every date on which the right hon. Gentleman announced new deflationary measures. He announced new deflationary measures on 17 different dates, though not just 17 measures, of course; there were a great many more measures than that. When the Chancellor spoke contemptuously of how we got out of financial crises, he said, "But your measures worked". What has happened to his measures? They have not worked. We have had the worst wage inflation there has ever been in our history. As we have said an infinite number of times, he would not have had to do anything like as much as he has done if he had acted with decision, and done enough at one blow, and said, "This is my policy", speaking honestly about what he was trying to do. He would have got the necessary check and had to do much less. But he did not do that, and the consequences are very grave.
The amounts involved are enormous. My right hon. Friend the Member for Barnet (Mr. Maudling), in a distinguished speech the other day, gave some figures showing the great weight of money involved in wage increases. I will not go into all that, but I mention merely the £55 million on the Forces. Again, I must criticise the Treasury for its presentation of figures. As I understand it, when the Chancellor was saying how clever he had been about reducing expenditure, the £55 million on the Forces was not considered as expenditure in real terms. That would be all

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right, of course, if one could rely on the Forces using every single extra pound to light cigarettes with, and the Treasury may, of course, expect them to do so, though I hardly think so. What they will do is spend the money on real resources, and a great deal of it abroad. By this steady mismanagement of our economy, by the Prime Minister paying no attention at all to what was going on and leaving others to fight it out, by all of them being wrong and ineffective, we have been put in a very dangerous position. I do not believe that these men will get out of it, and I am certain that, with the present Prime Minister in power, this country could never conceivably recover.
6.43 p.m.
Mr. A. E. P. Duffy: The right hon. Member for Flint, West (Mr. Birch) spoke entertainingly, as always, and stimulatingly. Some of it we heard on the Finance Bill last year. With some of it, especially his reference to imports, surprisingly enough, I agree. I agree that there was a considerable stockpiling in 1964. There was stockpiling also in anticipation of an election in 1964, which the right hon. Gentleman did not mention. I am surprised that he holds the view that there was a sharp improvement in the terms of trade last year, and I should like to know what his evidence is there.
I take issue with the right hon. Gentleman on his view, which was expressed also by the right hon. Member for Orkney and Shetland (Mr. Grimond), the Leader of the Liberal Party, that the Motion before us does not deserve support or, as the right hon. Member for Flint, West put it, the fundamentals have not really changed at all during the tenure of office of the present Government. The Motion admirably expresses the priorities in the management of our economy. It attaches first importance to strengthening the balance of payments, and there is no doubt, in the light of experience in the last 10 years, that this is still our No. 1 problem.
What most of us want—and here I agree entirely with the right hon. Member for Hint, West—is a satisfactory rate of growth. Yet we know that the balance of payments position is still the major
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constraint on growth. Some of our balance of payments difficulties may be attributed to demand management policy. For example, the 1963 expansion, like the previous upswing in 1959–60, led within less than two years to a serious balance of payments crisis. The right hon. Gentleman made no mention of that, yet we all know perfectly well—there is the evidence of his speeches in HANSARD at that time when he was on this side of the House—just how critical he was of that policy. There was no more acid critic in the House of the Government's management of our economy.
The persistence of an unsatisfactory underlying balance of payments position, on an average of fair years with bad, points, however, to more deep-seated factors than just the rôle played by the Chancellor. The disappointing export performance over the last few years is, perhaps, the most serious of these factors. It is interesting to look briefly over the past 10 years at the conduct of the Opposition when in Government and examine their management of the economy, then to bring the picture up to 1964 and compare it with 1965.
When we look at exports, for example, over the last 10 years, we all know, yet it cannot be repeated often enough, that Britain's share of world exports of manufactures had fallen from 20 per cent. to 13·7 per cent. The amount of imports which these exports would buy rose by 48 per cent., with a much more distinguishable improvement in the terms of trade within that period than any I am aware of in the last year to which the right hon. Gentleman referred. Yet, despite this rise in the amount of imports which those exports could buy, the volume of imports moved faster than the purchasing power of exports—56 per cent. against 48 per cent., and much faster than the gross domestic product figure of 33 per cent. During the same period, retail prices rose by 36 per cent. and unit costs by 37 per cent. The figures speak for themselves. It is not surprising, in view of this—and this, though a brief description, is a description of the hard core of our economic situation in those years and an overlying deterioration—that our reserves of gold and convertible currencies were consistently low in relation to short-term liabilities.

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When we look at 1964 and compare it with 1965, we find that in the last year of the Conservative Government the cumulative current account on our balance of payments was it is true, in balance, but only just, and it was making no contribution whatever to the financing of long-term capital exports, which by this time were averaging £175 million a year. Once again, we trace this weakness to export performance. We were always hearing from the Treasury Bench and notably, the Chancellor during that last year of the Conservative Government, about how exports would improve, but the fact remains that they did not. They were thoroughly unsatisfactory, as they had been during the previous three years. Considering the United Kingdom's comparative cost position as well as the generally buoyant conditions of world demand, it was a most unsatisfactory state of affairs.
Our exports of manufactured goods, which, incidentally, make up the bulk of our exports, have risen less fast than those of other major industrial countries taken as a whole. Our gold and dollar currency reserves were under £1,000 million, and lower than seven years before. The United Kingdom was the only major developed country, apart from the United States, not to increase its reserves in this period. One could mention other like facts, but those are sufficient to show that our economic position in 1964 was thoroughly unsatisfactory, and, of course, this reflects immediately upon the conduct of our economy and its general management by the previous Government.
When we come to the Motion and compare the state of our economy in 1964 with the position that we had reached by the end of 1965—we can even look right up to date, to last month, February—we notice the distinct improvements in certain key aspects. If we compare the reserves position in the autumn of 1964 with that of 1965, we find that the reserves have risen during the last quarter of 1965 compared with the previous year.
Mr. Birch: But £900 million of them are borrowed.
Mr. Duffy: No, not necessarily. It depends on how one looks at it. I should like to know just how the right hon.
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Gentleman has obtained his information in this respect.
Mr. Birch: We borrowed nearly £900 million from the International Monetary Fund, and that sum is put in our visible reserves.
Mr. Duffy: I know. I also know perfectly well that we have made repayments. I also know that the monthly adjustments to our reserves position have not been reflected in the figures published. That is why I am surprised that the right hon. Gentleman is so precisely familiar with the real position. There was a fall in February, but it did not surprise me. It was due to election speculation in the last week or 10 days which will be reflected in the February figures.
What really matters and what is important is the information that the Chancellor has given us, which is that the trade deficit is running now at less than half the level at the end of 1964. What is equally important is that exports were running considerably higher in the latter part of 1965 compared with 1964. What is equally important, despite what the right hon. Gentleman said about the import position—I agree that it is likely to deteriorate rather than improve in 1966 compared with 1965—is that imports are still running a good deal lower than the level of exports. Also, despite the disinflationary measures taken throughout 1965, there is no evidence of deflation.
It is easy to point to the employment position. It is noteworthy, in view of the requirements of the national plan for manpower, that the level of manpower in the last 18 months has been running at about 1 per cent. a year higher than previously. This is something that we should welcome. One cannot overlook the current position, the unfilled vacancies are higher than the numbers available to be employed, for that suggests trouble.
The flexibility that the Chancellor has displayed during the last year, in spite of the way in which it has been derided by hon. Members opposite, is heartening. It shows that we are getting away from the once-a-year Budget. It shows that our economy can be adjusted in the light of the prevailing situation. What is equally important is that prices are slowing up. We were told in answer to a Question

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last week that prices rose less last year than in the previous year—4·4 per cent. last year compared with 4·6 per cent. the year before. We were also told last week that Government spending is slowing up. It looks as if we have at long last got the runaway horse of public expenditure, for which the previous Government were responsible, responding to the bit.
Growth is our prime object. It needs to be not only faster but steadier. We have had with us for many years the question of how to achieve a higher level of growth with a more stable price level. I think that one way in which we can do this is along the lines indicated in the Motion—by effective policy for raising productivity and holding down prices. This surely points to the desirability, indeed the inevitability, of an incomes and prices policy. I cannot understand why the Leader of the Opposition should have been so openly contemptuous of what has been done in this respect in recent months. After all, this is a new frontier in industrial relations which the present Government are probing. I think that a person would be very bold to say what the outcome will be. I would not say that we are going to be successful. All I know is that we must try to devise an incomes policy.
The objectives that the previous Government were following of a stable price level, full employment and acceptance of the present system of collective bargaining were irreconcilable objectives and one of them had to go—not in absolute terms, but there had to be interference with one. I take it that the Opposition, no less than the Government, are concerned to maintain full employment. One also presumes that the Opposition are concerned to have sound money. This only means some attempt to interfere with market forces and not merely collective bargaining. In doing this, we on this side know that we are likely to be misunderstood outside this House, including by our own supporters. Indeed, this is what I understand the lobbying taking place in the House today is all about.
However, I would point out to those who have doubts about such a policy that any policy that smacks of interference with the unions is bound to give—certainly to hon. Members on this side—grounds for pause. But it is not intended
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to interfere—I see no reason why it should—with collective bargaining. Neither is it sectional. It is concerned with prices, dividends and profits. It is a very brave attempt to interfere with market forces, and I would not care to say what the outcome would be.
When the declaration of intent was made more than a year ago and an attempt at making an incomes policy was accepted by both sides of the House and both sides of industry, the case for some measure of restraint was conceded by everyone. Nothing that has happened since represents a new departure. It has merely taken the Government further steps along the road signposted a year ago. The Bill which will be before the House on another occasion is intended merely to achieve a cooling-off period when the public interest can be considered. It does not mean that ultimately collective bargaining will be interfered with or even that market forces will be interfered with. It is merely a pause that is being asked for so that the public interest can be considered. Such attempts must go on. Such explorations—that is what they are really meant to be—must be persisted with.
The other main hope which is embodied in the Motion for the purpose of achieving faster and steadier growth is better balance between the regions. I should like here to take up the right hon. Member for Flint, West and also the Leader of the Liberal Party, for they both referred to this matter. They asked whether the Government were as concerned for growth as they formerly were. I hope they are. I am. I am still an expansionist. I am very much concerned with growth. I think that it will require longer-term reforms of the structural character of our economy. The best immediate hope lies in certain parts of the economy in certain parts of the country; this will require a much more differentiated approach than we have had so far, and that means through regional development.
That is why I was delighted to hear the Chancellor of the Exchequer say that he hoped to tap the waste of resources in the regions. Such tapping of wasted resources in the regions is likely to lead to a greater underlying strength of our economy. The situation in regard to both productivity and performance

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has been disappointing in recent years. There is a varying scope for both in my own region of Yorkshire.
Paradoxically, the problem of Yorkshire is that it has long been regarded as relatively prosperous by comparison with the old depressed areas, but net migration rather than increasing demand has maintained full employment in Yorkshire. The simple explanation of Yorkshire's incipient economic difficulties is that the region does not contain enough growth industry. Notably, it lacks its share of the light engineering industries in which the biggest expansion of employment is projected in the National Plan. It is not surprising that the current Westminster Bank Review should claim fewer £5,000 a year men in this region than elsewhere, not excluding the North-West and Scotland. It is not suprising that average hours worked are longer than in any other region in England but that average weekly and hourly earnings are less. Nor is it surprising that the value of the net output per employee and the increase in net output, or in net output per employee, were also less than in any other English region.
This lack of prosperity is reflected in the infrastructure of the region, in housing, schools, hospitals and road expenditure. The Minister of Labour told me a fortnight ago in reply to a Question that the only individual items of expenditure in which household consumption was higher for the East and West Ridings of Yorkshire than for the United Kingdom were fish and chips, margarine, beer, radio and T.V. rental and licences. This is not Scotland or the Northern Region but the Yorkshire Region, and this takes us right back to George Orwell and "The Road to Wigan Pier", and the typical working class budget of the 1930s—perhaps George Orwell plus Granada in 1966.
All these factors reflect the comparative lack of prosperity in the Yorkshire region, a lack which has long been concealed by the low level of unemployment which, in turn, has influenced Government policy in the granting of I.D.C.s, for example, and more recently in the Government's incentives to investment scheme.
The breakdown of this tentative analysis which I am putting to the House on a geographical basis points to an even more alarming state of affairs, be-
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cause we find that the problems in the Yorkshire region are greater on the Western margins and in the Pennine valleys than in the East. There is a built-in shift of population from the Western margins to the East and South-East, towards Humberside. The problems of obsolete housing, poor amenities and scarcity of building land and lack of growth industry are more acute in the West than elsewhere in the Yorkshire region.
This is particularly true of my own constituency and of the Colne Valley Urban District which is central to the constituency and where, incidentally, the population has actually declined for years and where the birthrate is consistently lower than the national average. The Colne Valley Urban District is largely concerned with the textile industry, now both woollens and synthetics, and almost all the factories were built either towards the end of the last century or early in the present century. For the most part, they are constructed of stone and are three or more storeys high. They are old fashioned compared with modern factory buildings. The only factory of any significant size which has developed in recent years is a firm of manufacturing chemists.
However, despite the considerable efforts by the urban district council, as well as by myself in the House, it has not been possible to attract new industries into the area, or even to obtain support from various Government Departments, principally because of the reasons which I have put forward in respect of the region as a whole and particularly because there is full employment in the area, and, consequently, it is said there is no available labour force. With few significant exceptions, this may be said of most of the country and yet other areas get their new industries and when new industries are established land and housing accommodation are then forthcoming.
Recent statistics have shown that out of a working population of 11,000, approximately 4,000 leave the Colne Valley Urban District every day to go to their place of employment while the workpeople coming into the valley are only a few hundreds. In the Colne Valley, 40 acres of land are earmarked for industrial use and, with appropriate help

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from the Government, the council could undertake to provide service roads and houses if only we could get the new growth industries which we need.
I am pleading that the older industrial areas such as the Colne Valley should receive extra attention if they are to overcome their bad housing legacy, and the problems of urban renewal and unbalanced industrial development. The option mortgage scheme for new homes announced by the Chancellor of the Exchequer this afternoon is peculiarly appropriate to, and will be especially welcomed in, the Colne Valley, and both the nation and the economy will be amply repaid in terms of increased productivity if only extra attention is given to the older industrial areas like the Colne Valley, because such areas have a rich heritage of industrial skill and productive talent. I hope that the Government will look a good deal more closely at the regional planning machinery with a view to making it more efficient and purposeful and speeding up its work. The Yorkshire region is a case in point.
The low level of employment is a matter for satisfaction locally, but it does not necessarily point to increasing prosperity, as I have shown. At present, that prosperity is lacking, whether measured by individual incomes or by the social and economic infrastructure. In the long term, this requires a planned balance of industry and increased public expenditure. In the short term, it calls for a crash programme and the setting of targets for Yorkshire in investment and manpower in much the same way that such targets have been laid down in the National Plan for individual industries. Yorkshire is not depressed, but certain current trends suggest incipient problems which must be watched and planned against.
7.6 p.m.
Mr. Terence L. Higgins: In opposing the Motion, I hope that I shall cover a number of the points made by the hon. Member for Colne Valley (Mr. Duffy). I shall do so as briefly as I can because I know that a number of my hon. Friends are also anxious to oppose the Motion.
The first point which needs to be made is that the House is asked to support the
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Government's determination to carry through a number of objectives which are specified in the Motion. We should be perfectly clear that the present Government are lacking in determination when it comes to the crunch on a number of crucial issues and in particular that of the increase in the cost of living. Perhaps the classic example of this was the last minute intervention by the Prime Minister in the rail dispute. He intervened, so it was said, to prevent a strike when the increase which had already been negotiated was far in excess of the incomes policy norm. It is apparent that by and large, the Government have lacked determination and, in particular, on this as on other issues their efforts have been mistimed.
The second point is that a number of objectives are specified in the Motion with which almost everyone would agree—improving the balance of payments, halting the cost of living, better regional policy and so on. But the truth is that the Motion gives no indication, as the National Plan gives no indication, of how those objectives are to be achieved. As in the National Plan, we are told what needs to be done, but not how it is to be done.
In that connection I should like to take up the final point made by the Chancellor of the Exchequer who referred to a proposition put forward by this side of the House and specified in our policy document "Putting Britain Right Ahead" which says:
"We also believe that more of the cost of the social services should be transferred from the Exchequer to the employer. This would enable the levels of individual and company taxation to be reduced. It would also provide an incentive to the more efficient use of labour."
I was surprised that the Chancellor did not feel that this was a constructive policy which would encourage the efficient management of the economy. Surely it is one way in which we can relieve the heavy burden of taxation which is now such a disincentive to greater effort. On the other hand, it would increase direct labour costs and therefore encourage individual employers to introduce more automation, more labour-saving machinery, than they otherwise would. This is particularly necessary when we consider exports, as an examination of the

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figures for this country, France and Germany will show.
If we look at the figures, which are somewhat out of date but which have not changed, significantly in the last couple of years, for comparative taxes on households and corporations as a gross percentage of the national product we find: France 7·8, West Germany 12·4, and the United Kingdom 13·9. Indirect tax on the other hand, as a percentage of gross national product, gives the following figures: France 20·7, West Germany 16·6, and the United Kingdom 15·7. The final set of figures which we need to examine is social security contributions as a percentage of the gross national product. Here we find the following details: France 14·5, West Germany 11·5, and the United Kingdom only 4·8.
In other words, although the overall burden of taxation is no greater in this country than in the other two, we find that here far more of the cost of social security is being raised from general taxation than from social security contributions. We on this side of the House believe that our proposal is a sensible measure which may reasonably help to achieve the economic objectives on which people on both sides of the House could agree.
The first objective specified in the Motion is concerned with determination to strengthen the balance of payments. The Chancellor was somewhat complacent in suggesting that the deficit had been cut from £756 million to £350 million. The fact is that a number of factors, which were making for a large deficit in the period immediately before the last General Election, have also been making for a reduction in the deficit since that time. There was in particular a very considerable amount of stockpiling before the last General Election, because people thought that if a Labour Government were elected something might be done to increase the cost of imports.
They were absolutely right. The Government came into power and promptly put on a 15 per cent. import surcharge. These stocks have been used up since that was introduced, in increasing exports and producing for the domestic market. Thus the effect on the balance of payments in the second period has been favourable. Much the same is true if one looks at some of the items
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on capital account where deficits before the General Election were inflated by purchases such as the Montecatini Chemical plant. The revenue from this in the subsequent period has again tended to reduce the deficit. The Chancellor is being far too complacent about this matter. He is being complacent because ultimately the balance of payments situation must depend on whether our goods are competitive abroad and whether they are competitive at home with imported goods. This in turn must depend on comparative price levels.
As far as international trade is concerned, the Government's complete failure to keep down prices means that the long-term prospects for the balance of payments are nowhere near as favourable as the Chancellor has suggested. We need more competition in the home market and we need a reduction in tariffs, in particular, as my right hon. Friend the Leader of the Opposition has suggested, by reducing tariffs when the Monopolies Commission finds against a particular industry. I very much hope that we shall soon see the end of the import surcharge, which, after all, has proved a great deal less temporary than the present Government, who are proving very temporary indeed.
The next point I should like to make on the issue of holding down prices has to do with the extraordinary statement made by the Chancellor this afternoon, nostalgically reminiscing about This experience in the trade union movement and appealing to trade unionists not to go above the 3½ per cent. norm. As I pointed out in a recent debate, this kind of appeal is incredibly naive because no trade unionist worth his salt will take any notice of it whatsoever, unless he has a reasonable assurance from the Chancellor that the norm is going to be maintained by other sectors of the economy too. If this guarantee is not forthcoming and not achieved then any union sticking to the norm is going to lose out.
The second point about which the Chancellor was naive was that of saving. We on this side of the House would much prefer to see people save more, so that more can be invested to raise productivity, than to have voluntary saving replaced by taxation. I do not think that the bargain which the Chancellor produced

