Commons Sitting of 17 April 1969

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]

ROYAL ASSENT
Mr. Speaker: I have to notify the House in accordance with the Royal Assent Act, 1967, that The Queen has signified her Royal Assent to the following Acts:

1. Representation of the People Act, 1969.

2. Derby Corporation Act, 1969.

3. Bournemouth Corporation Act, 1969.

4. Coventry Corporation Act, 1969.

5. Northampton County Council Act, 1969.

6. Chelsea College, University of London Act, 1969.

PRIVATE BUSINESS
WALSALL CORPORATION BILL (By Order)
WEST BROMWICH CORPORATION BILL (By Order)
WOLVERHAMPTON CORPORATION BILL (By Order)
Second Reading deferred till Wednesday next at Seven o'clock.

ORAL ANSWERS TO QUESTIONS
  WALES

    Snowdonia National Park
    Mr. Peter M. Jacksonasked the Secretary of State for Wales what steps he proposes to take to ensure public access to those parts of the Snowdonia National park to which his attention has been drawn by the Executive Committee of the Rambler's Association; and whether he will make a statement.
    The Minister of State, Welsh Office (Mrs. Eirene White): A Working Party, consisting of representatives of the Welsh Office, Ministry of Agriculture, Fisheries and Food, the Countryside Commission, the Nature Conservancy and the local planning authority, is making a study of that part of Snowdonia purchased by the Secretary of State with a view to preparing a plan for its future use and management. Access to this land is one of the matters which is receiving special attention. Elsewhere access arrangements are under consideration between the planning authority and the Countryside Commission.
    Mr. Jackson: While thanking my hon. Friend for that reply, may I draw two matters to her attention? The first is that the Caernarvon County Council have still not produced a definitive footpath map. Second, it appears to be intended to sell off parts of the Vaynol estate, recently purchased by the nation, without any access agreements having been secured. Will it not be infinitely more difficult to secure those agreements once the land has returned to private ownership?
    Mr. Speaker: Order. Questions must be reasonably brief.
    Mrs. White: I share my hon. Friend's regret at the delay in publishing a definitive footpath map for Caernarvon, but we are in touch with the county council about it. As to the other part of my hon. Friend's Question, it is due to a complete misapprehension. My right hon. Friend has no intention of selling off any land until he has received the report of the working party.
    Mr. Gwynfor Evans: Is the hon. Lady aware that this is a good illustration of the need for the national parks of Wales to be administered by the people of Wales rather than by a national body, and the need for a Welsh Countryside Commission for that purpose?
    Mrs. White: If the hon. Gentleman studies the matter, he will appreciate that my right hon. Friend the Secretary of State has purchased a large area of Snowdonia, as Secretary of State for Wales, precisely for the benefit of the people of Wales and of other parts of the Kingdom.

    Carmarthenshire County Council (Secretary of State's Visit)
    Mr. Gwynfor Evansasked the Secretary of State for Wales if he will pay another visit to the Carmarthenshire County Council.
    The Under-Secretary of State for Wales (Mr. Ifor Davies): My right hon. Friend has no plans to visit Carmarthenshire County Council in the immediate future but he will certainly bear in mind the hon. Member's interest.
    Mr. Gwynfor Evans: Is the hon. Gentleman aware that members of the Carmarthenshire County Council were very impressed by his right hon. Friend's promise when he was last there in September that the Carmarthen diversionary road, so desperately needed, will be started this summer? Why did the Welsh Office subsequently state that it would not be started until next year? Who was right? Can we have an assurance that it will be this summer?
    Mr. Davies: There was no misunderstanding. It was made clear that it would be at the beginning of 1970. Let me make it clear that my right hon. Friend attaches great importance to this matter, but there was no misunderstanding on the issue.

    Activity Rate
    Mr. Gwynfor Evansasked the Secretary of State for Wales what plans he has to raise the activity rate in Wales.
    Mrs. White: I would refer the hon. Member to the policies set out in "Wales: The Way Ahead" (Command 3334) and to subsequent regional policy decisions which are intended to eliminate any avoidable difference between activity rates in Wales and Great Britain as a whole.
    Mr. Evans: Is the hon. Lady aware that the activity rate in Wales has further declined to 47·4 per cent., while that in Scotland is 56 per cent. and that in England 57·4 per cent.? If the activity rate in Wales equalled that of England, there would be 200,000 more people at work in Wales. Is she aware that they are Wales's hidden unemployed?
    Mrs. White: The hon. Gentleman will be aware that the figures of activity rates
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    do not include self-employed persons, of whom there is a very large proportion in Wales, especially among small farmers, their wives and families. I am sure that he would not wish the farmers of Carmarthen and their wives to be regarded as economically inactive. Though there is certainly room for improvement, taking account of that fact, it is not as bad a picture as the hon. Gentleman would like to paint.
    Mr. Birch: Can the hon. Lady assist me by defining what is meant by "activity rate"?
    Mrs. White: I think that it would take too long in reply to a question.

  EDUCATION AND SCIENCE

    Size of Classes
    Mr. van Straubenzeeasked the Secretary of State for Education and Science what proposals he has for reducing the overall size of classes in primary and secondary schools, respectively.
    Mr. Laneasked the Secretary of State for Education and Science if he will make a statement on the Government's present policy regarding the reduction of class-sizes in primary and secondary schools.
    The Minister of State, Department of Education and Science (Miss Alice Bacon): The Government's policy is, within the resources available, to increase the supply of teachers as quickly as possible, to see that each local education authority gets its fair share, and then encourage each authority to deploy their teaching force to the best advantage as between primary and secondary schools. To assist this process my right hon. Friend is about to propose the abolition of the class-size regulation which discriminates against primary schools.
    Mr. van Straubenzee: I thank the right hon. Lady for that reply. Will she make it clear whether this new proposal that she has in mind will mean the abandonment of the 1964 target to reduce the effective class size to 30 in both types of school?
    Miss Bacon: No, that is not the case. As the hon. Gentleman knows, the effective thing in schools, at any rate these

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    days, is not the class size, but the pupil-teacher ratio, because a lot of teaching goes on in groups. The pupil-teacher ratio decreased from 23·9 in 1967 to 23·8 in 1968 and to 23·5 in 1969.
    Mr. Lane: But in order to concentrate on the important problem of increasing, the supply of teachers, will the right hon. Lady suggest to her right hon. Friend the Secretary of State that rather than making more ill-judged speeches on the educational backlash, he might concentrate on something more constructive such as re-forming the National Advisory Council?
    Miss Bacon: Both these questions seem very little related to the original Question, but perhaps I can give an answer which is more related to it.
    The main factors determining the size of classes are buildings and teachers. The value of the building programme in 1971–72 is twice that of 1963–64. An estimated 32,000 students successfully completed their training last year compared with 19,842 in 1964.
    Mr. R. C. Mitchell: Can my right hon. Friend give an assurance that there will be no unemployment amongst teachers leaving the colleges of education this summer?
    Miss Bacon: There should not be any unemployment if the local authorities employ the additional number of teachers that they asked for when the rate support grant was fixed, which was 13,000.
    Mr. Alisonasked the Secretary of State for Education and Science when he estimates that all class sizes in primary and secondary schools will be reduced to 30.
    Miss Bacon: I have made no such estimates and doubt whether any useful estimates can now be made, since classes as we know them may not be the prevailing pattern of school organisation, and since deployment of teachers depends upon the decisions of local education authorities and individual head-teachers.
    Mr. Alison: Was it not, therefore, rash of the right hon. Lady's party to make a pledge in 1964 which has now vanished in the mirage of an uncertain estimate? Does the Minister realise that the substi-
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    tution of pupil-teacher ratios, being an average figure and therefore concealing wide discrepancies on either side of the mean, is no substitute for firm commitments on class sizes?
    Miss Bacon: I do not agree with the hon. Gentleman about that. If he goes inside our schools, particularly primary schools, he will see that the pupil-teacher ratio is important. When a head teacher is given another teacher, often he prefers to use him to take a group of children rather than to reduce the size of classes overall. I might add that we expect that the target in the Ninth Report of the National Advisory Council, which envisaged that over-40 primary classes would be virtually eliminated by 1978, will probably be reached well before that date.
    Mr. Christopher Price: If my right hon. Friend intends to get rid of the criterion of class size in considering this matter, will she show some urgency in reaching agreement with the teachers' organisations about the way in which the pupil-teacher ratio is used in solving this problem? Is she aware that there is great concern among teachers' organisations about this switch?
    Miss Bacon: As I told the House before my hon. Friend came into the Chamber—I regret that he was not in his place when I answered an earlier Question along with one in his name—the essential factor is the supply of buildings and teachers. Both have increased considerably in the last few years.
    Sir E. Boyle: While recognising the case for this switch in criterion, may I ask the right hon. Lady if it is not the case, as has been suggested, that this represents a great departure from both the Labour Party manifesto of 1964 and the Prime Minister's speech to the Council of Education in 1963? In this context, would not the right hon. Lady agree that it is vitally important that local authorities have the finance to recruit part-time teachers?
    Miss Bacon: It should not be assumed that because we have switched to this pupil-teacher ratio criterion—the right hon. Gentleman will, I am sure, appreciate that this is the right thing to have done; he said that he understood the position—we have in any way abandoned our intention to get rid of over-sized

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    classes as soon as possible. This can be done only by an adequate supply of teachers and buildings.

    Student Grants
    Mr. van Straubenzeeasked the Secretary of State for Education and Science whether he will make a statement on his meeting with representatives of the National Union of Students on the subject of the level of student grants.
    The Minister of State, Department of Education and Science (Mrs. Shirley Williams): My right hon. Friend and I met representatives of the National Union of Students and the Scottish Union of Students on 2nd April. We discussed many aspects of the present system of student grants. However, any changes in the system that involve increased expenditure must await the next review of student grants.
    Mr. van Straubenzee: Does the hon. Lady accept that the cost of living index since 1962 shows an increase of 30 per cent. while the increase in grants is 12 per cent? Does that not seriously justify a review of these major awards before the expiry of the three-year period?
    Mrs. Williams: My right hon. Friend and I have never denied that students have had to carry part of the sacrifice involved in certain reductions in the rate of increase in Government expenditure. We will give due priority to students' grants as soon as the economic situation allows.
    Mr. Peter M. Jackson: Whilst having sympathy for my hon. Friend's position, may I ask whether she agrees that the student body is carrying a disproportionate degree of sacrifice?
    Mrs. Williams: I think that this must be watched in the context of the rapid increase in student numbers. Total expenditure on student grants has risen very fast indeed, although individual grants have risen rather more slowly than the cost of living.

    Secondary School Building Projects
    Mr. Ian Lloydasked the Secretary of State for Education and Science how many local education authorities have been refused allocations for secondary
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    school building in 1969–70 on the grounds that projects submitted did not fit into a comprehensive pattern.
    Mr. Christopher Priceasked the Secretary of State for Education and Science from how many local authorities he has now deferred allocations for secondary school building on the grounds that they are not consistent with the principles laid down in Circular Number 10/65.
    Miss Bacon: For the 1969–70 programme my right hon. Friend deferred secondary projects for eight authorities pending clarification of their intentions towards reorganisation on comprehensive lines. For four of these he has since authorised projects which are compatible with a comprehensive pattern. He is still considering a reorganisation plan submitted by a fifth. For the 1970–71 programme he has recently taken similar action with 14 more authorities.
    Mr. Lloyd: Would it not be wholly accurate and justifiable to describe this consequence as a somewhat narrow doctrinaire interpretation of educational need and, perhaps more important, as a backlash of four years' serious fiscal mismanagement of the economy?
    Miss Bacon: Local authorities have known for some time, since the issue of Circular 10/65, that they must submit building programmes compatible with secondary reorganisation. This has not suddenly been thrown at local authorities without their prior knowledge.
    Mr. Molloy: What is my right hon. Friend's attitude to those projects which are submitted, as in the case of the London Borough of Ealing, which would wantonly destroy a Walpole grammar school merely to frustrate a later endeavour and a gradual approach to the comprehensive system?
    Miss Bacon: My right hon. Friend has that matter under consideration, so it would not be proper for me to comment on it.
    Sir E. Boyle: How many projects for urgently needed new school places have been turned down, not because the projects infringed the policy of either side of the House, but because the local authorities concerned had not submitted

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    proposals for reorganising their existing schools?
    Miss Bacon: I could not give that answer without notice, because there will be a difference of opinion about what were urgently required projects. But, as the right hon. Gentleman knows, for some time we have been asking that projects should be compatible with secondary reorganisation. In one or two cases we have allowed local authorities to build comprehensive schools, even where they have not submitted a secondary reorganisation plan to us. The right hon. Gentleman knows that some secondary projects have been allowed in the City of Birmingham, even though the Birmingham authority had not submitted an overall plan.

    University Teachers (Pay)
    Mr. Alisonasked the Secretary of State for Education and Science what progress is being made towards the establishment of negotiating machinery for determining the pay of university teachers.
    Mrs. Shirley Williams: Following my meetings with each of the parties concerned, the University Grants Committee is now discussing with the Committee of Vice-Chancellors and Principals and the Association of University Teachers possible alternative forms of negotiating machinery.
    Mr. Alison: Did the hon. Lady note the significant change in tone in the Chancellor's Budget speech on the prices and incomes policy? Can the hon. Lady give a pledge that university teachers will never again be chastised with the scorpion of Mr. Aubrey Jones?
    Mrs. Williams: It would be inappropriate for me to give a pledge about any one group in the community. My view is that the professions should be subject to the same situation as those who work in manual trades. However, I hope to make a more prolonged and detailed statement to the House shortly.

    Primary School Pupils (Free Milk)
    Mr. Speedasked the Secretary of State for Education and Science what is the cost per pupil in providing free milk in primary schools.
    Miss Bacon: Approximately £2 14s. 0d. per year.
    Mr. Speed: Might I declare my interest in this matter, in that I have a son at primary school? Does not the right hon. Lady agree that most parents would be prepared to meet this charge if, by so doing, they could improve educational standards?
    Miss Bacon: I do not think that that matter arises on this Question, which is essentially concerned with the cost of providing free milk to children in primary schools.
    Mr. Will Griffiths: Will my right hon. Friend resist all of these mean advocacies to abolish free milk for children in primary schools? Has she seen the report of a survey which was carried out in East London which revealed that an alarming number of children go to school without having had a proper meal in the morning and some go without having had a proper meal the night before?
    Miss Bacon: I agree with my hon. Friend about that.

    Science Subjects (Teaching)
    Mrs. Renée Shortasked the Secretary of State for Education and Science what plans he has to assist the teaching of science subjects in schools.
    Miss Bacon: In 1969–70 my Department is holding 37 short courses and 12 one-term or one-year courses for teachers of science subjects. Priority in the training of graduates for teaching is being given to science and mathematics graduates. I have offered grants to scientific societies to establish regional centres for science teachers, and have issued guidance on the design of accommodation for science teaching. The Schools Council is at present sponsoring six curriculum development projects in science.
    Mrs. Short: I am obliged to my right hon. Friend for that very interesting reply. Would she agree that only about 6 per cent. of our best science graduates are now attracted into teaching and that far more effort should be made to try to persuade them that teaching is a worthwhile career?
    Miss Bacon: I agree with my hon. Friend and we are doing everything we can to bring that about.
    Mr. Ridsdale: Cannot the right hon. Lady be more imaginative and get industry to help by, for example, seconding staff to teach in schools? Is she aware that it is through industry that we can get more science teachers, rather than through many of the schemes about which we have heard?
    Miss Bacon: I assure the hon. Gentleman that we would be glad to have people from industry coming to teach in our schools, but they must be qualified teachers.

    Medicine, Science and Technology (University Places)
    Mr. Silvesterasked the Secretary of State for Education and Science what was the excess of university places in medicine, engineering and technology and science at the beginning of the current academic year; and what steps he has in mind to reduce the excess in 1969.
    Mrs. Shirley Williams: There were no vacancies in medical schools. The Sixth Report of the Universities Central Council on Admissions shows that while on the Council's figures, 514 more students were admitted to study science and technology in October, 1968, than in October, 1967, the numbers fell below the estimates made by universities in May, 1968, by 455 in engineering and technology, and by 738 in science. The recommendations made in the Dainton Report to increase the number of students in science and technology are being vigorously pursued by the bodies concerned, including my Department.
    Mr. Silvester: Has the hon. Lady considered in particular recommendation No. 11 of the Dainton Report which asked for special university degree courses to be held for those who had not previously been trained specifically in science and technology but who at school had had an arts training? What progress has been made on that score?
    Mrs. Williams: A number of universities are embarking on what are called conversion courses for those who have taken their "A" levels not entirely in scientific subjects. We are having dis-
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    cussions with the universities about this. The Standing Council on University Entrance and the Schools Council are together considering the possibility of widening the entrance qualification for university study.
    Sir E. Boyle: Does the hon. Lady agree that this is a crucial matter which should concern the whole House in view of the national need at this time of expansion of higher education? Is she aware that we shall seek to provide the House with an early opportunity to express its views on this subject?
    Mrs. Williams: Yes, Sir. It is a matter of the greatest possible importance and it is worth noting the early evidence; I cannot go further at this stage. University applications for the present year indicate some improvement in the science and technology sphere and some decline in the figures for social studies.

    Primary School Teachers
    Mr. Silvesterasked the Secretary of State for Education and Science what is his estimate of the number of teachers required in primary schools in 1978; and on what size of class this estimate is based.
    Miss Bacon: No separate estimate of the number of teachers required in primary schools in 1978 has been made. An estimate of the total number of teachers needed in that year, with details of the basis of estimation, is given in Table 43 of Statistics of Education, 1967, Vol. 4, published last week.
    Mr. Silvester: The right hon. Lady has rightly drawn attention to Table 43, but may I ask her to answer the second part of the Question, which deals with the size of class on which this estimate is based? In view of what she said earlier about the Government not having abandoned the elimination of over-sized classes, is she satisfied that the estimate for 1978 will allow classes in primary schools to fall, on average, to below 30, as was promised in 1964?
    Miss Bacon: The Ninth Report of the National Advisory Council envisaged that it would be possible to reduce the number of over-40 primary classes to negligible proportions by 1978. I now expect this objective to be achieved some years earlier.

    Women Medical Students
    Mrs. Renée Shortasked the Secretary of State for Education and Science how many women medical students began training at the beginning of this academic year; and how many will begin training in October, 1969.
    Mrs. Shirley Williams: 683 women students, just over a quarter of all medical students, entered pre-clinical medical courses in universities in Great Britain in October, 1968, the highest figure ever. It is not possible to forecast yet how many will do so in October, 1969.
    Mrs. Short: I thank my hon. Friend for that Answer. Is she aware that last October the U.C.C.A. said that about 259 medical training places had not been taken up? Does not this make the numerical clauses applying to women students indefensible? Will she do all she can to see that this ridiculous barrier which prevents women students from being trained is removed?
    Mrs. Williams: I am glad, in answer to the first part of my hon. Friend's supplementary question, to assure her that the figure to which she referred has been shown to be incorrect and that there is no difference between the number of places and the demand for them. They are absolutely equivalent.
    To answer the second part, there is evidence to show that the numerical clauses to which she referred are not operated in practice in most medical schools. According to the Royal Commission on Medical Education, the advice of which we take strongly, the treatment of both sexes should be absolutely equal.
    Mr. R. C. Mitchell: Would my hon. Friend reaffirm the Government's intention to press on at all speed with the new medical school at Southampton University?
    Mrs. Williams: My hon. Friend need have no fear about that. We certainly intend to do so.

    Documents, Manuscripts and Archives (Export)
    Mr. Marquandasked the Secretary of State for Education and Science whether he will advise the appointment of a Royal Commission to investigate the
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    report of documents manuscripts and archives.
    The Minister of State, Department of Education and Science (Miss Jennie Lee): On 13th March I announced that a Working Party had been set up to study this important matter—[Vol. 779, c. 322–3]—and the Government think it better to await its findings and, in the light of those, decide what further action is most appropriate.
    Mr. Marquand: While thanking my right hon. Friend for her reference to the work of the Working Party, may I ask if she is aware that there is a good deal of anxiety among contemporary historians in that their views and interests have not so far been taken into account by those concerned with this matter? Would she give an assurance that the Working Party will consult the representatives of contemporary historians and that there will be a publication to make it clear what conclusions the Working Party has arrived at?
    Mr. Speaker: Order. Questions must be reasonably brief.
    Miss Lee: The answer to my hon. Friend's supplementary question is, "Most certainly". When the report is completed, it will be published. This is a rather complicated matter, but my hon. Friend may rest assured that every effort will be made to see that all interested parties are consulted.
    Mr. Kenneth Baker: Could I ask the right hon. Lady to accelerate the work of this Working Party as much as possible? There was a report before Christmas, but nothing has been done. Documents are leaving the country all the time without even the requirement that a photostat should be taken. This is unsatisfactory. We must have a policy urgently on this matter.
    Miss Lee: I agree with the hon. Member about the importance and urgency of the matter. We must also have a solution which is practical and which can be legally enforced.
    Mr. Channon: Would not the Minister agree that we have already had the recommendations of the review committee on the export of works of art? Even if those do not go far enough, would not

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    she take some action, because while the Working Party is sitting valuable manuscripts are being lost?
    Miss Lee: The difficulty is that the definitions involved in their report are too complex and insufficiently precise for administrative practicability and legal enforcement.

    Education (Private and Publicly-Financed Sectors)
    Mr. Biffenasked the Secretary of State for Education and Science if he is satisfied with the present distribution of education between the private and publicly-financed sectors; and if he will make a statement.
    Miss Bacon: No, Sir. But the existence of both sectors is an historical fact. I have no statement to make at present.
    Mr. Biffen: Does the hon. Lady's Answer of "No" mean that she is dissatisfied and is it therefore the policy of the Government to diminish the private sector? Are we to understand that she underwrites the hostile and reactionary speech of her right hon. Friend the Minister of Technology about private education which was made recently?
    Miss Bacon: The hon. Gentleman asked if I was satisfied with the present distribution of education between the private and the publicly-financed sectors. I said "No, Sir", and I meant that I was not satisfied with it.
    Sir E. Boyle: If the right hon. Lady is not satisfied, does that mean that she is proposing to go back on the pledge given by successive Ministers and Secretaries of State that the private sector has a right to exist?
    Miss Bacon: As the right hon. Gentleman knows, the Government are still considering the first Report of the Public Schools Commission and are not yet ready to make a statement about it. The second report on day schools and direct grant schools is expected later this year.
    Mr. Christopher Price: Is my right hon. Friend aware that many of us were most disappointed that her Department did not manage to persuade the Chancellor of the Exchequer to include in the Budget those recommendations about the finances of the private sector of the
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    public schools which were in the first Report of the Public Schools Commission? Having failed to do so in this Budget, would my right hon. Friend urge the Chancellor to do this perhaps in his next Budget?
    Miss Bacon: I take note of what my hon. Friend has said.
    Mr. Christopher Priceasked the Secretary of State for Education and Science if he will seek powers to enable him to adjust the distribution of educational resources between the private and public sectors; and if he will make a statement.
    Miss Bacon: I am not sure precisely what my hon. Friend may have in mind but any statement on this general question would be premature at the present time.
    Mr. Price: Is my right hon. Friend aware that it is disappointing to see that she is not sure what I have in mind? Is she aware that, while allowing a private sector to exist and assenting to that principle, the size of the public and private sectors in the educational system can be just as big, or as small, as the Government want them to be? When her right hon. Friend makes the statement on the Public Schools Commission will he state a policy about the size of the two sectors?
    Miss Bacon: Yes. As I said in answer to a previous Question, my right hon. Friend is not yet ready to make the statement about the Public Schools Commission. I hope that when he does so my hon. Friend will be pleased with what he has to say.
    Mr. Longden: As the right hon. Lady, unlike her hon. Friend, has responsibility for raising money for the State sector, is she not grateful for those who take some of the burdens off the State?
    Miss Bacon: No, I would not go along with that argument. [Interuption.] Indeed, it might be argued that in some respects it is the other way round.

    Scottish Universities (Admissions)
    Mr. Edward M. Taylorasked the Secretary of State for Education and Science how many applications were received for admission to Scottish universities in the current session; and how

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    many applications were received for admission to Scottish universities in the current session; and how many were admitted.
    Mrs. Shirley Williams: The provisional number of students entering Scottish universities at undergraduate level in October, 1968, is 9,662. Information about the number of applicants is not available.
    Mr. Taylor: Is the Minister aware that, despite the considerable expansion in Scottish university places in recent years, some of our universities are bursting at the seams? Can she hold out any hope of a university being established in the Highlands of Scotland, perhaps in Inverness, in the short or in the longer term?
    Mrs. Williams: I am sure that the hon. Gentleman recognises that a considerably higher proportion of Scottish boys and girls go to university than do English boys and girls. I am sure that he also recognises that the proportion of those going to English universities is well in line with the proportions of population as between England and Scotland. I will bear in mind what the hon. Gentleman says, but I am afraid that at present it cannot have the highest priority since we need a build-up of the university at Stirling at the earliest possible stage.
    Mr. Hector Hughes: As the Minister's Answer was a generalised one, will she give particulars of the universities referred to and the figures for each?
    Mrs. Williams: Since I am not an encyclopedia, I will have to ask my hon. Friend to put down a separate Question.