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this afternoon, in terms of encouraging National Savings is a very good one. He offers £4 11s. 3d. per cent. at a time when the cost of living is going up 5 per cent. At the end of the year in real terms the person accepting this particular bargain will find himself worse off. It is not a very big incentive to come forward with this kind of offer and say, "If you invest in our National Savings Certificates and we maintain the splendid record on the cost of living, at the end of the year you are going to be worse off than if you had put your money into some real assets". On this score we certainly oppose this Motion.
The issue of achieving an effective policy for raising productivity is specified in the Motion. Here the crucial question is the level of investment because, generally speaking, the increase in output per man depends to a large extent on whether investment is increased. I would not say, as the Chancellor argued this afternoon, that one must encourage investment at home rather than investment abroad. It may well be that the return one gets from investment abroad is higher than the return from investment in this country. Moreover, it is absurd to have an incomes policy which is temporarily holding down prices but failing to hold down wage increases, so that one gets a squeeze in profit margins and people have less to invest, and then to say, when one has carried out this policy, "We are going to give cash handouts to everyone to encourage investment". It would be better to have a policy which is internally consistent.
Instead of giving firms which are profitable incentives to invest, as our system of tax allowances did, the present Government have introduced a system where firms can get cash hand-outs if they invest. It is relevant in this context to quote Mr. Bernard Shaw who was, I believe, a Socialist. He said, "Primitives always pay in cash". This is precisely what the present Government are proposing to do on the extraordinary ground that, on the one hand, as the President of the Board of Trade said in a recent debate, the Government are trying to encourage modern management techniques, and on on the other hand, as the First Secretary said in the same debate, the Government were having to give cash hand-outs be-
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cause the firms did not understand about discounted cash flow. I should have thought that one only wanted to encourage investment by firms capable of appraising a system of investment incentives which requires the use of discounted cash flow techniques.
The system of cash grants is extremely unwise and unfortunate. The discrimination which has been exercised does not give the same degree of incentive to the hotel and tourist industry, which is an important foreign exchange earner, the service industries, where labour can be saved, or the distribution industries which distribute goods including exports as is given to production industries. The policies of the Government designed to raise investment do not deserve the support of this country.
The National Plan is also mentioned in the Motion. Some months ago I asked the First Secretary if he would produce an input-output table reconciling the figures in the National Plan. He said he would and that it would soon be published. No such figures have, as far as I can ascertain, been published. We still do not know whether the National Plan adds up and cross-checks. Those of us who have studied it fairly closely regard the non-publication of this table as extremely suspicious. I have been unable to reconcile the various figures it contains.
It is also relevant to note that the Chancellor's measures have not been allowed for in the National Plan. We were told by the First Secretary that the National Plan would be revised from year to year. It seems that the easiest way for the Government to revise the National Plan would be to change the dates and put everything back one year because over the last year production has been almost entirely stagnant.
Finally, we are asked to consider the achievement of greater social justice. I should like to return to the point which I made in my maiden speech about old-age and non-pensioners. Since then they have been prevented from receiving a pension under the Bill proposed by my hon. Friend the Member for Abingdon (Mr. Neave) by a filibuster on the part of hon. Members opposite. They will now be prevented from benefiting from a similar Measure introduced by my hon. Friend

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the Member for Honiton (Mr. Mathew) by the fact that the Prime Minister has called a General Election. I am very glad my right hon. Friend the Leader of the Opposition has urged both sides of the House to support a Measure of this kind. Given that the incomes guarantee is not to be introduced, even though it was repeatedly promised to the country and the House after the Government came to power and were aware of the economic situation, this whole question is a touchstone by which we may judge the appeal to social justice in the Government's Motion.
The fact is that the whole of the Government's economic policy has been based on a schizophrenic—split personality—approach to economics. We have heard them saying one thing abroad and quite a different thing at home. We have heard them saying one thing and doing another. Above all, as my right hon. Friend said, there has been a division of power on economic matters between the First Secretary of State and the Chancellor of the Exchequer with no effective co-ordination by the Prime Minister. This, I am sure, is at the root of our economic troubles.
This schizophrenia has recently run through the speeches made by the Prime Minister, who, although his name is Harold, constantly says, "I want to be frank" or, in his more desperate moments, "Let me be frank". While I can understand that when he goes out of office he may, like the Minister of Technology, wish he could return to a trade union post, the fact is that the electorate have heard quite enough of this kind of frank speaking. They have heard before all the promises that we have had today, although at the last General Election some of them were better than the ones we are getting now. I am sure that when the electorate judge, as the House must judge, this Motion, their verdict will be strongly in favour of the return of a Conservative Government.
7.22 p.m.
Mr. William Hamilton: The hon. Member for Worthing (Mr. Higgins) is ill-advised to talk in a debate like this, or in any other debate, about social justice. He spoke about the Bill which the hon. Member for Abingdon
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(Mr. Neave) sought to introduce and the Bill introduced by the hon. Member for Honiton (Mr. Mathew) which is now before the House. I would remind the hon. Gentleman that for 13 years no hon. Member opposite sought to raise the question of the non-pensioners, and still less to introduce a Bill, although if that had been done the Conservative Government had a majority of about 100 and the Bill could have gone through within about 24 hours. Moreover, it ill becomes him to talk, as a member of the Conservative Party, of social justice when it was his Government which introduced the 2s. per item per prescription at the same time as they introduced a gift to the Surtax payers of £83 million a year.
I would ask right hon. and hon. Members opposite this question: Is it their intention to reintroduce prescription charges? We should like to know. Is it their intention to reintroduce the Rent Bill? I have evidence to suggest that they intend to do both those things.
Mr. Higgins: I cannot take up all the points which the hon. Gentleman raises, but my hon. Friend the Member for Abingdon (Mr. Neave) did attempt to deal with the subject matter of his Bill during that 13 years, which is more than can be said for any hon. Member opposite. There is official Front Bench support on this side of the House for such a Bill. Does it have support of hon. Members opposite?
Mr. Hamilton: The hon. Gentleman says that the hon. Member for Abingdon introduced it. Who opposed it? His party formed the Government for 13 years. It just had to say "Yes" and the Bill would have been law by now. But I remember the hon. Lady the Member for Finchley (Mrs. Thatcher) saying from the Government Front Bench that it was impracticable, was much too costly and could not be done. What I said last week is right—the Tories' social conscience quickens when they find their backsides on the Opposition benches. This is true. Every minority group has been covered by them. They have discovered new pockets of poverty in our society which, apparently, did not exist during the 13 years when they were in power. However, these are hustings points, and I shall be glad to get there as soon as I can.

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The Chancellor of the Exchequer today gave a brilliant, authoritative and optimistic progress report of what has happened since the Government took office. There was a very interesting reaction from Her Majesty's loyal Opposition. All the good news was greeted with unmitigated gloom, and anything bad or less good was heralded with equally unmitigated delight. They want the country to sink, as long as they get back to power.
The right hon. Member for Flint, West (Mr. Birch), who pops in and out like a political louse, castigated the Government for mismanaging the economy. I remember when, sitting on these benches, he told Harold Macmillan, the then Prime Minister, to get out in the most forthright, blunt and brutal speech which I have ever heard made about a Prime Minister. He has not yet made a speech like that relating to the current Prime Minister. He spoke about sterling and steady mismanagement. He was on the grouse moors, as was revealed at the Bank Rate leak tribunal, at a time of very great danger of devaluation under the Tory Government, when they were advising their friends in the City to get out of sterling because, although it might not be British, it made good sense to them. These are the right hon. and hon. Members who are telling our people that they are not doing what they ought to do.
When the right hon. and learned Member for St. Marylebone (Mr. Hogg) spoke in Oxford in January, 1965 he said:
"Broadly speaking, there are three principles of opposition in Parliament: remain united; speak authoritatively; and appeal to moderate, responsible and well-informed opinion everywhere."
That was the genuine voice of the one who, according to a recent poll, most Tories would prefer to be their leader. They clearly prefer the bellringer to the organ grinder.
Let us look at the question of unity about which the right hon. and learned Member for St. Marylebone spoke. I have been searching diligently for one major issue on which the Opposition are united. I have not found one. On a prices and incomes policy, the Tory manifesto of 1964 said this:
"An effective and fair incomes policy is crucial to the achievement of sustained growth without inflation."
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There is no doubt about that. But the right hon. Member for Wolverhampton, South-West (Mr. Powell) said at Birmingham on 28th November, 1964:
"An incomes policy is a nonsense, a silly nonsense, a transparent nonsense."
The right hon. Member for Barnet (Mr. Maudling), who has not appeared in the Chamber all day, said the very next day in the Sunday Express:
"The Government are right to persist in their efforts to obtain union acceptance of an incomes policy."
At London University the following day, the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home)—that is, three speeches on three successive days—said:
"Mr. Powell always states the case very clearly, but rather extremely. I would not go as far as he".
So we have three Opposition Front Bench spokesmen on successive days, one for, one against and one a "don't know". That is the party that is telling the country, "Put us in Government and we will show you the way to prosperity."
That is on incomes. On prices, the right hon. Member for Kinross and West Perthshire, the then Prime Minister, said on 6th April, 1964:
"The Government under my leadership"—he did not realise how short his leadership would be—
"has declared war on rising prices"
The right hon. Member for Wolverhampton, South-West, however, came back and said at the National Liberal Forum Club, as reported in New Society of 6th February, 1964:
"To maximise profits is management's basic duty…. In certain circumstances, returns will be maximised by raising prices. Where-ever that is so, it is the responsibility and duty of the management concerned to raise its prices."
The right hon. and learned Member for St. Marylebone, on 23rd February, 1965, said:
"We support an incomes and prices policy and we will do our best to achieve it."
But the hon. Member for Horsham (Mr. Hordern) asserted on 19th March last year that
"there is among the new and young Conservatives in Parliament today a body which rejects the whole concept of an incomes policy."

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I am looking at the hon. Member for Oswestry (Mr. Biffen), who is an up-and-coming young man in the Tory Party—at least, he thinks he is.
Mr. John Biffen (Oswestry): However much the hon. Member may hold me in disrespect, surely I do not deserve the compliment.
Mr. Hamilton: A compliment from me might jeopardise the hon. Member's chances among the Conservatives. I leave him. Suffice it to say that he is one of the Conservatives who flatly reject an incomes policy, and he is regarded as a man with a considerable future in his party on those benches.
Let us turn to the question of social justice and social security, to which the hon. Member for Worthing referred. When the right hon. Member for Enfield, West and the right hon. Member for Wolverhampton, South-West wrote their pamphlet in 1953, they asserted that all social services should be means tested. I return to the point of the prescription charges. In a recent Adjournment debate, the hon. Member for Eastbourne (Sir C. Taylor) used these words:
"In order to prevent a further waste of money and materials"
the prescription charges should be re-imposed. He hoped that the Minister of Health
"will re-impose the prescription charges, which I think were wrongly abolished. "—[OFFICIAL REPORT, 11th February, 1966; Vol. 724, c. 878.]
The right hon. Member for Leeds. North-East (Sir K. Joseph) the spokesman for social services on the Conservative benches, in the House on 9th February, talked about a reimposed charge. In the recent Second Reading debate on the National Health Service Bill the right hon. Member for Bridlington (Mr. Wood) went further. Referring to other charges he said:
"It seems to me that we should have learned a great deal if doctors had been allowed to charge a fee for service, which subsequently could be wholly or partly reclaimed."—[OFFICIAL REPORT, 3rd February, 1966; Vol. 723, c. 1387.]
We have a right to know whether the Conservative concept of social justice and the future of the social services is to be geared to a comprehensive means test on prescription charges, on fees paid to doctors and even, as the Bow Group
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recently suggested, fees for all parents for all children attending all schools in Britain. This is a suggestion which has been put forward by one of the more progressive elements in the Conservative Party.
The same with rent control. "Putting Britain Right Ahead", the recently-issued Conservative manifesto for the election states:
"We would retain security of tenure and control over the level of rents."
That is fair enough. Members of the party opposite are in favour of rent control. The right hon. Member for Wolverhampton, South-West again comes to their rescue, however. He firmly opposes rent control and housing subsidies. Speaking in Glasgow on 3rd April, 1964, he said:
"The two great evils of rent control and housing subsidies have inflicted incalculable hardship and squalor on the people of this country, by destroying the mechanism of supply and demand."
Writing in the Sunday Times of 14th March last, the same right hon. Gentleman said:
"The 1957 Rent Act (the Rachman charter) was concerned with only one of the obstacles to a free market—rent control. Subsidy was outside the scope. Even so, without the Rent Act, housing conditions would be worse today than they are."
We—and the electorate—have a right to know who speaks for the Tory Party on housing rents and subsidies, whether it is the right hon. Member for Wolverhampton, South-West or their recently-issued manifesto. What has the Leader of the official Opposition to say about it? He was strangely reticent this afternoon.
On defence, the same kind of dichotomy appears. The Conservative Party has never yet said whether it opposes a ceiling figure, whatever it might be, to what we can afford or whether we should decide upon the cost of our commitments regardless of any consideration of a ceiling. My right hon. Friend the Chancellor was quite right this afternoon. Every suggestion of economy in our defence services that has been put forward by the Government has been opposed by right hon. and hon. Members opposite. The TSR2 and the other aircraft projects, the economies in the Territorial Army and the aircraft carrier, which would have cost something like at least £150 million over the next 10 years—the Tory Party

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has opposed all these savings and yet, at the same time as it wants all these things, the right hon. Member for Enfield, West went to the Conservative Party conference last October and promised to reduce direct taxation. If he intends to reduce direct taxation, it follows that if the Tory Party wants all these projects it must intend substantially to increase indirect taxation. Hon. Members opposite cannot have it both ways. They cannot get all these defence projects and all the kind of social services that the right hon. Member talked about in his Birmingham speech and, at the same time, talk about reducing taxation.
Also in the realm of defence, we have the question of the east of Suez rôle. The right hon. Member for Wolverhampton, South-West says that we should not have one. The Leader of the Opposition says that we should have one. The hon. Member for Derbyshire, West (Mr. Crawley), who used to sit on these benches and who crossed the Floor some time ago, said that if the right hon. Member for Wolverhampton, South-West kept this up he would have to get out and go from the Tory Front Bench. But he is still there and, presumably, he would be in the Government if that party ever got back.
I have gone through item after item of policy showing a two-way split in the Tory Party, but the party improved upon that, because on Rhodesia it split three ways, just to show that anything it had done before it could improve on. The Tory Front Bench gave a magnificent—
Mr. Speaker: If the hon. Member goes into the Rhodesia question he must link it with the Motion, which is wide enough, but not wide enough to cover the whole of world policy.
Mr. Hamilton: I would remind you, Mr. Speaker, that the right hon. Member for Flint, West referred to the cost of sanctions being applied to Rhodesia and the cost of the support going to Zambia.
Mr. Speaker: I am sure the hon. Member is not questioning my Ruling. I was practically advising him to follow what the right hon. Member for Flint, West did: he talked about Rhodesia, but from the economic point of view.
Mr. Hamilton: I was just giving a prelude to what I had to say. I just referred to the speech of the right hon. Gentleman who was talking about the cost of the imposition of sanctions to Rhodesia and to the effect on the internal economy. As far as I understand it, the right hon. Gentleman did not oppose the imposition of sanctions, and, therefore, he should not object too much to the cost of them. He made no alternative suggestion to them. I would say in passing that on that particular issue the Conservative Party split three ways.
Similarly, when the National Plan was published last September the Leader of the Opposition condemned it as a gimmick—before it was published. The Times subsequently described it as
"a first-class analysis of the British economy"
involving
"a greater commitment to long-term planning than has been accepted before".
Similarly, the Confederation of British Industry in its journal described it as
"a first-class analysis of our present position and the problems facing us, and stands as a yardstick for our future performance."
But, nothing daunted, the Leader of the Opposition trundled up to Inverness. Why? To try to irrigate the Tory desert there. But you cannot make a desert bloom with a water pistol. As Mr. George Gale described it in the Daily Express, it seemed to him that "his speech fell flat". It was flat. He went on to say:
"The trouble with Ted Heath is that he is so glossy you can hardly see through the shine. All men have rough edges, splinters, chips and warts, but Heath has polished himself so assiduously that the man beneath the veneer hardly shows at all."
To which we on this side say, amen. While the Opposition Leader goes up to the Highlands of Scotland to make a speech, we get on with the job.
To the extent that we use all the resources of this country we shall go some way, anyhow, to solving our economic problems, and one of the first measures of this Government when they got back was to introduce a Bill for the development of the Highlands and to set up an authority for the development of the Highlands. The former Secretary of State for Scotland, the right hon. Member for Argyll (Mr. Noble), described

1193
it as a Marxist measure. My right hon. Friend the Secretary of State for Scotland invited him, if he thought that about the Bill, to put down an Amendment to leave out his own constituency, but the right hon. Member for Argyll was very careful not to do that.
What has happened? After four short months of the constitution of the Highlands and Islands Development Board, of which Professor Grieve was appointed Chairman, he has made an interim report, just a few days ago, and this is what has happened in an area in Britain which for generations has been neglected by successive Conservative Governments. In four months there have been 103 applications for financial help for the establishment of small industries to the tune of £500,000 and 20 of those applications have been assessed and 11 worth £40,000, have been granted. The Board has submitted its first formal scheme, a fishery project for the Islands, to the Secretary of State for Scotland. It has commissioned the development of a first-class caravan park at Glencoe to encourage tourism. In the industrial field, two new small industries are already "in the bag", which is the expression Professor Grieve uses. It is about to engage on an industrial survey of the possibilities of the Moray Firth and Beauty Firth area, and it is hoped to establish a new chemical engineering industry in that part of the country. It is possible that there will be a really big industrial and urban complex established in that part of Scotland. A similar study is to begin at Thurso and Dounreay.
The Scotsman said that this Board, established by this Government,
"is supplying dynamic leadership. The amount of co-operation and good will they have already inspired is a most hopeful sign."
That, coupled with the announcement by my right hon. Friend the Minister of Technology about establishing the prototype fast breeder reactor at Dounreay, indicates what tremendous progress there is being made in Scotland. We do not need our leader to go up there and make a silly speech. We are getting on with creating the jobs and opportunities.
I will mention some unemployment figures in Scotland to show what progress is being made. In 1965 the monthly average of unemployed was 65,000—I
1194
give the round figures—and in 1964 it was 80,000; in 1963, it was 105,000; in 1962, 83,000. So unemployment has already been very substantially reduced.
Now that all Scotland is virtually a development area it is poised for massive advances on all fronts. This regional planning which we have indeed got here is going to ensure the maximum use of all our resources, and clearly this is one of the keys to our future national solvency.
The Conservatives have given belated recognition to that fact. I say "the Conservatives". I mean, some of them have. As usual, the right hon. Member for Wolverhampton, South-West has his reservations. On 2nd April last he said that
"It would be better to say to them"—
that is, to those in Scotland and the under-developed areas of the United Kingdom—
"if they have hands and brains to spare, 'Come and join us here in Wolverhampton'."
Heaven knows why Scots want to go down to Wolverhampton for anything. He said:
"Here is no lack of work, no lack of reward for effort or for enterprise."
Again one has to ask the question, who speaks for the Tory Party? Is it the right hon. Member for Wolverhampton, South-West, or the Leader of the Opposition, who pretended today that he believed in regional planning?
I used to be a school teacher and, if I had to give a progress report on the the right hon. Gentleman's speech today, I would say:
"He is a good trier. He could do better. He must do a lot better. Occasionally he leads with his chin."
He charged the Prime Minister today, for instance, with returning home empty-handed from his several foreign missions. The man from Brussels would be ill-advised to talk like that. He shuffled back and forth like a self-contained Cook's tour for I do not know how many weeks before Charles across the Channel rejected him.
The right hon. Gentleman made similar remarks about owner-occupiers. In effect, he said, "Anything you do, I can do better—only it takes me 13 years to do

1195
nothing at all". He said that the most important question on the housing front was an adequate supply of housing. Let me tell him that the number of houses under construction is higher than ever, and that in Scotland there are 50,000 under construction for the first time in Scottish history.
I want to conclude with a testimonial that was given to the Government by William Davis, the Financial Editor of The Guardian. Writing about election prospects, he said on 3rd February:
"I am not a Socialist, nor am I a Tory."
He would not be, being a talented fellow.
"I regret the fact that, as things stand, one has to choose one way or the other. But this is the way our system has developed. Given the current position, I think it would be in the economy's interest to have an early election and a decisive result. I should want Mr. Wilson to win because his Government has set in motion many useful steps which cannot produce quick results. If a Tory Government were returned, it would either have to pursue the same policies or instigate an about-turn. If the first applies, we might as well stick to the present lot. If the second were to come about, we should have complete confusion. Business men already have great difficulty in deciding where they stand; a change of Government would make things worse."
7.53 p.m.
Mr. Nicholas Ridley: I am grateful to the hon. Member for Fife, West (Mr. William Hamilton) for the long series of eminently sensible quotations that he read from speeches of my right hon. Friends. I am glad to see that he has taken so much notice of the words of wisdom which have come from this side. I can offer him some slight consolation. He was quite clearly hankering again for the old days of opposition when he attacked this side. It may not be too long before he has the opportunity again.
I would like to cover different ground and talk about the economic situation. The fifth Budget of the Chancellor which we had today was quite extraordinary. It contained all the words of a Budget Speech, in the heavy, ponderous language which the Chancellor is so pleased to copy from many years ago, and a sonorous assessment of the situation. It is extraordinary that we should have had five Budgets in the 17 months of this Government. But no one can accuse the
1196
Government of going to the country at a time when we are on the eve of a boom. That attack which the Prime Minister has made against this side can certainly not be made against his own side. There is no suggestion at all of that.
The balance of payments position has been so analysed that I will not go into it again. All I can say is that I do not believe it is anything like a satisfactory situation. I do not believe that the improvement was more than fortuitous and cyclical. We have had a combination of inflation and stagnation combined. We have had the largest wage and pension increase for many years cancelled out by the largest rises in prices for many years. It is a story of such dismal failure and of such complete and utter inability to improve the nation's economic standing that it seems incredible that anyone could have the face to put down the Motion on the Order Paper today.
I was looking at the manifesto on which hon. Members of the party opposite fought the last General Election. They wrote in October, 1964:
"Every jerk of expansion has ground to a full stop as the Government jams on the brake in a desperate attempt to combat inflation and rising prices."
Under this Government we have not even had a jerk of expansion. We have had nothing but stagnation all the way. I do not want to spend long on the reasons for it. The original blunder was magnifying the deficit by far too much. The second mistake was the words in the White Paper of November rejecting any solution based on a return to stop-go economics. Then they found that they had to use stop-go, or, rather, stop economics. Thirdly, they applied the brake in four short jabs, and today there has been another, none of them hard or serious enough.
The fourth major error was the First Secretary himself. He has behaved like an economic bull in a china shop. I see that President Sukarno has appointed a similar person in Indonesia who, I gather, is to be shot if he does not succeed in getting prices down. If we get back to office, I hope that we shall never make the mistake of having two economic Ministers of equal standing with completely different attitudes to our economic problems.

1197
The Government have relied on their incomes policy working and have not taken sufficient deflationary action to hold the economy in check. At the same time, their partial success on prices has had the result of making demand increase while, at the same time incomes have increased. The result has been a greater demand which has added to the inflationary spiral. It has been a most depressing story of muddle.
This is all called the short-term management of the economy and it has been singularly inept. We have accumulated large debts. We have stagnated for one year and if the new Government complain on 1st April about their economic inheritance they will be able to do so with complete justification.
Apart from their incompetence we all feel that there is a long-term difficulty a basic inefficiency and a basic malaise about the British economy which is quite separate from the short-term management of the economy from day to day. The Government were quite aware of it after the last election when they said that they also believed that the further steps necessary to enable Britain to stand on its own feet were well within the capacity of the nation. But what have they done about it? What action have the Government taken to improve the economic competitiveness and the ability of the British economy to perform? They have done nothing about the candy floss economy.
What have they done about the endless taunts which the Prime Minister levelled at the Conservative Government when he was Leader of the Opposition? He was at his very best in those economic debates, taunting the Government about how low down we came in the league tables, about the need for dynamic economy, about the need for massive increases of exports for the Commonwealth and about the need to drag Britain kicking and screaming into the twentieth century. Those were criticisms that he made of the Government, but he and his right hon. Friends have done nothing about it. There have been a few words, but there has been no positive action, No new policies have been put into operation to improve the situation.
What have the Government done about the overmanning of machines in Indus-
1198
try?What have they done about restrictive practices? What have they done about demarcation disputes, or about work sharing, or the Devlin Report on the docks, and the reports on shipbuilding and London Transport? What have they done about sloppy and unprofessional management—about lack of drive and initiative in industry, and the lack of sales effort? What have they done about the total failure to devote resources to research, or the sad lack of mobility of labour?
These are the problems the solving of which would enable this country to grow in strength. They cannot be solved by the short-term management of supply and demand. We must tackle these fundamental issues. In this respect the Government have not only failed; they have not tried. They have not been honest with the people in continually telling them that they could have greater social benefits, with all the admittedly desirable objectives, if only it were not for the difficulty of the present situation, when what we have to do is to improve our performance so that we can afford these things.
It was quite wrong for the Chancellor to say that we can pay for the housing subsidies by taxing gambling. It was quite wrong for him, as he did in his first Budget, to say that he could raise pensions and could pay for them out of increased Income Tax. The only way in which these things can be paid for is through an increase in the competitive ability of this country. It is also the only way in which we can get our balance of payments right. We should not link social benefits to certain taxes or sources of revenue. We should link our progress to our ability to earn by being efficient in world markets.
The Prime Minister is lulling the public into a sense of false security. People do not realise the seriousness of our economic situation. To talk about social justice and planning as panaceas for all our economic ills is to shirk the simple fact that we do have to be dragged kicking and screaming into the 20th century—if I may use the Prime Minister's own words.
I want to make two constructive suggestions to illustrate what I have been

1199
saying. First, the Government have been at great pains to suggest that they have taken strong, dynamic action to improve our balance of payments, and that we would not have taken that action. They are trying to stand up as the heroes of this improvement in our balance of payments figures. If we take the whole aspect of defence—and the hon. Member for Fife, West mentioned defence—we see that the cost of the foreign exchange element of this Government's defence policy will be greater than would be the cost of the Tory policy which it replaces.
The £500 million or so which is to be spent on buying aircraft from the United States represents many years' purchase for commitments which the Government are proposing to give up. The failure to allow arms to be exported to countries like South Africa and Spain, for doctrinaire reasons, is another example of the failure of the Government to give priority to the balance of payments situation. I wonder what the cost of the Rhodesia enterprise will be. Although I agree with the aims of that enterprise, I wonder whether we can afford it. We should know what it has cost us in foreign exchange. All the personalised squabbles which the Prime Minister is having with Spain, South Africa and Rhodesia have to be paid for by this country in larger exports, to cover the foreign exchange drain which the right hon. Gentleman's activities have cost us.
My other suggestion concerns the Export Credits Guarantee Department. When the present Government came into office the figure of indebtedness covered by the E.C.G.D. stood at £1,304 million. Just over a year later it stood at £1,713 million. In that period our indebtedness rose by £470 million. This means that we exported £470 million worth of goods for which we were not paid. That does not help the balance of payments. We may eventually be paid for those goods, but I wonder whether it is wise to go on competing with our neighbours in giving longer and longer credit, until we reach the point at which we have to wait for many years before we get back a large chunk of payment for what we export.
1200
We must be prepared to look critically at aid and other desirable objects. I suggest that in addition to producing a budget of our internal resources every year—or, in the case of this Government, five times a year—we should produce a budget of our foreign exchange, showing that we export capital for so much, that the profit on our trade is so much, and that our invisible profits amount to so much, so that we can see what military and investment commitments we can afford, and people can have some idea how we are progressing towards making ourselves solvent.
Why not move towards the Common Market? It is clearly part of the duty of the Government to open up the greatest possible market for our industries. The Government have taken no step whatsoever to get nearer to Europe. They have not even declared their willingness to do so. They are standing idly by as this great community of 200 million prospers and fluorishes and builds up its tariff barriers against us, developing the sort of things that we should be developing. This large market is denied us by rising tariff barriers. The great advantage that we would have in sharing our research and development costs with Europe is denied to industry to far too great an extent.
The Government have behaved with criminal neglect towards our chances of getting into Europe. They have shown no enthusiasm for doing so. It is a question of the Prime Minister's fiddling while the Treaty of Rome burns.
But there is something still more important in respect of which I accuse the Government. The whole set-up in the last 17 months has created a new sort of industrial ethic—an ethic that assumes that we should have an industrial Welfare State. We are told that wages should be subject to similar rises, and that there should be no reward for those who choose to go to more difficult or more unpleasant jobs. We are told that there should be no great differential for those who increase their productivity more than others. As for salaries, those who carry high responsibility are to be taxed much more heavily than are any of their counterparts in the rest of the world. The Labour Party have made constant attacks upon profits. The Leader of the Liberal Party made a very

1201
sensible approach to the need for providing people with an incentive, and for encouraging profits.
How often has the hon. Member for Fife, West attacked dividends? If we are not going to allow high dividends to be paid by successful enterprises, how will risk capital be attracted? What is the reward for the investor if to draw greater than usual dividends is to be regarded as anti-social, or criminal? Bankrupt businesses are bailed out by using revenue obtained from taxing others. Those who dare to try to compete with State enterprises—the airlines, or the B.B.C.—are to be stamped out. As for competition, even bogus competition, as suggested in the Hovercraft industry, is not to be welcomed. Everything is to be put into one amorphous mass, so that there can be no standard of comparison between one and the other. Worst of all, those who succeed despite all the obstacles to which I have referred will have to pay the bulk of the highest level of taxation anywhere.
We have got into a state in our industrial affairs where, in all cases, discretion is the better part of valour. The old commercial vigour of Britain is being replaced by these conceptions of a welfare State, of equality in industrial effort and industrial reward. I believe that we must encourage enterprise and reward success. We must stop providing soft livings for dying companies and industries. We must stop looking with such a puritanical eye at those who increase their incomes at all levels.
If we could do this, I see no reason why wages, salaries, dividends, pensions—all forms of income—should not be at least double, perhaps treble what they are now. We are denying ourselves this profit, this rate of increase of wealth, for which the Government blamed the Tory Party before the last election. Yet they have not done anything at all; they have not taken any step, they have not made the slightest move in that direction. For that reason, I hope very much that they will get off the wind-pipe of the British people and let us carry on the government after the next election.
8.11p.m.
Mr. Geoffrey Rhodes: I hope that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) will forgive me if I do not refer
1202
at length to his picture of contemporary society in the United Kingdom, except to say that my experience of life without is completely alien to the kind of egalitarian Welfare State conception which he appears to have. I would remind him—this was one of the big mistakes made by the Leader of the Opposition during the debate on the Welfare State last week—that the number of people living in dire poverty in this country even today is far more than any nation with a social conscience can adequately afford.
In the earlier part of his speech, the hon. Gentleman casually made the remark on the current Tory propaganda line that the increase in pensions had been cancelled by the rise in prices. This, of course, is sheer rubbish. The pension increase was 20 per cent. and not even the Conservatives, with their extraordinary imagination, can conjure out any statistical evidence to prove that that 20 per cent. has been cancelled by the rise in prices. In view of the Government's measures in relation to rates relief for the elderly, in particular, concessionary fares legislation—a very small Measure, but important to many elderly people in my constituency—I would suggest that, if we are to have a sensible debate, we should for the moment forget the coming election and talk sense.
The Motion contains the words:
"…to plan more rapid economic growth and a better balance between the Regions."
It is this sentence upon which I want to speak this evening. I am happy to support the Motion on this sentence, but I want at the same time to make a number of perhaps critical but, I hope, objective remarks about the state of the economy in the North of England at present.
The economic situation in the last 12 months was the same kind of crisis, in many respects, which we had in the early 'sixties. During the early period, during the indiscriminate credit squeeze economy and the era of the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), the impact on the north of England was disastrous. During the peak of the unemployment of that period, 80,000 people were out of work in the northeast of England. Before that, the tip of the iceberg had been showing. Before the squeeze, there was always a somewhat

1203
higher percentage of unemployment in the North than in the rest of the country.
Of course, when the heavy squeeze was put on the economy a major part of the iceberg became visible and we found the deep depression in the shipbuilding industry, in engineering and coalmining, from which for a century the North has drawn its life blood. When the new Government came into power, faced with an economic situation which had similar characteristics to the earlier one, there was a danger—I did not fear it, because I knew something of the kind of priorities which the Government had in terms of regional planning—that in squeezing the economy or in dealing with the economic crisis facing the country, measures would be taken which would drive the North-East economy down to the same depths of despair which it had reached in 1962.
This simply has not happened. In spite of the measures which had to be taken by the Chancellor of the Exchequer to deal with this economic crisis, the north of England continued to get the lion's share of the new jobs which were being created. The north of England was exempted in many respects from the restrictive measures which had to be put on the economy. The shipbuilding industry was stimulated, in the words of the shipbuilders themselves, by the measures taken by the Government to encourage foreign ship-owners to buy ships built in the yards of the Tyne, the Tees and the Wear. Consequently, and in spite of measures taken to deal with the economic crisis, there are, at the moment, 50,000 people at work in the north of England who were not at work three and four years ago.
For those hon. Members of the Conservative Party who sometimes hint in their propaganda speeches that there are many unemployable people about, the fact is that there are 50,000 workers who were out of work when they were in power in a region where there is now increasing confidence. It is of great interest to me that the last time the lion's share of new jobs created in this country went to the north of England was in the period between 1945 and 1950. I would suggest that, if the last 20 years are anything to go by, a greater degree of priority will
1204
always be given to the North by a Labour Government than by a Conservative Government.
However, there are still certain underlying weaknesses in the economy of the north of England which it would be fatal for any Government, of any party, to ignore. There is still very heavy dependence, in terms of the percentage of the manpower in that area, on two basic industries, coalmining and shipbuilding. It is perfectly clear that the streamlining which is going on in coalmining will mean a considerable contraction in employment prospects in that industry in the future. In spite of its current prosperity, it is clear to everybody with any knowledge of the shipbuilding industry that it is not an industry about whose future there can be complete confidence. A great deal needs to be done in that industry in order to build up a sense of security which has been so lacking in the past.
For example, there needs to be an end to the restrictive practices within the industry on both sides. This is particularly true, for example, in relation to the means of carrying out industrial apprenticeships. The steps already taken by the management and the men in the shipyards of the Tyne area to come together to discuss their problems and discover ways and means of abolishing restrictive practices in future represent a move in the right direction.
I am pleased that the Minister of State, my hon. Friend the Member for Barnsley (Mr. Mason), visited the region recently and had some controversial things to say about restrictive practices. I am glad that he said what he did. The majority of people in that area agree very much with what he said and feel that the sooner we can get down to the problem of building a shipbuilding industry relevant to the needs of the second half of the twentieth century the better.
Also lacking in that region is the growth of a major new expansive industry. I am convinced that the establishment of a major growth industry—I have previously mentioned the development of a motor car manufacturing plant—would be a tremendous boost to the whole of the northern economy. This is the kind of decision which must not be

1205
left entirely to the whims of private enterprise. The decision can be influenced by a Government who have their priorities right.
It is vital to hold on to the highly skilled technical people in the complex industries. I will quote two relatively small examples in terms of the number of people involved in two organisations in my constituency. There is in my area—this is perhaps somewhat unique in the House—a plant for the manufacture of astronomical telescopes. This involves the employment of tremendously skilled staff. I am sure that with proper Government planning—financial encouragement and so on—involving universities, observatories and similar institutions much could be done in a sphere which is highly important in the international trading sense.
Another example of fine work being done is that of the International Research and Development Corporation Ltd. The work of the corporation is often not fully exploited by industry in other parts of the country but, with adequate Government encouragement—I will not be more precise than that now because I do not wish to delay the House—much could be done to retain the highly skilled staff which exists in the north of England.
An underlying weakness in the northern economy is that although we have a much higher level of employment today than has been the case for many long years, we under-employ women in industry in the area. The percentage of women who go out to work in that part of the country is markedly lower than in other regions. Because we are not tapping these resources of labour, the under-employment of women to some extent hides the basic weakness which exists there.
The region requires much greater opportunities for non-industrial employment, such as the development of clerical and executive employment. In my constituency 8,000 to 9,000 people are employed at the headquarters of the Ministry of Pensions and National Insurance. It is time that more Government Departments were located in the north of England. This would mean greater opportunities for the young people who are inclined towards non-industrial employment, remembering that there are far too many young people in commercial courses and so on at colleges in the
1206
north of England, particularly those taking advanced courses, who can find an outlet for their skills perhaps only in the Midlands and the South. While the situation is improving, complacency would be fatal for the economy of the North.
There also needs to be a considerable extension of industrial retraining facilities. The Government have announced the establishment of new retraining facilities in parts of Northumberland and elsewhere, but the facilities at present available and those likely to be available in the foreseeable future are not adequate. We cannot be satisfied with the present plans. Much more is needed.
Although I have outlined some of the weaknesses in trying to be fair and objective about the state of the economy of the North, I am, nevertheless, pleased that the rate of unemployment in the region has been reduced to such a low level that we are now getting up against the hard core—the very small hard core—of what might be described as the unemployable. By and large, a man who wants work in that region today can get it. This situation has been a long time coming and we are thankful for it.
I will refer briefly to a remark made by the Leader of the Opposition when he spoke rather disparagingly about the abandonment of the concept of the growth zone—which, he said, was a topic which he had pursued in the past—and seemed sceptical about the Government's decision to make the whole of the north of England a development area. Under the growth zone policy a large part of the North was left out of things; at least, it felt that it had been left out. These were what my hon. Friend the Member for Durham, North-West (Mr. Armstrong) referred to as the "travel-to-work areas", particularly in west Durham. In these areas there were considerable threats of major pit closures. The idea of making many of the people there travel great distances to work might have meant a great deal of the social capital there becoming under-used. It might have meant under-using housing facilities in parts of Durham on the western side.
I know the economic arguments about the main lines of communication being along the mouths of the three rivers and

1207
the fact that the main line between Darlington and Newcastle on the eastern side would be the major growth area. But the Leader of the Opposition said that the decision to declare the whole of the growth area a development area—thus bringing in those parts of the west of Durham—was a political decision. That was an astonishing statement and I found it curious because all the marginal constituencies of the North-East are in the eastern part of the North-East. And the constituencies which most benefit from the decision to declare the whole area a development area are, I should have thought, those in the western part of the North-East, where the safest Labour seats lie. If the Government were playing a purely party political game it is arguable that they would not have taken a decision which would encourage work in the areas of heavy Labour votes, as distinct from those areas of the Tyne, Tees and the Wear where all the marginal seats are situated.
The trouble, of course, is that the Leader of the Opposition smells a political rat under every bed, so to speak, and cannot conceive the possibility of the Government taking a decision based on social priorities—a decision which is sensible, reasonable, right and proper for the mining community of the western parts of Durham.
Although my constituency is in one of the growing and more prosperous parts of the North-East Coast, I do not oppose the Government's policy in this matter because it would have been wrong to expect thousands of miners and their families to be shunted across many miles of country and zoned into the points of least commercial resistance.
In 1962, 80,000 people were out of work in the region and many were on short time. Now we have got down to the small hard core of people who are unemployed. This core is less than half what it was. Although I have fired a few cautionary shots and pointed to some weaknesses, the Government are to be congratulated on the fact that, despite the measures which they have had to take on the international front, the northern economy has continued to grow, prosper and recover—an achievement which could never have taken place had the Conservatives been in office.
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The northern economy cannot yet be described as a prosperous one. However, it is becoming increasingly prosperous. The confidence of the people of the area in their economy will be clearly displayed in the results of the General Election.
8.28 p.m.
Sir Alexander Spearman: I shall try to follow the advice of the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes) and for a few minutes forget about the coming election. I may perhaps succeed in that particular thing rather better than he did but, of course, it is easier for me to do it.
As I have often said in this Chamber, I think that the Government were absolutely right to stand firm against devaluation. Devaluation would have afforded a temporary but a most damaging respite. I believe not only that we should maintain the present parity of sterling but that we should and can do so, and nothing I say will do anything to encourage those who think that we ought to, or even must, devalue.
Nevertheless, we have a very long way to go before we are safe, and I am afraid that the Chancellor of the Exchequer—and he is, if he will allow me to say so, a very old and valued friend—by what seemed to me an electioneering, a pre-Budget review, did not strengthen the balance of payments. One of our most eminent economists, Lord Robbins, said two or three weeks ago that unless within a measurable period of time we get equilibrium on current account—and it is that, of course, the current account, which matters—inevitably the balance-of-payments crisis will recur with increased violence.
Like Lord Robbins, I cannot share in the euphoria which prevails in many quarters about our prospects. "Euphoria" is a newish word to me; I believe it means living in dreamland. If a great industrial company paid greatly increased dividends and wages, no doubt its shareholders and workers would be pleased, but if those people found that its distributions were not coming out of increased earnings but out of declining reserves, they would know that they had been living in a fool's paradise and that soon there would be no wages for the workers and no dividends for the shareholders.