    British Standard Time
    Mr. Dudley Smithasked the Secretary of State for Education and Science what representations he has now received from local education authorities, schools and individual parents in England and Wales about the operation of British Standard Time in the winter months; and what conclusions he has reached with regard to the first year's operation of the experiment where schools are concerned.
    Miss Bacon: Last summer my right hon. Friend received 13 letters opposing
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    the introduction of British Standard Time. Immediately after Circular 23/68 was issued on 22nd November, 1968, he received about 40 more letters in the same strain, a few supporting the change, and about 30 on various related matters.
    My right hon. Friend, the Secretary of State for the Home Department is making an assessment of certain aspects of the effects of British Standard Time and when this is complete my right hon. Friend the Secretary of State for Education and Science will consider whether any action in relation to the schools would be desirable.
    Mr. Dudley Smith: Nevertheless, is the right hon. Lady aware that most parents disliked sending their children to schools in the darknees of the past winter, and that the children themselves disliked it? Would she now encourage the Government to revise the operation of British Standard Time rather than wait until the end of the three-year experimental period?
    Miss Bacon: As I have said, the whole matter of British Standard Time is one for the Government as a whole. Our responsibility is whether or not to advise local authorities to open or close schools at different hours. We must await the review, of which I have spoken, being undertaken by the Home Secretary.

    Natural History Museum, South Kensington
    Mr. Allasonasked the Secretary of State for Education and Science what is the estimated shortage of space in the Natural History Museum, South Kensington; and what plans he has for meeting the shortage.
    Miss Jennie Lee: Approximately 186,000 sq. ft. To meet this, a new extension of 48,000 sq. ft. is to be added to the main building of the Museum's outstation at Tring, and a further 138,000 sq. ft. is planned for the South Kensington site.
    Mr. Allason: Are we to understand from that that all the problems at South Kensington will be relieved, and thereafter is the right hon. Lady satisfied that the other museums also will be relieved from the problems of overcrowding?
    Miss Lee: A great deal of thought has been given to this matter. The solutions proposed are approved of by the Trustees. This means that in the autumn we will have a start on this additional space at Tring, and a little later we are looking forward to development of South Kensington. The Trustees do not assume that this will solve the long-term problems, but that it will settle their immediate needs.

    Radio Telescope, Meifod
    Mr. Brooksasked the Secretary of State for Education and Science whether he will make a statement on the Meifod radio telescope.
    Mrs. Shirley Williams: The design study for a 400 ft. steerable radio telescope for Manchester University is almost complete. It will be considered in due course by the Science Research Council. The site at Meifod was chosen because it meets the requirements specified by the radio astronomers at Jodrell Bank.
    Mr. Brooks: Could we be assured that there will be no similar financial difficulty affecting the Mark V telescope as affected that at Jodrell Bank? Will my hon. Friend indicate whether the Atomic Energy Authority Engineering group has taken a decision on the question of hydrostatic bearings?
    Mrs. Williams: On the second part of my hon. Friend's question, hydrostatic bearings have been borne in mind at the design stage, but I do not know the details. On the first part of the question, no decision is likely for approximately a year while the design stage is being considered in all its aspects. I cannot at the moment give my hon. Friend that assurance.

    Museums and Galleries (Sunday Opening Hours)
    Mr. Channonasked the Secretary of State for Education and Science what changes are to be made in opening times on Sunday in the national museums and galleries.
    Miss Jennie Lee: The Imperial War Museum started on 6th April to open on Sunday at 10 a.m. instead of 2 p.m. This is a six month experiment. On the same date the Victoria and Albert
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    Museum reverted to opening at 2.30 p.m. on Sundays. The agreement to open the main galleries at 10 a.m. was terminated by the warders at the end of its one-year experimental period. I should like to see more museums opening on Sunday mornings but no other agreements of this kind have at present been reached.
    Mr. Channon: Is it possible for the right hon. Lady to do anything to try to ensure that the Victoria and Albert Museum is open once again in the mornings? It would be very welcome if it was able to do so.
    Miss Lee: The experiment was a great success. Attendances on Sundays rose by 32 per cent. However, after the year, the warders declined to work on Sunday mornings. It is understood that their reasons are dissatisfaction over a number of national and local issues affecting their conditions of service. I would be glad if they changed their minds and we could get together, but that is their mood at the moment.
    Mr. George Jeger: In view of the great success of the opening of the Victoria and Albert on Sunday mornings, could not my right hon. Friend see that more attendants are employed especially for that work and so cater for the masses of children who enjoy their Sunday morning outings?
    Miss Lee: Each museum and gallery has its own special problems and special character, and the breakdown at the Victoria and Albert was not on numbers but simply because the warders said that they did not want to work on Sunday mornings. I shall go on trying, because I attach a very high priority to this and believe that a great capital city should have its galleries open on Sunday mornings.

  SCOTLAND

    Clyde Estuary (Industrial Development)
    Miss Harvie Andersonasked the Secretary of State for Scotland what special arrangements he has made for Ministerial consideration of the industrial development of the Clyde estuary and valley.
    The Under-Secretary of State for Scotland (Mr. Norman Buchan): All major planning applications for large scale industrial developments of the kind and in the area covered by the Clyde Estuary Development Study will be referred to my right hon. Friend for decision. I do not expect any other special arrangements to be necessary.
    Miss Anderson: Does the hon. Gentleman net think it rather curious that there is an inquiry of a very small order going on at present, the result of which may affect the whole concept, and would it not have been much better to have had joint Ministerial responsibility for the whole concept at the outset?
    Mr. Buchan: Of course, there is always this kind of discussion with the Ministers of other relevant Departments. However, I think that the procedure adopted at present is the correct one.
    Mr. Gordon Campbell: Will the Government regard the whole question of co-ordination of the developments in the Clyde estuary as a very urgent matter? It is becoming extremely important, because some of the deepest water round Britain is in the Clyde and will be needed for the larger tankers and bulk carriers which are coming?
    Mr. Buchan: We are conscious of the importance of these projects. That is why we are pleased that a Government who believe in planning are there while it is going ahead.

    British Standard Time
    Miss Harvie Andersonasked the Secretary of State for Scotland what representations he has received to date from persons or bodies in Scotland about British Standard Time.
    Mr. Buchan: Since my right hon. Friend's Answer to the hon. Member for Perth and East Perthshire (Mr. MacArthur) on 26th March, representations have been received from two local authorities, two other representative organisations and two private individuals.—[Vol. 780, c. 305.]
    Miss Anderson: Is it not a fact that many educational interests, the whole building industry and the whole of Scottish agriculture have already made representations to the Minister? In view of
    1322
    the importance of all three considerations, will he not take urgent action to alter British Standard Time now?
    Mr. Buchan: We are making an assessment of the position as it arose throughout the winter and during the spring. We will see what results are arrived at from that assessment. As has been recognised already, we feel on the whole that it is important to allow two winters to run before drawing any final conclusions.
    Mr. William Hamilton: Has the Scottish T.U.C. made further representations, or does it still adhere to the view that British Standard Time is acceptable?
    Mr. Buchan: I understand that both the T.U.C. and the other body in industry, the Scottish C.B.I., adhere to their earlier view on this.
    Mr. MacArthur: Will the hon. Gentleman bear in mind, in addition to the points of hardship put forward by my hon. Friend, that the number of accidents to schoolchildren during this first experimental period has increased in Scotland in the hours affected by the change of the clock? Will he not agree that one winter's experiment is sufficient?
    Mr. Buchan: It is important to remember that there is also a fluctuation within those figures; for example, the number of fatal accidents was down. I think that we want to make a more careful assessment rather than the instant assessment that the hon. Gentleman has made.

  ROYAL COMMISSION ON LOCAL GOVERNMENT
  Mr. Ridleyasked the Prime Minister if he will co-ordinate the activities of the Home Secretary and the Minister of Housing and Local Government in regard to the implementation of changes necessary in local government boundaries as a result of the report of the Royal Commission on Local Government.
  The Prime Minister (Mr. Harold Wilson): The Report of the Royal Commission will be relevant to the Departmental responsibilities of many Ministers, and I shall, of course, make the necessary arrangements for co-ordination.
  Mr. Ridley: Is the Prime Minister aware that, in his speech on 14th October last, the Home Secretary said that he

  1323
  might well delay the implementation of the Parliamentary Boundary Commissions' Reports until he had considered the Reports of the Local Government Commissions? Will he undertake that implementation of the Parliamentary Boundary Commissions' Reports will not be delayed for any reason such as that? Will he frustrate the Home Secretary's knavish tricks?
  The Prime Minister: I have been informed, though I would like to check on it, that the hon. Gentleman's account of what my right hon. Friend said was somewhat elliptic. He has answered a Question about it in the House, in any case. The Reports of the Boundary Commissions have not yet been received. They are expected soon. The Redcliffe-Maud Report, which is the subject of the main Question, is also expected in the near future, and my right hon. Friend will put his conclusions before the House on the Boundary Commissions' Reports after he has studied those Reports.
  Mr. Boston: Would my right hon. Friend accept that there is a need for very full and adequate consultation with local authorities, other statutory bodies and other bodies before implementing any legislative proposals arising from the Redcliffe-Maud Report? Despite what has been said, is there not a strong case for avoiding costly duplication of two sets of boundary changes and a strong case for doing the whole job at one time, once we have produced any legislative proposals arising from the Redcliffe-Maud Report?
  Mr. Speaker: Order. Questions must be reasonably brief.
  The Prime Minister: My hon. Friend's second point is a matter which the House will have to deal with when it has received both Reports. On the first part of his question, I agree about the need for full consultation with local authorities about the recommendations of the Redcliffe-Maud Report. These consultations are important. On the other hand, they should not go on for ever. The Redcliffe-Maud Report will deal with a situation in local government which has remained unchanged since the 1890s—even before the motor car—and will be dealing with the problems with which we have to live in the modern age. I think that we should make speedy progress,
  1324
  given sufficient time for consulation.
  Mr. Heath: If the Reports of the Parliamentary Boundary Commissions are to be received shortly as well as the Report of the Redcliffe-Maud Commission, which I agree must be given proper consideration and full consultation, does not the Prime Minister think that a situation in which Birmingham, Ladywood has an electorate of 18,095, and Billericay has an electorate of 109,000 ought to be changed in accordance with the recommendations at the earliest opportunity?
  The Prime Minister: I understand the right hon. Gentleman's pessimism about both. But, on the main question, we had better see the Reports before taking a decision on this. There is an assumption going about—the right hon. Gentleman has done nothing to spread it himself, but I have seen some newspaper articles to that effect—that, for some reason, the Reports when received are unlikely to be in favour of Government candidates. I am sure that the right hon. Gentleman will have formed a more objective view, particularly since I have received reports from the most experienced national party agent whom I have known, based on exhaustive local surveys, suggesting that the consequences will at most be highly marginal. We shall decide this matter when it comes up and put our recommendations to the House. On our present information, there will be no advantage to either side.
  Mr. Heath: In order that the Prime Minister can put to the test the recommendations of the most objective national agent he knows, should he not implement the Report immediately and then have a General Election?
  The Prime Minister: The right hon. Gentleman is not the Parliamentarian I would listen to most about the timing of a General Election, because he was a member of the Government who, for the first time in a hundred years, postponed the election until the very last minute allowed under Statute.
  Mr. Ridley: On a point of order. Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

  RHODESIA
  Mr. Winnickasked the Prime Minister if he will make a statement on the latest situation on Rhodesia.
  The Prime Minister: I have nothing to add to my reply to a Question by my hon. Friend, the Member for Ealing, North (Mr. Molloy) on 3rd April.—[Vol. 781, c. 650.]
  Mr. Winnick: Are not all the illegal régime's plans for a new constitution and a so-called republic completely meaningless in law? In view of the shabby advice given by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) in a recent matter, will my right hon. Friend completely ignore in future advice which the right hon. Gentleman gives either on South Africa or on Rhodesia?
  The Prime Minister: The proposals of the illegal régime for an illegal constitution are as illegal as the régime itself and have no basis in law. The only law governing this matter is the law passed by this Parliament, which has responsibility in the matter. The right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) is not here and there is, therefore, no point in going into his advice about South Africa. He accepted in a recent debate that the advice he brought back from Rhodesia from the same trip was also incorrect.
  Sir C. Osborne: Will the right hon. Gentleman show the same patience and tenacity in trying to get a settlement with Rhodesia as he has shown in trying to get into Europe?
  The Prime Minister: I am not going to say in which of these two operations I have met with the more resistance. The hon. Gentleman, who made helpful comments on behalf of all of us in this House when out there, will know that we have indeed shown tremendous patience and tenacity in trying to get an honourable agreement which we could justify in this House and in Rhodesia as well. I do not think that it could be laid to the charge of the Government if, after all we have done—leaving the "Fearless" terms on the table in the face of considerable Commonwealth pres-
  1326
  sure to withdraw them—there is no agreement. We are still prepared to consider alternative proposals about a second safeguard if that is the sticking point, provided that they are equally effective to what we have proposed.
  Mr. Alfred Morris: Has my right hon. Friend received any reports about the new embarrassments to which Sir Humphrey Gibbs has been subjected in recent days?
  The Prime Minister: No, Sir. I have only seen brief reports. We shall look further into the matter. A number of reports coming from Rhodesia need to be checked—including, for example, a statement by Mr. Smith in the Rhodesian so-called Parliament yesterday about the question of a republic and what the constitutional position of Rhodesia would be even if we got agreement. I do not accept his statement on that. I should like to look further into the question of Sir Humphrey Gibbs' residence.
  Mr. Biggs-Davison: While acknowledging the Prime Minister's efforts in relation to the "Fearless" proposals, may I ask whether it is not the case that his present attitude is, "Take it or leave it—it is lying on the table"? Is this really quite enough? Would not the right hon. Gentleman agree that the last hope of saving Rhodesia for the British Crown and connection may be to start talks again before the referendum?
  The Prime Minister: I am not sure whether one can really save a country from a people determined to destroy it. We have done our best with Rhodesia. Indeed, Mr. Smith knows perfectly well—and the Leader of the Opposition helped me to clarify this point, which may well have been unclear—that the last word has not necessarily been stated on the question of the second safeguard, if Mr. Smith would only come up with proposals that we would accept. But we cannot go, on with a situation in which, year after year, we keep putting proposals which he turns down fiat on this or that point, while accepting others, but never comes forward with alternative proposals of his own. We have put forward five or six alternatives on the question of the second safeguard and have had no come-back from Mr. Smith as to what he would accept.

  CARIBBEAN (VISIT BY THE PRIME MINISTER)
  Mr. Martenasked the Prime Minister whether he will make an official visit to the Caribbean.
  The Prime Minister: I have no plans to do so, Sir.
  Mr. Marten: While giving a mixed welcome to that reply, may I ask whether the Prime Minister is aware that, among people at home and overseas, there is a certain anxiety about the feeling that the operation against Anguilla was not legal? Would he therefore, in the interests of Britain's good name, consider setting up a full, frank and searching inquiry into the whole thing to see whether the operation was legal and whether the evidence on which it was based was fair?
  The Prime Minister: I am not sure that that arises from the Question on the Order Paper, but certainly we reject any suggestions there may have been—and I am not sure what they were—that the operation was illegal. If there is this anxiety in the hon. Gentleman's mind, his Question would have been better addressed to my right hon. and learned Friend the Attorney-General. I am not sure that I can help the hon. Gentleman.
  Mr. Lipton: Is there not something rather suspicious about the constant desire of hon. Members opposite to keep the Prime Minister moving over the face of the globe instead of staying at Downing Street to look after the shop?

  NIGERIA
  Mr. Edward M. Taylorasked the Prime Minister if he will make a statement on his visit to Nigeria.
  The Prime Minister: I would refer the hon. Member to my reply to a Question by my hon. Friend the Member for Lancaster (Mr. Henig) on 15th April.—[Vol. 781, c. 984–5.]
  Mr. Taylor: Is the Prime Minister aware that, despite the complexity of the problem, it is intolerable that we should stand by in inactivity when Federal troops are at the gates of Umuahia and a major fight seems inevitable? Would any purpose be served by an appeal for a cease-
  1328
  fire by all the major Powers? If so, could the right hon. Gentleman be prepared to sponsor it?
  The Prime Minister: The hon. Gentleman has put his question very fairly. But I have said before that a cease-fire as such by itself would not be a contribution to the solution of the problem. A cease-fire requires arms control just as arms control could not be effective without a cease-fire. I am sure that the hon. Gentleman will agree, particularly if he recalls the report I gave to the House before Easter, that the important thing now in getting forward from the present situation to negotiations must be to leave it to the Consultative Committee of the O.A.U., which is meeting in Monrovia today under the chairmanship of President Tubman of Liberia. The Emperor of Ethiopia is also present at the meeting and he as made very distinguished, long and exhausting attempts to get the two parties together. I commend to the House that it should wait and see what comes out of the O.A.U. meeting.
  Mr. James Griffiths: While appreciating what my right hon. Friend has said—that the best hope now is mediation from other African States—since the O.A.U. is meeting today, would my right hon. Friend not consider sending a message in the name of the Government and, I hope, in the name of the House, urging the meeting to take the initiative to bring about a ceasefire and stating that if it does, he will take action with other Powers to seek an embargo on all arms?
  The Prime Minister: My right hon. Friend has long experience of Nigeria and of African problems in general. He acknowledges that mediation is now for African States. The Federal Government know our views and I have had encouraging assurances from them, which I have reported to the House. The Emperor Haile Selassie also had a full report and I indicated to the House how close we were in our approach to the problem. I have also exchanged messages with President Tubman. I am not sure that any further measures are necessary at this time but, of course, we are prepared to give any help that we can.
  Mr. Hugh Fraser: If anything comes out of the present conference—and I fear that nothing will—will the right hon. Gentleman consider, through diplomatic

  1329
  channels or the United Nations, approaching the four major Powers, as he should have done, in my view, from the beginning? After all, they tried to do something about the Middle East.
  The Prime Minister: I am not sure whether the right hon. Gentleman means an approach for purposes of mediation or for an arms control agreement. But I have told him before why I do not think that such an agreement could be positive, for the only way to enforce it would be on the ground, which would mean a ceasefire. We are prepared to co-operate in any way we can. We have discussed this matter with U Thant and have put proposals to a number of other leaders and African Governments. The answer at present does not lie there but in Monrovia. We shall have to consider what more we can do if, unhappily, the right hon. Gentleman is correct and no progress is made there.
  Mr. Frank Allaun: As long-range Federal guns have begun to shell the most densely populated areas of Biafra, according to Red Cross reports, will my right hon. Friend ask Lagos to stop this killing of civilians?
  The Prime Minister: My hon. Friend will be aware of the representations I made about indiscriminate bombing, and there are signs that what I said then has been listened to. I said before that this is a brutal civil war. I did what I could then, and others have done what they can. Many of Her Majesty's Ministers have been out there for this purpose and talked to both sides, there and here, to try to get the parties together. I do not think we can, in those circumstances, say to the combatants that they must stop fighting. After all there has been no offer from Colonel Ojukwu to stop the continued shipment of arms supplies there. It is a tragic thing, and I agree with many of the things my hon. Friend has reported about his own visits there. It is not the way to get a peaceful solution.
  Mr. Heath: Is this not a new doctrine—which was first put forward by the Foreign Secretary, and has been repeated by the Prime Minister—that we can only have a cease-fire with an international agreement about an arms embargo? This was certainly not the case in Laos, where the cease-fire was obtained. It was cer-
  1330
  tainly not the approach in Vietnam. A cease-fire was obtained in the conflict between Israel and the Arab countries without an arms embargo. Ought not the Government to concentrate on getting a cease-fire, the whole purpose of that being then to reach negotiations about a settlement, and then the arms embargo can be arranged afterwards, if it is ever possible?
  The Prime Minister: My right hon. Friend and I are not seeking to enunciate any international doctrine appropriate to circumstances other than these. What I said was in relation to this particular war. The position here is that a great deal of arms are being ferried in by night, mixed in with the relief planes to Biafra. If we had a cease-fire without an arms embargo then of course this would merely be a period for one side to regroup and rearm. I do not know many combatants in history who would have agreed to a cease-fire on those terms. As to the cases he mentioned, which were all legitimate and well-proven cases, as he said, they were cases where there was no problem about the ability of one side to continue the fighting being advanced at the expense of the other by a cease-fire, unaccompanied by an arms embargo. This is a very different situation.
  Mr. Alexander W. Lyon: Could my right hon. Friend say whether he is aware of any information that the renewed military activitiy has led to the mass slaughter which was referred to by the hon. Member opposite? Does it not appear that in so far as it is possible to wage war without mass slaughter the Federal forces have been doing as well as they could?
  The Prime Minister: That was my impression from my visit, and from the reports of international military observers whom I met, as well as from the reports of very distinguished British serving soldiers who went into this question when I was there. At the same time, one must say, accepting the phrase "they did as well as they could", that there has been the problem of indiscriminate bombing, about which the House was right to be concerned and which I raised—I put very strong pressure on Colonel Gowon—and on which I got, I thought, the best possible answer in the circumstances.
  I have no recent information about casualties during the period of the fighting, which appears to be getting close to

  1331
  Umuahia. In the absence of any authoritative information I should not like to comment on this. This has been a most brutal war, and civil wars unfortunately carry with them a degree of brutality going even beyond what the modern world knows by international war.
  Mr. Heath: If I may press the Prime Minister on this, with reference to his earlier reply, while this ghastly conflict goes on, arms are going to both sides and it is understandable that during a ceasefire, possibly, arms would continue to go to both sides. But at least it would give the opportunity for a mediator, or both sides directly, trying to get some sort of interim settlement. Is it not worth concentrating on this rather than abandoning the hope of a cease-fire because it is known that we cannot get an international arms agreement?
  The Prime Minister: I recognise this as a respectable argument, and one which might very well be applicable in many other situations. If a cease-fire were necessary to get negotiations, I think that the right hon. Gentleman's case would be even stronger than I know he feels it to be. The plain fact is that the Nigerian Federal Government are unlikely to agree, and I think it would be unreasonable to ask them to agree, to a cease-fire—alone—if, when they feel that they are making substantial military progress, a cease-fire could be used for a unilateral build-up of arms to redress the present arms and military imbalance. What the Federal Government expressed to me, and I told the House, was their willingness to sit down, now, today, tomorrow, with Colonel Ojukwu or his representatives to discuss a settlement. That is possible, even without a cease-fire.
  Mr. Thorpe: Since today's reports indicate that the Red Cross is evacuating Umuahia because it is under fire, can we not take some initiative to try to step up the number of international observers and, albeit to put them in a very hazardous position, to try to get them on both sides of the line?
  The Prime Minister: This is what I spent a lot of time trying to deal with when I was there. I discussed it with international observers and it was certainly one of the things that I would have
  1332
  wished to discuss with Colonel Ojukwu. Many of his own claims, which he has a right to demand should be investigated—some of them have been quoted in this House—could have been investigated in many cases if we had had international observers on the other side of the fighting line. It became impracticable and in the event, regrettably, I was not able to meet with Colonel Ojukwu.

ROYAL HONG KONG POLICE AND AUXILIARY POLICE FORCES
The following Written Question stood upon the Order Paper:
Lieut.-Commander MAYDON: To ask the Prime Minister if he will consider whether the Hong Kong Police Force should be accorded some mark of distinction in recognition of the loyal and outstanding services rendered by the Force over the years.
The Prime Minister: With permission I will now answer Unstarred Question No. 42.
I am most grateful to the hon. and gallant Member for raising this matter. I am glad to be able to inform the House that Her Majesty The Queen has been graciously pleased to accord the title "Royal" to the Hong Kong Police and Auxiliary Police Forces. In addition, Her Royal Highness, Princess Alexandra, has consented to accept, in an honorary capacity, the appointment of Commandant General of the two forces.
Lieut.-Commander Maydon: In thanking the Prime Minister for that reply, may I say that I am sure that there will be widespread delight at Her Majesty's gracious decision in this matter, and that that pleasure will be echoed by the loyal subjects of Hong Kong, both of British and Chinese stock? May I add that it is a rare honour for a police force to receive, the only other which comes to my mind is that of the Royal Canadian Police——
Mr. McNamara: And the Royal Ulster Constabulary.
Lieut.-Commander Maydon: Is not that honour enhanced by the acceptance of Her Royal Highness, Princess Alexandra, of the honorary rank of Commandant-General of the Royal Hong

1333
Kong Police and the Royal Auxiliary Police Forces?
The Prime Minister: I thank the hon. and gallant Gentleman. It was a happy coincidence that he should put this Question down at just about the time when the Government reached a decision to make their recommendation to Her Majesty The Queen, after the hon. and gallant Gentleman has pressed this matter for a considerable time. I am most grateful to him for raising it and for the initiative that he has taken.
I will not spoil the occasion by giving a list of the other Royal police forces—there are one or two in the Caribbean. I will join with him in welcoming what has been done and regarding it, as I know he does, as a tribute to the very great spirit, vigour and courage shown by the now Royal Hong Kong Police Force in the very severe difficulties that they have had to face in recent years.
Mr. Rankin: In reaching the decision which the Prime Minister has announced, did he keep before him the fact that Hong Kong as a State stands for everything that we in this country reject? There is no such thing as popular representation in Hong Kong——
Hon. Members: Nor is there here.
Mr. Rankin:—and that system is loyally backed up by the Hong Kong Police Force. Is he aware that in those circumstances it seems anomalous that it should have had conferred upon it the title "Royal"?
The Prime Minister: I am sorry about my hon. Friend's lack of enthusiasm in this matter, and I would not accept his account of the position in Hong Kong or of the police. It certainly was not the impression which I formed on my two brief visits there. No doubt my hon. Friend formed his own view. Of course, it is a colonial territory. It is a colonial territory living under continuous pressure, not only from Communist China, but also from infiltration from some extremely strange gentlemen from Taiwan who are the cause of a great deal of unsettlement and insecurity there. It is in this situation of almost double threat and double provocation that I think the Hong Kong police force has discharged its duties with singular integrity.
Mr. Royle: Is the Prime Minister aware that the House agrees with what the Prime Minister has said and totally rejects the comments made by the hon. Member for Glasgow, Govan (Mr. Rankin). The appointment of an immensely popular Princess will be widely accepted and well received in Hong Kong. There is a great need in Hong Kong for further political support from Her Majesty's Government. Will the Prime Minister do all he can——
Mr. Speaker: Order. This is a Question about honours paid to the police force, and the hon. Gentleman must not go wider than that. Mr. Heath, business questions.