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In this country we have record high employment, and earnings rising more quickly than prices. No doubt there are many who are content. The question is: lots of jam today, but where is the bread coming from tomorrow? This situation just cannot last, and those who are content with it are indeed living in a fool's paradise. When the profit squeeze reaches its limit some companies will have to slow down their expansion—and thereby dismiss workers and we shall have some unemployment; and others, more dangerously still, will have to raise their prices, and that will precipitate a balance-of-payments crisis.
Sterling was not rescued last autumn by increased productivity or greater ability to compete. It was rescued by loans. Alan Day, in the Observer—a generally friendly critic of the Labour Party—said that this was a miraculous escape, not an economic miracle. It was done by borrowing. I believe that the Government were absolutely right to borrow; where I criticise them is in the use they made of the time they borrowed. We cannot now rely upon other countries letting us out by inflating as much as or even more than ourselves. Exports are at a high level, but what it not always remembered is that most of those exports were ordered 18 months ago when we were getting those record export orders because of the competitive advantage we gained as a result of the policies of my right hon. and learned friend the Member for Wirral (Mr. Selwyn Lloyd). We are losing those advantages very quickly.
The C.B.I. questionnaire on the future prospects of export orders has proved for the last two or three years a very accurate guide, but the answers to its latest questionnaire last month have not been optimistic. The prime failure is due to excess demand. We are spending instead of saving. Under these conditions costs are just bound to rise, and they are not only rising by the 8 per cent. or 9 per cent. by which earnings have gone up, but in many cases by very much more as a result of the big fall in the working week. Getting enough competition, which is what we have to do, is of course always unpopular. Those seeking more wages and those seeking more profits like inflation. What is economically desirable is very often politically difficult and sometimes politically disastrous, and vice versa.
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The Prime Minister's words on this are admirable. He said on one occasion:
"Whatever has to be done to get the country on a sound basis we shall do regardless of electoral consequences."
The Prime Minister likes this theme. He has often repeated it and the Chancellor seems liable to catch it. There is nothing unpopular in talking tough—it goes down well—it is actual action which is unpopular. Politicians are always under a great temptation to do what is unforgivable, to say one thing and to do another. Of that arch-politician Cardinal Richelieu it was once said:
"He is like a man rowing a boat. He is always going in the opposite direction from which he is looking."
The Prime Minister is indeed a master of words. I think the Economist paid him a very deserved tribute two weeks ago, if he takes it as a tribute. It said:
"Mr. Wilson has an unequalled talent for making acts of weakness look powerful and dynamic."
We must get more competitive, but how? One way, which appeals to me as a lifelong Free Trader, would be the unilateral reduction of tariffs, but that clearly is impracticable in the present state of our resources. If we had vast reserves we could deal with a temporary surge of imports, but today we cannot and therefore it must be by regulating total demand so that we get the right balance between resources and the claims on those resources.
What I mean by total demand is what the Government spend, plus what industry spends on investment, plus consumption. The Government expenditure is going on rising and rising. The Times on 24th February said in a leading article that the monetary increase in Government expenditure in the coming financial year will be nearer 10 per cent. than 7 per cent., vastly more than any conceivable increase in production. Consumption is being fully maintained and the only indication of any drop is perhaps in industrial investment. That surely is the very last thing that the Government ought to want, particularly the Prime Minister after his brave words at Swansea.
Of course I entirely accept that the Chancellor has tried. He has imposed many burdens on us. Indeed, it might be said that we are having the worst of all worlds. We have borne these

1211
burdens without getting any advantages. If a doctor prescribes a very disagreeable treatment and the patient does not get any better, it is generally wise to change the doctor. The Chancellor has imposed on us heavy taxes. I have not criticised him for that. Indeed, in one debate I said that I accepted the need for it. He has imposed a record credit squeeze and put on hire-purchase regulations but all these have been vitiated, partly by the inflationary effect of his first Budget and partly by the fact that this was done in driblets. As my right hon. Friend the Member for Flint, West (Mr. Birch) told us today, on a previous occasion he compared it in military terms with wet hand tactics.
Finally, there was the continual assurance that these measures would not hurt us nor create any unemployment. What better way could there be of encouraging those people to hoard labour who do not need it? I should guess that today there are at least 2 million men and women working for companies which do not need them when they are urgently needed elsewhere.
The Chancellor rather maladroitly has been taking what he can of the steam out of the economy but the First Secretary of State and Secretary of State for Economic Affairs has been putting it back. The unfortunate thing is that the First Secretary puts it back twice as much as the Chancellor takes it out Professor Phillips, in a very brilliant essay, convincingly shows that money incomes rise faster than production only when the use of capacity in terms of employment exceeds 97½ per cent. This is taken by the experts to equal running the economy at 95 per cent. of capacity. It is now running at pretty nearly 98 per cent. A leading article in The Times a few weeks ago pointed out that the American economy was likely to have a record growth for all time. Then it added that the American economy is running at 92 per cent. capacity. I believe that 92 per cent. is a good deal too low for us, but I am sure that 98 per cent. is dangerously high.
To get the economy down to 95 per cent., it is necessary to keep down demand, and therefore production, for a time and to keep up growth. I quote two
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sentences from page 2 of the National Plan:
"…the underlying growth of output per head seems to have averaged a little over 2 per cent. in the early 1950s, nearly 2¾ per cent. over the period from 1960 to 1964, and may now have reached a rate of about 3 per cent per annum. The required acceleration to 3·4 per cent. thus seems feasible in the light of past trends".
Professor Paish in his article in the Daily Telegraph on 16th February, to which my right hon. Friend the Member for Flint, West referred, said that productive potential—that is, the underlying growth—was rising at 3¼ per cent. a year last year and that the rise had fallen back to 2 per cent. In fact, at a time when according to the National Plan we need an acceleration of 3·4 per cent., we have got a decline to 2 per cent. This is the progress towards raising productivity on which the Government are asking for our congratulations.
The decline in the productive potential is in money terms of the order of between £350 million and £400 million per annum. It is an inevitable consequence of the Government's policy and I believe it to be the most grave economic development today. We must have a far stiffer Budget than had been thought necessary a short time ago and a far more painful and stiffer one than would have been necessary if the Chancellor of the Exchequer had acted earlier. It is an unhappy proof of the complete failure of the Government to get our economy back on a sound basis. If in 1965 production had been kept stable for a year and if the rate of productive potential had remained at 3¼ per cent., within a year we should have got a 5 per cent. safety margin of spare capacity. Then we could have a steady and safe rise in the standard of living. Then, indeed, the Government might have won the election and told the truth. They failed. Therefore, it is vital that there should be a drastic cut either in Government expenditure or in consumption. It can be argued either way, according to choice.
How is it to be done? There is no painless way of doing it. Before the war we used to think that all that a Government had to do was to raise the amount of revenue to match their expenditure. I rather suspect that some hon. Members opposite still think that. If that were so, it would in the short run be quite easy.

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The Chancellor of the Exchequer could confiscate a large part of huge private fortunes or greatly increase company taxation. But if it came out of savings, as it largely would, it would serve no economic purpose at all. The safety of the economy does not depend on how much the Chancellor can collect in revenue. It depends entirely, I maintain, on how much we can cut consumption.
Rather presumptuously, perhaps, I have two suggestions to make. I say "presumptuously" because, obviously, one cannot on the back benches, without resources, make detailed suggestions with any confidence. But I hope that my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), when he becomes Chancellor, will look carefully at the Irish retail turnover tax, which appears to have worked very well in Ireland, in spite of all the criticisms when it was instituted, and to act as a very good regulator. I suggest, also, that he look at the possibilities of a substantial payroll tax discriminating in favour of the unemployment areas.
What are the objections to running the economy at 95 per cent. capacity? It will be said that it means massive unemployment. I believe that this is a myth and completely out of date today. Professor Paish, to quote him again, has said that, in his opinion we could run the economy with complete efficiency with unemployment down to 1½ per cent. in the areas where two-thirds of the workers live. It would, of course, be higher elsewhere, and the object would be by special regional arrangements to bring it down in those areas. It is said that it would check growth. I believe the very opposite to be true. In the short run, maximum growth depends not on investment but on better use of existing resources, and in the long run, I believe, it depends more on the quality of investment than on the quantity.
Any number of industrial companies brought out reports in 1962 making that clear. I quote from just one, the Steel Company of Wales in 1962. The chairman said:
"The emphasis on the company's activities has shifted from maximum production to maximum economy in operation".
In that way, by making the object maximum output per unit of labour rather
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than maximum output per unit of capital, we maximise national resources.
We can have stability and the background for growth by accurately regulating the pace of the economy, but we cannot have maximum growth unless we are prepared for changes, and changes which hurt—employing one man instead of two or one man instead of three. Lord Plowden put this very well to a conference two or three years ago, and I quote one passage from his speech:
"We can have a rapid rate of growth and a rapidly rising standard of living if we will accept the necessity of change and the fact that change is often uncomfortable. What we cannot do is think that we, as individuals, can get all the benefits from being progressive and adaptable while leaving other people with the pains and disturbances that are the price of progress and adaptability."
We must make a choice. If we want progress, we must give up resisting change for the sake of present comfort. We are not likely to get that attitude under a Government who ratted on Lord Beeching and who prefer fine words to decisive action.
8.50 p.m.
Mr. John Rankin: I have always listened to the hon. Member for Scarborough and Whitby (Sir A. Spearman) with respect and a certain amount of profit. I was interested when he said that we require to employ one man instead of two men. Basically, no one will disagree with that. But it is all very well to say that one's purpose is to employ one man instead of two men without saying what is to be done with the other man. That is a very important aspect of automation, one of the aspects that my right hon. and hon. Friends are seeking to face up to in this debate, which to some extent has been a classic one. On this side we are seeking to put into operation a policy of controlled and managed inflation. From the other side we have heard a succession of speeches advocating deflation.
The hon. Gentleman may have repudiated slightly the general theme which has come from the Opposition benches. But my country and my constituency have for 13 years experienced the deflation of Toryism. As a result Scotland with the exception of its capital Edinburgh, and Portobello and Leith, has been declared a development area. If any Tory feels

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proud of that Tory achievement, I invite him to Scotland to tell the Scots why. Throughout those 13 years, because of this policy of deflation there has been a steady drift of people from Scotland to the Midlands of England and London, where they have formed Scots communities and societies.
What has been happening in Scotland as a whole has recently been experienced in my constituency. While the Tory Party was in power, Harland and Wolff Ltd. in Govan closed down, and not two people but 2,000 immediately lost their work. No word of encouragement or hope came from the Conservative Government to those 2,000 men who had lost their jobs in shipbuilding. When my Government came to power—
Mr. Charles Doughty: The hon. Member's Government?
Mr. Rankin: I am part of it, of course. If it were not for people like me, the Labour Government would not be here.
I do not suppose, Mr. Chancellor—
Mr. Deputy Speaker (Mr. Roderic Bowen): Order. The hon. Gentleman should address the Chair.
Mr. Rankin: I hope, Mr. Deputy Speaker, that it is not out of place for me to deny some of the rumours which have been circulated by the Opposition during the debate. I am not revealing any secret if I say that I was fairly closely in touch with what was happening about Fairfields and that my right hon. Friends the First Secretary, the Chancellor of the Exchequer and the Prime Minister worked together as closely as three chief Members of the Government could be expected to work. There was no running in different directions, as some hon. Members opposite have sought to imply. There is no truth whatever in the suggestion that the First Secretary sought to undo, in its application to Fairfields, anything that the Chancellor of the Exchequer was trying to do.
Tonight Fairfields is in operation and 4,000 men are working there with a Labour Government in power; but if what happened at Harlands had been repeated—and hon. Members opposite have seemed to imply that that is what
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they would have preferred—instead of working and earning wages and producing the commodities which the hon. Member for Scarborough and Whitby wants them to produce, those 4,000 men would have been out of work. That is one big difference between the last Government and the present Government.
I know that there has been an effort to disrupt the decision which the Government took on 22nd December, when the First Secretary made his announcement that the Government were to inject money into Fairfields, up to 50 per cent. of the total which had to be provided. When the announcement was made, the right hon. Member for Altrincham and Sale (Mr. Barber) said:
"Is the right hon. Gentleman aware that we on these benches last month supported the injection of public money to keep Fairfields going until we had the Report of the Geddes Committee in February…?"
He certainly said that the Opposition supported the move, but he went on to add that this was "creeping nationalisation" and described it as
"putting a premium on bankruptcy".—[OFFICIAL REPORT, 22nd December, 1965; Vol. 722, c. 2103–4.]
What he would evidently have preferred to have seen would have been 4,000 men walking the streets of Govan.
I know that hon. Members opposite say that there are plenty of jobs in other places. I indicated where those other places are. But it is not easy for men who have been working in a shipbuilding yard for 20 or 30 years and who have their families around them and who may have bought their houses to give up everything and move to some other part of the country, seeking not only new jobs and homes, but perhaps other jobs for members of their families. That sort of transfer is not so easy for a large percentage of the men.
This is the policy of deflation which the Tories would have applied to Govan if they had had the chance. They applied it to Harlands and they would have applied it to Fairfields, and 6,000 men in my constituency would have been unemployed. I hope that everyone in Scotland, particularly in Glasgow, will note what has been happening over the last few years and see that every Labour

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Member, when he comes before the electorate, will be elected to keep this Government in power.
9.0 p.m.
Mr. Iain Macleod: The hon. Gentleman the Member for Glasgow, Govan (Mr. Rankin) referred to this as a classic debate. It has certainly been a remarkable one. [Interruption.] "Classic" was the word he used unless my ears deceived me.
Mr. Rankin: Classic in what sense?
Mr. Macleod: I never know in what sense the hon. Member means. The debate was opened by a speech from the Chancellor of the Exchequer, to which I listened with great care, and which I have since had the opportunity of reading in full. I am grateful to the Chancellor for supplying me with a copy. I think that the more the speech is studied and dissected under the microscope the more politically dishonest it will seem. It is a classic example of the new techniques of "substitute Government" that we now have.
We started with "instant Government" and now we have a sort of "substitute Government" in which if one is not able to do anything one says something. So we have White Papers instead of Bills, leaks instead of statements—and the leek would have been much more appropriate than a daffodil for the Chancellor of the Exchequer's buttonhole. In addition we have speeches instead of Budgets. I gather from the Press that the Prime Minister is "sensitive" to the charge that the economy is in difficulty. I am bound to say that sensitive is not the word I associate first of all with the Prime Minister, and I hope that he does not think that the half-formed apologia, giving only one side of the balance-sheet which we were given this afternoon, alters the charge that I now make quite specific.
I believe that the Prime Minister is running away because he hopes that the going is good, just as the Socialists ran away in 1931 and 1951. So much for the gutsy purpose of Government we hear so much about. I want to comment on the proposals and the omissions in the Chancellor's speech. The tough words were heard over and over again, accompanying half-planned action done to hide one simple fact, and that is that the Chancellor is budgeting for inflation.
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This cannot be known too clearly. There is a score of proofs. For example, at the end of the discussion on his statement of 23rd February, the Chancellor of the Exchequer said:
"A total growth…of between 2½ per cent. and 3 per cent. is quite likely this year."—[OFFICIAL REPORT, 23rd February, 1966; Vol. 725, c. 418.]
The right hon. Gentleman is much too optimistic. I think that all the evidence which comes from the National Institute of Economic and Social Research would not put the figure beyond 2 per cent. both for 1965 and 1966—and, I would guess, unless present policies are changed very radically, for 1967 as well. But the Secretary of State for Defence, in a Written Answer next day, was asked what growth he was assuming in the Defence Estimates, and he said, not 2 per cent. or 2½ per cent., but a growth of
"5 per cent. in money terms."—[OFFICIAL REPORT, 24th February, 1966; Vol. 725, c. 141.]
So the inflation is there, naked and admitted. The gap is growing, and this must worry the Chancellor of the Exchequer very much indeed.
In December 1963 the White Paper introduced by my right hon. Friend the Member for Barnet (Mr. Maudling) forecast a 4·1 per cent. increase in public expenditure against a presumed growth of 4 per cent. In fact, that 4 per cent. growth was substantially exceeded in the last two years of Tory administration.
Then we had the National Plan in which the Government put expenditure higher at 4¼ per cent., but estimated a lower growth at 3·8 per cent. The growth, in fact, has been nothing like 3·8 per cent. It has been 2½ per cent., if that, and, I would guess, lower. Therefore, our programmes, against which the accusation was made that they were swollen, have been increased while at the same time the country can afford less and is producing less than both sides of the House planned for.
The Chancellor of the Exchequer made some fun of recent speeches of mine. May I offer to send them to him, because he knows very well that we do not write the headlines which appear in newspapers; I dare say that he has suffered from this himself. May I quote just this from my speech at the Conservative Party conference at Brighton:

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"Economy is rarely a popular theme, but it is going to be necessary for a very long time to keep a critical, indeed a jaundiced, eye on all public expenditure, especially in the nationalised industries."
Then, apologising to some of my hon. Friends whose pet proposals were not included in our proposals, I said:
"If the time comes when we can meet extra commitments, then indeed I will rejoice. But the careful management of our economy and the repayment of debt must come first."
Gladstone could not have said fairer than that. The Chancellor of the Exchequer will find—and I know that he will take my word for this—those words, and similar words, included in all my speeches.
But, of course, there is a conflict of approach and a conflict of philosophy. Right hon. and hon. Members opposite believe in high taxation for social purposes. We believe in lower levels of taxation. The Labour Party believes in indiscriminate subsidies for everyone, and we believe in concentrating them on those who are in true need. The Government believe in a high protection economy, and we do not.
The Prime Minister's first thoughts on this matter were best. If I may look back to the 1964 election forum, when challenged by Mr. Ian Trethowan about whether his policies would or would not mean an increase in taxation he said:
"You couldn't carry out these programmes on the basis of stagnant production and increased taxation. No, these plans do depend on getting an increase in production that I believe we can get…."
Mr. George Brown: Hear, hear.
Mr. Macleod: It is all very well saying "Hear, hear" in a small voice, but we have not got it. What we have is the stagnant production against which the Prime Minister warned us, and we have the increased taxation which the Prime Minister quite rightly said would make his policies impossible.
Last night, therefore, he said this. It is a very different story from "This Week". [Interruption.] The Prime Minister, who has just joined us, has a good memory, so I will not quote word for word what he said in the 1964 election forum. I was going on to remind the House of
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what he said last night. I obtained this quotation, which, I believe, is accurate:
"But one thing I do say: you cannot increase expenditure and reduce taxation."
That is not true. We did it over and over again in our Administration. Many countries have achieved this. America has done it over and over again. It is not true that this relies only on levels of unemployment, because that ignores altogether the sheer relief from the burden of taxation and the lift and the energy that it can give to the people of a country. In our 13 years nine out of 14 Tory Budgets reduced taxation—[HON. MEMBERS: "For whose benefit?"] More frequently for National Assistance than for National Insurance, and only once for Surtax payers. Hon. Members opposite should look up their facts.
We were also able to make enormous increases in real terms in social service expenditure. In 1951, for example, when we took office, education was running at the rate of 3·1 per cent. of the gross national product. When we left office in 1964 it was 5 per cent. In those 13 years the standard of living went up more than in the last 50 years of this century.
The Chancellor of the Exchequer—and I think it is a good idea—had to introduce a new Savings Certificate. I hope that it goes well. One of the reasons why he had to introduce it, however, was the dramatic slide which has taken place in National Savings, which the right hon. Gentleman has to make up in taxation because the people are less willing to save under a Socialist Administration than they were under the Conservatives.
My hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) made today what is, I am afraid—because he is leaving the House of Commons—his last speech in this House. It was well worthy of all those that have gone before. Few people have given as close and fruitful study to our economy as my hon. Friend. The key point made by my hon. Friend was that the National Plan assumed an acceleration to 3·4 per cent. and said that this looks feasible but that there has been a fall to 2 per cent. or a little more. This is due largely to the unexpected—I agree that few people foresaw this—fall in the number of hours worked, as shown by the recent Ministry

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of Labour figures. I am sure that this worried the Chancellor a great deal.
What that means, however, is that there has been a loss in productive potential of between £300 million and £400 million, depending upon whether one takes it at market price or at factor cost. This is the key point to which my hon. Friend the Member for Scarborough and Whitby rightly drew attention. It makes clear the conclusion drawn by my hon. Friend that this Budget, the Budget that is formed in the Chancellor's mind—I do not say the Budget of which he gave us a glimpse this afternoon, but the whole of the Budget—will have to be much tougher than it would have been if only he had taken action more decisively at an earlier date.
The Chancellor of the Exchequer gave us this afternoon some figures of the balance of payments. I am bound to say that I thought that at all times he was much too complacent in this field, because I believe that there is very little chance indeed—I state this quite frankly—of achieving the target of paying our way at the end of this year. I think that that is what most people who have studied these matters believe, and I am surprised to find the Chancellor still holding to an assessment which I think events will show to be a good deal too optimistic.
There has been this afternoon some comment on sterling. It touched parity yesterday and went below it today, and discounts of forward sterling are widening. That is an ominous combination. Of course, I agree that sterling itself is not a party issue, although the management of the economy is, and ought to be, and will be at the election as it comes.
Then the trade figures which the Chancellor gave were again I think, too complacent. The figures for January are bad; and although it is not right to take one month in isolation, I should like the Chief Secretary to answer the point, also made by my hon. Friend the Member for Scarborough and Whitby, that if one draws a graph—I have had this done—of the forecasts of the C.B.I., it shows that these are slanting downwards very fast indeed at the present time, and I would guess that firms are a great deal less optimistic about their export prospects now than they were only a very short time ago.
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Profit margins, to which there has been some reference, are really disastrously low, lower than they have been for some 80 years. I think it was the First Secretary, in a Written Answer some time ago, who gave the figure of 1 per cent. increase in the first nine months of 1965. This can only mean one of two things. It must mean either that there is a rapid rise in prices coming in the near future, or that there will be a severe cut back in investment—or, of course, both of those together, which I think possible. I am surprised that the First Secretary denies this. I do not see how we can study the figures and come to any other conclusion. My right hon. Friend the Member for Flint, West (Mr. Birch) said, in a very incisive speech, that costs per unit of output—this is really what matters most to us—are getting disastrously high and this threatens the whole of our competitive position. It was really appalling that the Chancellor had little to say and less to suggest on this key sector of our economic performance.
The Chancellor twitted us for not putting down an Amendment to the Motion. We did this partly for the reasons advanced very cogently in the leader in the Daily Mirror which has already been quoted today, and partly for a similar reason summed up by the statement of the American on the human race when he said, "Half of it is squirrels and the other half is nuts".
We are asked to support the Government in their efforts to secure greater social justice. It was unfortunate for them that the very day this Motion appeared there was in The Times a letter from three members of—of all places—the London School of Economics and Political Science, and it said this:
"We feel that these two awards once again demonstrate the absurdity of the claim that the present Government's incomes policy has anything to do with social justice."
We are asked to congratulate the Government, and on what? Do we congratulate them on stagnant production, on increased taxation, on an interminable period of high Bank Rate, on the consistent prices and wages inflation, on their savage attack on business, particularly on the small companies? De we congratulate them on sacking Dr. Beeching and allowing the railway deficit to

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rise? Do we congratulate them on cutting the road programme? Do we congratulate them on holding back university and technical college building? They should not be congratulated. They should be certified.
I will make some brief comments on the Budget which the Chancellor of the Exchequer put before the House today. I imagine that he meant it to reassure opinion, certainly at home and probably abroad, in the weeks of the election. That is an admirable aim. But I do not think that he will succeed in that, for a very simple reason. He told only half the story. He gave it a certain amount of jam, but no powder.
He said that at this stage he did not foresee the need for "severe increases in taxation." What exactly does that mean? Perhaps the First Secretary would like to expand on that. How severe is "severe"? How much is in the Chancellor's mind, because he gave no hint. He wrote himself a blank cheque and undertook to fill in the figures later. The best way of dealing with that is to make certain that he is not there to fill in those figures.
He announced a plan in relation to housing. In fact, that plan is an interesting development of what for a long time has been known as the Merrett-Sykes proposals. I do not know which politician can claim the distinction of first making a speech about them, but if the Chancellor likes to turn up the speech that I made a year ago at the beginning of the Leyton by-election of happy memories he will find the Merrett-Sykes proposals gone into in some considerable detail there.
Then he made some proposals about gaming, and I am bound to say that I thought that he was sadly innocent in his approach. It would be much better to leave these things to a reformed character like myself rather than to the virgin innocence of the Chancellor of the Exchequer. He is following the error of precedent. I do not think he knows the flaws that there are in doing that. What he seeks to do by taxing turnover is to repeat the identical mistake which Winston Churchill made forty years ago.
He is much nearer the mark in what he told us about the casino side of
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gambling in this country. Some time, off the record, I will tell him exactly where he has gone wrong and what he ought to do. [HON. MEMBERS: "Tell him now."] I do not propose to tell him now. I see no reason to anticipate my Budget statement.
The prices and incomes policy is not mentioned in the Motion, and no one will be surprised at that. I am sure that the First Secretary knows how difficult it was to get into the Chamber today through the hordes of loyal Labour supporters protesting about his policy in the Central Lobby. But the First Secretary has rightly described the present position as insupportable. The Chancellor would agree, and I certainly would agree, too.
If we continue with average earnings at 8 per cent. and productivity, however one measures it, the merest fraction of that, the balance of payments is bound to continue adverse and there may be longer term effects on sterling as well.
The First Secretary says, "Therefore support me". He says that it is sabotage to oppose his prices and incomes policy. I wish it would occur to him that he may be wrong and that the first responsibility is the Chancellor's for getting the level of demand right, and when that is done the position of a prices and incomes policy falls into place as a secondary and not a primary weapon of economic policy.
What we have had throughout these 16 months is a long, painful and costly education of the Chancellor of the Exchequer. I deal with him in this respect and not with the First Secretary, because the First Secretary is a one-man national disaster area. I regard the Chancellor in a much more friendly way, as someone who is stumbling towards the light. It has been essentially the double talk from him since October, 1964, that has put us into our present position. My right hon. Friend the Member for Flint, West told us of the number of occasions—17, I believe—on which the right hon. Gentleman has brought forward measures that would ordinarily be classified as deflationary, but almost every time he has said something quite different.
When first he raised the Bank Rate from 5 per cent. to 7 per cent. he said that he hoped it would not work through to the domestic economy. On 15th July

1225
he said that he would resist the temptation to impose further economic restrictions, and a few days later, almost, he imposed them. The net result has been that every time he says anything—and I am afraid that this happened this afternoon—people do not believe in his resolution. People do not believe that these measures will be carried through by a Socialist Government.
I have a good deal of sympathy for the Chancellor, because all the time the Prime Minister is sitting on his shoulder and one never quite knows what rôle the Prime Minister is playing at any given moment.
Mr. Archie Manuel: You tell us.
Mr. Macleod: I will respond to the invitation of the hon. Member for Central Ayrshire (Mr. Manuel) and tell him. For the first 100 days—until Leyton—the Prime Minister was a combination of John Fitzgerald Kennedy and Napoleon. We had all this about decisive action. Then there was the Dunkirk spirit and the re-incarnation of Sir Winston Churchill. Then for a time—Heaven help us—over Rhodesia the Prime Minister was Abraham Lincoln, with malice toward none and binding up the country's wounds. He emerged recently as the Duke of Wellington—"Hard-pounding, gentlemen. Let us see who can pound longest.
John Fitzgerald Kennedy described himself in a brilliant phrase as an idealist without illusions. I would describe the Prime Minister as an illusionist without ideals. The Daily Mirror again recalled—as I have just recalled—the saying of Abraham Lincoln which ends:
"But you cannot fool all of the people all of the time."
Mr. Ioan L. Evans: Thirteen years!
Mr. Macleod: The Prime Minister is not concerned with 13 years; he is concerned with three weeks. He wants to know whether one can fool 50 per cent. of the people for three weeks. That is the only thought in the Prime Minister's mind at present. The answer is that the Prime Minister—[Interruption.]
Mr. Speaker: Order. The Chair wants to hear the peroration.
Mr. Macleod: So do I, Mr. Speaker.
The Prime Minister, as he knows very well, has been engaged in a daily spate of bribes over this last few weeks. But the Prime Minister has been rumbled. He was seen through at Westminster long ago: it becomes the task of the Tory Party in this month to make sure that he is seen through in the country.
9.31 p.m.
The Chief Secretary to the Treasury (Mr. John Diamond): Mr. Speaker—[Interruption.]
Mr. Speaker: Order. Let us get on with the debate.
Mr. Diamond: I am not quite ready with my peroration, Mr. Speaker.
It is my proud responsibility to try to answer the questions which many hon. and right hon. Members, particularly right hon. Members on the other side of the House, have put to me. I hope, therefore, that, as the information has been requested, I may be allowed to give it. I recognise that there are two alternative ways of enjoying a last evening in this House for many hon. Members opposite and they may decide to adopt one method or another. I hope, however, I shall satisfy them with the information for which they have asked.
First of all, the Leader of the Opposition—who has courteously sent me a note of apology for his unavoidable absence—asked about the reserves. I should like to clear up this position, because it would be unfortunate if, through any misunderstanding, any right hon. Gentleman paid less than justice to what my right hon. Friend has done and, in particular, if any right hon. Gentleman tried, through a misunderstanding, to denigrate the state of the reserves or the strength of our economy.
It seemed—I am sorry that this seemed to be the case—that, during the whole of my right hon. Friend's speech and all the facts he gave indicating the tremendous progress which had been made in adding to our reserves and strengthening the £, which I thought was a common objective with both sides of the House, that every single statement he made to that effect was greeted with complete silence until there was the misunderstanding about the effect in one month and it was thought that the reserves had fallen for

1227
that one month, when the whole of the Opposition came to life and enjoyed themselves enormously. This is a pure statement of fact, and I should like therefore to clear up the facts about this month.
It is the month of February. As was made clear by the Chancellor, two things have happened as a result of which the reserves are shown at a higher figure than would otherwise have arisen. The reserves are shown as having increased by £225 million on the previous month. My right hon. Friend made it clear that that arose partly because the portfolio had been brought into the reserves. Instead of being treated as a hidden reserve, it became an open reserve of £316 million. Debt redemption of £103 million has taken place. Therefore, of that £225 million, £213 million was attributable to these special transactions and £12 million was the amount of the real increase in the reserves resulting from the flow of money in and out, excluding, of course, the figure which is never detailed but which is referred to; the reduction in the market forwards. That also took place during the month and, therefore, the figure of £12 million is understating the real improvement.
I mention this because the Leader of the Opposition seemed to think that, in this particular month, a fall had taken place. So, in fact, our reserves, as the Chancellor made quite clear, have gone up since August by £380 million—£318 million having been repaid, the reserves increasing by £64 million, and as my right hon. Friend said earlier, the total reserves and credit facilities available for use now total more than £1,800 million. I hope that I am not going to add to the disappointment of any hon. Gentleman opposite when I say that, as a result of my right hon. Friend's speech, sterling has already risen.
I was also asked by the Leader of the Opposition exactly what was the effect of bringing in the portfolio which had previously been, as I can only describe it, the reserve which was not disclosed—a hidden reserve in the best sense of that term—and would it mean that we would now be losing interest which might otherwise be earned or losing the possibility of capital gains which might otherwise be obtained.
1228
The answer to both questions is "No". All that has happened is that as we have now repaid the debt, as the Chancellor indicated, it is appropriate to bring from the hidden reserves into a fully disclosed position, the extent of this portfolio, the short-term investments, the short-term instead of long-term ones, which can be easily realised and which are referred to by the curious title of the "liquefied portion". It is merely that this has been transferred from a hidden position to a disclosed position and shows more naturally the full strength of our reserve, and observers and others who are interested in it are entitled to know about it.
We are purely continuing, as hon. Gentlemen opposite know, a process—a very sensible and proper one—which was started by them. In fact, when we took over more than half of the present amount of the liquefied reserves had been liquefied by them. That is, more than half happened in their time and less than half in our time. I am sure that there is no dispute between the two sides that this is a proper way of dealing with the situation.
Mr. Anthony Barber: The right hon. Gentleman has given a fair description of the position, which I accept, from the point of view of the reserves. Would he now tell the House how much of the debt incurred by the present Government is still outstanding?
Hon. Members: Answer.
Mr. Diamond: I do not suppose that the right hon. Gentleman was here during the speech of my right hon. Friend the Chancellor. [HON. MEMBERS: "Answer."] If he will look at tomorrow's OFFICIAL REPORT he will see it given precisely. [HON. MEMBERS: "Answer."] Being rather careful about the figures I give, the bellowing of hon. Gentlemen opposite will not make me rely on my memory and give a figure which may not be completely accurate, particularly since my right hon. Friend gave the figure this afternoon.
Mr. William Clark: Will not the Chief Secretary agree the figure of £899 million which was given by the Chancellor this afternoon?
Mr. Diamond: If it helps the House for me to repeat that the amount borrowed was less than the deficit which we inherited from hon. and right hon. Members opposite, I can repeat that, but if the House is concerned to know whether there is any immediate anxiety about repaying the debt, the Chancellor explained the details of the repayment due and showed that there was no difficulty at the moment, the way we are going, in meeting our obligations, provided we keep on the policy we have so far adopted—
Sir John Barlow: Will the right hon. Gentleman tell us—[Interruption.]
Mr. Speaker: Order. Two hon. Gentlemen wish to conduct the debate on their own. Sir John Barlow.
Sir J. Barlow: Will the right hon. Gentleman tell us our total overseas indebtedness at the present time?
Mr. Diamond: I can give the hon. Gentleman any information which he requires, but I have been asked about what my right hon. Friend the Chancellor of the Exchequer said earlier in the day and, on the assumption that memories are fallible and that people want to be reminded of what he said, I can tell the House that my right hon. Friend said: "I must remind the House that in December, 1967, we shall need to repay £385 million which the International Monetary Fund lent us in 1964"—
Mr. William Clark Mr. William Clark rose—
Hon. Members: No.
Mr. Speaker: Order. If the right hon. Gentleman gives way, that is his right. Mr. Clark.
Mr. William Clark: Would the Chief Secretary be good enough to clear up once and for all one remark? The Chancellor said that in 1967 we need to repay £385 million, and that in May, 1970, we have to repay another £514 million. Those two amounts total £899 million.
Mr. Diamond: The hon. Gentleman is reading, and I am very grateful to him for it, from the speech of the Chancellor of the Exchequer which my right hon. Friend sent him. The hon. Gentleman has very kindly confirmed what I said,
1230
which was that the figures were given at the start of the debate by the Chancellor. They are in HANSARD. I do not know what all the fuss is about. If everyone wants a speech made twice over, we can do that, but I was hoping to deal with some of the other questions which right hon. and hon. Members asked me.
The interesting part of the whole of the debate is that until the right hon. Member for Enfield, West (Mr. Iain Macleod) wound up for the Opposition I had not heard a single speech from either side criticising any of the proposals which my right hon. Friend put before the House this afternoon. That is the interesting part. Not one criticism was made of, as it were, his Budget proposals, or of the proposals which he said he would bring forward—except a partial one made by the right hon. Gentleman. He, drawing on his great knowledge of gambling, said that one part of the gambling tax might be improved as to its machinery. I know that the right hon. Gentleman is a great expert in these matters, and we shall be glad to have his advice and assistance. As he is such a great gambler I wonder whether I might ask him the one question: would he tell us whether he has made any bet on the Tories winning the forthcoming election—[Interruption.] I am grateful to the right hon. Gentleman. He has answered; he said perfectly clearly, "No". He might be a fool but not as big a fool as all that.
As the proposals of my right hon. Friend are apparently acceptable to all parts of the House, what I now have to deal with is the history of what has taken place, the record of the present Government and the proposals which right hon. Gentlemen opposite have for what they would be doing in circumstances in which we find ourselves. The first thing I must say—because this came from both right hon. Gentlemen who started and wound up the debate for the Opposition—is that the accusation against my right hon. Friend is that his actions have not been sufficiently decisive. What hon. Members opposite would have my right hon. Friend do—[An HON. MEMBER: "Resign."]—is precisely what they did when they themselves were in power—take "decisive action" of the kind which we came to know and the whole business community came to know, the whole of

1231
the unemployed came to know, as stop-go policies. That is what they are asking us to do.
I shall tell the House the essential difference between the way we have managed the economy and the way they did when they found themselves in difficulties. We have taken the stop out of the stop-go. I shall explain exactly what I mean by that. What happens when decisive policies of the kind the right hon. Gentleman was proposing are put into effect are two things. Unemployment rises, as it rose in 1963, to 800,000—800,000 unemployed is "decisive action". Unemployment rises and investment falls. Future prosperity, which depends on present investment, is prejudiced. That is what the right hon. Gentleman means by "decisive action".
What my right hon. Friend has done is so to direct the economy that at no time has there been a large increase in the unemployed. We will be very frank. That is how we propose to continue doing it. The figure of unemployed has in fact fallen from the time that we took office from 1·6 per cent. to 1·2 per cent. It is not telling the whole story to show that it has fallen, because the greatest part of the fall has been in the areas where there was highest unemployment. As a result of the regional policies of my right hon. Friend the First Secretary of State and Secretary of State for Economic Affairs, there has been a fall in those areas since we took office of 47,000. Those are 47,000 good answers to what the right hon. Gentleman said when he asked what my right hon. Friend was doing.
My right hon. Friend was restoring them to employment, to happiness, to prospects in life, to a feeling that one could make a contribution to society, to a feeling that one was wanted by one's fellow men. He was adding 47,000 men and women to that body in the community. Twenty per cent. of the unemployed figure has gone in those areas as a result of our regional policies and we do not propose to take "decisive action". This I can see is shortly going to cause an explosion in the right hon. Member for Flint, West (Mr. Birch). We propose to take action of a kind to keep the economy going in such a way that men are employed, their services
1232
are used, their contribution is made use of, and they feel that they are needed.
The same thing has happened in regard to investment. In the years 1961 to 1963 when hon. Members opposite were in power, manufacturing investment fell back by 17 per cent. as a result of their "decisive" policies. It is on investment, as everybody knows, that the prospects of future growth depends. During our period of office over the last year for which figures are available, the 12 months to September, 1965, as compared with the 12 months to September, 1964, investment increased by 12 per cent.—a 17 per cent. fall to a 12 per cent. increase. That is the difference between the way in which the Tories manage a balance of payments difficulty and the way in which we do.
A word or two about the balance of payments difficulty. It was astonishing that the right hon. Member for Enfield, West should accuse my right hon. Friends the Prime Minister and the Chancellor of the Exchequer of double talk and of deceiving the nation. It is only a short time ago that we became the Government. The first thing that happened was that we were informed of the prospective deficit for the year of £800 million, a figure which had never been disclosed by any right hon. Member opposite. We are astonished that the right hon. Gentleman did not think it right to disclose such a figure at a time when there was an election. We are astonished that he did not think it right, because he was concerned to save his political skin, to tell the nation that the Tory Party had made the most ghastly mess of the economic situation. He knew that the one thing that the Tory Party could not possibly survive was a third go at stop-go, evidence for the third time that they were running into a balance of payments deficit. I should have thought, therefore, that the right hon. Gentleman would have chosen his ground a little more carefully.
I would also like to follow up the comments which the right hon. Gentleman the Leader of the Opposition made today, and which he made in another speech as to the contents of which I do not think there is any dispute, about the taxation policy which he would adopt and the course he would follow for dealing with the present situation. These methods

1233
have been advocated by other speakers today. The hon. Member for Worthing (Mr. Higgins) made a speech very much on these lines. What the right hon. Gentleman proposed was that the cost of carrying a number of our services should be put on the employer. By this means, he said, the taxpayer would be relieved of the cost and there would be the delightful situation in which the employer would be carrying the additional cost and the taxpayer would be saved from part of the burden of taxation. This was a method advanced by the hon. Member for Worthing, in particular. He was seized of the point. He said that wages must be kept low; they must not go beyond the 3½ per cent. norm; it must be taken for certain that they must not increase beyond that; exports must be increased. The hon. Gentleman was aware of all these desirable objectives.
This proposal, which the hon. Gentleman copied from his right hon. Friend, would have exactly the opposite effect, because everybody knows that, if a tax of this amount is put on wages, it is carried straight through to prices. It goes on to costs. Not only is it carried through in that amount, but it is carried through proportionately with profits and prices. Because of this, the prices of our exports would be uncompetitive and our exports would fall. Not only that, but our home produced goods would be unable to stand up against competition from imported cheaper goods.
We are not in a position to introduce a tax of this kind to encourage imported goods. We would be if it was a different kind of tax, but not a tax of this kind. Therefore, imports would become competitive in price with what we produce. Imports would swell. Exports would fall. Our balance of payments position would be worsened. Costs would rise. Profits would increase. The rate of tax on profits would slightly fall, and hon. Members like the hon. Member for Worthing and his friends would have then achieved what they want. They would have saved a little in tax and put the price on to the whole of the community.
Mr. Higgins: It is strange that the right hon. Gentleman has taken one half of the proposition and not the other. Can he reconcile what he has said with the fact that the figures which I gave
1234
for this country are quite different from the figures for European countries which have adopted precisely the proposal which I put?
Mr. Diamond: The hon. Gentleman is mistaken about the methods which European countries have adopted. They have adopted methods of taxation under which they can, just as we do with our export rebate, rebate some of their internal taxes so that their exports become competitive. The right hon. Gentleman's proposal is precisely the opposite, a tax which gets included in costs, adding to our costs and the cost of exports and resulting in a falling off in exports.
I have been asked about prices and output. As regards output, during the 14 months since we came into office the rise has been 3·1 per cent. True, it started off in a steep rise and has since been at a much more leisurely rate of increase. We do not take the view that it is possible to put everything right in the first year. We are not satisfied with the rate of increase. We still believe that our Plan will be achieved. It is a five-year Plan, and all our figures and our activities are based on achieving our Plan by the end of the five years.
Similarly, in public expenditure, we plan to achieve our target in the course of the five years. But I can add that, as a result of the methods which we have adopted in planning expenditure, allocating to each spending Minister the resources which could be made available, and the self-discipline which we as planners have accepted for ourselves to see that the figures cannot be exceeded, this year's Estimates show the smallest increase, so far as I am aware, since the war. The increase is only 1·8 per cent., an increase which is entirely consistent with carrying out the terms of our plan in relation to public expenditure for the first year.
In public expenditure, we have shown ourselves capable of government and capable of planning and control. In terms of the balance of payments, we have shown ourselves capable of government and capable of planning and control. My right hon. Friend has demonstrated that this Government have the capacity even to deal with the greatest ever deficit which we inherited from right hon. Gentlemen opposite.