BUSINESS OF THE HOUSE
Mr. Heath: Will the Leader of the House kindly give us the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): The business for next week will be as follows:
MONDAY, 21ST APRIL—Conclusion of the general debate on the Budget Resolutions and the economic situation.
Remaining stages of the Army Reserve Bill.
Second Reading of the Customs Duties (Dumping and Subsidies) Bill (Lords) which is a Consolidation Measure.
TUESDAY, 22ND APRIL—There will be a debate on Welsh affairs, which will arise on a Motion to take note of the Report on Wales, Command No. 3930.
Motion on the Family Allowances (Qualifications) Regulations, 1969.
WEDNESDAY, 23RD APRIL—Supply [17th Allotted Day]: There will be a debate on the situation in Anguilla, which will arise on an Opposition Motion.
Remaining stages of the Customs Duties (Dumping and Subsidies) Bill [Lords].
At Seven o'clock opposed Private Business has been put down by the Chairman of Ways and Means for consideration.

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THURSDAY, 24TH APRIL—Second Reading of the Air Corporations Bill and of the Overseas Resources Development Bill.
FRIDAY, 25TH APRIL—Private Members' Bills.
MONDAY, 28TH APRIL—Supply [18th Allotted Day]: Debate on a topic to be announced.,
Mr. Heath: We have asked during the last two days for a statement by the Secretary of State for Social Services on the proposed increase in contributions as a result of the increased pensions that are to be paid. Will the Leader of the House assure us that this statement will be made before the end of the Budget debate?
Mr. Peart: Yes, I will do my best on this, and I will convey the strong views of many hon. Members on this matter.
Mr. Heath: As the Leader of the House will realise, the statement will have to be made on Monday, so I hope that he can be specific about this.
Mr. Peart: I have said that I will convey the feelings of hon. Members. I cannot say at this stage, but I think that my right hon. Friend should make a statement.
Mr. Speaker: Order. I would remind the House that we have the third day's debate on the Budget before us, many hon. Members wish to speak and I hope that hon. Members will be fairly generous in cutting down their questions.
Mr. Ronald Bell: Does the announcement which the Leader of the House has made of the business for next week and the following Monday mean that the Parliament (No. 2) Bill has at last been given its due priority?
Mr. Peart: That question is not on next week's business. My right hon. Friend will be making a statement.
Mr. William Hamilton: Will the right hon. Gentleman say whether he will give time to debate Motion No. 261 on the pay and conditions of nurses, which are thoroughly unsatisfactory in a profession which has wide support on both sides of the House?
[That this House deplores the fact that nurses in National Health Service hospitals are now called on to pay for all meals consumed on hospital premises, as a condition attached to the pay increases recently recommended by the National Board for Prices and Incomes and accepted by Her Majesty's Government resulting in many student and other nurses being worse off than they were previous to the award being granted, with likely adverse effects on nurse recruiting; and therefore calls on Her Majesty's Government to take urgent steps to ensure that the nursing profession gets remuneration Commensurate with its responsibilities and with the magnificent service which it renders to the community.]
Mr. Peart: I cannot promise to give time next week, but I will convey the views of my hon. Friend to my right hon. Friend.
Mr. Peyton: Will the Leader of the House be more forthcoming than he was to my right hon. Friend the Leader of the Opposition and give an absolute assurance that a statement will be made before the end of the Budget debate remedying the extraordinary omission of his right hon. Friend the Chancellor to say how much the pensions increase will cost and how it will be levied?
Mr. Peart: I have replied to that question, and I hope that my reply will be accepted.
Mr. McNamara: Will my right hon. Friend say when the Merchant Shipping Bill will be dealt with, and also the reorganisation of the industrial ports?
Mr. Peart: I think that my hon. Friend should wait for the statement of the Prime Minister.
Mr. Lubbock: Is the right hon. Gentleman aware that controversial Private Bills have been set down for consideration on Wednesday, involving Wolverhampton, Walsall and West Bromwich. Would not it be better for each Bill to be taken on a separate day, so that hon. Members who wish to express views on each of them will have adequate time to prepare their speeches?
Mr. Peart: This is a matter for the Chairman of Ways and Means, as the hon. Member knows.
Mrs. Renée Short: Will my right hon. Friend be able to find a day to discuss the care of subnormal patients arising from the reports on the Ely and South Ockendon Hospitals, and will he bear in mind that this would give an opportunity also to discuss the report of the Estimates Committee on special hospitals?
Mr. Peart: I am aware of my hon. Friend's interest in this. My hon. Friend must be aware that my right hon. Friend is meeting regional bodies on this matter, and I think we should wait until we have a statement from him on that.
Mr. Emery: Will the right hon. Gentleman have words before Tuesday of next week with his right hon. Friend the Chief Patronage Secretary about the mess caused by the existence of too many Standing Committees upstairs, to the extent that the Government were unable at any time today to maintain a quorum in the Standing Committee on the Development of Tourism Bill?
Mr. Peart: I will look into this.
Mr. Hector Hughes: Will the Leader of the House at last find time for Motion No. 134 about the dire consequences that will follow from the closing of the locomotives works in Inverurie and unemployment in North-East Scotland in general?
[That this House is shocked by the unnecessary and untimely threat by British Railways to close the railway locomotive works at Inverurie thereby increasing unemployment in North-East Scotland, increasing the already injurious trend south of workers and their families, the further concentration of workers and population in South-West Scotland and requests the Government to set up a Royal Commission to devise means of spreading population and industry and employment more evenly throughout Scotland, of improving communications between Northern Scotland and Europe and the United States of America and thereby increasing British export trade and Scottish prosperity and happiness.]
Mr. Peart: My hon. Friend has stressed this very often, quite rightly from his point of view, but I cannot find time next week.
Sir C. Taylor: Further to the question asked by my hon. Friend the Member
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for Honiton (Mr. Emery), may I point out to the Leader of the House that this morning at no time could the Government provide a quorum in Committee E dealing with the Development of Tourism Bill, and on four occasions the Government were defeated on Divisions.
Mr. Speaker: Questions should be questions.
Mr. Peart: I have already answered that question.

PARLIAMENT (No. 2) BILL
The Prime Minister (Mr. Harold Wilson): Mr. Speaker, with permission, I should like to make a statement about the Parliament (No. 2) Bill.
As the House knows, the Government introduced this Bill, following consultations in the all-party conference on Lords reform, as the measure best calculated in our view to modernise Parliament on a comprehensive basis, dealing with the powers of another place and its composition.
Following the Government's decision to introduce early legislation for the purpose of giving statutory effect to some of the salient proposals in the White Paper "In Place of Strife", Cmnd. No. 3888, it is now clear that the legislative priorities governing the Parliamentary timetable for the rest of this Session must be recast in order to give right of way to the Industrial Relations Bill, and—as soon as this can be made ready—the Merchant Shipping Bill, which my right hon. Friend the Leader of the House recently indicated that the Government wished to bring forward this Session.
The Government have, therefore, decided not to proceed further at this time with the Parliament (No. 2) Bill in order to ensure that the necessary Parliamentary time is available for priority Government legislation, including the two Measures to which I have just referred.
My right hon. Friend the Leader of the House will, at the appropriate time, keep the House informed about the Government's further intentions on the matter of the Bill.
Mr. Heath: Does not the fact of the Prime Minister making this statement make it clear that, he having personally

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broken off all the inter-party consultations in a fit of pique and petulance and having then proclaimed his intention of introducing the Government's own Bill for the reform of the House of Lords, the Prime Minister and the Government have now completely failed to carry it through this House?
The Prime Minister: I thank the right hon. Gentleman for his helpful intervention. No Government would have continued amicable discussions on the future of the House of Lords when that House was being used by the direction of the right hon. Gentleman to wreck an important piece of legislation. Nevertheless, he has put his finger on a very important fact. This Bill started as a consensus Measure, which meant, predictably, that it was regarded in a spirit falling far short of enthusiasm by a considerable number of hon. Members on my side as well as some hon. and right hon. Gentleman opposite. That would not have been the case had we introduced a one-party Measure, not seeking to get an agreed solution. In fact, the idea of a consensus Measure fell through when it became clear that we had no support whatsoever from right hon. Gentlemen opposite in making reasonable progress with the Bill.
Mr. Sheldon: If my right hon. Friend is perfectly right to draw the attention of the House to the fact that we did not receive support from the Front Bench opposite on this Measure which was agreed by them—[Interruption.]—would he now ensure he introduces a one-party Measure to remove the delaying power of the Lords.
The Prime Minister: On the point made by my hon. Friend, it is a fact that we did not deviate in the preparation of the Bill from the conclusions that were reached in the all-party talks at the point when they were suspended. It is a fact that the Bill was welcomed on Second Reading by spokesmen of Her Majesty's Opposition. Unlike my hon. Friend, I would have liked to see the Bill go through, but unlike my hon. Friend, whose position I well understand—and I have had plenty of time to understand it anyway—I feel it would have been highly agreeable to have got an
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agreed solution in this House on this problem which has been left alone for too many years. I regret that this is the situation, but I recognise that the Opposition, who obviously were very far committed in these matters, could not deliver support from behind—this is a problem not confined to one Front Bench, for we have been in the same position. But the fact that the 16 leading Front Benchers opposite, members of the Shadow Cabinet, registered between them 62 Divisions against the Government, most of them not on substance but on matters affecting the reasonable forward progress of the Bill—[Interruption.]—does suggest that the right hon. Gentleman and his hon. Friends were not concerned to make progress with the Bill but to exploit the Parliamentary situation which had been created. The right hon. Gentleman, out of 59 Divisions, voted in only one—just one more than the right hon. Gentleman for Enfield, West (Mr. Iain Macleod)—and that was against a Government Motion which would have helped us to make progress towards getting what we all want, an agreed solution on another place. That is a new situation which has been created.
Mr. Heath: Will the Prime Minister state quite clearly that there was absolutely no agreement whatever about this Bill? It was never put to the Opposition as such. We did not see the Bill beforehand. There has been no agreement of any kind. Secondly, will the Prime Minister also state quite clearly that there is absolutely no obligation on the Opposition to join the Government in closuring a debate in this House? It was entirely due to the management of the Government Chief Whip who could not even get enough people to closure in the interests of his own Government.
The Prime Minister: If that is the right hon. Gentleman's obituary notice on this Bill, which started on the basis of inter-party agreement—[HON. MEMBERS: "No."]—I am sorry; which started on the basis of inter-party consultations and which faithfully recorded the position reached in those consultations, which was sent to the right hon. Gentleman and which he never rejected as failing to reflect those inter-party consultations—if that is all he can say about this Measure these are the

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same weasel words as he used on immigration.
Several Hon. Members rose—
Mr. Speaker: In case hon. Gentlemen have forgotten, there is a Budget debate ahead.
Mr. C. Pannell: May I ask my right hon. Friend whether the lesson of this fiasco is not that in future, rather than striving for all-party agreement, we should seek to impose a proper settlement based on the promises which we made at the last General Election? And when any Ministers from this side or hon. Members opposite go into deliberations with the House of Lords, will he call their attention to the fact that when people, whatever their political affiliations, go along that corridor they go into another political reincarnation to defend another establishment?
The Prime Minister: I would regret drawing from this episode of constitutional history the same conclusions as my right hon. Friend. In a major constitutional Measure—and even if more than half of the House was bored, as it was indicated on Second Reading that they were, it was nevertheless a very major constitutional Measure—it is desirable, if possible, to proceed by agreement not only between the parties but between the two Houses. I believe our Measure represented that. I believe it still represents the best way forward for any House of Commons now or at any future time which want not only to fulfil the points made by my hon. Friend about powers but also to modernise Parliament; because it is difficult to try to improve other democratic institutions and leave Parliament untouched. Therefore, I would regret joining my right hon. Friend in the conclusions that he has, perhaps too hurriedly, drawn.
Mr. Thorpe: Reverting to the question of imposing settlements, can I ask the Prime Minister about the Industrial Relations Bill? Is he aware that the House is always anxious to help the Government with its timetable. If when this Bill is introduced the Prime Minister hopes to avoid the strife which he has faced on the Parliament (No. 2) Bill, is he satisfied that enough time is being left for its consideration by opponents and critics of the Bill?
The Prime Minister: I think there has already been a lot of time for consideration by opponents and critics, and supporters, of the Bill. There will be enough time for consideration. I can assure the right hon. Member of that. But it was necessary to make the announcement I have made this afternoon to make sure that the House has the time required for consideration of what is an important Parliamentary Bill, a Bill which to my way of thinking, however desirable the Parliament (No. 2) Bill may have been, is more important and relative to what we have to do.
Mr. William Hamilton: Is my right hon. Friend aware that many on this side will regard this episode of the Parliament (No. 2) Bill as an extremely healthy Parliamentary exercise, but will he give an assurance now that the Government will introduce a very short, sharp Measure quite simply to take away the powers of the House of Lords and let them get on with whatever they like?
The Prime Minister: My right hon. Friend the Lord President of the Council will keep the House informed. But my hon. Friend, having had what was obviously not only a healthy but enjoyable exercise, will wish to concentrate now on giving the Government his full support on the somewhat shorter, less controversial Bill that we shall be introducing.
Sir A. V. Harvey: For the sake of the record, does not the Prime Minister agree that the White Paper on the Parliament (No. 2) Bill differed fundamentally from the Bill—[Interruption.]—and will he now say——
Mr. Speaker: Order. We are not debating the Parliament (No. 2) Bill this afternoon.
Sir A. V. Harvey: Would not the Prime Minister agree that the right way to approach this problem would be to include it in the terms of reference of the Royal Commission which is to sit on the Constitution and to go into the whole thing properly? Does he not think it most regrettable that in the state of the country today 10 days of Parliamentary time should have been wasted on a Bill of this type?
The Prime Minister: I regret that it took an obviously reasonable Bill 10 days to get as far as it did. On the first

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part of the hon. and gallant Gentleman's question, I do not at all accept his dictum that the Bill was fundamentally different from the White Paper. It was not. Indeed, this was the whole basis of what we put before the House. With regard to the Constitutional Commission, that has certain duties in relation to the Constitution, but when it was announced in the debate on the Gracious Speech last year that that Commission would be set up, we made clear that its establishment would not be a bar to any legislation that might be necessary, whether in relation to Lords reform, local government reform or any other matter which might come within the terms of reference of the Commission.
Mr. Woodburn: Has my right hon. Friend any comments to make on the curious coalition that has succeeded in preserving the powers of the hereditary system in the House of Lords?
The Prime Minister: I find it an interesting Parliamentary and historic phenomenon of great interest to all students of Parliament. The difference is, I think, if one looks across the two sides of the House, that whereas the leader of this coalition on the Conservative side is in a position to dictate to his own Front Bench, the leaders of the coalition on our side are not.
Sir D. Renton: As the Government were unable to carry out their own declared programme, even with a majority of 70, and can therefore no longer be said to be governing effectively, would it not be better to make a fresh start and hold a General Election as soon as possible?
The Prime Minister: On that argument there would have been 27 General Elections between 1951 and 1964, in addition to those which took place, because during that particular period of our history no fewer than 27 Government Bills, either introduced in the House of Commons and dropped or introduced in another place and then not introduced here, were in fact dropped before the end of the Session
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in question. The right hon. and learned Gentleman, himself a distinguished member of that Government for a short period, will recall that, so far from having 27 elections which his doctrine would require, the last election was, as I said earlier this afternoon, postponed to the very last statutory minute.
Mr. Michael Foot: Since the Prime Minister has rightly put his finger on the dangers of introducing legislation into this House which has the explicit or the implicit agreement of right hon. Gentlemen opposite, and since that was the origin of these troubles, will he take note that the right hon. Member for Enfield, West (Mr. Iain Macleod) has expressed himself as an enthusiastic supporter of the Industrial Relations Bill, which may very well suffer the same fate as the Parliament (No. 2) Bill?
The Prime Minister: My hon. Friend, I am sure through inadvertence, has, first, misconstrued what I said about the lessons to be drawn from the Parliament (No. 2) Bill and, second, drawn a totally illogical conclusion from his own misconstruction. On the first point, I said—and I think it is right—that on a major constitutional Measure it is better, and it is preferable, to be able to get inter-party agreement on it. I indicated some of the facts which have occurred since in this House—not only the opposition of a substantial number and, indeed, quality of Members on both sides of the House during this period, but also the fact that there was no co-operation at all from the Conservative Front Bench, but rather, quite the opposite. That is the construction I put on it. Certainly I do not draw from what my hon. Friend says any conclusion at all because of the ability of the right hon. Member for Enfield, West (Mr. Iain Macleod)—a past master at this—to attempt to play upon divisions he thinks he sees on this side of the House and the regrettable ability sometimes of some of my hon. Friends to rise to him.
Several Hon. Members rose—
Mr. Speaker: Order. I must now lead the House back to the Budget.

ORDERS OF THE DAY
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [15th April].

  AMENDMENT OF THE LAW
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance, so, however, that—

  (a) without prejudice to any authorisation by virtue of any Resolution relating to purchase tax, selective employment tax or selective employment payments, this Resolution does not extend to the making of amendments of the enactments relating to either of those taxes so as to give relief therefrom;

  (b) this Resolution does not extend to making amendments of the provisions of the Customs (Import Deposits) Act 1968 so as to give relief from the import deposits required by those provisions to be paid, other than amendments making the same provision for all goods on which such deposits are so required to be paid.

  Question again proposed.

  BUDGET RESOLUTIONS AND ECONOMIC SITUATION
  Mr. Speaker: May I remind the House that I have notice of a vast number of would-be participants in the Budget debate. Reasonably brief speeches will help.
  4.6 p.m.
  The President of the Board of Trade (Mr. Anthony Crosland): I am sorry to bring the House down from the dizzy excitements of House of Lords reform to mundane issues such as the trade balance and the structure of industry, which are the two subjects I propose to talk about this afternoon. I comfort myself with the thought that, mundane as they are, they may be at least equally relevant to the welfare of the country as issues of constitutional reform.
  Last year's Budget was presented soon after the monetary crisis which culminated in the Washington conference and the two-tier gold system. At that time many people feared that monetary instability might disrupt world trade and world prosperity. There was even gloomy talk of a return to 1931. But, in the
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  event, 1968 saw one of the largest increases in world trade ever.
  The British trade balance also improved, but, as my right hon. Friend the Chancellor said on Tuesday, not sufficiently. It has to improve a good deal further if we are to achieve a satisfactory surplus on our balance of payments.
  To this end, we have to look critically at the behaviour of both exports and imports. People sometimes talk as though excessive imports were the sole, or at least the basic, cause of all our troubles. But the mere fact that we have a trade deficit does not tell us how far this is because exports are too low, or because imports are too high. Nor does the fact that our imports have risen rapidly in the last 10 years prove that our difficulties are caused entirely, or even mainly, by excessive imports. For imports have risen even faster in other countries that do not have trade deficits. In fact, our share of world imports has been falling.
  In Italy, Germany, the United States, Sweden and Japan, for example, imports over the last ten years have risen in volume at rates of between 7 and 13 per cent. a year, compared with less than 5 per cent. for the United Kingdom. Of course, these countries have mostly had a faster growth in the national income than we have had. But even relating imports to G.N.P., imports into most of these countries have risen by more than imports into Britain. Whereas imports into Britain have risen by 50 per cent. more than G.N.P., in Sweden they have risen by 70 per cent. more than G.N.P., in Germany and the United States by 80 per cent. more, and in Italy by 120 per cent. more.
  So there is no presumption that all the trouble is either on the side of imports or on the side of exports, though I shall give figures later to suggest that our export performance has a good deal to do with our problems. Obviously we need adjustments on both sides of the account.
  To some extent—and provided there is a reasonable pattern of international exchange rates—the market mechanism can help bring about the required improvement in the trade balance in the most economical manner. That is why we devalued in November, 1967, rather than have recourse to artificial controls over our foreign trade. But, clearly, the price

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  mechanism cannot always do the whole job. It often moves too slowly, and it also suffers from some serious blind spots, notably where there is a conflict between the private economic interest and the national economic interest. So other and more direct measures are required. These measures must be designed both to save imports and to promote exports; for since no one can say dogmatically how the improvement should be distributed between higher exports and import-saving, the common sense approach is to proceed simultaneously on both fronts.
  That is what we are doing. I start on the side of import-saving. I should emphasise in passing what the Chancellor mentioned in his Budget speech, that imports have now been virtually stable for many months, despite a continuous rise in domestic output. But I see that a distinguished Select Committee of this House, on which some hon. Members present serve, recently suggested that the Board of Trade was insufficiently interested in import-saving. This surprised me, to say the least, and must have taken away the breath of many of our traditional suppliers who take a very contrary view. One has only to think—I say this despite our scrupulous care to maintain our international obligations—of the protests and resentment aroused in E.F.T.A., in the Commonwealth and in many other countries at—I take some examples at random—our aluminium smelter programme, designed to save £40 million a year of imports in the early 1970s; investment grants on ships; my action last November in re-imposing a 10 per cent. tariff on E.F.T.A. frozen fillets; my recent announcement of sharply-reduced butter quotas for 1969–70; our exceptionally quick investigation on the anti-dumping application on cheese; and so on.
  If there were time, I could add many other major examples of import-saving projects—in North Sea gas, in petrochemicals, in potash in Yorkshire, or, in a quite different field, in hotels and tourism, where I hope the Development of Tourism Bill now before the House will still further fortify the invaluable contribution which tourism already makes to our foreign exchange earnings—a contribution which in 1968 amounted
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  to some £275 million, an increase of 16 per cent. over the figure for the previous year, and an increase which for the first time since statistics have been compiled brought our tourism account—traditionaly in substantial deficit—into a modest but welcome surplus.
  Lest it be said that the increase in S.E.T. announced by my right hon. Friend the Chancellor on Tuesday will strike a mortal blow at the efforts of the tourist industry, let me point out that the incidence of S.E.T. on hotels will now be between 4 and 5 per cent. of turnover, and that the increase made in this Budget might add threepence in the pound to the cost of hotel accommodation out of the £55 which overseas visitors spent on average in this country last year. Let me further point out that, since S.E.T. was introduced in 1966, our foreign exchange earnings from tourism have risen from under £220 million to £275 million last year—a rise of 25 per cent. So I will wager a large sum of money that the present increase in S.E.T. will not prevent a further large rise in tourist earnings in 1969.
  Mr. Peter Emery: Surely the figures which the right hon. Gentleman has just given are in sterling and, therefore, do not take account of devaluation. In these circumstances, are they not meaningless?
  Mr. Crosland: They are not meaningless. Whatever allowance the hon. Gentleman makes for devaluation—if he wishes, I will give the figures in any currency he likes—he will find that there has been a substantial rise in tourist earnings from overseas visitors in the years in which S.E.T. has not merely been operating but increased once—last year.
  To return to the trade balance, it is, of course, true, as the Select Committee said, that we in the Board of Trade attach exceptional importance to expanding exports. There are two reasons for this—
  Mr. John Mendelson: Is my right hon. Friend being fair to the Select Committee? Should he not address himself to the argument that whatever individual successes he can quote the Government have not been radical enough in choosing the right method to control imports rather than doing it piecemeal,

  1349
  as he has outlined? That is the much bigger case which he has to answer.
  Mr. Crosland: The method of import saving which my hon. Friend probably has in mind was not in the minds of the members of the Select Committee on Agriculture when they made these remarks.
  To return to the trade balance and the Select Committee, it is true that we in the Board of Trade attach exceptional importance to expanding exports. There are two reasons for this. First, comparing our performance with that of other industrial countries, it is on the export side that we have mainly fallen down. Our exports have risen in volume over the last ten years by about 3 per cent. a year. American exports have risen by 4 per cent. a year in volume, while exports from Germany, France, Italy, Sweden and Japan have all risen at rates ranging from 7 to 15 per cent. a year.
  Mr. Robert Maclennan rose—
  Mr. Crosland: I have given way twice in the first ten minutes. Mr. Speaker has asked for relatively short speeches.
  As a result, our share of world trade in manufactures has fallen steadily from 18 per cent. ten years ago to less than 12 per cent. in 1967.
  But there is another argument why increased exports are of great importance to us all. Against the background of modern technology, Britain is a comparatively small market. Only if we participate substantially in wider international markets can British firms obtain the longer runs, the economies of scale and the technological progress which are essential to our higher standard of living. In a country the size of ours—and the Germans and Japanese realize this only too well, let alone the Swedes, the Swiss and the Dutch—it is more and more true that only those firms which see their market as being a world and not simply a domestic market—that is, only those firms which export a high proportion of their output—can achieve anything like maximum efficiency. That is why an export orientation, as opposed to an inward-looking protectionist approach, is essential, not only to solving our balance of payments, but to a rising standard of living.
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  As to the future, there are some encouraging signs. The volume of exports was 14 per cent. higher last year than in 1967. It is less if adjustment is made for the effect of the dock strike. This is, of course, a much larger increase than we have achieved for many years past. Admittedly, as the Chancellor said on Tuesday, we were greatly helped by the expansion in world trade last year. But last year was only the second year for a long time when, during the year, the steady decline in our share of world trade was arrested. This is significant because in the past it has been precisely in those years when world trade has grown fastest that our share has fallen most. True, there has been a pause in the last two or three months in the growth of exports. This partly reflects the results of the American dock strike. It also reflects a levelling-off in exports of engineering goods which the industry's buoyant order books suggest may only be temporary.
  Certainly the indicators point to a resumption of the upward trend of exports. This is especially true of the engineering and shipbuilding industries, where the full benefit of the rise in export orders since devaluation has still not been completely felt. The position in shipbuilding is particularly encouraging. New orders since devaluation have risen substantially. Last year, for example, the tonnage of new merchant ships ordered for export was ten times as large as in 1967. As a result orders in hand have been rising strongly, and there should be a sharp increase in exports later this year and in 1970.
  Mr. Simon Wingfield Digby: Although I am sure that we are all glad that shipbuilding exports have risen, is the right hon. Gentleman aware that in December, 1968, shipbuilding exports in Germany had risen by 158 per cent.?
  Mr. Crosland: It is true that there has been a boom in shipping order in every major shipbuilding country. It does not alter the fact that our proportion of those orders has increased. The position of the British shipbuilding industry in terms of total orders and export orders is very much healthier than it has been for many years.
  As I was saying, the engineering industry as a whole had considerably more export orders on hand in January than

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  before devaluation, and, what is more significant, new orders were still coming in at a rate which was about one-quarter higher than in the third quarter of 1967; that is to say, the period immediately prior to devaluation. And the C.B.I.'s industrial trends survey, completed in February, showed that of nearly 1,000 manufacturing firms engaged in exports, 90 per cent. continued to be very optimistic about their export prospects.
  I believe that this evidence confirms the view that the reaction to devaluation is bound to be a lengthy process. I think people sometimes forget that there are many stages to be gone through before industry can take full advantage of the opportunities which devaluation created. It takes time for overseas demand to respond to the increased competitiveness of British goods. It takes time for our producers to reorganise the direction of their sales effort, their management effort, their marketing effort, and, in many cases, even their production effort. This is particularly true in the case of heavier equipment and engineering products, many of which have to be tailored to meet the particular requirements of individual customers.
  I should add that it is not the case, as some people have suggested, that the price advantage which we gained from devaluation has already disappeared. Over the field as a whole we still have a price advantage of about 7 per cent. and this, of course, is after many of our exporters, in my view very sensibly, have increased their margins on overseas sales, so improving the profitability of exporting.
  Sir Cyril Osborne rose—
  Mr. Crosland: I shall not give way any more. I have been asked to make a short speech, and I have given way three times already. The hon. Gentleman can take what I have said as being true.
  There is good reason to expect that the growth in our exports will soon be resumed and that 1969 will be a good year for exports, provided always that British managements increasingly accept that they must sell to a world market, that export production is not disrupted by irresponsible strikes, and that world
  1352
  trade remains as buoyant as now seems likely.
  To achieve the further improvement we need in the trade balance the Government must, first, ensure that the resources are available for the higher exports and the import-saving. The switch of resources required to move from substantial deficit to substantial surplus is quite modest in relation to our total output of goods and services. It certainly should not be beyond our abilities. After all, most other advanced countries have for years devoted a lower proportion of their total output to personal consumption than we have in Britain. To achieve this switch of resources is obviously the purpose of my right hon. Friend's Budgets, both this year and last.
  But this is only a necessary and not a sufficient condition. We still need to do more to encourage the fullest possible response to the new situation, and here the Government can help by making available a comprehensive range of export promotion services. We now operate in the Export Services Branch of the Board of Trade one of the largest commercial intelligence organisations in the world. Our expenditure on this—and on support for trade fairs and British promotions overseas—was about £3 million in 1966–67. In the coming year I expect it to have more than doubled to about £6½ million. To take one particular promotion measure—I mention this to give some sense of the size of the operation—support at overseas trade fairs last year was given to 5,300 firms at 239 events. In these matters the British National Export Council plays a crucial rôle, and I should like to pay my tribute here to the invaluable work both of the Council and of its area committees.
  We have initiated a number of new export-promotion developments in the last 12 months. I do not wish to weary the House with details, so I shall only briefly mention a few of them—the increased volume of buyer credit and lines of credit provided by E.C.G.D. in co-operation with the City and its bankers; the Group Export representation scheme, designed to stimulate firms into sharing sales representatives overseas; the Overseas Project Group to help co-ordinate action on major overseas projects between Government, nationalised industries, bankers, consultants and manufacturers; a new scheme of

  1353
  Government help for market research in overseas markets where British penetration is lagging; and so on.
  I should add, before I leave the subject of export promotion, that we look forward to receiving shortly the report of the committee under Sir Val Duncan set up by my right hon. Friend the Foreign and Commonwealth Secretary to examine the function and scale of British representation overseas.
  But whatever our export promotion efforts, we shall not get the rise in exports that we need without an increase both in capacity and in productivity. Capacity has only too often been a constraint in the past. When we have had an export boom—we have seen this time and again—we have too often run into a shortage of capacity, an inability to supply promptly, and so the familiar complaint about long British delivery dates. I was therefore particularly pleased to see that despite the fears expressed by the C.B.I. in December and January, at the two Neddy meetings, recent forecasts of investment intentions have confirmed the earlier indications of a rise in manufacturing investment of 10 per cent. to 15 per cent. in real terms between 1968 and 1969, with a still further rise in 1970. These forecasts gain additional support from the fact that manufacturing investment was already rising quite strongly in the second half of last year—there was a rise of 4 per cent. between the second and third quarters, and a further rise of 7 per cent. in the last quarter. And the strongest growth is occurring in some of our most important, most crucial export industries such as vehicles and chemicals.
  Some hon. Members have suggested in this debate, and some outside commentators have also suggested, that the increase in Corporation Tax announced by my right hon. Friend on Tuesday will falsify these hopes of a rise in investment. I do not believe it. An increase of 2½ per cent. in Corporation Tax in last year's Budget did not prevent investment rising in the second half of last year, and this was hardly surprising. After all, it is obvious enough, and I quote the Richardson Report to support the view that changes in profits taxes have comparatively little effect on investment since—as the Report put it—
  "factors other than taxation largely determined investment decisions … the need to keep
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  capital equipment up-to-date and, if possible, ahead technically of that of competitors; the need to improve product quality and manufacturing efficiency and to reduce costs; the growth and potential of a particular market; the general growth and development of the business".
  To that I would add that gross trading profits of companies last year rose by 11 per cent.—or £500 million—and are expected to show another strong rise this year. So there should be plenty of room for the £75 million this year which the increased Corporation Tax will yield, and I conclude that we can still expect manufacturing investment to rise sharply through 1969 and into 1970.
  As to productivity, of course the main responsibility rests not on the Government but on the two sides of industry. But there are a number of ways in which the Government can help, and I should like to mention some to which we are giving special attention. The House will know of the pilot scheme for grants to small firms to help them employ consultants. This started in June of last year in Bristol and Glasgow, and was brought to a close in February. It has already resulted in about 250 small companies in these two cities receiving the benefit of expert advice from professional consultants. In the light of this response, which I regard as excellent, I shall be considering the possibility of a national scheme on the same lines.
  Everyone agrees that design is crucial to our export effort. Following discussions with my right hon. Friend the Minister of Technology, I am glad to announce that the Government accept in principle the recommendation made last year by a Working Party of the Council of Engineering Institutions that a National Design Council should be set up, to take over the present responsibilities of the Council of Industrial Design, to build on its organisation, and to give greater emphasis to engineering design. I hope to make a further announcement shortly on the details of this plan.
  In the context of exports and productivity I want to stress, although most hon. Members are well aware of it, how important a contribution is made by the smaller firms. We hear a great deal about the big battalions, which tend to receive most of the publicity, but the

  1355
  small firm, with its capacity for innovation and its flexibility, can and does make a critically important contribution.
  We already do much to help this sector of industry by our financial help to the British Productivity Council, the British Institute of Management and the Centre for Inter-firm Comparison. The consultancy scheme to which I have referred is also directed towards the smaller firms. Many of them will be substantially encouraged also by my right hon. Friend's concession on close companies.
  Mr. William Baxter: This is an important part of my right hon. Friend's speech. As he said, the importance of small firms must not be under-estimated. Does he recognise the difficulty of close companies when an inspector of taxes in any locality can insist upon the disbursement of the remaining profits after 45 per cent. has been paid to the Exchequer? This is biting at the initiative of close companies which are the backbone of the nation.
  Mr. Crosland: I understand that there will be no fewer than two Treasury speakers taking part in Monday's debate. It might be more sensible to leave the detailed taxation part of the subject until then. I am dealing with it in rather broader terms today.
  There may be more that we can do to help the small firm. I should add that I have been discussing with the C.B.I. over the last few months the possibility, which it strongly supports, of an independent inquiry into the economic problems of the small firm. With its agreement, we now propose to set up a small committee to consider the role of the small firm not just in relation to exports but in the economy as a whole. I hope to make an announcement shortly about the membership and terms of reference of this committee.
  I turn now to the second of my two subjects, the structure of industry, which is at least as crucial to our competitiveness as any of the matters I have mentioned so far. It has been greatly discussed recently in relation to monopoly and merger policy. We have to start from the simple and basic truth that there is no one industrial structure which can possibly be suitable for all industries. Economies of scale vary enormously from
  1356
  one industry to another. Differing sizes of market, the extent of international trade, technological change, the location of raw materials, the availability of managerial talent and many other factors will all point to different structures for different industries at different times.
  That is why no Government can have one single and comprehensive industrial policy. That is why this Government pursue a variety of policies which are sometimes said to be contradictory but which, in fact, reflect the basic truth that there is no such thing as an ideal structure universally applicable to all industries. Often, the best structure can be left to market forces to settle. At the other extreme, in the cases of steel and the ports, we have decided that nationalisation is the right answer. In many cases, we have sought to promote rationalisation through the I.R.C. Sometimes, as with computers, we have intervened directly, at other times, as with shipbuilding, indirectly through an independent board. In other cases still, we have brought the Monopolies Commission into play and asked it either to investigate existing situations of market power or to examine a proposed merger when it was not self-evident that it would be in the public interest. In each case the objective is the same—to find that industrial structure which seems most in the national interest, but the means are different because the situations are different.
  This afternoon, I shall say something about the Monopolies Commission in particular. Most of the recent discussion in the Press and in the House has been about its rôle in relation to mergers. But it also has a vital rôle, which was, indeed, its original rôle, in relation to existing monopoly situations, whether or not they were created by recent mergers. Its task here is not solely, as people sometimes think, to protect the consumer or to investigate particular abuses of market power. These are certainly two of its functions, and very important ones, but they are far from being the whole story.
  The Commission also has a more directly constructive job. This is to find out whether a monopoly is making the best and most efficient use of resources or whether the absence of competitive pressures has led to inefficiency, inertia and the misuse of resources. So, when I

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  make references to the Monopolies Commission—and I hope to make some more shortly—the House should not assume that I necessarily have evidence of the abuse of monopoly power. The motive will often be the more positive one of ensuring that an industry which may not be subject to effective competition, either from other British firms or from imports, is nevertheless being run efficiently and in the public interest; or, in other cases, it may be to ensure that the expected benefits from a previous merger have, in fact, occurred.
  I turn now to the Commission's rôle in relation to mergers, which has been much in the public eye lately. A reduction in the number of competing firms in an industry must raise the question of the public interest; that, after all, is why Parliament passed the 1965 Monopolies and Mergers Act. If a reduction in competition results, then, as a minimum, we must be sure that there are compensating advantages from the merger. In Britain, with many of our older industries in particular too fragmented to compete effectively with larger German or American firms, there often will be such compensating advantages, and this explains why the Board of Trade has referred to the Commission only 10 out of the 350 or so mergers which we have examined since the 1965 Act.
  But we must not accept the case uncritically. Size, to put it mildly, is not a universal guarantee of greater efficiency. There are plenty of sleeping giants in British industry horn of past mergers, and plenty of highly efficient specialised smaller firms. That is why in a minority of cases we do make a reference to the Commission, why in other cases we seek assurances to safeguard the public interest, and why I shall keep continually in mind the possibility of a subsequent reference to the Commission if the advantages of a merger do not accrue or if there proves to be insufficient safeguard of the public interest.
  As the House will know from my Manchester speech, which was referred to in the debate on 7th March, I have been thinking a good deal about whether I should describe more explicitly and in more detail the Government's approach to merger references. For example, I have considered whether to publish guide-
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  lines, similar to those put out last May by the United States Department of Justice, to show when a merger would be referred to the Monopolies Commission and when it would not.
  But if we were to take the American guidelines as a model, what would happen? We should specify the market share which would lead us to make a reference to the Commission; for example, we should refer all mergers where the market share of the combined companies exceeded, say, 50 per cent. We should also have to specify the size of mergers which would be referred to the Commission; for example, if the assets of the two companies together exceeded, say, £100 million. On conglomerates, we could not follow the American guidelines, since they are not at all specific. We should have to formulate our own exact definition of conglomerates and lay down, for example, that any conglomerate so defined involving over, say, £50 million of assets would be referred. Also, to reduce uncertainty we should have to say, as is done in the United States, that, in the cases we had specified, a reference to the Commission would be automatic and despite any benefits which might be claimed from the merger. Otherwise, we should be back to the same position as we are in today.
  I am quite clear that, however suitable such guide-lines may be in the United States, they would not do here. To adopt them would, to begin with, involve major legislation which overthrew the whole basis of all our post-war monopoly legislation under successive Governments, for this does not start from the assumption that certain types of market structure are undesirable in themselves. On the contrary, it adopts an entirely empirical and pragmatic approach.
  Quite apart from the legislative side of the question, such guide-lines would be highly unwelcome to British industry. They would fit badly with our policy, which I am sure is correct, of encouraging desirable mergers through the I.R.C. They would involve referring a far higher proportion of mergers to the Commission. They would impose a degree of rigidity which would make no sense in a country so heavily dependent on international trade and so subject to international competition as we are in Britain. It is not

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  even clear that they would eliminate uncertainty. In difficult cases, American-style guide-lines leave a lot of room for argument on interpretation. For example, how do we define the relevant geographical and industrial markets, particularly in a country like ours which imports as much as we do? It seems likely to me, having thought about this a great deal, that the merger cases which cause most difficulty under our present system would cause at least as much difficulty if we were to adopt arithmetical guide-lines on the American pattern.
  The fact is that the use of guide-lines in the United States is related to an entirely different legislative philosophy, different institutional arrangements, and a different international trade situation. Their legislation prohibits any steps which might lead to a significant reduction in competition, with the result that a large proportion of important mergers are manifestly unlawful. For all the reasons that I have given, I believe that this would not be the right policy for this country.
  Nor would it do us any good to adopt guide-lines without the arithmetical criteria, because then the guide-lines would be either meaningless or totally platitudinous, consisting of saying that more exports are good or that exploitation of the consumer is bad. They would be liable to endlessly different interpretations. They would in no way increase the certainty of the business community as to when we were likely to refer and when not. Yet they might inhibit the freedom of action which the 1965 Act was intended to give us, so I think that we would probably get the worst of both worlds.
  However, as I said at Manchester, within the framework of the present legislation, I should like to give more information about the way we deal with mergers and more explanation of how we use the discretion which the law confers on us, but without attempting to formulate guide-lines as such. I want to do this for three reasons: to assist informed discussion, to help firms prepare themselves when they have to present merger cases to the Board of Trade, and to show, as I believe to be the case, that we are following a consistent attitude. But we must do it without tying ourselves to rigid
  1360
  or detailed rules and without running any risk of distorting industry's rationalisation plans to fit some non-existent notion of an "ideal" merger.
  I have decided to issue later this year a concise but comprehensive publication on the subject. I want it to provide, both for those who are directly concerned in merger questions and also for the interested public, extensive information about the Government's attitude and practices in this sphere. Without laying down rules, it will explain our procedures in merger cases. It will describe the questions which we ask of merging firms and the factors that we take into account in deciding whether or not to make a reference to the Commission.
  Of course, the weight that we attach to the different factors must vary with the individual circumstances of the particular case, and the final decision must depend on a balance of considerations. But I hope that this publication, besides explaining our procedures in a way which will be useful to industry and, I hope, interesting to public opinion, will also show that our criteria and approach to mergers are consistent, and consistent, too, with other aspects of the Government's industrial policy, such as support for the I.R.C.
  There is one other change of emphasis which I want to make, and it concerns assurances from merging firms. After all, the choice is not simply whether to refer a merger to the Commission or not. There may be good reasons for not referring a merger because the advantages to be expected from it are, on balance, clear ones, and yet one may want to obtain from the companies concerned some assurances as to future behaviour. Alternatively, it may be unnecessary to refer a merger where one simple, obvious disadvantage can be identified, if this can be dealt with by a firm assurance. For example, as the House knows, one of the anxieties which I felt about the E.M.I./A.B.P.C. merger was met by an assurance that E.M.I. would divest itself of its talent agency. There are other cases in which I have approved a merger only after receiving similar assurances, the latest being Ross and Associated Fisheries, where I thought that the merger on balance was clearly desirable, but was most anxious to safeguard the

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  position of the merchanting side of the industry.
  I do not propose to ask for assurances in every single case, because the fact is that the great majority of mergers are relatively small-scale affairs, neither obviously very good nor obviously very bad, and not raising problems to which assurances are relevant. But I propose in future to seek assurances somewhat more freely in major merger cases. For example in co-operation with my right hon. Friend the First Secretary, I want assurances about the handling by the companies concerned of the problems of industrial relations to which rationalisation and redundancy may give rise. Rationalisation is often desirable, but it can be very painful to the workers and families involved. It must be carried through in proper consultation with the unions concerned and without unnecessary or avoidable injury to the interests of the workers affected.
  Again, in large-scale mergers I must see and be assured that proper attention is paid to the Government's regional policies. In other cases, particularly in the case of a take-over bid from overseas, I may need to be assured that exports will not be prejudiced nor imports unreasonably increased. Lastly, there are the specific assurances related to the particular circumstances of the industry which I may seek in such cases as E.M.I. or Ross/Associated Fisheries, which I have already quoted. These assurances will never form a major part of our monopolies and mergers policy, but they can represent one useful step towards the accountability of large firms which we on this side of the House have always wanted.
  I hope that these changes of emphasis, while preserving the flexibility in our approach which I think has the support of both sides of the House, will give the public a greater sense both of certainty and of consistency.
  Mr. Stan Newens: Could my right hon. Friend tell us briefly what assurance we can have that firms abroad taking over businesses here will keep the guarantees which they will be asked to give, in view of the fact that I understand that the Ford guarantee of 1960 has been shot through again and again?
  Mr. Crosland: We have considerable powers over such a firm. In the event
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  of a large-scale merger, if I decide not to refer it now under the mergers part of the legislation, I can decide to refer it at a later stage under the monopolies part. There are other powers as well.
  Getting the right industrial structure, of course, is only part of the whole problem of achieving a better export performance and a general improvement in competitiveness. That, at the end of the day, is what all the problems are about and what determines our standard of living. If we want to improve that standard of living, it is on improving our industrial competitiveness that the efforts of us all, whether Government, management or unions, must be concentrated.
  4.47 p.m.
  Sir Keith Joseph: We are so used to the scale of Socialist failures that I think that I ought to bring back the House to a sense of proportion. I shall pick up the various points made by the President of the Board of Trade in what I say, but, before coming to them, I want to return to the point made yesterday by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). He contrasted the balance of payments experience of this country with Socialist Governments on the one hand and with Tory Governments on the other. The figures are brief, and I hope that the House will allow me to give them.
  The Socialists normally run the country into debt and deficit. That is the normal outcome of their administration. This time, they have piled up no less than £3,000 million of debts, and they have used up £500 million of our accumulated overseas assets. In seven out of ten years of Socialist Administration there have been current trading account deficits adding to a total net trading loss of £900 million.
  The Tory contrast is sharp. It has been our function, and will be again, to set about the repayment of debts incurred by Socialist Governments. In nine out of our 13 years of administration there was a surplus on current account adding up in total to £750 million net. We built up the overseas assets which the Socialists have raided.
  I do not think that any publisher would have agreed to publish a novel which incorporated as its plot what has happened to the trading of this country

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  under this Socialist Administration. It would have been regarded as too incredible. But my right hon. Friend the Leader of the Opposition warned the country. I doubt whether most of us really thought that our forebodings would come true so quickly and so profoundly. We knew that it would happen, but, by a combination of arrogance and naivety, the complete sacrifice of all confidence which lies behind the debacle, it has occurred more quickly than most of us ever feared.
  The result of nearly five years of naïve and arrogant administration is that the normal instruments—I would have used the word "levers", but I do not want in any way to be personal about one, on the whole, rather sensible hon. Gentleman opposite—of Government policy have been rendered useless. So we now face a virtually impotent and despairing Government relying on what I will call and hope to justify as a gambler's Budget.
  The trade figures published on Tuesday were as significant as the Budget produced by the Chancellor on that day. All of us, I think, including the Chancellor, expected a much sharper improvement after the depressing outcome of the February international trading results. On Tuesday we faced the revelation that in March this country ran up a further £52 million of trading deficit.
  We have a visible-deficit, invisible-surplus trading history. We have been able to rely on invisible surpluses to cover Government expenditure overseas and to cover the gap in visible trade. Once again, the invisibles have not failed us. The merchants dealing with invisible trade have served the country proudly. I am somewhat amazed that the President of the Board of Trade, in his long speech, did not find time to refer once to our invisible trade. I withdraw that. The right hon. Gentleman referred particularly to tourism. But, while tourism has done excellently, I think that he was wrong not to pay tribute to the record of the shipping, air, insurance and banking industries and the overseas earnings. No doubt I in turn have omitted some important ones. This Budget and this Government have discouraged invisible trade. I will give some examples in a few moments.
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  The invisible surplus can only cover a modest visible deficit. If the visible deficit were now at about £20 million regularly we would be in balance. I may be wrong, but I take into account current Government expenditure overseas and the cost of U.S. aircraft. I believe that is the order of magnitude. But the last three-monthly average has shown a deficit not of £20 million, but of over £40 million.
  The case that we on this side put to the Government is that the Budget does nothing to help plug this gap. Who will plug this gap? Only British industry and commerce, helped, not hindered, by the Government.
  What help have the Government provided? Let me give some credit. Some relief was announced by the Chancellor from the worst excesses of the statutory prices and incomes policy. For that relief much thanks. There is some relief to close companies, and for that relief much thanks. Otherwise the Budget has made exporting and investing less profitable.
  The President is sanguine about the effect on investment intentions of the rise in Corporation Tax. But it is not just the rise in Corporation Tax that the investing company faces; it is a rise in Corporation Tax cutting its cash flow by 15 per cent. combined with the most savage monetary squeeze that the I.M.F. and the Government together have been able to devise. Whether, in face of this, the investment expansion for which the President still hopes, and for which we hope, is achieved in full substance no one can yet tell.
  On top of this the Selective Employment Tax is to be screwed up again to provide the Chancellor with a further interest-free loan of £70 million from British industry. I thought that the Chancellor, on the one hand, and the First Secretary, on the other, were a little ambiguous about the Selective Employment Tax. Is the increase in the tax intended to reduce consumption? In that case it must presumably be passed on to the consumer. Or is it meant to be absorbed by the firms concerned? There was a certain ambiguity about this, and I hope in later stages of the Bill that we shall make the Government speak about it with one voice. Business also

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  has to face increased charges on petrol and other costs.
  The Chancellor was coy about one particular blow that he directed to one vulnerable part of British industry, the textile industry, a blow which he manages also to direct at the grey areas. The announcement about a rise in taxation will precipitate a boomlet for a few weeks in textiles, but once that boomlet is over the textile industry fears that it will suffer seriously from the increased tax. The textile industry feels particularly injured because it understood that, pending the outcome of the President of the Board of Trade's consideration of the Textile Council's report, no major decisions affecting it would be made. I gather that the President will be in Nottingham tomorrow evening facing a textile audience. I warn him, if he needs warning, that he will face fierce questioning on this issue, questioning which we on this side will also take up.
  One feature of the Chancellor's Budget speech which might be of great help to industry is the decision of the Government on industrial relations. If industrial relations were to be transformed in the relatively few but important areas where they are not ideal, I am sure that industry would gladly put up with the other less advantageous parts of the Budget. But does anybody on the Government side really believe that the industrial relations legislation will provide an instant panacea for British industrial problems?
  The hon. Member for Ashfield (Mr. Marquand) was right in urging the Government not to overplay this panacea as they overplayed before incomes policy, interventionism and devaluation. This is surely in danger of becoming just another bit of instant politics.
  In our view, the Budget does nothing to help the crucial balance of payments problem. No doubt the Chancellor will rely on monetary policy—and this may please the I.M.F.—which is a very powerful universal weapon, but some of us fear that, in its very universality, it will hit exports among other things.
  The Chancellor—I hope that the right hon. Gentleman will listen, as well as having his gossip with the President of the Board Trade—seems to have caught
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  the Prime Minister's foolhardy optimism. He goes tiptoeing through the tax field with his eyes not on the national interest but on party unity.
  The balance of payments, which is not improving as intended, is not helped by this Budget. The balance of payments, as the right hon. Gentleman constantly reminded us, is the central issue of the economy at the moment, but the Chancellor has introduced nothing more nor less than a gambler's Budget.
  The Chancellor of the Exchequer (Mr. Roy Jenkins): Does the right hon. Gentleman believe that I should have taken further measures, and, if so, what?
  Sir K. Joseph: I shall come on to explain why I think the entire strategy of the Government is wrong, and I shall explain where it is wrong. I shall not avoid the issue.
  It is common ground between the two sides of the House that devaluation was not chosen by the Government. It was not an instrument of their choosing. It was forced on them. It is also common ground that the Government, having been forced to devalue, should have used devaluation as an opportunity. There were, tragically, five wasted months after devaluation, and history will apportion the blame for the waste among the Prime Minister, the Home Secretary and the Chancellor of the Exchequer.
  The outcome so far on the export and import front should be analysed briefly somewhat more sceptically than the analysis presented today by the President of the Board of Trade. In 1966, under Labour Administration, exports paid for about 98 per cent. of our imports. I admit that these are my calculations and that my percentages might not be precisely correct. In 1967 that proportion suddenly fell to 90 per cent.
  The National Institute of Economic and Social Research suggested on page 17 of its last publication that during 1967 there was a sudden worsening of our underlying competitiveness. The figure fell further in the first half of 1968, to 88 per cent., then recovered to 92 per cent., and in the first quarter of this year edged up towards 93 per cent. These figures may not be exact, but they show the true trend.