1235
We inherited liabilities and created assets. We are going ahead. We know that the nation is shortly to choose—as the House is about to choose—whether to vote for a Government who have demonstrated the vast number of things which they can do and the achievements which they can make in the course of a very short time or whether to go back to a Government who will once more support the policies which they advocated
and carried out, the policies of economic disaster and of stop-go, policies under which any troubles they run into have to be borne on the backs of the unemployed. I do not believe that the country will choose this way. The right hon. Gentleman does not even put a shilling on it himself. Neither do I.
Question put:—
The House divided: Ayes 291, Noes 287.

Division No. 37.]

AYES

[10.0 p.m.

Abse, Leo

Edelman, Maurice

Johnson, James(K'ston-on-Hull, W.)

Albu, Austen

Edwards, Rt. Hn. Ness (Caerphilly)

Jones, Dan (Burnley)

Allaun, Frank (Salford, E.)

English, Michael

Jones, Rt. Hn. Sir Elwyn(W. Ham, S.)

Alldritt, Walter

Ennals, David

Jones, J. Idwal (Wrexham)

Allen, Scholefield (Crewe)

Ensor, David

Jones, T. W. (Merioneth)

Atkinson, Norman

Evans, Albert (Islington, S. W.)

Kelley, Richard

Bacon, Rt. Hn. Alice

Evans, Ioan (Birmingham, Yardley)

Kenyon, Clifford

Bagier, Gordon A. T.

Fernyhough, E.

Kerr, Dr. David (W'worth, Central)

Barnett, Joel

Finch, Harold (Bedwellty)

Leadbitter, Ted

Baxter, William

Fitch, Alan (Wigan)

Ledger, Ron

Beaney, Alan

Fletcher, Sir Eric (Islington, E.)

Lee, Rt. Hn. Frederick (Newton)

Bellenger, Rt. Hn. F. J.

Fletcher, Ted (Darlington)

Lee, Miss Jennie (Cannock)

Bence, Cyril

Fletcher, Raymond (Ilkeston)

Lever, Harold (Cheetham)

Benn, Rt. Hn. Anthony Wedgwood

Floud, Bernard

Lever, L. M. (Ardwick)

Bennett, J. (Glasgow, Bridgeton)

Foot, Sir Dingle (Ipswich)

Lewis, Arthur (West Ham, N.)

Binns, John

Foot, Michael (Ebbw Vale)

Lewis, Ron (Carlisle)

Bishop, E. S.

Ford, Ben

Lipton, Marcus

Blackburn, F.

Fraser, Rt. Hn. Tom (Hamilton)

Lomas, Kenneth

Blenkinsop, Arthur

Freeson, Reginald

Loughlin, Charles

Boardman, H.

Galpern, Sir Myer

Mabon, Dr. J. Dickson

Boston, Terence

Garrett, W. E.

McBride, Neil

Bottomley, Rt. Hn. Arthur

Garrow, Alex

McCann, J.

Bowden. Rt. Hn. H. W. (Leics, S. W.)

Ginsburg, David

MacColl, James

Boyden, James

Gourlay, Harry

MacDermot, Niall

Braddock, Mrs. E. M.

Greenwood, Rt. Hn. Anthony

McGuire, Michael

Bradley, Tom

Gregory, Arnold

Mclnnes, James

Bray, Dr. Jeremy

Grey, Charles

McKay, Mrs. Margaret

Broughton, Dr. A. D. D.

Griffiths, David (Rother Valley)

Mackenzie, Gregor (Rutherglen)

Brown, Rt. Hn. George (Belper)

Griffiths, Will (M'chester, Exchange)

Mackie, John (Enfield, E.)

Brown, Hugh, D. (Glasgow, Provan)

Gunter, Rt. Hn. R. J.

McLeavy, Frank

Brown, R. W. (Shoreditch & Fbury)

Hale, Leslie

McNamara, Kevin

Buchan, Norman (Renfrewshire, W.)

Hamilton, James (Bothwell)

Mahon, Peter (Preston, S.)

Buchanan, Richard

Hamilton, William (West Fife)

Mahon, Simon (Bootle)

Butler, Herbert (Hackney, C.)

Hamling, William (Woolwich, W.)

Mallalieu, E. L. (Brigg)

Butler, Mrs. Joyce (Wood Green)

Hannan, William

Mallalieu, J.P.W.(Huddersfield,E.)

Callaghan, Rt. Hn. James

Harper, Joseph

Manuel, Archie

Carmichael, Neil

Harrison, Walter (Wakefield)

Mapp, Charles

Carter-Jones, Lewis

Hart, Mrs. Judith

Marsh, Richard

Castle, Rt. Hn. Barbara

Hattersley, Roy

Mason, Roy

Chapman, Donald

Hazell, Bert

Maxwell, Robert

Coleman, Donald

Healey, Rt. Hn. Denis

Mayhew, Christopher

Conlan, Bernard

Heffer, Eric S.

Mellish, Robert

Corbet, Mrs. Freda

Herbison, Rt. Hn. Margaret

Mendelson, J. J.

Cousins, Rt. Hn. Frank

Hobden, Dennis (Brighton, K'town)

Mikardo, Ian

Craddock, George (Bradford, S.)

Holman, Percy

Millan, Bruce

Crawshaw, Richard

Horner, John

Miller, Dr. M. S.

Cronin, John

Houghton, Rt. Hn. Douglas

Milne, Edward (Blyth)

Crossman, Rt. Hn. R. H. S.

Howarth, Harry (Wellingborough)

Molloy, William

Cullen, Mrs. Alice

Howarth, Robert L. (Bolton, E.)

Monslow, Walter

Dalyell, Tam

Howell, Denis (Small Heath)

Morris, Alfred (Wythenshawe)

Darling, George

Hoy, James

Morris, Charles (Openshaw)

Davies, G. Elfed (Rhondda, E.)

Hughes, Cledwyn (Anglesey)

Morris, John (Aberavon)

Davies, Harold (Leek)

Hughes, Emrys (S. Ayrshire)

Mulley,Rt.Hn.Frederick(SheffieldPk)

Davies, Ifor (Gower)

Hughes, Hector (Aberdeen, N.)

Murray, Albert

Davies, S. O. (Merthyr)

Hunter, Adam (Dunfermline)

Neal, Harold

de Freitas, Sir Geoffrey

Hunter, A. E. (Feltham)

Newens, Stan

Delargy, Hugh

Hynd, H. (Accrington)

Noel-Baker, Francis (Swindon)

Dempsey, James

Hynd, John (Attercliffe)

Noel-Baker,Rt.Hn.Philip(Derby,S.)

Diamond, Rt. Hn. John

Jackson, Colin

Norwood, Christopher

Doig, Peter

Janner, Sir Barnett

Oakes, Gordon

Donnelly, Desmond

Jay, Rt. Hn. Douglas

Ogden, Eric

Driberg, Tom

Jeger, George (Goole)

O'Malley, Brian

Duffy, Dr. A. E. P.

Jenkins, Hugh (Putney)

Oram, Albert E. (E. Ham, S.)

Dunn, James A.

Jenkins, Rt. Hn. Roy (Stechford)

Orbach, Maurice

Dunnott, Jack

Johnson, Carol (Lewisham, S.)

Orme, Stanley

Oswald, Thomas

Rose, Paul B.

Thornton, Ernest

Owen, Will

Ross, Rt. Hn. William

Tomney, Frank

Padley, Walter

Rowland, Christopher

Tuck, Raphael

Page, Derek (King's Lynn)

Sheldon, Robert

Urwin, T. W.

Paget, R. T.

Shinwell, Rt. Hn. E.

Varley, Eric G.

Palmer, Arthur

Shore, Peter (Stepney)

Wainwright, Edwin

Pannell, Rt. Hn. Charles

Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)

Walden, Brian (All Saints)

Pargiter, G. A.

Short, Mrs. Renée (W'hampton,N.E.)

Walker, Harold (Doncaster)

Park, Trevor (Derbyshire, S. E.)

Silkin, John (Deptford)

Wallace, George

Parker, John

Silkin, S. C. (Camberwell, Dulwich)

Warbey, William

Pavitt, Laurence

Silverman, Julius (Aston)

Watkins, Tudor

Pearson, Arthur (Pontypridd)

Silverman, Sydney (Nelson)

Weitzman, David

Peart, Rt. Hn. Fred

Skeffington, Arthur

Wellbeloved, James

Pentland, Norman

Slater, Joseph (Sedgefield)

Wells, William (Walsall, N.)

Perry, Ernest G.

Small, William

White, Mrs. Eirene

Popplewell, Ernest

Snow, Julian

Whitlock, William

Prentice, R. E.

Soskice,Rt.Hn.Sir Frank

Wigg, Rt. Hn. George

Price, J. T. (Westhoughton)

Spriggs, Leslie

Wilkins, W. A.

Probert, Arthur

Steele, Thomas (Dunbartonshire, W.)

Willey, Rt. Hn. Frederick

Pursey, Cmdr. Harry

Stewart, Rt. Hn. Michael

Williams, Alan (Swansea, W.)

Randall, Harry

Stonehouse, John

Williams, Clifford (Abertillery)

Rankin, John

Stones, William

Williams, Mrs. Shirley (Hitchin)

Redhead, Edward

Strauss, Rt. Hn. G. R. (Vauxhall)

Williams, W. T. (Warrington)

Rees, Merlyn

Stross, SirBarnett(Stoke-on-Trent,C.)

Willis, George (Edinburgh, E.)

Reynolds, G. W.

Summerskill, Hn. Dr. Shirley

Wilson, Rt. Hn. Harold (Huyton)

Rhodes, Geoffrey

Swain, Thomas

Wilson, William (Coventry, S.)

Richard, Ivor

Swingler, Stephen

Woodburn, Rt. Hn. A.

Roberts, Albert (Normanton)

Symonds, J. B.

Woof, Robert

Roberts, Goronwy (Caernarvon)

Taverne, Dick

Yates, Victor (Ladywood)

Robertson, John (Paisley)

Taylor, Bernard (Mansfield)

Zilliacus, K.

Robinson, Rt. Hn. K. (St. Pancras, N.)

Thomas, George (Cardiff, W.)

Rodgers, William (Stockton)

Thomas, lorwerth (Rhondda, W.)

TELLERS FOR THE AYES:

Rogers, George (Kensington, N.)

Thomson, George (Dundee, E.)

Mr. Lawson and Mr. Sydney Irving.

NOES

Agnew, Commander Sir Peter

Clark, William (Nottingham, S.)

Godber, Rt. Hn. J. B.

Allan, Robert (Paddington, S.)

Clarke, Brig. Terence (Portsmth, W.)

Goodhart, Philip

Allason, James (Hemel Hempstead)

Cooke, Robert

Goodhew, Victor

Amery, Rt. Hn. Julian

Cooper, A. E.

Gower, Raymond

Anstruther-Gray, Rt. Hn. Sir W.

Cooper-Key, Sir Neill

Grant, Anthony

Astor, John

Cordle, John

Grant-Ferris, R.

Atkins, Humphrey

Corfield, F. V.

Gresham Cooke, R.

Awdry, Daniel

Costain, A. P.

Grieve, Percy

Baker, W. H. K.

Courtney, Cdr. Anthony

Griffiths, Eldon (Bury St. Edmunds)

Balniel, Lord

Craddock, Sir Beresford (Spelthorne)

Griffiths, Peter (Smethwick)

Barber, Rt, Hn. Anthony

Crawley, Aidan

Grimond, Rt. Hn. J.

Barlow, Sir John

Crosthwaite-Eyre, Col. Sir Oliver

Gurden, Harold

Batsford, Brian

Crowder, F. P.

Hall, John (Wycombe)

Beamish, Col. Sir Tufton

Cunningham, Sir Knox

Hall-Davis, A. G. F.

Bell, Ronald

Curran, Charles

Hamilton, Marquess of (Fermanagh)

Bennett, Sir Frederic (Torquay)

Currie, G. B. H.

Hamilton, M. (Salisbury)

Bennett, Dr. Reginald (Gos. & Fhm)

Dalkeith, Earl of

Harris, Frederic (Croydon, N. W.)

Berkeley, Humphry

Dance, James

Harris, Reader (Heston)

Berry, Hn. Anthony

Davies, Dr. Wyndham (Perry Barr)

Harrison, Brian (Maldon)

Bessell, Peter

d'Avigdor-Goldsmid, Sir Henry

Harrison, Col. Sir Harwood (Eye)

Biffen, John

Dean, Paul

Harvey, Sir Arthur Vere (Macclesf'd)

Biggs-Davison, John

Deedes, Rt. Hn. W. F.

Harvey, John (Walthamstow, E.)

Birch, Rt. Hn. Nigel

Digby, Simon Wingfield

Harvie Anderson, Miss

Black, Sir Cyril

Dodds-Parker, Douglas

Hastings, Stephen

Blaker, Peter

Doughty, Charles

Hawkins, Paul

Bossom, Sir Clive

Douglas-Home, Rt. Hn. Sir Alec

Hay, John

Box, Donald

Drayson, G. B.

Heald, Rt. Hn. Sir Lionel

Boyd-Carpenter, Rt. Hn, J.

Eden, Sir John

Hendry, Forbes

Boyle, Rt. Hn. Sir Edward

Elliot, Capt. Walter (Carshalton)

Higgins, Terence L.

Braine, Bernard

Elliott, R. W. (N'c'tle-upon-Tyne, N.)

Hiley, Joseph

Brewis, John

Emery, Peter

Hill, J. E. B. (S. Norfolk)

Brinton, Sir Tatton

Errington, Sir Eric

Hirst, Geoffrey

Bromley-Davenport,Lt.-Col.Sir Walter

Eyre, Reginald

Hobson, Rt. Hn. Sir John

Brooke, Rt. Hn. Henry

Farr, John

Hogg, Rt. Hn. Quintin

Brown, Sir Edward (Bath)

Fisher, Nigel

Hooson, H. E.

Bruce-Gardyne, J.

Fletcher-Cooke, Charles (Darwen)

Hopkins, Alan

Bryan, Paul

Fletcher-Cooke, Sir John (S'pton)

Hordern, Peter

Buchanan-Smith, Alick

Forrest, George

Hornby, Richard

Buck, Antony

Foster, Sir John

Hornsby-Smith, Rt. Hn. Dame P.

Bullus, Sir Eric

Fraser, Rt. Hn. Hugh(St'fford & Stone)

Howe, Geoffrey (Bebington)

Burden, F. A.

Fraser, Ian (Plymouth, Sutton)

Hunt, John (Bromley)

Buxton, Ronald

Galbraith, Hn. T. G. D.

Hutchison, Michael Clark

Campbell, Gordon

Gammans, Lady

Iremonger, T. L.

Carlisle, Mark

Gardner, Edward

Irvine, Bryant Godman (Rye)

Carr, Rt. Hn. Robert

Gibson-Watt, David

Jennings, J. C.

Cary, Sir Robert

Giles, Rear-Admiral Morgan

Johnson Smith, C. (East Grinstead)

Chataway, Christopher

Gilmour, Ian (Norfolk, Central)

Johnston, Russell (Inverness)

Chichester-Clark, R.

Gilmour, Sir John (East Fife)

Jones, Arthur (Northants, S.)

Clark, Henry (Antrim, N.)

Glyn, Sir Richard

Jopling, Michael

Joseph, Rt. Hn. Sir Keith

Morrison, Charles (Devizes)

Stainton, Keith

Kaberry, Sir Donald

Mott-Radclyffe, Sir Charles

Stanley, Hn. Richard

Kerby, Capt. Henry

Munro-Lucas-Tooth, Sir Hugh

Steel, David (Roxburgh)

Kerr, Sir Hamilton (Cambridge)

Murton, Oscar

Stodart, Anthony

Kershaw, Anthony

Neave, Airey

Stoddart-Scott, Col. Sir Malcolm

Kilfedder, James A.

Nicholls, Sir Harmar

Studholme, Sir Henry

Kimball, Marcus

Nicholson, Sir Godfrey

Summers, Sir Spencer

King, Evelyn (Dorset, S.)

Noble, Rt. Hn. Michael

Talbot, John E.

Kirk, Peter

Nugent, Rt.Hn. Sir Richard

Taylor, Sir Charles (Eastbourne)

Kitson, Timothy

Onslow, Cranley

Taylor, Edward M. (G'gow, Cathcart)

Lagden, Godfrey

Orr, Capt. L. P. S.

Taylor, Frank (Moss Side)

Lambton, Viscount

Orr-Ewing, Sir Ian

Teeling, Sir William

Lancaster, Col. C. G.

Osborn, John (Hallam)

Temple, John M.

Langford-Holt, Sir John

Osborne, Sir Cyril (Louth)

Thatcher, Mrs. Margaret

Legge-Bourke, Sir Harry

Page, John (Harrow, W.)

Thomas, Sir Leslie (Canterbury)

Lewis, Kenneth (Rutland)

Page, R. Graham (Crosby)

Thomas, Rt. Hn. Peter (Conway)

Litchfield, Capt. John

Pearson, Sir Frank (Clitheroe)

Thompson, Sir Richard (Croydon, S.)

Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)

Peel, John

Thorneycroft, Rt. Hn. Peter

Lloyd, Ian (P'tsm'th, Langstone)

Percival, Ian

Thorpe, Jeremy

Lloyd, Rt. Hn. Selwyn (Wirral)

Peyton, John

Tiley, Arthur (Bradford, W.)

Longden, Gilbert

Pickthorn, Rt. Hn. Sir Kenneth

Turton, Rt. Hn. R. H.

Loveys, W. H.

Pike, Miss Mervyn

Tweedsmuir, Lady

Lubbock, Eric

Pounder, Rafton

van Straubenzee, W. R.

Lucas, Sir Jocelyn

Powell, Rt. Hn. J. Enoch

Vaughan-Morgan, Rt. Hn. Sir John

McAdden, Sir Stephen

Price, David (Eastleigh)

Vickers, Dame Joan

Mackenzie, Alasdair (Ross&Crom'ty)

Prior, J. M. L.

Walder, David (High Peak)

Maclean, Sir Fitzroy

Quennell, Miss J. M.