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  This position is admittedly in the right direction but, as the Government acknowledge, it is too slow a movement. We should not even take the comfort which the President allowed himself to take from the volume increase in 1968. The Chancellor was straightforward on Tuesday and acknowledged that one-third of the volume increase in exports last year resulted really from what had been deferred from 1967. The President also acknowledged this.
  Nearly one-half of the volume increase, on top of that one-third, may well be due only to the rise in world trade. We in this country have traditionally, over many decades, increased our volume of exports by about one-third of the volume of growth in world trade. Last year it was 15 per cent., and thus that explains, without devaluation, the rise in our export volume by about 5 per cent. When all is said and done, I believe that the National Institute is right in saying that devaluation has so far only had
  "… a very slight benefit on export volume growth".
  Moreover, although the President denies this, the National Institute says that we are beginning to lose such advantage in price as devaluation gave us. The President says, in effect, "I agree, but the prospects are rosy". We hope that they are, but what will happen if consumption in this country does not fall? While we hope for stable or even slightly rising consumption, with strong export growth and, we hope, strong investment growth, those two aspects implacably bring with them strong import growth too.
  I come to the question of imports. The President did not tell us that 80 per cent. of the volume of our imports is accounted for by food, beverages, tobacco, fuels, industrial raw materials and semi-processed materials. If the G.N.P. grows, whether from exports, investment or consumption, unless a miracle occurs an increase of more than the increase in the G.N.P. will occur in imports. The Board of Trade says that a 1 per cent. increase in the volume of G.N.P. leads to a 1⅔ per cent. increase in the volume of imports.
  When people say that there is a consumption boom and imply that that reflects a boom in imported consumer goods, they are only partly correct,
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  because probably only about 6 per cent. of the volume of our imports represent consumer goods; 14 per cent. or so represent manufactured goods, mostly plant and machinery.
  If, as we hope, exports and investment grow and consumption grows marginally, as the Chancellor intends it should, will export growth alone be enough, based on the scale which the President anticipates? Remember it will have to cover not just the present deficit but also increased imports.
  In considering future prospects, it is fair to say that we may succeed and that the Government may be right in what they have said on this score. We hope that they are. [Interruption.] I assure hon. Gentlemen opposite that we do not want to inherit a deficit. However, the Chancellor has dropped his £500 million surplus target for this year and world trade is losing its impetus.
  There was a rather cruel article in today's Guardian by Mr. Anthony Harris. He wondered what the Chancellor might say to the I.M.F. and if the right hon. Gentleman would blame the unwillingness of the Germans, Italians and Japanese to behave properly as surplus countries. They are certainly not behaving as the Chancellor would like and, if the National Institute is right, we are losing the benefit of devaluation as the year goes by.
  As my right hon. Friend the Member for Enfield, West emphasised, we face at the end of the year, together with a number of other damaging prospects, the end of import deposits and, as the Budget statement straightforwardly recognises, the likelihood of a turn-up in imports as a result. In addition, we know that stocks are at a low level and will have to rise. When my right hon. Friend the Member for Barnet (Mr. Maudling) ended his period at the Exchequer this country was strong in stocks, financed largely during his term in office. Those stocks have been run down and we fear that when we return to power we shall find a low-stock high-debt country.
  I come to the fiercest criticism I can make of the Government's attitude to the international trading world. From the moment of devaluation right through to the Budget they have behaved as if our competitors are inert. At the time of

  1369
  devaluation it was said that our exports would rise and our imports fall because of the price consequence. But it was not like that, as my hon. Friends said from the beginning. Our competitors lowered their prices to hold their share of our market and they cut their prices in their home markets and in third markets because they are fierce and competent competitors.
  That is how they are still, and although the President of the Board of Trade allowed himself to indulge in some unfamiliar optimism—I have been reading his speeches on the balance of payments covering the last 15 months and have been unable to find a quotation to make against him; today he was somewhat more cheerful, and we are glad about that—one is bound to wonder what is in store.
  Mr. W. Baxter: The right hon. Gentleman said that our competitors had decreased their prices to retain their market here. Does he have facts and figures to prove that, and if so from where has he obtained them? Is it not a fact that they were able to hold their market here because our manufacturers were not in a position to take advantage of the opportunity provided by devaluation?
  Sir K. Joseph: It was anticipated that import prices would rise by 17 per cent., but a number of our suppliers devalued with us so that their prices did not change. Other commodities which came to this country did not increase in price by 17 per cent. but by about 9 per cent. I have studied the figures, which are available, closely, and although I do not have the relevant tables with me, I assure the hon. Gentleman that the position which I have described is the correct one.
  I acknowledge, as the President said, that the trouble is not entirely imports. Our main rivals have increased their imports more than us, but they have increased their exports still more.
  The saddest part of the right hon. Gentleman's speech was that in which he said that there would be no change in strategy; that is, the strategy of the Government which has not yet succeeded. Perhaps in the present state of affairs there is nothing that the Government can do to make their strategy succeed. We have always been a visible trade deficit
  1370
  economy and an invisible trade surplus one, and confidence has normally been able to carry our capital account. We do not despair of a visible trade surplus. Even a visible trade deficit is tolerable if it is covered by big enough invisible surplus. Our present agricultural policy continues to gear us to a visible deficit. It is historical that we have been a visible deficit country. While the Government obstinately refuse to change their agricultural policy, it will be that much harder to turn us into a visible surplus country and therefore, will put more of a strain on to the invisibles.
  We maintain that the Government strategy needs changing. It needs changing in its attitude to private enterprise. If I had to find one or two words to describe their attitude, it is half-hearted and schizophrenic. Ministers have been more willing, indeed eager, than Ministers probably for decades to listen to industry, but have been singularly unwilling to understand and to heed industry and commerce. The result is that each step the Government have taken to try to help industry—and there have been many such steps—have been offset by two or even three steps which have damaged industry and commerce.
  The net result has been a disastrous slump in confidence, and indeed in the regard in which industry held this Government when they came to office. I need only mention the headlines of the subject which are so familiar to us. In this country we have the most penal and discouraging taxation in the developed world on the very people who can most improve our trade. We have the S.E.T., we have controls at home and controls on overseas investment of a wide variety. We have bludgeoning, bullying, witch hunting—all words which I can back up with evidence. We have heavy nationalised industry costs and subsidised competition. The President of the Board of Trade dragged into his speech small companies. We welcome the Committee which he proposes to set up, but many of the problems of small companies have been caused by this Government.
  We have interference with industry. I was glad that the President did not spend much time on the I.R.C. We deplored the Kent/Cambridge affair and said so. We hope that nothing comparable will occur in the ballbearing industry. Then

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  there is the transport mania of the Government and the endless loading of business costs by individual extra burdens, each one no doubt reasonable in more prosperous and less over-governed conditions.
  What we ask the Government to do, on the contrary, is to change their attitude. Sadly I say that it is too late—the chance has gone. If on devaluation, cuts in both consumer and Government expenditure and a change of attitude aimed at removing over-government had occurred at once, this country might now be riding upon a triumphant industrial wave and the Government, rightly, would be getting the credit because they would have turned disaster into triumph. But perhaps the Government will recognise that their Budget has produced no benefit to industry.
  I am amazed that neither the Chancellor nor the President made even passing reference to the value-added tax. Were we not told last year that the Chancellor was examining it? Should we not be given a progress report? Does not the President long to have some instrument to stimulate exports, as may be a value-added tax would do?
  The essence of our alternative is that we believe enterprise is the key to prosperity. We want to release talents in the country, and the talents are abundant. We do not believe that exhortation, lectures and speeches will make businessmen export. Exporting is hard and difficult and only comes about as a result of a stimulating climate. The business talent in this country is probably greater than ever before, and the anti-business snobberies of previous generations have declined, if not vanished. If we can get the right climate we have the talent in abundance and a wonderful opportunity. For generations this country—the industrial pioneer of the world—has been leapfrogged by our competitors. But the game of leapfrog gives us a chance to leap in turn. We have that opportunity, given the right administration.
  The stimulation of talent comes from competition, disclosure of results, and from tax reform and, above all, from involvement in the success and failure of each business, of the people, of the managers in charge of that business, by
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  such mechanisms as option schemes. These are the techniques of encouragement which reach into every business large and small. They are far more effective than I.R.C., or Mintech, or even the President's beloved subsidised management consultancy.
  We accept that competition is not automatic, and the Government must be vigilant. We welcome wholeheartedly the President's victory over his own competitors—over the Secretary of State for Economic Affairs and the Prices and Incomes Board—when each of them was seeking to grab the functions of the Monopolies Commission. We congratulate the President on strengthening the Monopolies Commission. We cannot congratulate him on everything. I have criticised him for his delay in referring the Unilever Allied merger, for eight weeks is a long time in a company's life. We welcome the new position of the Monopolies Commission. I was interested to hear that the President knows of "plenty of sleepy giants". Some legislation introduced by the Government will have great effect on such giants. The disclosure provisions in the 1967 Companies Act will merge into the full light of day this year and next. We regard this as an important ingredient in the stimulation of a competitive economy.
  A sensible point was made by Mr. Jim Slater in an article in the Financial Times that further disclosure should be required in order to make companies disclose the degree to which any profit rise was due to acquisition as opposed to the growth of existing businesses.
  It does not do to agree too much with Ministers, but at first sight I cannot find anything with which to disagree in what the President said about monopolies and mergers. I think he is right—though I must reserve my party's position—to avoid rigid rules and is also right to give the public as much information as he can. On the matter of assurances, I hope that he will avoid so smothering those concerned with mergers that the benefits to the economy entirely vanish.
  Our solution requires not only competitiveness and tax reform, but also involves cuts in public spending, encouragement of invisible trade, and the return, if and when we can do so, to a more constructive policy about overseas investment. At the moment although a

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  big firm can borrow overseas and gear up its activities within Government policy, small and medium-sized firms cannot do so. We believe that there should be a vigorous alliance between Government, diplomacy, industry and finance. I am sure the Board of Trade and E.C.G.D. are greatly improved, but there is more to do. I hope that we shall soon be told when the President intends to publish the Val Duncan Report.
  Finally, I return to the familiar theme that nothing will be achieved by this country without confidence. The time for this Government to produce any successful measures has gone. We have heavy debts incurred by the Government, we have smaller assets than when they took office, and we are now seeking further help from our creditors. We have had a gambler's Budget. The Government have plundered the past and pawned the future, and the only honourable thing they can do is to go.
  5.20 p.m.
  Mr. Alfred Morris: We have just heard a somewhat melodramatic speech by the right hon. Member for Leeds, North-East (Sir K. Joseph). It was also a speech of some passion. Yesterday there were several speeches of even greater passion on industrial relations and in particular on the need to avoid penal clauses in the forthcoming industrial relations Bill. It may, therefore, be useful to remind ourselves that there are industries, including many important ones, where strikes are already illegal.
  These industries include the electricity supply and gas industries. A strike may be illegal in each of these and other public utilities in two cases. In the first case, a strike in breach of contract may constitute a criminal offence under Sections 4 and 5 of the Conspiracy and Protection of Property Act, 1875 and Section 31 of the Electricity Supply Act, 1919. Secondly, it would seem also that a strike is unlawful at common law if it involves a breach of the contract of employment. Thus the House may well ask itself what was the effect of this legislation during the severe industrial crisis in the electricity supply industry in 1961. The right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) on 25th July, 1961, announced the pay pause in this House. But there will be hon. and right hon.
  1374
  Gentlemen who remember that in November of that year the pay pause was widely felt to have been smashed in the electricity supply industry.
  I took some part in the discussions about the wage claim submitted in July, 1961, by the manual workers' unions in the electricity supply industry, a strike in which, as well as being illegal, could have affected industries everywhere. The trade unions appreciated the legal position and decided that mass resignation is much the same thing as the withdrawal of labour. An agreement was made in November, 1961, in the electricity supply industry which was in excess of what had been envisaged by the then Chancellor in his pay pause speech. The party opposite, which has said a good deal about the need for more and more legal restraint on trade unions, should recall its own bitter experience in the electricity supply industry in November, 1961.
  I feel strongly that the electricity supply industry has good industrial relations and, indeed, has much to teach other industries in this field. But no one should forget what happened in 1961. It was an important lesson for all of us. It was that industrial relations cannot always be improved by increasing legal restraint on the trade union movement.
  The right hon. Member for Enfield, West (Mr. Iain Macleod) referred yesterday to housing subsidies. He said that we should start subsidising people and stop subsidising bricks and mortar. This is attractive phraseology which hides some very loose thinking. The implication of the right hon. Gentleman's speech is that our system of housing subsidies is profligate in subsidising rich tenants and diverting help from those in real need. The Prices and Incomes Board recently published a valuable report on council-house tenants and their incomes. Shattering the myth of the council housed Bentley-owner, the board showed that only 1·3 per cent. of husbands and wives have a combined income of over £40 a week and only 10 per cent. have a combined weekly income of over £30. These percentages would have been still lower if tenants living on sick pay and supplementary benefit had not been left out of the board's survey.
  The survey also showed that more than 50 per cent. of council households, again excluding the sick and elderly poor,

  1375
  have a combined husband-and-wife income of less than £20 a week; and more than 25 per cent. of husbands and wives earned combined gross incomes of less than £15 a week. Facts like these have brought informed and fair-minded opinion to dismiss the whole un-funny game of "knocking" the council tenant.
  Listen for a moment to the normally conservative voice of the Economist. It asked:
  "Does council housing really represent the grotesque diversion of subsidies from the needy to the affluent that the fashionable cry of 'more selectivity' often suggests? Some striking figures from the P.I.B. suggest that, on the contrary, local councils are doing a job of housing the needy more thoroughly than has been supposed."
  There are facts other than those in the P.I.B. report which also deserve to be more widely known. For one thing, it is pure make-believe to say that all council tenants receive the same help with their housing costs regardless of their incomes.
  Local authorities all over the country operate rent rebate schemes, subsidising persons and not houses by discriminating in favour of lower-paid workers and tenants on low fixed incomes. It is a nonsense to suggest that the present system subsidises bricks and mortar and not persons. Nor is it true to say that the 10 per cent. of husbands and wives with a combined weekly income of over £30 received the same help with their housing costs as the 25 per cent. living on gross weekly incomes of less than £15.
  Why should the 10 per cent. with over £30 a week get any help at all? Why should their houses attract any subsidy from public funds when, the party opposite may say, they could afford to buy homes of their own? One answer, if we are to avoid the atmosphere of the ghetto, is that one ought not to be able to deduce a person's income from his address. An even more important answer is that most of the 10 per cent. with over £30 a week would probably be receiving much more help from the Exchequer if they were to buy homes of their own.
  The fact is that the council tenant receives on average much less from the Exchequer than the owner-occupier with a mortgage. I have been tabling a
  1376
  number of Parliamentary Questions recently to discover the actual difference in support given from public funds to council tenants and house purchasers with mortgages. In 1966–67 the average Exchequer housing subsidy for council tenants was £20 11s. and for the home buyer with a mortgage the average benefit was £36. This means that the average home buyer received £15 9s. more than the average Exchequer subsidy per council tenant.
  But that is by no means the whole story. The total cost to the Exchequer of mortgage interest relief in 1966–67 was £155 million, while the total cost of Exchequer housing subsidies was only £1008 million. Thus financial help from the Exchequer to the home buyer cost £54 million more than the total Exchequer housing subsidies paid to local authorities in that one year. In 1967–68, mortgage interest relief cost the Exchequer £63 million more than the total amount paid in housing subsidies. And in 1968–69, the differential in favour of the home buyer is expected to have increased to £65 million.
  So who is subsidising who? The council tenant pays his taxes like anyone else. The more he earns, the more he pays. But while council house tenants receive less help as their incomes rise, home buyers may well receive more help as their incomes rise. For the bigger the home buyer's house and mortgage, and the higher the rate at which he pays tax, the more interest relief he receives.
  All of which prompts the thought that there are some council house tenants who have paid more in rent than some owner-occupiers have paid in mortgages for homes of a superior standard. There is also the further thought that buying a house is an important form of saving and a good hedge against inflation. I therefore ask the Opposition, before they do any more lecturing about housing subsidies and before seeking any further to stigmatise council house estates, to look at the facts of the reliefs given from public funds to council house tenants on the one hand and home buyers with mortgages on the other.
  Yesterday the right hon. Member for Enfield, West also referred to the urgent need to apply import levies on food. The right hon. Member for Leeds, North-East has again emphasised the urgency

  1377
  attached by the Opposition to this matter. There has even been a suggestion from the benches opposite that the National Farmers' Unions may come to agree with this policy.
  My reading of the attitude of the N.F.U.s suggests that they are strongly opposed to the Conservative Party's policy on import levies, and it is a policy which housewives will like even less. The right hon. Member for Grantham (Mr. Godber) said in a recent interview with the Dairy Mirror that Conservative policy would increase food prices by between 5 and 6 per cent. My right hon. Friend the Minister for Agriculture rejected this as a completely unrealistic assessment of the effect of imposing levies on imported food.
  Conservative policy is, in fact, to transfer lock, stock and barrel the cost of support on to the cost of food in the shops. While the Conservatives talk at the hustings about the need to bring down the cost of living, they are quietly planning the biggest ever increase in the cost of living, first by imposing import levies on food imports and, secondly——
  Mr. David Lane: The hon. Gentleman is being unfair to what we propose. Is it not the case that the agricultural policy the Opposition are putting forward is estimated to have an effect of not more than ½ per cent. per year over a period of several years on the cost of living whereas in the past year the cost of living has risen no less than 7 per cent.?
  Mr. Morris: I was using the figures set out by the right hon. Member for Grantham, who is Shadow Minister of Agriculture, in his interview with the Dairy Mirror. He said that Conservative policy would mean an increase of 5 to 6 per cent. in food prices. The hon. Member for Cambridge (Mr. Lane) may seek to compare that with increases in the cost of living in recent years, but I would remind him that the Opposition have not said that this would be the only increase in the cost of living that would flow from their policies. What I am seeking to emphasise here is that by imposing levies on food imports the Opposition would be gratuitously and additionally increasing the cost of food to the extent either of the right hon. Member
  1378
  for Grantham's estimate or of that of my right hon. Friend the Minister of Agriculture.
  The Opposition has said again and again that they are anxious to see the introduction of a tax on value added. Indeed, this explains the confidence with which they have pledged themselves to get rid of the Selective Employment Tax. But a tax on value added would make the Selective Employment Tax look like an act of consumer protection. With a tax on value added the buck is passed to the housewife at every stage of production and distribution. Such a tax is classically a tax on consumption. Do the Opposition mean to apply a tax on value added to foods, fuels and other necessities?
  Sir K. Joseph: My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said yesterday again that we have considered and are seriously considering but have not committed ourselves to a value-added tax or to details of how and where it would be applied.
  Mr. Morris: I am asking whether it would be applied to food, fuels and other necessities?
  Sir K. Joseph: My right hon. Friend said at the last Conservative Party conference that if we adopted it, it would not apply to food.
  Mr. Morris: So it would apply to fuels and many other necessities. This being so, and since a tax on value added is classically a tax on consumption, it would have a profoundly important effect on the cost of living. I will quote, from one of our most influential newspapers, a report about the recent introduction of a tax on value added in Holland. I hope that the House will excuse my Dutch. The report said:
  "The letters BTW in Holland stand for Belasting Toegevoegde Waarde, meaning Added Value Tax. But it has been given many other names—hardly any of them endearing. The fact is that introducing AVT in Holland, though it was carefully planned, has proved a major operation. During the few weeks that AVT has been in force it has grown from a technical problem to a major political issue, upsetting whatever equilibrium there was between wages and prices and even threatening the life of the present Coalition Government."

  1379
  I commend the Opposition to read carefully the experience of Holland in applying the policy which right hon. Gentlemen opposite support so passionately.
  While the party opposite pretends that it is very concerned about rising prices, it would, by threatening rent increases, which would follow from slashing housing subsidies, by imposing levies on imported food, and by introducing a tax on value added, bring about one of the sharpest increases in prices ever experienced in this country.
  I have criticised the Selective Employment Tax in previous finance debates because I prefer taxing means to taxing needs. I am for equality of sacrifice, and there is no equality of sacrifice unless taxation is based on ability to pay. I said last year in the debate on the Finance Bill that I was prepared anywhere to defend the system of taxing people according to their ability to pay.
  I must declare a Co-operative interest during this debate, and I take pride in doing so. The cost of S.E.T. to the Co-operative movement is very high. My estimate is that the original cost to retail co-operative societies was £9·4 million in a full year. The 50 per cent. increase in S.E.T. which was imposed last year raised the cost to nearly £14 million. There is now proposed a 28 per cent. increase in S.E.T., which will raise the cost for co-operative retail societies to £18 million. The rate of tax now proposed for a male employee is £2 8s. per week, which is an increase of 92 per cent. above the original rate.
  In 1966–67 the rate of dividend for co-operative retail societies was down by 16·3 per cent. after only six months of the original rates of S.E.T. Co-operative surplus, excluding share interest, as a percentage of retail sales was 4·66 per cent. in 1964; 4·59 per cent. in 1965; 4·04 per cent. in 1966; and 3·47 per cent. in 1967.
  There are those who ask why the Co-operative movement should have been so apprehensive and have expressed itself so strongly about the effects of the Selective Employment Tax. But this point has been answered again and again in the House of Commons by those of us who are directly associated with the movement. Some of the Co-operative
  1380
  movement's biggest competitors operate only in big city or town centres, whereas the Co-operative movement provides a service wherever a service is required by its members. There will be very deep concern throughout the Co-operative movement about the decision to increase by 28 per cent. the Selective Employment Tax.
  Moreover, there will also be a great deal of anger and bitterness. It is a movement with a social conscience which exists for consumers and is informed by democratic institutions. The movement expected when the Reddaway inquiry was appointed last year that there would be a quick report about the effect of S.E.T. on retail distribution. But there has been no such report. I ask my right hon. Friend when the Reddaway report will be available. Surely there is a need now, when the Selective Employment Tax has been increased by another 28 per cent., to hasten the publication of the Reddaway report? The Co-operative movement gave evidence to the Reddaway inquiry some considerable time ago. Is the inquiry properly staffed and does it have adequate facilities to enable it to report quickly? If not, why not? There are those in the Co-operative movement who have told me that they now regard the Reddaway inquiry as having been a delaying tactic, and I ask my right hon. Friend to take the most serious possible note today of the grave concern in the Co-operative movement about the trend of the last three years towards increasing the burdens on retail distribution.
  There are manufacturing industries which, in my view, waste labour, and there are manufacturing industries which are far less efficient than many service industries. Those of us who are personally associated with the Co-operative movement have made a strong case on this matter in previous debates; and I ask my right hon. Friend not to mistake the mood of the Co-operative movement at this time. I do not wish to see any clash between the different wings of the Labour movement. Indeed, as I see it, part of the genius of the Labour movement is that it was built to serve workers and consumers alike. Thus, I hope that all of us on this side of the House will realise the value of the Co-operative movement to the Labour movement and to this Government.
  5.47 p.m.
  Mr. Michael McNair-Wilson: In rising to make my maiden speech I ask the indulgence of the House for any apparent nervousness which I feel I am bound to show. This is a somewhat daunting experience.
  Before coming to the content of what I want to say, I would like to pay a tribute to the late Mr. Will Robinson, the former Member for Walthamstow, East. I know he was a much respected Member of this House, and I assure hon. Members that he was also much respected in East Walthamstow, where he had a great many friends.
  I listened to the Chancellor's Budget statement last Tuesday and I heard with particular pleasure his reference to the rises in old-age pensions which are due to take place in November. One of my keenest memories of the by-election is of the plight of old people. A high proportion of old people live in my constituency, and many of those whom I saw were living in extreme poverty. Single people living on a total income of £5 Us. 0d. a week, this being £4 10s. 0d. old-age pension and £1 1s. 0d. supplementary benefit, are finding life a tremendous struggle. A married couple living on £8 10s. 0d. a week are hardly better off. It is necessary to spend these sums carefully and they require the most careful budgeting. When such people are asked how they spend that money, they invariably say that the two major items with which they are faced are the cost of food and the cost of fuel. Their weekly diet seems to consist mainly of tins of soup, baked beans and eggs and chips. Meat is a luxury kept solely for the weekend. This is an unhappy state of affairs. It is harmful to their health and it can give none of us satisfaction. Luxuries are unknown. The pleasure of going out has long since been forgotten. New clothes are not bought. They are the gifts of friends and relatives. In short, these people are living on the edge of extreme poverty.
  I know that there are many excellent welfare organisations which do their best to help old-age pensioners. The meals-on-wheels service is known to all of us. But it is not enough for us to sit by and let voluntary welfare organisations seek to do the task of the Government,
  1382
  namely, to provide the wherewithal for people to enjoy a decent living standard.
  The Government take pride in the 20 per cent. rise in pensions which they have made since 1964. But the warmth of that statistic has long since cooled in the chilly blasts of the rapidly rising cost of living. Today pensioners are worse off, not better off, than they were in 1964. I therefore hope that the Chancellor of the Exchequer, or whichever Treasury Minister winds up the debate on Monday night, will give an assurance to the 3 million old-age pensioners who draw supplementary benefit that the rise in their pension next November will not mean, as has happened in the past, a reduction in the rate of supplementary benefit. If that were to happen, it would make a mockery of the pension rises.
  I would like to point out to the Chancellor of the Exchequer that the Purchase Tax imposition on pet foods, which may seem almost frivolous to those of us who can afford these things, will be a heavy burden on old-age pensioners. Many of these people who live alone look upon their pet as their best friend, and this extra charge will adversely affect their budget. They still have six months to live through before they get the pension increase during which the cost of living is bound to rise.
  I must also touch on another point of the Budget which I believe will hurt old people—Selective Employment Tax. I know that if a person over 65 years of age is taken on by an employer, the employer gets a two-thirds refund on the Selective Employment Tax paid. But the rise in Selective Employment Tax proposed in the Budget means that it will now cost an employer 16s. a week to take on somebody over the age of 65. It is unquestionable that before taking on old people many employers wonder whether they can do the job that a rather younger person could do. Therefore, this 16s. may be an obstacle. I hope that the Government will consider the possibility of alleviating this to some extent or perhaps abolishing Selective Employment Tax as it affects the employment of people over 65.
  I have raised these points about old people, pensions and Selective Employment Tax because, as I have said, the plight of old age pensioners demands our absolute sympathy. I very much hope

  1383
  that on Monday I shall hear the Chancellor of the Exchequer or a Treasury Minister give me the assurance for which I have asked.
  5.54 p.m.
  Mr. William Molloy: When the hon. Member for Waltham-stow, East (Mr. Michael McNair-Wilson) rose to make his speech, he warned us that he might be nervous. He proceeded to make a very sincere speech with such efficiency and sang-froid that one imagined he had been a Member for many years. I compliment him on the manner with which he delivered his speech, which was so touching that it called for silence while we listened to it. I am sure that the House will enjoy his contributions to our future debates.
  I wish to begin with a question which I would have put to my right hon. Friend the President of the Board of Trade had he given way to me during his speech. I do not blame him for not giving way to me, because one of my hon. Friends rose at the same time and my right hon. Friend, probably very wisely, preferred to give way to him rather than to me. The point which I wished to make concerned mergers. My right hon. Friend covered a lot of ground in this very tricky business. Both Front Benches acknowledge that this is a matter which must be handled with very great care because the consequences of mergers going wrong can be very serious.
  My right hon. Friend the President of the Board of Trade said that there would be consultation particularly on the possibility of men being put out of work or, to use the modern term, made redundant. I ask my right hon. Friend to bring in the Secretary of State for Employment and Productivity and her Department and all other industries in the area concerned which might not be affected by the merger to see whether those industries can absorb some of the skilled workers and craftsmen who will be made redundant by a merger. This is a worth-while suggestion of which perhaps my right hon. Friend will take cognisance and pass on to the Secretary of State for Employment and Productivity.
  We had from the right hon. Member for Enfield, West (Mr. Iain Macleod) his usual top-form debating contribution,
  1384
  during which—and it was repeated to some degree by the right hon. Member for Leeds, North-East (Sir K. Joseph) today—reference was made to the fact that from 1946 to 1951, under a Labour Government, in only two years out of six was this country in surplus on current account. An analogy was made with the 13 years that the Conservative Party was in power. The right hon. Members for Enfield, West and Leeds, North-East left it at that, as if this was something truly remarkable. It was said what a bad showing it was that we were in surplus for two years out of six.
  Let us look at the picture. In 1945 the Labour Party took over the reins of office just after the world had gone through one of the most devastating and frightful wars that mankind has ever experienced. We had men and women all over the world to defend our way of life and the democratic system. Our great cities had been bombed and smashed. During those years of war we hardly built a house or repaired a hospital. All our resources had to be channelled into the war effort. It ill behoves right hon. Members opposite to make political capital out of what happened after the war and the achievments of the 1945–51 Labour Government. I am prepared to say that even the achievements of this Government cannot yet compare with the magnificent achievements of that Government.
  When the Labour Government took over in 1945, not only was Europe destitute, with a world which had been smashed, but this nation was bankrupt. That was what they took over in 1945.
  Mr. Wingfield Digby: Would the hon. Gentleman like to tell the House about how the Labour Government of 1945 squandered the American loan, largely on tobacco?
  Mr. Molloy: I am quite prepared to answer that. There was no loan squandered. I get a little tired of Conservative Members of Parliament, whenever they think it is a right and proper time to make a political point, eulogising the Americans. It would have been much to the credit of the United States of America if they had been with us at the very beginning and had not waited until they were threatened. I believe the

  1385
  behaviour of this island during the war years and immediately afterwards was a credit not only to this nation but also to the principle of democracy. What happened after that war when the Labour Government inherited a bankrupt nation? Sir Winston Churchill warned us that we were to be faced with a devastated Europe and a bankrupt nation. I believe that the achievements of that Government were quite remarkable, because within a period of five or six years we built more schools, more houses and more roads, developed a National Insurance service which is first class, and, above all, then proceeded to build the foundation of a National Health Service which is not only a credit to this country but something that the rest of the world ought to try to emulate.
  Mr. F. A. Burden: Does not the hon. Gentleman remember Aneurin Bevan, who was building houses for the other side when that party was in power, saying that it would be impossible for the Conservative Government to keep their promise of building 300,000 houses a year and that we immediately built far more?
  Mr. Molloy: I was expecting that challenge, and I am saying that it is only partially true. I challenge the hon. Gentleman at any time to deny that what happened was that at a particular Conservative conference Mr. Harold Macmillan was put under great pressure and said he would build 300,000 houses a year. He did so for a couple of years and then the number dropped back. That target was made only for a political purpose and then the Conservatives slid back. I challenge any right hon. Gentleman opposite to tell me that that is not so. Let me hear a thunder of appeals to give way.
  Mr. W. Baxter: I deprecate going back so far in history rather than devoting time to the Budget before us, but I would like to substantiate what my hon. Friend has said in this regard. One cannot build houses without considerable planning and preparatory work; and the numbers that were built by the Conservative Government in 1951 after it came into power were actually planned and started under a Labour Government. I would remind my hon. Friend that even on the question
  1386
  of industrial activity—and we may take the Budget at the present time—
  Mr. Deputy Speaker (Mr. Harry Gourlay): Order. Interventions ought to be brief.
  Mr. Baxter: I appreciate that, Mr. Deputy Speaker, but you have allowed the debate to go rather wide.
  Mr. Deputy Speaker: The debate has been perfectly in order so far.
  Mr. Baxter: I would not want to depart from your strict rules of order, I can assure you. I would only say to my hon. Friend that it takes a considerable amount of time to achieve what one sets out to do.
  Mr. Molloy: I could have made the point myself. I was going to show that whilst the right hon. Gentleman the Member for Enfield, West and his right hon. Friend this afternoon harped on those years, they did not wish to put the whole picture; because if it is painted in its totality it does great credit to that Labour Government. The point of my hon. Friend in his intervention was that Aneurin Bevan said if we were to concentrate all our resources on one sector and build only houses, we should not build hospitals for people to be trained as doctors and surgeons or schools for people to become teachers; and this was demonstrated. We have seen what a Labour Government achieved after five years of terrible war. Let us look at what was achieved during 13 years of Tory government.
  The right hon. Gentleman who opened for the Opposition this afternoon—I regret that he is not now present—painted a gloomy picture by his wide use of statistics which he used more like a drunken man uses a lamp post, for support rather than illumination. The fact is that during those 13 years we saw a rotting of our social furniture. During those years when we had this so-called "surplus" we had crises in housing, hospital building and school building and all kinds of crises in matters which are so very important to the well being of this nation. Certainly, we had some kind of surplus on current account at different times, but while we were gloating about it we were neglecting education, the future of the nation. We

  1387
  have in Great Britain today a great housing problem. Hon. and right hon. Gentlemen opposite said, "Set the builders free". Were they not free in their 13 years? To use a phrase spoken from the benches opposite, we have had a particularly "bum" argument, because since then we have seen the refurbishing not only of our industry in this country but of our social furniture as well. I would ask the hon. Member who made his maiden speech this afternoon to consider—and I am sure he would agree, working in the area he has to now—that we have seen more concern in the past five years for the sick, the crippled and the pensioners than we have for a very long time. This is what this House has to make clear to everybody, irrespective of which Government is in power.
  I would suggest—and I hope I would carry all hon. Members in this argument—that we all know that, generally speaking, when we talk to our own or somebody else's constituents and bring up the problem of the blind, the pensioners, the cripples, the sick and the state of the primary schools, everybody agrees that the pensioners should have more, that we should do more for the disabled groups and for the blind and should build better primary schools. But when we say that to do that we have to raise taxes they raise their hands in horror. A great deal of this has been the responsibility of some of our national Press, and, indeed, some of the evening papers in this great city. On the front page of an earlier edition of the Evening Standard today there was a large picture of what is called a glamorous film star who I am certain is not hard up for a copper or two. On an inside page was a very pungent and touching article about a man living in poverty not three or four miles from this House.
  I share the ambition of the hon. Member for Walthamstow, East to better the standard of life of ordinary people, irrespective of whether they are crippled, pensioned, homeless, or whatever. I believe that everybody should share in our prosperity, because Britain is prosperous. I do not accept the pictures which are painted by some sections of the national Press and by some of the less worthy contributions of the B.B.C. which seem to be looking for some disaster to hit Britain, as if anything is
  1388
  good enough to hit Britain with. What a commotion Concorde's punctured wheel caused. A balanced view should have been presented of a minor incident in a massive overall effort of technological achievement.
  As I travel round the country I see a pretty buoyant nation. Nowadays more people take their holidays overseas, more people own motor cars, more people try to buy their own houses, than ever before. Is all this the hallmark of a bankrupt, finished nation? It is time that the moguls who control our mass media took a real look at the state of the British people and stopped being so misguided, because I believe their present attitude arises because they do not like the Government who are in power. In the end democracy could pay dearly for their attitude.
  For far too long under the Tory Party we jogged along like a half-wit hippy. We gave way during the so-called "affluent years" to the temptation to take it easy, to take it cushy, to live off the fat of the land. Other nations, particularly West Germany, acted very differently. The paradox is that the very fact that we had almost totally flattened Germany's industry provided West Germany with a greater opportunity to rebuild in a more modern way than we ourselves had.
  I believe that we could have made better efforts after 1951. We built a very good solid base, but we then proceeded to build a flimsy and not particularly efficient superstructure. We should have looked at the problem of regionalism long ago. The right hon. Gentleman the former Leader of the Liberal Party has mentioned this many times, and he was right to do so. I regret that the Labour Party did not take earlier cognisance of it. We should have given it more thought than we did when we came to power, but at least we have done something.
  The jackpot cannot be hit straight off. It was essential that we tackle the task, knowing full well that it would cause a great deal of upset and would be irksome to many people. We had the courage to attempt to do something to solve the problem of putting the right materials in the right places for the right skills. Under the Tory Government all we had was the jungle of the free-for-all. The Labour Government are trying to get back to the

  1389
  principle of work to ensure the future. We succumbed under the Tories to the siren call of the affluent society. Whether the Tory Party likes it or not, we must face the fact that we must return to calling a spade a spade and to devaluing the champagne cork.
  The Labour Government, despite all the criticism which has been hurled at them by the mass media, have done a remarkable job. I welcome the fact that this Budget is a more or less "holding the ring" Budget. It has not imposed a great deal more taxation. I believe that it would have been wrong if it had done so. However, it would have been absolutely stupid of my right hon. Friend the Chancellor if he had yielded to some of the siren calls which have come from hon. Members opposite and from some sections of the Press. Both parties must acknowledge that we shall everlastingly have the element of public spending and private spending. There must be a marriage between the two, and they must not always be represented as being in conflict. I believe that some hon. Members opposite agree that the view that there is and always will be a conflict between publicly owned industry and public spending and private industry and private spending is a myopic one to adopt and that the country could pay dearly for it.
  Comparing public spending with private spending, we must recognise that the person who buys a yacht, a motor car or a T.V. set does not mind saving for it. He does not mind giving up something or going without something to buy it. We must persuade people to understand that when a person has to pay more taxes to pay for more schools and hospitals or a more efficient National Health Service this is community spending which is just as important as is private spending. Both sides of the House must now acknowledge this and advocate this realistic appraisal.
  We cannot any longer continue with the process which has been developing in the Western world of striving to satisfy wants which we have created. This has been one of the dangers. Because of this, we have fallen into the trap of thinking that the answer must be in increased production. Unless we ask ourselves "Production of what?" we shall be in even more serious trouble. This is the
  1390
  key phrase: we must ask ourselves "What shall we produce?". We must face the very difficult problem of getting the nation to understand that we want, not increased production by itself but a specific form of increased production. Shall we solve our problems by producing more detergents, more beauty salons, or more motor cars?
  We must speak not of the nation's gross output but of what that is from an economic and sensible point of view. For too long we have been too content to have a firm anchor in nonsense rather than put out on the troubled seas of thought. All the errors committed by this Government will have been worth it, because the Government have at least had the courage to put out on the seas of thought. It has caused a great deal of unrest, but it had to be done; and it is to the Government's everlasting credit that they did it. We are seeing now more than ever before that public services can work in co-operation with private service and private endeavour.
  I want to reinforce an argument which has been advanced from these benches about S.E.T. I am sorry that the Chancellor did not make some special arrangement for exempting from the increase sections of the building industry which are engaged on doing certain work. I do not know whether this is a practical possibility. In contrast to the building of a large, non-essential office block, those involved in the building of a housing estate or a hospital, whether the builders are a private firm or a local authority building force, should have been exempted from the increase. I hope that consideration will be given to this before the debate is concluded.
  I ask that consideration be given, too, to the question of the proposed legislation on trade unions. Much of the trouble we have had has come not merely from recalcitrant unions but from slothful and contemptuous management. If one moves in industrial areas, one will come to know that. I know first-class, big firms that the trade unions say are well worth working for. Perhaps one of their secrets is that the members of the unions and workers in the factory meet the managing directors—and not only when there is trouble—so that there is a general feeling of participation and consultation all the time. I hope that other firms will take note of this.

  1391
  I also hope that my right hon. Friends the Prime Minister and the Secretary of State for Employment and Productivity will pause for a while, and make a last effort with the trade union movement to arrive at a voluntary basis for doing away with wildcat strikes and all the troubles that afflict our industry. If we panic into legislation the nation will pay a very big bill. I hope that even now it is not too late for a fresh attempt by the Government and unions to recognise the problem and resolve it in a way that will benefit the people of this country and perhaps give an example to others. By doing so, the Government will show once again not only that they are fit to govern but that they are one of the best we have ever had.
  Mr. Speaker: Order. I remind the House that I have appealed for reasonably brief speeches.
  6.21 p.m.
  Mr. Anthony Grant: I shall not follow the hon. Member for Ealing, North (Mr. Molloy) in his fascinating historical dissertation about the misfortunes that befell the Labour Government immediately after the war, when they enjoyed a world sellers' market and our major competitors were flat on their backs. I can only conclude that he thought that he was delivering an after-dinner speech to the Ealing, North constituency Labour Party Executive of the year 1945.
  But in one way I entirely agree with the hon. Gentleman, and that is in offering congratulations to my hon. Friend the Member for Walthamstow, East (Mr. Michael McNair-Wilson) on a remarkably sincere, straight-forward and commendably short maiden speech. He came to this House preceded by a sad event, the premature and sudden death of Will Robinson, whom I knew well. He was a fellow solicitor, and we used to sit on the all-party solicitors group. I respected him greatly, and we miss him very much. He played a very full part in the House as a back-bencher. I have no doubt that his successor, my hon. Friend, with his brother the hon. Member for New Forest (Mr. Patrick McNair-Wilson)—they are unique in that sense—will contribute greatly to our debates. My hon. Friend made his maiden speech remarkably
  1392
  quickly after his arrival here; I can only conclude that in the Government's present state of disarray he imagined that there was a danger of a General Election, and thought he had better make it quickly.
  I regard the Budget as almost totally irrelevant to our economic problems. In many ways it is positively harmful. Industry, which is expected to bear the burden of the export drive and our economic recovery, and must do so, is to have further burdens imposed on it through increases in Corporation Tax, the petrol duty and the ludicrous Selective Employment Tax. If I perhaps detected a note of criticism of that particularly absurd piece of fiscal legislation from the hon. Member for Ealing, North, then I agree with one other thing in his speecth.
  The best that can be said about the Budget is that it offended the Parliamentary Labour Party less than had been expected in its present state of disarray. That was probably the prime strategy behind it. It was entirely political. The Chancellor set out to offend as few groups as possible. The only group that he was prepared completely to offend was the domestic pets of this country, by putting Purchase Tax on pet food, though, as my hon. Friend the Member for Walthamstow, East pointed out, this can cause hardship not merely to cats and dogs but to many old people whose ownership of these creatures is their sole enjoyment in life. We always give some sort of name to a Budget, and if a name has to be given to this year's I would probably call it the "Kit-e-Kat Budget". It is just about as irrelevant as that to our economic affairs.
  I wish to address myself to two narrow, specific points—overdrafts and savings. The removal of tax relief from interest paid on overdrafts has been rather glibly accepted by the financial Press and others as being an inevitable and logical step. But a number of people are considerably worried and anxious about how this will work out. They include many people in my constituency, particularly small businessmen and professional men who rely entirely on bank overdrafts. It is proper for them to do so. After all, that is what banks exist for; there is no other purpose for a bank except to lend money. These people are very concerned about how the change

  1393
  will work out, and I include myself in this anxiety. The Chancellor said:
  "… interest which is a proper business expense will continue to qualify for relief;"—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1040.]
  But there is a very "phoney" distinction. Many people borrow from their bank to finance their business activities. If the borrowed money goes in capital to the firm, that is readily understood. But part of the borrowing of other people is for their personal consumption and part for business. It will be very difficult to separate the two. These people are not rich. The rich will be all right anyway. Those affected are mostly professional people or small businessmen rendering a valuable service to the community.
  I hope that in interpreting the new law the Treasury will be instructed to be as lenient and tolerant as possible, and that when he winds up on Monday the Chancellor did give some indication of that intention. Otherwise, many people will stampede to re-mortgage their houses up to the hilt or seek loans to reduce their overdrafts from very expensive and less satisfactory sources.
  I understand that the object of changing the law was to stop a large number of wealthy people borrowing money, getting tax relief and then using it for investment in shares. I do not know what is so wicked and sinful about investment in shares. It can hardly be said to be a contemptible activity, and I should have thought it one highly to be commended. But the people affected are not very rich, as hon. Members opposite so often think. Together with the hon. Member for Colne Valley (Mr. Richard Wainwright), I heard only today from a leading member of a London clearing bank, who said that the loans the banks were making for this purpose were not of very large amounts. They were not big loans to rich people to enable them to invest, but in the main were pretty small loans, mostly to people in the middle income range—the executive type, the sort of people who were going in for the London and Manchester Assurance Company scheme, which enabled fairly big earners to borrow forward on their money to make certain investments. That would seem to me to be wholly commendable.
  1394
  It would turn large earners into owners, which is a thoroughly satisfactory thing to do.
  In a sense, that is contractual savings. The people concerned borrow the money and contract with their bank to invest and save. It is not a wicked activity to be condemned. We should not glibly say that disallowing interest on bank overdrafts is a logical move. We must look further into this question. I hope that there will be more discussion and thought on it when we consider the Finance Bill. The change could have harmful as well as very worrying effects.
  The exemptions the Chancellor proposed are rather extraordinary. Why should it be wicked to invest in shares, which is the supposition one must make if we are not to be allowed tax relief on interest for that purpose, and yet be all right to invest in houses and land? A rich man will take advantage of this by borrowing money, if not from the clearing banks, from merchant bankers, to buy vast areas of land and houses instead of shares. I see no equity in this, and I have great difficulty in understanding the thinking behind some of the Chancellor's methods if he wants to see an increase in investment.
  My last point relates to the contractual savings scheme which the Chancellor announced, and which was a novelty in this Budget. The Chancellor will recognise that ever since I have been in this House I have nagged him and his predecessors to do something in this direction, and the pressure has been building up each year. Pressure has been brought to bear by the C.B.I., and even the T.U.C. belatedly got on the band wagon.
  The Wider Share Ownership Council, of which I am a member, has for some time been urging the Chancellor to do something in this direction, and this body enjoys quite a lot of support in the House. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), and the hon. Member for Colne Valley are vice-presidents. The right hon. Member for Sowerby (Mr. Houghton) is a very helpful and useful vice-president, and the Financial Secretary is a former member and a very useful ally to our cause. We have brought considerable pressure to bear on the Treasury to bring in a contractual savings scheme, and we are therefore glad that the Chancellor has

  1395
  taken this timid step forward in the right direction.
  I am particularly glad that the principle of contractual savings has at long last been accepted by the Treasury. This is a most gratifying step forward, but I very much regret that it is to be limited to National Savings, and perhaps later extended to building societies. The scheme announced by the Chancellor is nothing more than a slightly improved National Savings Certificate, and in that context I cannot understand why the savings should be limited to £10 per month. It seems a remarkably low figure, and I think it should be raised.
  I am most disappointed that the scheme is not to be extended to equities and shares, because in recent years there has been a personal dis-saving in equities generally. It would be fare more beneficial to spread wealth and investment throughout the country and throughout industry than to lend money again to the Government on expensive terms.
  Apart from that, there are other defects in the scheme. First, I do not believe that it will be wildly attractive to the small saver. The scheme has been described as quite attractive, but I do not think that the offer of £12 for every £60 saved will prove particularly attractive. The return to a nil taxpayer is 7 per cent., and that must be compared with a 6·2 per cent. inflation last year, which means that if inflation continues at that rate the scheme will not be wildly attractive.
  I do not think the scheme contains sufficient safeguards against switching, which is one of the things any new scheme must be designed to guard against. The scheme will be more attractive to Surtax payers than to small savers, because on my hasty arithmetic 7 per cent. grosses up to about 50 per cent. for the top Surtax payer. The scheme will therefore be more beneficial for him, and he is likely to switch.
  The scheme is unimaginative in its approach compared with the sort of investment mediums which have sprung up and attracted people. The Premium Bonds scheme was an instant winner which attracted people, and it continues to do so. The growth of investment clubs until they were struck by the
  1396
  1965 Act showed the interest and desire of people to participate in equities and in the ownership of British industry, and I therefore regret that the new scheme is unlikely to attract people in that way.
  Last year I moved a new Clause to the Finance Bill in which I proposed a thrift scheme, based on the company, designed to attract wage earners. It was designed to reflect the increasing interest of wage earners in shares generally, and to attract a new type of saver. It would have enabled investment to take place on a broad scale, administered on a local level, with tax concessions at the point of savings. It was an admirable scheme, but, not having the facilities of the Treasury, I recognise that it might have had administrative defects. I was told at the end of the day that it was a good idea, but that the administrative defects were too formidable. I had to accept that, although an almost identical scheme works successfully in the United States, and indeed something comparable to it operates in West Germany, whereby people can invest in equities.
  I hope that the Government will not regard what they have done as more than a first step, more than a chink in the door, and that if the present scheme does not prove to be as successful as is hoped they will not reject the principle of contractual savings but will widen the door which has been opened so nervously. I say that because, apart from the economic advantages of a broad based savings scheme, there is a deep philosophical factor involved, in that by encouraging earners to convert to owners and by spreading wealth throughout the community, we raise the status and the responsibilities of individuals and create a bulwark against the increasing and encroaching powers of the central State.
  Until we recognise the need to increase the incentives to effort and enterprise, and the need for those incentives to be turned into the ownership of the wealth of this land, we have no hope of liberation from the morass and malaise of our economy into which the present Government have brought us.
  6.36 p.m.
  Mr. William Baxter: We have listened to some excellent speeches, but for sincerity, clarity, and to the point, and for giving credit