Walker, Peter (Worcester)

Macleod, Rt. Hn. lain

Ramsden, Rt. Hn. James

Wall, Patrick

McMaster, Stanley

Rawlinson, Rt. Hn. Sir Peter

Walters, Dennis

McNair-Wilson, Patrick

Redmayne, Rt. Hn. Sir Martin

Ward, Dame Irene

Maddan, Martin

Rees-Davies, W. R.

Weatherill, Bernard

Maginnis, John E.

Renton, Rt. Hn. Sir David

Webster, David

Maitland, Sir John

Ridley, Hn. Nicholas

Wells, John (Maidstone)

Marples, Rt. Hn. Ernest

Ridsdale, Julian

Whitelaw, William

Marten, Neil

Robson Brown, Sir William

Williams, Sir Rolf Dudley (Exeter)

Mathew, Robert

Rodgers, Sir John (Sevenoaks)

Wilson, Geoffrey (Truro)

Maude, Angus

Roots, William

Wise, A. R.

Mawby, Ray

Royle, Anthony

Wolrige-Gordon, Patrick

Maxwell-Hyslop, R. J.

St. John-Stevas, Norman

Wood, Rt. Hn. Richard

Maydon, Lt.-Cmdr. S. L. C.

Sandys, Rt. Hn. D.

Woodhouse, Hon. Christopher

Meyer, Sir Anthony

Sharples, Richard

Woodnutt, Mark

Mills, Peter (Torrington)

Shepherd, William

Wylie, N. R.

Mills, Stratton (Belfast, N.)

Sinclair, Sir George

Yates, William (The Wrekin)

Miscampbell, Norman

Smith, Dudley (Br'ntf'd & Chiswick)

Younger, Hn. George

Mitchell, David

Smith, John

Monro, Hector

Smyth, Rt. Hn. Brig. Sir John

TELLERS FOR THE NOES:

More, Jasper Morgan, W. G.

Soames, Rt. Hn. Christopher

Mr. McLaren and Mr. Pym.

Spearman, Sir Alexander

Resolved,
That this House supports the Government's determination to strengthen the balance of payments; to achieve an effective policy for raising productivity, holding down prices and increasing the real value of incomes; to plan more rapid economic growth and a better balance between the Regions; to secure greater social justice; and congratulates them on the notable progress they have made towards these ends.

BUSINESS OF THE HOUSE
Ordered,
That the Proceedings on the Motion relating to the Business of the House may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Bowden.]
Ordered,
That Government Business shall have precedence on Friday 4th March.—[Mr. Bowden.]

CONSTRUCTION INDUSTRY WORKERS (SAFETY AND WELFARE)
10.13 p.m.
Mr. Geoffrey Howe: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Construction (Working Places) Regulations 1966 (S.I., 1966, No. 94), dated 31st January, 1966, a copy of which was laid before this House on 11th February, be annulled.
It will perhaps be for the convenience of the House if we discuss at the same time the other Motion:
That an humble Address be presented to Her Majesty, praying that the Construction (Health and Welfare) Regulations 1966 (S.I., 1966, No. 95), dated 31st January, 1966, a copy of which was laid before this House on 11th February, be annulled.
Mr. Speaker: So be it. If it suits the convenience of the House I have no objection.
Mr. Howe: After the excitement of the earlier part of the evening, it is appropriate that we should devote a certain amount of time to these two apparently rather staid Statutory Instruments. They are examples of the extent to which our promises and aspirations as legislators sometimes outstrip our performance. Moreover, they are very important in their own right because they give the House an opportunity to consider the very grave problem of the rapidly rising casualty rate in industry, especially in the construction industry.
The scale of casualty in that industry can be usefully compared with the pattern of casualties in other industries. I see only today that in the farming industry, which has been protected since the passing of the 1956 Act by the last Conservative Government, the casualty rate this year was the lowest ever and that, although in manufacturing industry generally last year there was an increase of 29 per cent., it is very sad that there was a much sharper increase in the rate of 40 per cent. in the construction industry.
What is perhaps more important is the extent to which the casualties in the construction industry, in contrast to those in other industries, are fatal. There was a letter written to The Times almost four
1242
years ago, on 30th August, 1962, by the then secretary of the National Federation of Building Trade Operatives who pointed out that, although the construction industry employed only 6 per cent. of those employed in industry, it experienced 12 per cent. of the industrial accidents and 39 per cent. of the fatal accidents in industry.
Therefore, it is not surprising, although very tragic, that in 1964 there were 277 fatal accidents in the construction industry, very many times more, percentage-wise, than on farms or in factories generally. And it is massively more than the percentage of fatal accidents in, for example, offices, shops and railway premises, to which protection was extended only two years ago. I understand that in those categories of employment there were no more than 12 fatal accidents in the period 1963–64.
I am sure that the House would agree with the description of the Merseyside secretary of the Transport and General Workers Union when, speaking at a conference in Manchester on 1st December last, he said:
"Every building site is virtually a battlefield. You find tremendous hazards all over the place."
That is reported in The Times for 2nd December. I am sure that all hon. Members agree with that, and that is why these Regulations are important.
I should like to ask the Parliamentary Secretary certain general questions about the Regulations before turning to particular points. First, I think that these constitute the fifth batch of Regulations dealing with the construction industry inended to replace the 1948 Regulations. There were Regulations in 1958, 1960 and two batches in 1961. They now constitute, as we are told, a complete code for the industry. Can the Minister assure us that before long all these Regulations will be consolidated into one general code for the use of those who have to regulate safety in these industries?
Secondly, it is probably opportune to mention the consequences of the, Brent Cross accident into which an inquiry was held. The commissioner who conducted the inquiry, Mr. Fay, reported last year. The accident, it will be remembered, involved the collapse of a

1243
crane with certain fatal consequences on the North Circular Road. It occurs to me that these Regulations might conceivably provide the opportunity for beneficial legislation to prevent accidents of that kind and to remedy the position for those involved in them.
I know that my hon. Friend the Member for Crosby (Mr. Graham Page) would like to raise a point concerning the extent to which the Regulations are ultra vires in so far as they seek to deal with people outside the category of persons employed. Whether they are ultra vires or not, I should like to know from the Parliamentary Secretary when his right hon. Friend the Minister expects to bring forward legislation expressly intended to prevent the kind of accident that occurred on the North Circular Road and to give statutory rights of action to people injured in an accident of that kind.
In a Written Answer on 1st November last year, the Minister told one of his hon. Friends that he was giving urgent consideration to legislation of this kind. I should like to know, therefore, when that legislation will be forthcoming.
Regulation 3 of the Construction Regulations defines the people upon whom obligations are placed to comply with the Regulations. Substantially, it re-enacts the obligations contained in the Building Regulations and the Construction (General) Regulations, but there is one point which I wish to raise. As the Parliamentary Secretary will know, concern is occasioned in the industry and among the unions dealing with the industry by the existence of some very small subcontracting firms which are not properly insured for employers' liability and which are able to evade direct responsibility for compliance with some of the Regulations. It does not appear as though these Regulations carry the protection of the worker employed by those firms any further than those that went before.
Secondly, a curious device is employed in Regulation 3 whereby it is stated in paragraph (1,a) that the duty in respect of certain Regulations
"in so far as they relate to the falling or slipping of persons"
1244
is placed upon the employer. Subparagraph (b) states that the duty in so far as the Regulations
"relate to the falling of materials and articles"
is placed upon the other employer. This is a strange form of drafting, because there is surely a middle territory—the duty to secure compliance with the Regulations in respect of something other than the falling or slipping of persons and other than the falling of materials or articles—in respect of which the duty is placed upon no one.
To give an example, I refer to the duty to ensure that scaffolding shall be close-boarded and that the gap between planks should not be more than one inch. Suppose that there is a gap of two inches, into which the wheel of a wheelbarrow slips, so that the workman wheeling the barrow sustains a hernia because of obstruction when the wheel is caught in the gap which is too wide. That is an accident which does not involve the falling or slipping of persons or the falling of materials or articles but, nevertheless, arises from an apparent breach of the Regulations. This form of words, which differs from that of the preceding Regulations, may leave the workman with no remedy in that respect.
These Regulations still apply only to buildings, which are more widely defined than in the 1948 Regulations. As far as I am aware, no Regulations are yet in existence to protect workmen concerned with the installation of plant in a factory when such plant is held not to constitute a building. For example, men employed in installing a furnace or parts of a power station have been held to be unprotected. Does the Minister visualise any extension of the Regulations to deal with those concerned with the installation of plant as opposed to those dealing with the construction of the actual buildings?
A further point which was considered by the Commissioner who considered these Regulations in draft is that Regulation 6—this is a matter of some importance—of the Working Places Regulations adopts for the first time a different formula for defining the duty of the employer in respect of means of access to a place of work and in respect of the safety of that means of access. The formula in Regulation 6 differs, for

1245
example, from that to which everyone in industry has become accustomed and is in Section 29(1) of the Factories Act, 1961. A very curious provision is that it differs from the other Regulations with which the House is simultaneously concerned. Regulation 16 of the Health and Welfare Regulations adopts something which is closer to the old formula.
The difference, if I can identify it precisely, is this. Regulation 6 of the Working Places Regulations, having provided that "so far as is reasonably practicable" suitable and sufficient safe access to and egress from shall be provided, goes on to say without qualifications that that
"access and egress shall be properly maintained".
So that it imposes in respect of a duty to maintain an absolute duty in contrast to that which went before.
The Commissioner considered this. Objection was made before him to that extension to make it an absolute duty, and he thought it was right to do so. I would question whether it is necessarily a wise extension because it does impose upon the employer, for example, an absolute duty to obtain the removal of the stray bits of wood and such temporary obstructions on a gangway.
This is an absolute duty placed for the first time by that Regulation for construction sites. If it is right that there should be placed an absolute duty in respect of access to and egress from places of work, why under Regulation 16 of the other Regulations is it not right for him to be placed under the same obligation in respect of access to and egress from a lavatory or canteen? If we are making this departure why should it not be done consistently?
One final point of detail on Regulation 38 dealing with safety belts, safety nets and safety sheets. I am sure that it is right for the legislature to try to move further in the direction of providing protection in respect of falling accidents when scaffolding of the conventional kind cannot be provided. I am sure the intention of Regulation 38 is right, because in the construction industry such a large proportion of fatal accidents arise from falling, but I wonder, and I ask the Parliamentary Secretary, whether it is right to have in Regulation 38(1) the qualification that provisions of this kind
1246
shall be made "where practicable" rather than "where reasonably practicable", because to say that it must be done "where practicable" imposes a duty of immense consequence and possibly of immense expense, and the more conventional phrase "where reasonably practicable" would cover a large number of cases and would be something with which industry could cope, at least in this stage of extending protection of that kind to the worker.
I have a few brief question about the whole pattern of enforcement of legislation of this kind. The Factory Inspectorate has got extensive duties under the Factories Acts, extensive duties under these Regulations, extended duties in respect of at least part of the Offices, Shops and Railway Premises Act, and I should like to know to what extent it is up to establishment and to what extent the establishment is sufficient. If I read the books aright, then, according to the Report of Her Majesty's Chief Inspector of Factories for the year 1964, at the end of that year we were 43 below establishment. A few weeks later, from an Answer to my hon. Friend the Member for Worcester (Mr. Peter Walker), on 22nd February, 1965, it appeared that we were 32 light. That Answer may be found in the Written Answers, column 12, of the OFFICIAL REPORT for that day. So some progress had been made in those few weeks. A couple of months after that, on 26th April, 1965, in answer to the hon. Member for Birkenhead (Mr. Dell), at column 17 of the Written Answers, it appeared that we were 35 light. So that the gap was widening again. In fact, the gap at that point was almost equal to the whole of the increase in establishment provided for to cope with the Offices, Shops and Railway Premises Act. Have we made headway? Is the gap narrowing? It is very serious if it remains wide, because these important Regulations cannot be enforced.
Secondly, the same Report of Her Majesty's Chief Inspector of Factories showed that in 1964 there was a massive and continuing failure to report accidents, and that the failure was worst of all in the construction industries, where over half of all the accidents that were regarded as reportable were not reported. In the construction industries, non-reporting was half as much again as the average in industry as a whole.

1247
Thirdly, to what extent are the Government satisfied and to what extent is the House satisfied about the level of the penalties that are being imposed by the courts for breaches of Regulations of this kind? I have seen two calculations of the average penalty in 1964. An article in New Society on 23rd September of last year said that the average penalty was £33. An article in the Financial Times on 15th February of this year, which may or may not be more accurate, said that the average penalty was £25. Either way, when set against the maximum penalties, and when one remembers that only a tiny percentage of the offences are the subject of prosecution, the penalties that are imposed seem very light.
Under the Road Traffic Act, someone who operates an unsafe motor vehicle on the road can, in the last resort, be imprisoned. Again under the Road Traffic Act, the Ministry inspector who identifies a vehicle which is unsafe has power there and then to condemn it and withdraw it from use. Yet, in the construction industry, there is no comparable power to condemn a piece of lifting equipment or another piece of plant and withdraw it from use right away.
What does the House think about it? Are the penalties severe enough, and are we seeing them enforced as heavily as we ought to do, when casualties in the construction industry in one year approach the number of people killed on the roads in a fortnight? It is quite a substantial figure. Is this patchwork progress of legislation on industrial safety really the best way of setting about it? Is it not getting to be time for a complete review of the whole pattern of protective legislation, because some people in some industries are protected properly, and others scarcely at all? We depend upon a jerky progress of modernisation of Regulations, and, while that patchwork pattern exists, should we not at least provide for the compulsory insurance of all employers in respect of their liability under industrial accidents? I put that point to the right hon. Lady the Minister of Pensions before Christmas.
Is it not to some extent vain for the House to approve these Regulations if
1248
it does, when there will still be employers who are not insured in respect of their breaches of them? If we oblige the owner and driver of a motorcar to be insured, just as we did in respect of the coal mines under the old Workmen's Compensation legislation, ought we not to require all employers to be insured in respect of their liability for breaches of Regulations of this kind?
10.34 p.m.
Mr. Eric S. Heffer: On the basis of the speech made by the hon. and learned Member for Bebington (Mr. Howe), I am assuming that this Prayer is merely a probing exercise and that it is not seriously intended by the Opposition to force it to a vote in any way.
I am sure that that must be the position, because, while we cannot be entirely satisfied with these Regulations, for people who work in the construction industry they are a further advance on the previous Regulations. We have seen a steady advance over the years in the Health and Welfare and Safety Regulations.
Mr. Howe: I should have made it clear—not for the hon. Member's guidance but for the guidance of those outside—that our Prayer was tabled to probe the Regulations. This is the only way in which the Opposition can express their concern about the importance of the Regulations, and ask questions of the kind that I have posed.
Mr. Heffer: I thank the hon. and learned Member for that explanation, and I also thank the Opposition for providing the opportunity to discuss these Regulations. It is very important that we should discuss them, for the reason that there is still a high accident rate in the building industry. But I cannot understand why the hon. and learned Member, while accepting the fact that the accident rate is extremely high and needs to be brought down, should contrast paragraph 6 of the working places Regulations with paragraph 16 of the health and welfare Regulations. In my experience of the building industry it is absolutely essential that these Regulations should be tightened up to make it compulsory for the employers to provide the maximum safety methods.
The construction industry is quite different from any other industry. Its very

1249
nature involves more danger, especially for workmen working on high buildings. Therefore, for the Regulations to provide that these precautions must be taken is clearly a step in the right direction. Unfortunately, too many employers continue to flout the Regulations. This arises from the fact that many construction workers are not fully acquainted with the Regulations, and also because there is an insufficient number of inspectors to enforce them.
I want to draw attention to one or two points in the health and welfare Regulations—and especially to paragraph 14. In sub-paragraph (2) it is provided that
"every sanitary convenience (other than a convenience suitable merely as a urinal) shall be under cover and so partitioned off as to secure privacy, and shall have a proper door and fastening."
That would not appear to be a great revolutionary advance, but for those who have worked in the industry for many years it is. I have seen many building sites on which these provisions did not exist, and where the workers were expected to use disgraceful toilets. Therefore, this is excellent. Of course, they are no different from the previous position, but over the years it has been essential to press forward with this type of Regulations.
Too many employers, even today, in the building industry still treat their workers as they were treated in the book "The Ragged-Trousered Philanthropists". It is essential that the Regulations should be strictly enforced. They do not entirely satisfy the trade unions and the workers in the construction industry. Naturally, they never will entirely satisfy them. We want to see the Regulations continually being improved. I agree with the hon. and learned Member for Bebington that they ought all to be brought together in one handy form so that they can be understood clearly in one useful document by the workers in the construction industry.
10.41 p.m.
Mr. Graham Page: I would certainly agree with the last remarks of the hon. Member for Liverpool, Walton (Mr. Heffer). Regulations of this type have come forward in a piecemeal fashion and I hope that we shall have a full set at some time. The hon. Mem-
1250
ber dealt with the Regulations from the point of view of the building industry and its employees, of whom he has great knowledge. I should like to call the attention of the House to the position of the public and to the extent to which the Regulations seek to protect the public and, perhaps, fail to do so.
The Regulations are made under Section 76 of the Factories Act, 1961, which says:
"…where the Minister is satisfied that any manufacture, machinery, plant, equipment, appliance, process or description of manual labour is of such a nature as to cause risk of bodily injury to the person employed or any class of those persons"—
he may, subject to the provisions of the Act, make these Regulations.
It is necessary, as a condition precedent to making these Regulations, for the Minister to be satisfied that they are for the benefit of persons employed or a class of employed persons. There is no power under the Act I have mentioned to make Regulations solely for the benefit of the public. This may be a great pity, but that is how the Act stands.
In Regulation 3 of the Construction (Working Places) Regulations, there is a division in the liability of the contractor. It is clear from paragraph (l,a) that the liability arises in connection with Regulations
"…as affect him"—
that is, the contractor or employer—
"or any workman employed by him…"
This paragraph deals with Regulations as they affect the employed person and this is within the powers of the Minister under 76 of the Factories Act, 1961.
In paragraph (l,b), however, there is no mention of the employed person. It states that the liability is
"to comply with such of the requirements of the following Regulations as relate to any work, act or operation performed or about to be performed by any such contractor or employer of workmen…"
But this appears to be a general responsibility. One would read it, at first, as giving some protection to the public, as giving some right to a member of the public, if he is injured by a failure of the contractor or employer to carry out the duties under the Regulations, to claim for damages against the contractor. But that is not the case in law, and it could not be the case because only persons whom the