  1397
  where credit was due, and criticising where criticism was due, the maiden speech of the hon. Member for Waltham-stow, East (Mr. Michael McNair-Wilson) was excellent in itself. The hon. Gentleman struck at the very core of the problem of our social services. The purpose of levying taxes is surely to provide for those who are in more need than ourselves, and because the hon. Gentleman devoted his speech to that he caught the ear and the imagination of the House. I commend the hon. Gentleman's attitude to all hon. Members. Let us give credit where credit is due.
  The question of raising old-age pensions is extremely important and it grows in importance with the passage of time. The difficulty of increasing old-age pensions becomes more difficult because of the increased expectation of life. An increasing number of our citizens are now ready and willing to take their pensions at 60 or 65. This makes the Chancellor's task extremely difficult, and this is one reason why all in this House and outside should do their best to ensure that good relations prevail between man and man in industry so that productivity, on which our social services depend for their lifeblood, can increase.
  But industry requires from any Government a measure of elucidation on the problems which they put upon industry, and the raising of old-age pensions is one such question about which the Government must give greater guidance. As other hon. Members have said, the Government must tell the nation how it is proposed to raise the finance to increase old-age pensions, right though the decision is. It is imperative that that be done for this reason. Industry must know the worst before it can do the best. Any industrialist or commercial man putting in a price for a particular job, in the export market or the home market, builds up his wage rate on many factors, not the least among which is a substantial overhead related to pension schemes and so on. It is imperative that the Government should tell industry exactly what amount it has to carry, and I appeal to my right hon. Friend the Chancellor to let us know that amount and how he proposes to finance the increase in old-age pensions, which I greatly welcome.
  1398
  I subscribe to the view which has been expressed by many hon. Members, and by the Chancellor himself, that the concessions which he has made are to be welcomed The raising of the Income Tax starting level will help the more needy among our people and is to be welcomed. The other small concessions made in these difficult times should be accepted with gratitude.
  I come now to the crux of the matter, as I see it. Apparently, the Chancellor finds it necessary to take about £400 million out of the nation's spending resources, and he bases that decision upon a Budget which is traditional in its approach to these matters. Be that as it may, good or bad, that is the position as we find it. It is not what I should like to see, nor what I should introduce as a Budgetary measure if I had the opportunity. In my view, there are different methods of approach to our fiscal and financial problems which could be more beneficial to the nation in this modern age than a strict following of the old patterns which have given us so many problems in the past. However, as I say, it is not my function now to say what sort of Budget I should submit for the consideration of the House. It is my purpose to draw attention to some of the problems which have been brought about by the Budget as it is.
  Most of the taxes which my right hon. Friend has proposed seem to me to be reasonably fair in the circumstances of today. I am a businessman—I declare my interest—and I have no objection to the increase of Corporation Tax from 42½ per cent. to 45 per cent. In my view, that is the right way to tax—not overdoing it. It is the right way to go about it in the context of our present Budgetary set-up. Accepting the present arrangements, one has to find methods within the traditional framework to raise money, and when profits are made or when incomes are high, it is from those sources that one should take the greatest amount. I have, therefore, no fundamental objection to an extra 2½ per cent. on the Corporation Tax. In present circumstances, it can be justified.
  There is, however, a glaring exception among the Chancellor's proposals for the raising of revenue. I refer to the Selective Employment Tax. This is a tax conceived in the wrongness of deception. It is not right for a nation to deceive

  1399
  itself or to deceive its partners under the G.A.T.T.; yet that is the purpose of the S.E.T.—to try to finance manufacturing industry so that it can export to a greater extent—commendable though that aim is—while at the same time undermining by deception what we have agreed. This is wrong from a purely Christian point of view, and we as a nation must have regard to that aspect of our legislation.
  We must not be party to an agreement and then try to find devious ways and underhand methods of getting round it once we have honourably accepted it. Moreover, after this tax has levied a considerable sum from service industries. It will give back—the Chancellor omitted to tell us the exact amount—something else to manufacturing industries. It is an iniquitous tax from every point of view. I see the possibility of many small firms, builders, hoteliers, shopkeepers and the like, being forced out of business, going to the wall, because of this tax. It is wrong that they should be undermined by Government action and not by bad business practice. Even if it be only one among many, it is still a crime which can never be justified. It will rebound upon us in the years ahead.
  Taxes have to be gathered if we are to keep the social services going, and they must be raised on a fair and equitable basis. We must keep as near as we can to that criterion. That is why I applaud the speech of the new hon. Member for Walthamstow, East; he sought to be fair, he sought to be reasonable in our difficult circumstances, and he gave credit when credit was due. No one can ask more. That is what Governments should do. It is what government was about at one time in the uplifting and development of the British nation.
  Running in unison with the question of the Selective Employment Tax is the question of the close company. The Chancellor has made a concession so that members of close companies can raise their salary as they so desire—that is the concession which he has made—but it is a wrong concession and not at all the concession to close companies which should have been made. The concession which should have been made is this: after they have paid their 45 per cent. of tax on profits, they should be left alone to reinvest the balance in their own
  1400
  business as and when and how they wish. The best people to run a business are the man or woman or small group of people who have built it up to the peak of perfection which enables them to pay 45 per cent. to the Exchequer—taxation which, I remind my right hon. and hon. Friends, we depend upon so much.
  In fact, however, when a close company is left with 55 per cent. of what it has earned, any inspector of taxes in any locality, without having any grounding in business techniques and management, can insist upon that company disbursing its profit to the extent of, I think, 60 per cent. This is madness to the greatest possible extent. The very life-blood of the nation has flown from these small industries. Not only are they the most important section of our community, but they also give to the nation, by virtue of experience and knowledge gained in running those businesses, the great tycoons in the bigger organisations. Without those people and those small businesses, huge losses would accrue to the nation. If we allow them to go by the board, I grieve for the consequences to the nation in the years ahead. Let it not be forgotten that it is from small acorns that great oaks grow. In the same way, it is from small businesses that great ones grow.
  I listened with interest to the speech of by right hon. Friend the First Secretary yesterday. I subscribe to the prices and incomes policy. We live in a modern age, and we cannot go back to the old Conservative ideology. On the other hand, no one in this House wants to see the nation become a Communist State. Therefore we must find a happy medium.
  My right hon. Friend said that she proposed to take out of the prices and incomes policy the power of compulsion by statutory means. She has lost the race to control that which she seeks to control. In doing that, she is playing up to the union which wants to be out of step and to get more for its members than they are entitled to under the present scheme of things. Once one section of the community gets more, another follows suit. No one who is prepared voluntarily to take only what he is entitled to can have any objection to statutory power being held in reserve. He knows that those who kick over the traces and ask for more than they are entitled to will be brought to book. If we open the door and permit

  1401
  a violation of the code whereby each man gets his proper share under the criteria laid down, great trouble will befall the Government in the years ahead.
  In the course of her speech, my right hon. Friend said that instead of "In Place of Strife" she proposed to introduce legislation which I believe is fundamentally correct at the present time. There can be no question about the 28-day conciliation period being a reasonable time in which to try to get conciliation between management and men. It would be wrong for anyone of a sensible nature to decry it. How can anyone argue against conciliation? If there is a threatened dispute and agreement can be reached within 28 days, the dispute will never reach the point of a strike. What is wrong with that? I have never heard an argument against it based upon reason and logic.
  I regret that my right hon. Friend has dropped from her proposed Measure the provision for a ballot on strike action being taken. It is an accepted practice in many unions and one which should never have been dropped.
  I come next to the penal clause. We must have penalties in every walk of life. Rules and regulations cannot be broken without a penalty being paid. It may be the management, it may be the men, but whoever breaks the rules and regulations should pay the penalty. My right hon. Friend included such a provision in her White Paper, and it should have been implemented in her proposed Measure. I regret that she has seen fit to discard the possibility of a national ballot before a strike. One of our greatest unions, the Mineworkers' Union has those provisions already. By virtue of those three factors being part of the national agreement, there has been a greater degree of peace in the coal mining industry of late than there has been since the inception of the industry.
  I have said that taxes must be paid if we are to have a proper structure in our social services. Having said that, surely it is right, whatever Government are in power, to look from time to time at the social services with a view to seeing whether they work in an efficient and businesslike way and that there is no violation of the code of good conduct. Anyone interested in the operation of a
  1402
  business sees many examples of people getting away with murder and taking more than they are entitled to. No one wants to deprive the decent honest working man who falls upon hard times. Adequate provision should be made for him in a proper social service system. Nevertheless, the social services must be looked at to make sure that they are working efficiently and well. We may need to be more selective about who should receive benefits. The social services should not be regarded as a sacred cow which cannot be inspected with a view to improvements being made.
  This nation is in a difficult situation. If we do not remember to cut our coat according to our cloth, we shall run into considerably more difficulties in the years ahead. We are not only in difficulties on one or two aspects. We are in difficulties by virtue of the quality of our workmanship and the poor goods that we produce. I have been making some comparisons with a certain Japanese machine and similar machines built in this country. British producers had better look to their laurels, because customers, be they German, Japanese or American, consider not only price but quality and reliability. It is important that as much attention as possible should be given to these aspects.
  As a Government, we have tried to reorganise British industry, but it cannot be done overnight. A factory is not built in an instant. It needs planning and a great deal of work. It is quite wrong of right hon. and hon. Gentlemen opposite to criticise the Government for not doing enough. The fact is that we shall reap the rewards of our labour if we labour well. In certain respects the Government have laboured well by helping industry to re-equip itself and by trying to increase its tempo and produce better goods than ever before, so making itself more competitive in the world's markets. There is a need for change, a need for new ideas and a need for new stimuli.
  For years I have maintained that there is a need for an encyclopaedia of the world's requirements in terms of trade and commerce. Small businesses should be able to get all the help and assistance that they need, but it should not be surrounded by university phraseology which simple men cannot understand.

  1403
  Years ago I suggested that we should establish in each of the capitals of the world permanent exhibitions with set-in selling organisations, not so much for the benefit of our large companies but with a view to helping smaller exporters. What is required in every capital is an exhibition of Britain where people can obtain full information about what we produce and how we can service our products.
  A great opportunity has been missed. Instead of financing our exports, we could easily have given them free transportation on our railways to the ports of embarkation. There are 101 methods whereby we could go forward with a dynamism which is absolutely imperative if we are to survive. I hope that my hon. Friends will not be hidebound by old concepts and ideas, but will take into consideration a new approach to a new Britain which would give great benefits not only to the old but to the young and, not least, to ourselves.
  7.0 p.m.
  Mr. John Smith: Was not it a pleasure, Mr. Speaker, to listen to such a straightforward capitalist speech from the benches opposite?
  There is a great deal to be said about this Budget, and, indeed, something to be said for it. I know you like short speeches, Mr. Speaker; so I propose to limit myself to matters which would be out of order on the Finance Bill. Therefore, if of necessity I deal with generalities I hope that the House will not think I do not have particular things to say about the Budget. I have many very particular things to say about it, but I will leave them out on this occasion in the hope of being called on the Finance Bill and, possibly, being able to mention them in Standing Committee.
  First, I should like to refer to Budgets in general—what the Chancellor called
  "… the annual spring rite of the Budget"—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1002.]
  Of necessity the Chancellor spoke for two and a half hours. The Budget is the most important and complicated economic pronouncement made in this House during the year. Yet hon. Members on both sides are expected to approach
  1404
  it immediately and for three and a half days with an open mouth.
  Over the years the Budget statement has grown to deal not with one matter but really several quite separate matters. First, there is the review of the past year and the forecast and outlook; the forecast part has, to the great credit of this Chancellor, been much improved.
  Second, it deals with correcting anomalies and with simplifying taxation procedure.
  Third, there are the measures which operate on the economy and which the Chancellor hopes will carry out his intentions for the economy.
  Fourth, there are the items of class warfare, now known as social justice, which invariably end up by maiming the weak and the honourable and strengthening the shady and the slick.
  There are these several different divisions in one statement and in one debate. If the Committee stage of the Finance Bill can be split into parts, some taken on the Floor of the House and some taken upstairs, why is it not possible to split the debate on the Budget?
  About the first section of the Budget statement, the forecast, the Chancellor said:
  "Its availability contributes greatly to the development of informed opinion, and its exposure to public criticism and comment should also help us to improve our forecasting techniques."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 998.]
  If that is so, why cannot we discuss that part of the Budget statement in advance of the Chancellor's measures? If he means what he says there, he cannot at the moment reap the benefit of anything which we or the newspapers say until 12 months have elapsed.
  Nowadays, one omnibus Budget per year is absurd. It is an absurd notion to suppose, with the pace of change as rapid as it is, that satisfactory decisions can be taken to last for 12 months. This is indeed recognised as absurd. We have in fact, had a Budget or an effort resembling a Budget every 15 or 16 weeks for the last five years. That is, 13 or 14 Budget-like pronouncements.
  I do not see why the Budget statement and legislation should not be divided into two or even three parts. The reviewing and forecasting part could be separate.

  1405
  The reviewing of anomalies and the simplifying of the tax structure could be another part. Into that could go all the non-contentious things which, as with a body like the Transport Commission's annual Bill, we could discuss upstairs. That would leave the parts of the Budget designed to carry out the Chancellor's policy and all the items of class warfare—contentious matters which it is important should not be revealed in advance—to go into a third part. It would be much better if the Budget were dealt with in those three parts with a gap between the review and forecast and our discussion of it than by the present method of confronting us with a complicated statement on several disparate matters upon which we are expected to comment immediately.
  Next, what is this Budget trying to do? The expressed aim is to achieve a balance of payments surplus. To do that the Chancellor wishes to take £270 million out of the economy this year. I do not propose, owing to the shortage of time, to go into the merits or demerits of the sum that he has in mind. I merely wish to analyse whether the Chancellor will achieve that particular object in that way.
  In his Budget Statement the right hon. Gentleman said that the squeeze on consumption
  "must and will be continued if the balance of payments is to be put right …"
  Later he said:
  "I must therefore limit the growth of home demand so that there is room for a substantial and continuing balance of payments surplus to develop."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 999–1002.]
  The Chancellor's aim, therefore, is to correct our balance of payments position by pressure on home consumption, and later he brings forward his measures to effect this object.
  The taxes on consumption are as follows. On wine the tax is £10 million. I think that is in a full year, although it does not say so in the statement. I do not believe that it would make much different if it was for a full year or for this year; so let us put it in at £10 million. On peanuts, pet food, etc., it is £26 million in this year. On gaming, which I have rather charitably put in as a tax on consumption, it is £9 million this year.
  Tax on petrol is £45 million. I must deal with the tax on petrol in more
  1406
  detail. The Chancellor says that of the 2·3d. per gallon that that £45 million represents, the companies are entitled to charge the public only 2d. because they rounded up their prices on the occasion of the previous rise in tax. Therefore, the cost to the country will not be £45 million, but 45 million times two over 2·3d. which is £39 million. It is well known that the petrol consumed by private users is about 30 per cent. of the total and that the rest is consumed by industry and commerce in one way or another. So that about £11·7 million of that rise in petrol duty will fall on private consumers in a full year. The Chancellor has, however, sensibly, for administrative ease, marginally reduced the duty on heating oils, which will cost £800,000, although this will not all benefit the consumer.
  Therefore, we can say with reasonable fairness that the consumer will carry about £11 million of the net increase in the duty on hydro-carbon oils. The total of those taxes falling on the consumer this year is thus £56 million out of the total he wishes to take of £270 million to achieve his object.
  There is, however, another side to the story. Under the somewhat baffling heading "Minor Measures" in his Budget Statement, the right hon. Gentleman proposes to give £250 million in a full year to pensioners, of which £125 million will come in this year. He has also made adjustments to the personal allowances which will cost the Exchequer £13 million this year. Those two items are the most rapid stimulants to consumption that exist because they are additions to the spending power of the poorest sections of the community, and they spend the money at once and in full. Thus, there will be an immediate boost to consumption of £138 million this year, counter-balanced only by a less immediate brake on consumption of £54 million this year.
  From where is the rest of the money coming? It is, of course, coming from industry, and this in a Budget which is attempting to put our balance of payments right. I have calculated that £28 million will come from industry on petrol and fuel. About £75 million will come from Corporation Tax this year—£120 million in a full year—and it is interesting to note, in connection with Corporation Tax, that if, as the Chancellor said, profits

  1407
  have gone up by 10 per cent.—the President of the Board of Trade said 11 per cent.—then, by putting up Corporation Tax by 2½ per cent., the right hon. Gentleman is taking 50 per cent. of the increase in profits. Is that the way to encourage productive investment? Another tax on industry is the £123 million extra to come from S.E.T. This shows that industry is producing £226 million of this money, more than four times as much as the taxes on consumption.
  How does all this square with the "sustained growth" which the Chancellor wants? He referred to there having been
  "… a lack of sustained determination to sell abroad …".—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1002.]
  Is that surprising in circumstances like this? The Budget, which is much like a poor man's version of last year's, is a reinforcement of failure. The right hon. Gentleman should have reinforced success, the success which he acknowledged in the export sphere. Instead of that, however, he is putting a greater part of the burden on the very people who are producing the success and, by so doing, he is guaranteeing the failure of his Budget.
  At whom are the benefits aimed? In column 1032 of his Budget statement the right hon. Gentleman referred to the 1,100,000 voters who would be taken out of tax altogether, with a further 600,000 having their tax liability "significantly reduced." About 40,000 voters are being exempted from Estate Duty. They are dead, it is true, but at least 40,000 people a year will have something to which to look forward. There is some relief for close companies, and, in the sense that they did not get what they feared they would get, for beer drinkers, a very numerous class. There are surprisingly friendly noises about the tax on high earnings being reduced, which is rather unfair, in that there has been a lot of talk but nothing done. As with so many things in the Budget, I shall believe that when I see it. Many millions of pensioners will benefit from the Budget. Thus, this is not just a Budget. It is, in so far as it is a Tory Budget aimed to capture Tory votes, an effort at vote retrieval. This is a
  1408
  Budget of divided aims, and, like everything with a divided aim, it will fail.
  I must mention one particular matter, namely bank lending. I must also declare a double interest in that I have an overdraft and have worked all my life in a bank. I am, therefore, interested in the subject not just from the first point of view but also in the reverse sense because, naturally, banks like their lending to be as high and not, as the Chancellor would wish, as low as possible. The Chancellor said:
  "With regard to the private sector, bank credit increase in 1968 by £753 million …".—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1008.]
  It would have been fairer of him to have used the words of the Financial Statement, which declared:
  "… the sterling element … in bank lending to the private sector … rose by about £525 million."
  That figure is more than £200 million less than the one used by the Chancellor. Although both are correct, £525 million is more to the point. The Financial Statement went on:
  "A large part of this rise was in categories of lending excluded from the credit ceiling, notably export finance".
  Later it said:
  "The rise seems to have been mainly due to increased use of existing overdraft facilities resulting from other pressures on credit".
  I am myself concerned both with the efforts the banks have made to get their lending under the ceiling put to them and, to a lesser degree, with the spending of public money. In my view the banks have made greater efforts to bring their lending down than the Government have made to cut expenditure. Banks and their customers take a different view of broken promises from the Government. If a bank has granted a customer a lending limit, it is not pleasant for it to tell him that he cannot have it. Moreover, if one calculates bank lending in real terms—which is convenient for Governments to use but not available to banks, which deal in old-fashioned stuff like money—and if one allows for the free loans to the Government which are paid by way of S.E.T., then I believe bank lending is well within the ceiling prescribed.
  It is difficult to make people love bankers, I know, but I do urge the Chancellor to remember these points when he

  1409
  threatens, as he did in col. 1008 of his Budget statement, to use the big stick on the banks and their customers.
  Thirdly and lastly, we must not let the fact that the Budget does not envisage net Government borrowing this year blind us to the need to cut Government expenditure. There is nothing magical about not having a net borrowing requirement. It could be due, for example, to a large loss of foreign exchange. When the Chancellor said
  "the public sector will be making no net demand at all on private savings."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1006.]—
  that merely meant that he had taxed the public too much.
  In this connection two considerations must be borne in mind. The first is whether Government expenditure can, in fact, be controlled. Is it possible to control it? It is very arguable. The Government have to pretend that it is. If one thinks that Government expenditure can be controlled, then spending must be planned so that expenditure can be cut or deferred where necessary, which is what every firm does and what many private individuals do. But Government expenditure has become a rigid monster. All expenditure always appears to have been committed for years ahead at the outset. That is a quite unnecessary way to plan expenditure, and it is a frame of mind from which we must escape.
  If, however, we believe, as I do, that Government expenditure cannot be controlled, that there is a fundamental difference between spending one's own money or shareholders' money, and spending the nation's money, which is an abstraction far too large to exercise any discipline on the individuals who make the decisions about spending, then I do not believe that it is possible to control Government expenditure. There are many events which we imagine we can control which we cannot really control at all. In many cases I would go further and say that often events control us. If that is agreed, then the corollary is that the Government must not embark upon expenditure in the first place. They must keep out of whole areas of expenditure altogether. Once one is embarked on certain expenditure but determined to make cuts, one has endless discussions, late at night; everyone is irritated; people
  1410
  are made to feel insecure; and at the end of the day no more is decided than to paint the seats in the park every three years instead of every two.
  All State intervention puts up costs and makes us less competitive abroad because all decisions in which the State does not intervene are taken on economic grounds; and State intervention is only thought necessary to warp such decisions away from the direction in which they would otherwise go, away from the economic grounds on which they were taken.
  We must accept that there are areas in which the Government must not spend money at all. The present state of thinking is our fault and the fault of the public. The public will always say, "Why are not the Government doing something about this?" when often the Government should do nothing. There are countless examples of this which would have shocked our grandfathers. Last year in the Budget, for example, there was a measure to register hotels; and there has been a call for the Government inspection of driving instructors. We end up with thousands of officials, simply paid to stop things happening. It is a frame of mind, and I choose these examples because it is the small examples which pile up on us. In the past both those two pieces of expenditure I have mentioned, if they were thought desirable, would have been done not by the State but by trade associations. There is no difference between inspecting driving instructors, and inspecting architects, which is done, at no cost to the State, by the R.I.B.A.
  To sum up, this Budget will fail in its objectives because it is not single-minded. It has been compiled with one eye on the I.M.F.—and quite rightly; the first part of the Chancellor's statement was excellent—but with the other eye on the voter. It is like the Church of Laodicea, which was neither hot nor cold, and one remembers what happened to that. I do not think that I should mention it.
  Hon. Members: Please tell us.
  Mr. Smith: No, I cannot. It would not do.
  The Budget will fail also because it gives no encouragement to those people upon whom the future prosperity of the country depends.
  7.24 p.m.
  Mr. Ted Leadbitter: During the past week or so I have been ill and I have been watching the accounts of the Chancellor's statement on television. It was a unique experience for me, because as a Member of this House I do not like to miss special occasions, which I am sure applies to us all. I was sorry not to be here, but I looked forward to seeing how what was happening here was being reflected to the public. I was surprised to learn how many people know how to govern the country. I saw the Chairman of the National Coal Board—he knew all about it. He knew what to do. He had all the answers, and even before the Chancellor's statement appeared on television he was pontificating about the Labour Government and not understanding where it was going or what it was doing.
  He was matched admirably by the excessive state of despondency of Mr. Victor Feather. I decided to switch to the other channel and there I found a professor making just as big a hash of his assessment as the previous gentlemen. He was an economist, and I reflected that all in all I would have been much better off to have been here. I am not so much concerned about the technical expressions to do with the financial state of the nation, or the balance of payments problems. These are discussed not only on Budget day but regularly in this House and in meetings upstairs, because Members regard them as a special challenge to their professionalism and look upon the attention they pay to them as a duty to their constituents and the nation.
  The moment that a Chancellor's statement is made there is the same kind of jargon from public figures outside this place and from the Press, the Daily Mail in particular, the Express and the Daily Telegraph. Commentators on television, soured dignitaries who have not got what they wanted, use the special opportunity to try to persuade the general public that this Government are not right. Because of this I felt that if I got back to this House I would try to say something to restore the balance, to bring back some sanity to our assessment of the situation.
  Before my illness I was abroad. I travelled in Malaya and Singapore and
  1412
  took the opportunity to stop at the commercial centre of the Middle East, in Beirut. Following that I was in Tunisia. During that time I met a good number of British personnel representing British firms. I met them as salesmen or as people who had been working in those countries for some time. Without exception I was astounded to learn that there is a buoyancy among our people abroad which is not talked about here.
  When I was in Tunisia a fortnight ago I visited a steel works in which members of the staff expressed great satisfaction about the British machinery and equipment which they were using. In the hotel in which I was staying I had met a salesman who was representing several firms, one firm of which was involved in the export of machinery which could be used in a tender which the steel works was thinking of putting out for extension purposes.
  I was then fortunate to meet a man who was the engineering consultant employed by the steel works, a man who began to talk British. Imagine how proud I felt. Here I listen to all this moaning claptrap, all this nonsense about close companies and acorns growing into big trees and all that Boy Scouts stuff, and on that occasion I listened to a man who knew his stuff and talked British.
  I went back to the hotel at about 11 o'clock that night and looked round for the salesman. He was due to fly out the next morning and I said to him, "There is somebody you must meet". Immediately he got on the telephone to this engineering consultant in his hotel. Just before midnight the two gentlemen met and the salesman cancelled his flight home because he was anxious to get hold of the new contract. I am glad that on that occasion a member of the Conservative Party was with me. On such occasions, as all Members of the House know, there is complete unity among both parties which endeavour when abroad to give the best impression of our country. I wish we would continue to do the same thing when we are in this country.
  The salesman had taken to us a good deal because of the assistance which we were giving him. His words were, "Since the Labour Government came in, my job has been made much easier. I and my colleagues travel throughout the

  1413
  Middle East and Europe, and our orders have gone up by 40 per cent. We do not want for anything, whether it is in terms of assistance, advice or financial support, from the Labour Government. Before then" he said, "we got nothing".
  When one hears the kind of stuff which was poured out on television on the day of the Budget statement, and some of the statements in this House, is it not time to realise that the record of Britain in the past few years is not as bad as many people would like to paint it and that in terms of exports we are in the highest bracket in the world? What is unfortunate is that we have not had a sufficient share of world manufacturing exports. This is our difficulty. As one of the largest exporting nations of the world, we should not put ourselves in a position of falsely showing to people abroad that we are lacking confidence in ourselves, or that we are lacking in ingenuity or skill. We should show them that we can beat the world.
  I should like to point to one or two things on which the Government and the country must concentrate. This House is a compendium of opinion covering a remarkably wide range. It acts as a kind of barometer for the nation which the Government should heed. I ask the Government to take note that the general public in this country are sick and tired of the jargon of percentages, averages, cost of living indices, interpretations of import and export figures and the like. They are not getting the right information handed out to them in the right way, or for the right reasons, in answer to the right questions. They rightly are more concerned with the matters which affect them most. They need to be told about the matters which they can readily understand, matters which they feel are closer to them and to the environmental conditions in which they have to live.
  If somebody stands on his feet in this House and, in order to justify some aspect of prices and incomes policy, says that the price index has gone up in the last six months by only 0·5—I use that figure only as an example I do not say that it is correct—housewives in the country will not accept the figure. The housewife will say: "Does the politician who says such things understand that where I live, in my street, or town or village, the bus fare on
  1414
  my route has gone up by 2d. or even 3d.? Does the politician understand that my rent has gone up this week by 2s. 6d., or my rates have gone up by so much?" These increases vary from area to area. Does the politician understand that there are certain specific matters which affect the cost of living and which cannot be weighted within a cost of living index? Members who attempt to examine these matters in their constituencies would help to close the gap between the general public and the the politician.
  One must now look at the ways in which money gets into people's pockets in the first place. This is what the Budget is about. It is about where money is to be used, why it is to be used in a particular way, and how much, in the end, people will be left with, whether they are working or not.
  So, we come back to the housewife because, traditionally, it is she who handles the money, who exercises the business of the house, and, indeed, in many respects, even up to fairly large income groups, runs the establishment, pays the bills and has all the worry of looking after the situation with which her husband has provided her.
  The right hon. Member for Leeds, North-East (Sir K. Joseph) put on a degree on synthetic anger today. One can always tell when his anger is synthetic because he has an unfortunate inclination to blush when he exercises it. He challenged the Government, but I remind him that when he was a member of the Conservative Government he came to my area, which is a special area, at a time when he could have exercised what he tried today to persuade the House the Opposition has the capacity to do now. The Hartle-pools then had about 4,000 people out of work, with a shipyard which had just closed. The town was rolling towards complete depression. He could have said, "The Government will help The Hartle-pools and the North-East to do something about this terrible situation." The region had about 80,000 people out of work while another 80,000 or more had migrated from the area in the previous seven years. He could have done what he and his colleagues are saying they have the capacity to do now.