1251
Statute intended to benefit have any civil claim against a contractor who has failed to carry out the obligations of the Regulations.
If that is the position, these Regulations do not meet the sort of case mentioned by my hon. and learned Friend the Member for Bebington (Mr. Howe)—the tragic case of the crane which collapsed at Brent Cross and other cases where cranes have toppled on to persons and vehicles passing in the street. There have been a number of very tragic accidents to the public from the failure to take care to carry out these safety Regulations. Yet the Minister has no power under the Act nor, as far as I am aware, under any Act, to make Regulations which are solely for the benefit of the public when a contractor fails to carry out his duties to make his work safe.
If there was an injury to a member of the public by reason of the failure of a contractor to carry out his duty under the Regulations, would there be any right, under these Regulations, even to prosecute that contractor? It would, I believe, be necessary to show that the Minister had power to make these Regulations, and he has that power only if the Regulations are made to benefit employed persons. I suggest that there would be great difficulty in prosecuting a contractor if he had failed to carry out these Regulations and there occurred some injury to a member of the public and not to an employed person.
It is worth recording these points while the Regulations are before the House. It may be that on some future date, if we find now that the Regulations do not protect the public as we might wish them to do, fresh legislation will be necessary to give the Minister power to make Regulations to protect the public.
There have been many serious accidents concerning building works alongside roads. Only a short distance from this House a whole building in the course of demolition not long ago collapsed across Victoria Street. It might have been a tragic accident had it occurred at any other time of the day than when it did occur. There have been other cases of that sort, where the results have been more tragic. I hope that we will find some way to produce valid Regulations to protect people from the failure of con-
1252
tractors to make their buildings and operations safe, not only to their employees but to the public.
10.49 p.m.
The Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton): I wish at the outset to express my appreciation of the reasonable and informed way in which the hon. and learned Member for Bebington (Mr. Howe) approached these rather complicated and technical Regulations. As he will appreciate, I cannot agree to the Motion, although he made it clear that he was conducting a probing operation, which it is proper for the Opposition to do. I welcome the opportunity afforded us of discussing the safety record of the construction industry, and I say at the outset that I agree with all the comments made by the hon. and learned Gentleman about the very serious nature of this rising trend of accidents.
Hon. Members have made it clear that, whatever may be said, the present accident position in this industry is a bitter disappointment to us all. I do not think for a moment that anyone would dispute this. Until the late 'fifties, it looked as though we were making real progress in accident prevention. Year by year the statistics of accidents reported in accordance with the Factories Act declined. Then, between 1958 and 1959, the trend changed. Since then, reported accidents, not only in the construction industry but in the whole of industry covered by the Factories Act, have been rising continuously.
I do not think it necessary to give the House the detailed figures of the rising trend of accidents in the construction industry. Last week, the provisional figures of reported accidents in the industry for the fourth quarter of 1965 were published in the Ministry of Labour Gazette. By adding these figures to the total for the first three quarters of the year, we get a provisional total for the whole year of almost 44,500. This, I regret to say, represents a further increase of nearly 10 per cent. on the already appallingly high figure for 1964. A little simple arithmetic will show that for 1965 the accident total was nearly 75 per cent. higher than it was in 1962—
Mr. Heffer: Has my hon. Friend the figures of the prosecutions resulting from accidents through negligence?
Mr. Thornton: I am afraid I could not give that information without notice.
There are, I must make clear, a number of qualifications to these disturbing figures that I have just given to the House and which it is necessary for us to bear in mind. The first is the proportion of accidents which are reported. Surveys on the reporting of accidents were carried out with the co-operation of the Ministry of Pensions and National Insurance in October, 1962, and again in April, 1964. Since the 1964 survey, we have been experimenting with a possible method of obtaining continuous information of the reporting standards. At the moment, however, the results are not sufficiently conclusive to enable me to say whether the reporting standard has changed and, if so, to what extent it has changed.
In view of the publicity given to the 1964 survey results, and the special efforts that have been made by the Chief Inspector of Factories and his staff and by the employers' organisations to improve the reporting standards, it seems to me reasonable to assume that any change in these standards will have been for the better. To the extent that this has happened, there would be an inflation of the accident figures.
Another factor which has to be borne in mind is the extent of exposure to risk. We have to remember that both the numbers employed in the construction industry and their average hours of work have increased in the period to which I have been referring. Nevertheless, although all our present statistical information does not enable us to calculate the weight to be given to those factors, it seems clear that there has been a substantial real increase in the incidence of accidents in the industry.
This, as the House will agree, is a wholly unacceptable situation. We do not have to accept it, and there is nothing inevitable about the human suffering for which these accident figures so tragically stand. The vast majority of accidents are due to human failures of one kind or another, and can be prevented. The responsibility for this grevious state of affairs rests fairly and squarely upon the industry. While I accept that the Government have an important part to play, it remains true that, ultimately, only those engaged in the industy can make it safer.
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I should like to say a word about safety training, because it is fundamental to the success of all accident prevention activities that workers should be so trained that they act in a safe way at all times. A worker who has not been properly trained may, through lack of adequate knowledge of the hazards which face him, interfere with the safeguards provided for his protection. He may fail to use protective clothing and equipment available for him or adopt an unsafe way of doing a job.
The Central Training Council has recognised this and has given general guidance on the matter for training boards, including of course, the Construction Industry Training Board. I am glad to tell the House that the Construction Industry Training Board has recognised courses in safety training for grant purposes. In the training of operatives, generally we must look to the construction industry in its training programme to implement the basic principle that the safe way to do a job is an integral part of the right way of doing the job.
Over and above this, however, there are some special safety training needs. Contractors' agents, safety supervisors, foremen and apprentices, can all benefit from safety training geared to their particular requirements. The industry has already made a substantial effort in safety training and I am glad to pay tribute to what has been achieved. A number of safety training centres have been established at various places. In 1964 these provided courses for 1,600 safety supervisors and about 1,500 other workers. Members of the Factory Inspectorate give lectures at the courses and some of the centres operate in premises at Government training centres. I am glad that we have been able to help in these ways.
From the figures I have mentioned the House will see that there is need for further development before it can be claimed that provision for safety is adequate. We should continue to encourage and support the spread of these activities. Closely associated with safety training is propaganda for safety. Carefully prepared and judiciously administered propaganda can make a very valuable contribution to accident prevention. I

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have recently seen a film entitled "The Choice is Yours". This film was produced by the Federation of Civil Engineering Contractors jointly with the trade unions represented on the safety committee of the civil engineering side of the industry. It is an excellent film and I think it will have a considerable impact on the audiences on construction sites in various places where it is shown. One of the most constructive services which an employers' organisation can give to its members is to supply a constant, but not indigestible, stream of effective propaganda.
I can assure the House that the Government will continue unremitting search for new lines of attack on all problems and to find solutions for the many new ones constantly thrown up. I might mention in particular a recent development. Although the construction industry and the Factory Inspectorate have a great deal of knowledge about how construction accidents happen, we know less about their underlying causes, and in particular why they have been increasing at such an alarming rate. In an attempt to throw light on these problems, my right hon. Friend has instituted a special inquiry into a small carefully selected group of construction sites. This inquiry, which has been undertaken by two inspectors who have been detached from normal duty, was planned in consultation and agreement with the Joint Advisory Committee on Safety and Health in the Construction Industry. It commenced in January, and it is expected to take about six months. The results will be reported to the Joint Advisory Committee, and in the light of the outcome we intend to re-examine existing accident prevention policy and practice.
The hon. and learned Member for Bebington raised the question of the inspectorate and the construction inspectors. I agree that this is a most important subject. About two years ago, it was decided to put a number of experienced inspectors full time on construction work. This produced an improvement, but we are still not satisfied and we are considering possible ways of increasing the amount and the effectiveness of construction inspection. The hon. and learned Gentleman mentioned
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the possible effect of the Offices, Shops and Railway Premises Act and, quite properly, called attention to the fact that we were still somewhat short of the establishment in the Factories Inspectorate as a whole. I can assure him that we are doing all we can to get the inspectorate up to full strength. The House will recall that, some months ago, my right hon. Friend made quite clear that, once he had got the establishment up to its full target, he would not hesitate to expand it if he thought that necessary in all the circumstances.
The hon. and learned Gentleman pointed out that the Offices, Shops and Railway Premises Act had made an additional call on the inspectorate, but I assure the House that this has had no effect on the adequacy of construction inspection. A special addition of 42 posts to the strength of the inspectorate was authorised to enable this new block of work to be tackled.
I turn now to the question of legislation. The House will recognise the importance of the standards laid down in the Factories Act and the Regulations made under it. The special attention of the House has tonight been directed to two new codes of Regulations for the construction industries which my right hon. Friend has recently laid before it. One of these deals with the health and welfare of construction workers, and it was to this that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) directed particular attention. But the debate has been concerned mainly with safety. It is a fairly common misapprehension that the Factories Act is concerned only with safety. I am glad, therefore, that opportunity has arisen through this debate to stress the importance of the health and welfare matters with which those Regulations deal.
I am sure that we all agree that, in this day and age, workpeople are entitled to reasonable and civilised amenities in their places of work, and for that reason the Construction (Health and Welfare) Regulations are a landmark, laying down detailed standards for the provision of such things as lavatories, washing facilities, shelter and accommodation for clothing and facilities for taking meals on construction sites.

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Together with the Construction (Working Places) Regulations, they complete the major task, begun in 1961 with the Construction (General Provisions) and the Construction (Lifting Operations) Regulations, of revising and extending the civil engineering provisions previously applicable only to building work. These two new codes have been hammered out as a result of the fullest consultation with all interested industrial organisations and following a public inquiry conducted by Sir George Honeyman. The Regulations which are now before the House are in the terms which Sir George recommended.
I might at this stage try to answer some of the points that have been put to me. I will certainly do the best I can, although they are very highly technical points. I thank the hon. and learned Member for giving me an indication of the points that he intended to raise, for it has given me a better opportunity of giving some intelligible answers on these highly technical points.
First, I deal with the Brent Cross accident inquiry, to which both hon. Gentlemen opposite referred. I have been reminded that a Government statement was promised some time ago on the recommendations made in the report of the formal investigation into the most tragic crane accident at Brent Cross, Hendon, on 20th June, 1964. The report was published on 22nd September, 1965. I realise that there is great interest in these recommendations, and am indeed sorry that I have to ask the House to be patient for a little longer. Some of the recommendations which were made—for example, that members of the public should be brought within the scope of the Factories Act, a point made by the hon. Members for Crosby (Mr. Graham Page)—are of a very far-reaching nature and require very careful study and interdepartmental consultation. Our thinking on these questions is now well advanced, and I am confident that the Government's views will be made known to the House in the near future. I am afraid that I cannot go further than that tonight.
The hon. and learned Member for Bebington raised the question of "labour only" sub-contracting. This is a very difficult point, I agree. There is the subcontractor who employs labour, and the
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employees of this type of sub-contractor are fully covered by the Regulations. I think that we all appreciate that. The other kind is the individual workman who contracts to perform certain work as an independent sub-contractor. Broadly speaking, if it can be shown that the main contractor controls the manner in which the work is done, the worker's position will be the same as that of any other employee. If, however, he is a genuine self-employed sub-contractor, he himself is not protected by the Regulations. Such protection is not possible under the Factories Act in its present form. He does, however, himself owe a duty under the Regulations to persons employed on the site. The main outstanding point here is whether this type of sub-contractor should be protected. As I have pointed out, we cannot do this under existing powers, but we shall certainly keep a close watch on the situation as it develops.
Mr. Graham Page: If a Regulation is for the benefit of an employed person as well as for the benefit of an independent contractor, it may be that the independent contractor has no claim for damages. But there is no need for an accident to occur before a prosecution can occur. Surely, if the regulation is for two classes of person, one within the Act, prosecution can be brought if the Regulation is not observed?
Mr. Thornton: I am not sure whether I follow the hon. Gentleman. Is he dealing with the point in the Regulations that it may be possible for a member of the public to be protected under the Regulations?
Mr. Graham Page: Obviously, I did not make my point clear. Provided that the Regulation is valid in that it protects an employed person, it may accidentally protect a member of the public or an independent contractor, and under Section 155 of the Act there is no need to prove that an accident has happened to anybody before a prosecution is taken for failure to obey the Regulations.
Mr. Thornton: I am advised that the Regulations do not protect members of the public or persons other than those employed. Regulation 3(1,b) is similar to the provisions in the 1948 and 1961 Regulations and I am advised that the formula has never been challenged. That is the position as I understand it and I

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hope that that answers the hon. Gentleman.
The hon. and learned Member for Bebington called attention to the wording of Sections 29 and 127 of the Act. I am advised that Section 29 is not applied by Section 127 to building operations and works of engineering construction. Under Section 76 of the Act, the Minister may make such Regulations as are reasonably practicable to meet particular needs. Circumstances on construction sites are very different from those in factories and Sir George Honeyman clearly considered, after hearing all the arguments, that the provisions to which attention has been drawn were relevant to and reasonable for construction sites. I think that we should accept the view of Sir George Honeyman who went into this matter, as the hon. and learned Gentleman pointed out, very fully.
The hon. and learned Gentleman referred to the case of Elms v. Foster Wheeler. There have been three or four cases in which the courts have expressed the view that the installation of plant, if contemporaneous with the construction of the building, is part of the building operation. I frankly admit that this still leaves certain plant installation uncovered. Correction of this situation would require amendment of the Act, and I assure the hon. and learned Gentleman that this will be considered at the appropriate time.
The hon. and learned Gentleman referred to Regulation 38. Basically, this Regulation requires safety nets where safe working platforms cannot be provided and it is practicable to provide such nets. Nets are not, however, required where it is impracticable to provide them, where work is of short duration, or where it is not reasonably practicable to provide them because of the frequent movement of materials. Employers need to ensure only that safety belts are in fact used where nets would be practicable, but the belts are provided as an alternative by the deliberate choice of the employer. The intention is to require the employer to take action to ensure the safety of his workpeople while leaving him with sufficient freedom of choice to prevent the Regulations from becoming too onerous. Sir George Honey man considered this latter point in his report.
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The hon. and learned Gentleman suggested the inclusion of "reasonably" before "practicable" in this Regulation. I have gone into the meaning of "reasonably practicable" with some care and I am quite satisfied that if we were to introduce "reasonably", it would make the Regulations too loose. I understand that in the operation of the Factories Acts "reasonably practicable" and "practicable" have their own particular understood meanings and interpretations. We certainly could not hold out any assurance that even in the future we would introduce "reasonably" here.
Lastly, I have been asked whether I consider that the penalties are severe enough under present conditions. I should not like to express an opinion on this, but I promise that I will have discussions with my right hon. Friend.
I think that I have now answered most of the points raised. I accept that there are points which a number of interested bodies would like to see changed, but this is inevitable.
In Regulations of this kind, which have been the result of long drawn-out consultations, it is impossible to satisfy everyone. There comes a time when a decision has to be made, and if we are to make progress with accident prevention it is important that these Regulations should remain in being. I assure the House that if their implementation gives rise to serious difficulties we shall reconsider the situation, when, as we intend, we embark upon the consolidation of the four major construction codes in two years' time.
Having given these assurances and explanations, I hope that the House will not attempt to press the matter further tonight.
Mr. Howe: I am sure that the whole House is grateful to the Parliamentary Secretary for having dealt with many technical points raised on these Regulations. It is good to know that the homework of the Department is proceeding to a point when my hon. and right hon. Friends on this side of the House will be able to make good use of it, even if that be two years ahead, as he indicated.
The Parliamentary Secretary failed to answer my question as to whether the

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Factory Inspectorate was up to establishment. The hon. Member for Liverpool, Walton (Mr. Heffer) raised the question of the frequency of prosecutions. The Parliamentary Secretary did not have the figures for the construction industry; nor have I, but the figures I have for factories and the construction industry as a whole in 1964 fortify my point that enforcement is not vigorous enough. In 1964 there were 269,000 accidents in factories and the construction industry, and there were only 2,449 convictions. This is a rate of 1 per cent.
Those 2,449 convictions produced only £25 on the average, by way of penalties. I very much hope that those responsible for any legislation revising the Factories Acts and any other Regulations will consider whether the policy of gentle persuasion ought not to be replaced by something more vigorous. I hope that the hon. Member for Walton will forgive me if I say that while the over-riding responsibility for the enforcement of codes of this kind rests upon management, there is also heavy responsibility upon the workmen employed, particularly in the construction industry, where employment is casual and training difficult.
Mr. Heffer: The general feeling in the industry among trade unionists is that each construction worker should be his own safety officer.
Mr. Howe: I am grateful to the hon. Member for that intervention. It appears that the Parliamentary Secretary considers that the existing legislation is not sufficient to provide protection for members of the public against what might be called the Brent Cross type of accident.
A short note in the Economist of 6th November last year pointed out the tragic fact that in the five weeks following publication of the report of the Brent Cross inquiry, three fatal crane accidents occurred, one in London, one in Bradford and another in Hull. I hope that those responsible will take these further tragedies as plain warning that it is time that we introduced effective legislation to protect the public in this kind of situation and had the courage to enforce it properly before many more tragedies of this kind occur.
I hope that the House will forgive me for having, as it were, had a second
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bite at the cherry. In view of the answers given by the Parliamentary Secretary, I beg to ask leave to withdraw the Motion.
Motion, by leave, withdrawn.

HEARING AIDS
11.21 p.m.
Mr. Laurence Pavitt: I beg to move,
That leave be given to bring in a Bill to provide for the establishment of a Hearing Aids Council to register firms engaged in retail selling of hearing aids, to advise on the training of salesmen and audiological technicians, and to regulate trade practices.
I am grateful to you, Mr. Deputy Speaker, and to others who serve the House for acting as a sort of human hearing aid in the absence of the 625 pairs of ears with which I hope to communicate during the next 10 minutes. As is known, I have a hearing disability and, therefore, I have an interest to declare as one of the consumers of this service.
In seeking consumer protection for this comparatively small disability, but one which nevertheless affects a large number of people, I want to make it clear that the Bill that I seek to introduce is not directed against the reputable and ethical firms which deal in hearing aids and whose record is extremely good. I am seeking to establish protection against those which are not within the same code of practice as is adopted by the ethical firms.
I pay tribute in particular to one firm—Multitone—whose trade practice, service and the way in which it is able to give a considerable amount of advice and free demonstration to its customers is beyond reproach. Other members of the Hearing Aid Manufacturers and Suppliers Association operate a code of practice which gives guidance on the rules of advertising. These things, however, good as they are, are operated only on a voluntary basis through a joint advisory co-ordinating committee of the Hearing Aid Manufacturers and Suppliers Association, which represents of necessity only the interests of the trade. The consumer is not represented.
The Bill which I wish to introduce provides for a Hearing Aids Council to

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be set up by the Minister of Health. On that Council, not only the trade associations and firms would be represented, but also the organisations which care for the welfare of the deaf, representatives of public bodies and representatives of the training bodies which deal with audiological technicians. The Bill would have to contain a Schedule, which, naturally, could be discussed in Committee, but the principle which I seek to introduce is that the majority control should be in the hands of the non-trade members—that is, the consuming public—and that the chairman should not be part of the trade machinery.
The purpose of the Council would be to establish and maintain a register, which would provide for the fact that only those firms that were on the register could be permitted to offer, to sell, to provide and to fit hearing aids to the general public.
In the three months from April to July, 1965, the Royal National Institute for the Deaf had 27 new cases of complaint, roughly one every three days. These arise from a number of difficulties which are caused to people who have to wear a hearing aid. Inadequate trial periods are a quite common complaint. There is also the fact that after a deposit has been paid, a hearing aid proves unsatisfactory and there is difficulty in securing the return of the deposit, and sometimes after a hearing aid has been proved to be unsatisfactory the need for continuous service is difficult to satisfy.
So the Bill would provide for a code of practice to ensure that only properly tested aids would be sold and no aid would be sold to a person suffering from a hearing disability unless the customer had been advised by a qualified medical practitioner that such a hearing aid would be of some service to him.
There are two types of deafness. One is conductive deafness and the other perceptive. Conductive deafness means that sound is being blocked and not activating the hearing mechanism. Some marvellous operations have been performed including some new ones in the last few years and have opened up a new field, and where indicated and successfully performed have meant that a hearing aid is not needed, or that certainly it would be unfair to the customer to sell him one.
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Perceptive deafness raises a different set of problems. It is an extremely difficult problem because a person may hear some tones but not others. I suppose every hon. Member has had experience with the elderly relative of whom it is said, "He can hear all right when he wants to". But he can hear some tones and cannot hear others. Sometimes a loud voice is more difficult to hear than a fairly soft one speaking with clarity.
So it is necessary that only an ear, nose and throat specialist should finally decide whether the expense of £60 or £70 or £80 is a justifiable expense on an aid, and in order that a person shall get the advice of the specialist a family doctor can give advice in the first case. No Medresco aid, issued through the National Health Service, is issued till a specialist has given approval.
The functions of the Council specified by the Bill would include care of proper training standards for audiological technicians; the vetting of advertisements; investigation of complaints; provision for disciplinary measures for those who contravene the rules and penalties to be enforced against those who do.
In my own disability I have learned that it is far easier to find sympathy for those who are blind than for those who are deaf, but deafness is a very difficult problem to cope with, and those who have to cope with it need all the help they can get. It needs a good deal of understanding, and I am afraid it needs quite a lot of education in order that people can best understand how to help people with hearing disability. In addition to this, there is need for the protection of the consumer, and although that is in a highly specialist field the number of people affected is large, especially as the population is growing and as the problems which come with longevity are becoming a typical part and parcel of everyday life.
For large numbers of people, therefore, this protection is urgently needed, and I hope the House will give me leave to bring in the Bill.
Question put and agreed to.
Bill ordered to be brought in by Mr. Laurence Pavitt, Mr. Robert Edwards, Mr. Turton, Mr. Alasdair Mackenzie, Mr. Will Owen, Dame Joan Vickers, and Lord Balniel.

HEARING AIDS

  HEARING AIDS
  Bill to provide for the establishment of a Hearing Aids Council to register firms engaged in retail selling of hearing aids, to advise on the training of salesmen and audiological technicians, and to regulate trade practices, presented accordingly and read the First time; to
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  be read a Second time Tomorrow and to be printed. [Bill 79.]

  ADJOURNMENT
  Resolved, That this House do now adjourn.—[Mr. Ifor Davies.]
  Adjourned accordingly at half-past Eleven o'clock.