  1415
  In case the right hon. Gentleman is not mindful of the fact, I remind him that I was leader of the Labour group in The Hartlepools at that time and met him. I was also the instigator of bringing into being a new industrial development department in the constituency which has been very successful since his departure. During his stay with us he had nothing to offer, and it is on record that he was quite unaware of why he had come. I challenged him to deny it.
  When the Opposition say to the public that they can show the country how to get on in the world and how to beat our competitors and settle our economic problems, people have a right to ask why they did not do all this when they were in power and should have done it.
  The right hon. Gentleman said today that the Conservatives did not want to inherit a deficit. What on earth did the Labour Government inherit in 1964? Then he had the temerity to say that we in this country, since the Labour Government came into power, had behaved as if our competitors abroad had been inert. Yet, since 1964, there has been a tremendous transformation in our export record. We have, under this Government, achieved record export figures. We have not only been successful abroad but at home we have built more schools, more houses, more roads and more hospitals than ever before.
  Mr. Julian Ridsdale: On borrowed money.
  Mr. Leadbitter: We have to ask the Opposition the great 64-dollar question. They repeatedly ask that public expenditure be cut. The public has a right to ask in return, if the Opposition argument is right, where they think that public expenditure should be cut. Would they cut houses or hospitals or roads? The Opposition cannot have the luxury of using a generality unless they are prepared to be specific.
  Mr. Burden: I understand that contracts have just been exchanged by the Civil Service Board for a building in the Euston Road, totalling 30,000 square feet, at £4 2s. 6d. a foot at a cost of £124,000 annually for rent. That expenditure should have been looked at at a time like this before it was indulged in.
  Mr. Leadbitter: I shall come to a point not dissimilar. Public expenditure covers a vast range and the hon. Gentleman has picked one microscopic part of it as an example as though it were the whole test. He has not gone far enough. I am prepared to say that there is an excellent case for the utmost vigilance and that the severest scrutiny should be applied to see that wastage is avoided. But when the Opposition talk about public expenditure they are talking in terms which will affect detrimentally the social wage. They are not talking in terms of the case quoted by the hon. Gentleman but about millions of pounds to make effective their policy. We must, therefore, again ask that they be specific when talking of public expenditure reductions. They must put a money value on their demands so that the general public can see what they are talking about. Let them put their cards on the top and not at the bottom.
  Mr. Ridsdale: One means of cutting Government expenditure would be to cut out the Department of Economic Affairs.
  Mr. Leadbitter: I am sorry, but when I look around me at the calibre of personnel in this House in terms of brain power and ability, and see the buffoons opposite, I wonder how on earth hon. Members opposite can ever think of themselves as an alternative Government. Their posture was quite different in 1963. They should read the headlines which were published in that disgraceful year. Let them read again the headlines about 1963, 1962 and 1961. In 1964 The Times gave the country a great warning about the conditions that the Tories left for us, and said that in the course of time the Tories would kid us that this had never happened. Hon. Members opposite cannot come to the House with their hands clean and dictate or lecture to us.
  Against a background of national crisis, which we do not deny, we have created conditions in terms of social wage that are a credit to the Government's courage. My region has benefited considerably. The whole country used to talk the language of two nations, the one affluent and the other not, the one that had some degree of good living and the other where good living had not been known for decades. Against the terrible background of unemployment, in just over 48 months of a Labour Government

  1417
  we now have houses built up to Parker-Morris standards. There are far more than Hailsham talked about, and far better, though he never talked about providing the money.
  The sum of £100,000 million has been spent in my region alone to attract and restructure industry, yet hon. Members opposite have the arrogant cheek to talk about the country going to the dogs. It is all nonsense. It is the language of mediocrities. It is time hon. Members opposite all crawled under the Table. We say to them and to the editors of the Daily Mail, the Daily Express, the Daily Sketch and the Daily Telegraph, "Do not count your chickens before they are hatched". When the next General Election comes, the electorate will not be arguing about this, that and the other, but choosing between the party opposite and my party, and even a person untutored in politics would regard the party opposite as past censuring and not even worth considering. We shiver and shake and dread the thought of even the possibility of its return.
  The average housewife and average man now enjoy a large part of the social wage about which I have talked, and the country's infrastructure has been improved. This has been part of budgetary policy, because that policy has something to do with the economic planning with which we are involved. It is not just a question of the balance of payments. When I consider that the average man, woman and child are enjoying the benefits of the great transformation in the infrastructure of the country, when the work possibilities arising from the restructuring of industry which has been promoted and accelerated these past months—[Interruption.] I have not even seen the hon. Member for Harrow, West (Mr. John Page) sweat in this House, never mind a workshop. Hon. Members opposite must understand that the restructuring of industry has been a profound success, though there is still much to do, and job opportunities are improving considerably.
  In the welter of change, the Government's provisions have assisted in the transitional period the very people who might have been hurt most. For the workpeople there have been redundancy payments, better unemployment benefits, and earnings-related benefits. The sick
  1418
  and injured have been looked after better than ever before. Take all these things into account, and that is the balance sheet in this country—not the corny, awful business of the balance of payments, about which we hear every time hon. Members opposite open their mouths. I say as a Member of Parliament, proud of my constituency and country, that no one in this country under Labour need go hungry. If he does, it is his own damned fault. No one need go without assistance, and no one need go without opportunity. All the language used against the Labour Party will be of no avail in the end. I say to hon. Members opposite, "I hope that you try to do more and more, because at the end of the day the fair-mindedness of our people will find you out."
  7.56 p.m.
  Mr. Richard Wainwright: Early in his speech the hon. Member for The Hartlepools (Mr. Leadbitter) told the House how vapid and unedifying he found much of the comment on television on the Chancellor's Budget speech. In saying that, he made my first point for me, because comment can only reflect the original performance. Even in Rugby League, not even the most expert commentator can make a bad game sound really thrilling and interesting.
  It seems to me that the one remaining advantage of the annual spring ritual of the Budget is that it at least gives the Government and the Official Opposition one chance to catch the attention of the whole nation on the country's economic position and the course which the Government are charting for the months ahead. This year, owing to the enormous scatter of miscellaneous proposals in the Chancellor's speech, and the extraordinary number of extra-budgetary items that he introduced, speaking as he did on behalf of the Land Commission, the Independent Television Authority, the Department of Health and Social Security and so on, there has been no impact on the country.
  I cite two immediate examples. With the eye of the nation upon him, with all the media putting out what he said on a matter so important to every motorist, the Chancellor expressed the firm hope that the rise in the price of petrol at the pumps as a result of his increase in the duty should not be allowed to

  1419
  exceed 2d. a gallon. In spite of the emphasis he gave to this plea on a day of such great importance, it was only a matter of hours before the majority of petrol stations, at any rate in the London area, had put up their price by 3d.
  Moving further north, I am astonished to find that as a result of the muddle and complexity of the Budget speech one of the shrewdest bodies of businessmen in the whole of these islands, because they work in such a very competitive atmosphere, the blanket manufacturers, who usually smell something before it has even been officially released, did not wake up until the following afternoon to the fact that their products had been suddenly and inexplicably roped into the scope of Purchase Tax.
  That is my first criticism. I grant the Chancellor the great difficulties in which he finds himself. They are not of his own making, and are not quite all of his predecessors' making. But it is very serious that he has lost a great opportunity of involving the nation in those problems and clearly explaining the course he charts to get out of them.
  The same applies to the Official Opposition, especially as they consider that their prospects for eventual office are high. They, too, have a duty to use this occasion not simply for scoring party points but for coming forward with constructive proposals. I wish that we had had from the right hon. Member for Enfield, West (Mr. Iain Macleod) more constructive proposals, if only because a Conservative administration which says that it intends to introduce a revolution in our tax affairs should be preparing it now. It is no secret that civil servants at some levels consider it their duty, with which I agree, to indulge in intelligent anticipation of what a future Government may require of them, and a future Government should therefore give our administrators a little more help by outlining their plans.
  If any signal has come to the nation from this muddled, extremely complex and at times petty Budget, it is that there is fog on the lines, there are desperate struggles going on in the main signal box and many points are frozen hard. A signal which Liberals and others would like to have seen in the Budget is a message
  1420
  to the efficient profit-making exporters. I do not hold much brief for those who export for any length of time without making a profit. The fact that we desperately need foreign currency is no excuse for giving away our products and our social services, which is what happens when we export on too low a margin. What message, if any, have exporters received? I speak for a part of the country which contributes very greatly to Britain's export trade, and the message which has been received is that in numerous, admittedly minor, but nevertheless significant, ways they are to be penalised rather than encouraged.
  The message which would have given most hope to exporters, even if it had to be hope deferred for a year or so, is an announcement from the Chancellor of his intention to introduce a value-added tax, not that there would have been any great novelty about this. This form of taxation is now becoming almost universal throughout Western Europe. Only the other day we learnt that Norway, which has nothing like the administrative machine that we possess, has gone over to a 20 per cent. value-added tax, with the consent of three of its main political parties, and with the Norwegian Labour Party deliberately offering no opposition. If Norway can do that, as the rest of Scandinavia and much of Western Europe has done, at least an announcement should be made of the Government's intentions on this. The great virtue of a value-added tax is that it does not fall mainly upon profits and the results of efficiency, but falls also upon business costs, and therefore recoups for the community some of the cost of the social services, education, welfare and so on for those who are employed.
  The second signal that Liberals would like to have seen from the Budget is a resolute determination to get away from the jungle-type taxes which have been tolerated for far too long. Our country has a long history of expertise in taxation, an extraordinary record of compliance in taxpaying and, if I may say so without undue immodesty, a substantial profession devoted to doing much of the Inland Revenue's work for it. That such a country should from year to year increase the primitive sector of taxation,

  1421
  the "bob-a-nob", or the "90 bob-a-nob" type of poll tax which is appropriate only to jungle countries, is extremely depressing.
  It was also depressing that, when challenged on the point, the Chancellor, who had made such great play of the detail of the pension increases next November, refused, and was apparently unable, to say how those increases are to be paid for. We are left with guesswork, but my guess, on which I am willing to be corrected if necessary by the Government Front Bench, is that in November the weekly stamp, for example, for the adult male who is "contracted out", will cost not less than £4 10s. That is a poll tax of the most primitive and, for the lower-paid worker, the most cruel character. It means that a number of the weaker brethren in employment will lose their jobs. Employers will not think it worth while to stamp a card with £4 10s. for someone who is not perhaps up to a full day's strenuous work.
  The third signal that I should like to have seen in the Budget is an indication of the Government's intentions for the back-benchers may be in possession of it, context of taxation. If a Budget speech can cover the territory of practically every Ministry in the Queen's service, something could have been said about the intermediate areas. We know that the Government are in possession of the Hunt Report. It is rumoured that before long backbenchers may be in possession of it. Perhaps it is not too late for us to hear in this debate the Government's intentions for those areas which were the pioneers of industry and which have never had repaired the damage which they suffered in the interests of the whole nation during the last century. Our proposal would be a graduated percentage payroll tax, favourably graduated for the intermediate areas as well as for the development areas.
  Liberals were also hoping, and indeed have been led to hope, that we should have from the Chancellor this year a genuine "own as you earn" scheme. As the hon. Member for Harrow, Central (Mr. Grant) pointed out, a timid first step has been announced, but I offer two warnings, whilst welcoming the relief given for the first time to contractual saving.
  1422
  My first warning is this. The Budget has given great tax privileges to those who lend to the Government; that is to say, in the relief on gilt-edged transactions from Capital Gains Tax, and the new contractual savings scheme through the National Savings Movement. To the extent that great privileges at public expense are given to those particular forms of saving, the possibility of industrial investment by the ordinary wage-earner and the man on a medium salary is handicapped. I greatly regret that the possibility of interesting millions of our fellow citizens in industrial investment has been deferred as a result of the character of the Government's contractual scheme.
  My other warning is that it may not come off. I hope that the Chancellor's hopes are fulfilled, particularly in the building society section of his scheme. But it may be that he is chasing a fictitious animal. Certainly, when he says he hopes to get a lot of savings from people who pay scarcely any Income Tax, I believe he is chasing a fictitious animal. By definition, people who are not paying any significant amount in P.A.Y.E. are most unlikely to have anything to save. It next year, or the year after, we are told that the scheme has not had the success which was hoped, shall we then be told that there is no future at all in tax-assisted savings schemes? Shall we be told that the whole movement for spreading wealth has just been an illusion and that it must be totally abandoned? I hope not. I am not willing that ideas for tax-assisted savings and the spread of ownership should be judged by the results of this particular scheme, although so far as it goes I wish it well.
  A great opportunity has been missed this year by a Chancellor whose ability and humanity none of us doubts; but the opportunity may not come again, and we must receive this Budget with great regret.
  8.10 p.m.
  Mr. Kenneth Baker: It has been a very rambling and long debate, which is not surprising because on Tuesday afternoon we did not hear so much a Budget as a Queen's Speech, delivered not by the Sovereign but possibly by an Heir Apparent; and yesterday we had another huge dose of new legislation.

  1423
  Then this afternoon the right hon. Gentleman the President of the Board of Trade comes down and makes an important statement of new policy on monopolies and mergers. It is extraordinary for a Government which is clearly in its twilight period to indulge in such vitality; but it is the vitality of the grave digger. The greater the effort, the greater the yawning grave at their feet.
  I found particularly poignant but perhaps pertinent the concern of the President of the Board of Trade with the policy of his party on mergers and redundancy, because the only thing keeping that party together is fear of collective redundancy. But I would like to address my remarks to the basic inconsistency within the Budget. The Chancellor of the Exchequer has decided to deflate the economy by 1 per cent.—£340 million—this year by cutting consumer spending; but the basic inconsistency is that he has used a method which, uniquely, will not affect consumers very much. Over £250 million of that £340 million is to be met by industry through the Corporation Tax and Selective Employment Tax. Probably Corporation Tax will not be passed on at all, and the Selective Employment Tax only marginally. What is going to be hit by this Budget is not consumption but economic growth; and if there are two taxes which the Chancellor should have left alone this year they were Corporation Tax and S.E.T. Corporation Tax is uniquely a bad tax to raise at this time because it hits the most efficient companies, those making profits.
  It would be irrelevant for me to rehearse all the arguments against S.E.T., but I have always felt that the most important argument that really weighed against this tax is that it falls on that sector of our economy, the service industries, which are the most expanding industries in our economy. They are often the most technologically advanced. The computer industry, the telecommunications industry and urban transportation are all service industries, growth points, and yet they are penalised by S.E.T. If we look at the American economy we find that over 50 per cent. of the people working in America are employed in service industries. Probably within a matter of 10 years we shall have the same
  1424
  conditions in our country. These are industries which should not be penalised. They should be encouraged.
  Another disadvantage of S.E.T. is that it hits hardest those who are doing some of the best work for this country: invisible exporters, insurance salesmen, bankers, brokers, shipping agents and hotel keepers. These are the people who kept this country solvent last year and who will keep it solvent this year. They are to have to pay an increase of 28 per cent. upon their payroll tax. This is scant gratitude to people who have done such good service for their country. The reaction of business to this Budget will be for boards of managing directors and senior executives to get together this week and next to see where they can cut their spending; and they will cut their overheads, their employment and capital investment.
  It is absolutely extraordinary that these two taxes should be raised, because they come on top of the most vicious credit squeeze British industry has had to suffer and in advance of a further heavy levy which industry will have to bear in October or November next by the increased stamp contribution. By raising these two taxes at this particular moment in time, the Chancellor of the Exchequer has achieved the unique action of creating conditions in which unemployment will rise and investment will fall.
  It was almost one year ago that I made my maiden speech. On that occasion I spoke of the twin needs of tax reform and tax reduction. Over the last year there has been no tax reform and, as the House well knows, there has been no attempt at tax reduction. The 1968 Finance Act was so complicated, two thirds of it being devoted to anti-avoidance measures, that the Inland Revenue had to take on an extra 700 inspectors—and this in a year when no really major new tax was introduced. The 1969 Finance Bill, when we see it, will be another big, fat Bill, two-thirds of which will clearly have to be devoted to anti-avoidance measures.
  On Tuesday when the Chancellor was introducing his Budget he said he had considered tax reform but that it was very difficult. Of course we know it is difficult, but this whole tax structure with which we are burdened at the moment

  1425
  has to be simplified and the skein has to be unravelled. Personally, I believe this is one of the most important things to which the Government should address its attentions, and yet this Government has done nothing to simplify our tax system. For the Chancellor to shrug his shoulders and say it cannot be done and for the Inland Revenue to say, as they are saying to the Sub-Committee of the Estimates Committee upstairs, that their burden of work is so heavy and complicated that they are afraid there cannot be any major change in our tax system for two years is for the tail to be wagging the dog.
  Imagine what would happen if the managing director of a company said that important changes had to be made and that he had to do this, that and the other and his chief accountant then said, "I am very sorry but we cannot have these changes because they would involve complicated book-keeping which we cannot do". He would be fired, and correctly fired. The Chancellor cannot fire the Inland Revenue, but he should be working now on a long programme of tax reform to simplify our system and reduce the whole complexity of tax collection.
  Mr. Eddie Griffiths: On this question of tax avoidance, I am greatly touched by the hon. Member's concern that so much of the time of the Inland Revenue staff is taken up with chasing tax avoiders, but would he consider that the main people involved in tax avoidance are friends of the Government or friends of the Opposition?
  Mr. Baker: What a pertinent interruption! I was about to remark that this Government is preoccupied with tax evasion almost to the extent of paranoia. They put tax evasion before imagination. We can see this in their proposal to disallow bank interest against taxable income. The object of that roposal is to get at the very rich person—and I hold no brief for that sort of person—who uses a very large overdraft as a means of tax avoidance. But already the bloated plutocrats have, since Tuesday, devised schemes to enable them to continue to enjoy these benefits; and those who are to be hit by disallowing bank interest will be people of very moderate means. I can give an example: the young executive or employee of a
  1426
  company who is purchasing shares in his own company under a share purchase scheme. There is nothing underhand about these share purchase schemes. They are approved by the Inland Revenue.
  I should declare a very small interest inasmuch as I benefit in a very small way from one such scheme. The object of these schemes is that employees are loaned money by the company so that they can purchase shares in it and build up some capital. This happens in America, Germany and France. Interest on money borrowed by the employee is not now to be allowed to be set against his taxable income. If these forms of share purchases are not saving, what is saving? As a result of this preoccupation with tax evasion and avoidance the net is cast so wide that a lot of fish are brought in which should not be brought in. I hope that answers the hon. Gentleman's question.
  It is incumbent upon any Conservative Member who speaks in this debate to say what he thinks is needed for the country. When a similar question was addressed to a very obscure American Vice-President about 50 years ago, "What is good for America?" he gave the reply, "A good five cent cigar." That presumably accounts for the fact that his obscurity remained inviolate. If I were to answer the question, "What is needed for this country today?" I would answer, "A completely new approach".
  I would start not by holding back Government expenditure, but by positively cutting it. Every time Government expenditure was mentioned on Tuesday afternoon there was a fruity gurgle of approval from the Chief Secretary. He is very proud of the fact that he has held back Government expenditure this year to an increase of £600 million—a mere bagatelle. That is £600 million increase in money terms in Government expenditure this year. Contrast this with what Nixon has done in three months. He has slashed the American budget by 4,000 million dollars.
  The second leg of the new approach is a complete programme of tax reform. That cannot be introduced overnight. It has to be a long programme, of three or four years. Look again at what Nixon has done. He has already introduced a tax reform programme for three years.

  1427
  This Government have been in office for 5 years and it has not attempted to cut Government expenditure or reform the tax system.
  The third necessity in this new approach is that the rôle of the State in our society should be reduced. We are at something of a watershed in our society. Over the last 150 years, since the early 19th century, the rôle of the State has been increased with the approval of the broad mass of the people. It has happened in America and in all sophisticated western societies. The State was brought in to organise and control society.
  At this moment there is a slow movement beginning, I think it began in the late 1950s in our country, to reduce the rôle of the State, to increase the rôle of the individual, and to say to the State: "There are some things that you cannot do or that we as citizens can do better." This is the broad movement of history, and it is for politicians of any party, and I know that some hon. Members opposite agree with me, to recognise this trend. Once we do it means that we have to run down the rôle of the State in many spheres where it is now operating. If we believe in reducing the rôle of the State the inevitable consequence is that we can reduce taxation.
  This, then, is the Conservative new approach. It is a positive approach, and I am quite certain that it is what the country needs, because it has had five years of restraint and deflation and it now wants a psychological tonic.
  8.25 p.m.
  Mr. Frank Judd: I hope that the hon. Member for Acton (Mr. Kenneth Baker) will forgive me if I do not follow him in all the interesting observations he made in his charming address. I think he would understand that a lot of us sympathise with him in his disappointment. He told us that since he spoke a year ago in this House on economic matters he has seen very little progress along the lines which he then advocated. I was rather distressed by the all too characteristic Conservative ambiguities which appeared later in his remarks, when he went into a long dissertation about tax avoidance and failed to establish clearly whether he was in favour of abandoning efforts to deal with
  1428
  tax avoidance, and when he made references to public expenditure.
  True to the form of his Front Bench, he declined to give any specific examples of where he would cut public expenditure. I would love him to come down and meet the Conservative council with which I have to deal quite frequently and talk to it about the cuts in public expenditure which he advocates. He might have rather a dusty reception.
  He also went on, more interestingly, to talk about participation, and I found a good deal of sense in what he was saying. What he must recognise is that this problem of greater participation, and a greater rôle for the individual in society, is no more answered by the trend towards mergers in the private sectors of the economy, which are every bit as impersonal as public enterprise. It would have been more interesting to hear how he would have combated these trends within the private sector, which seem to work against the rôle of the individual that he was advocating.
  I want to congratulate the Chancellor on what I regard as a fair and just Budget in extremely difficult circumstances. There are several specific points which I would like to take up. First, I want to make a few observations about S.E.T. There is a danger in the policy which the Chancellor has enunciated that food distributive costs may increase, hitting rather severely ordinary folk who are not always in a position to meet increased costs. There may be adverse effects upon the cost of housing, again placing an unfair burden on younger people trying to establish a home of their own.
  More specifically, for those in the building industry, these proposals may give yet another encouragement to the unfortunate process of labour only subcontracting, which has become an increasingly acute problem within the building industry. I would like to hear my hon. Friend's observations as to what action the Government have in mind in this sphere. We are not only seeing the problem of tax avoidance labour-only sub-contracting enterprises, but we are also seeing, to the distress of many skilled and responsible craftsmen, a lowering of standards.
  Everyone would agree that one of the most welcome aspects of the Budget was

  1429
  the emphasis on the export strategy, which must be the mainstay of Britain's economic policy. If we are not more efficient than our principal industrial competitors, and cannot hold our own against them there is only disaster ahead.
  Some of my hon. Friends have argued that we should have embarked upon the process of devaluation earlier than we did. One point needs to be answered. The only certainty which follows from devaluation in terms of our balance of payments problem is that we have to pay more for our imports. All the rest is potential.
  There were all the indications before the devaluation decision was taken that there was not the will and ability on the part of industry to seize the opportunities of devaluation and the new export markets which would become available. There is still some doubt about whether it was geared to seize the opportunity when devaluation came. But it would have been disastrous to devalue earlier. The act of devaluation spells out very clearly that, in the nature of our society, there must be co-operation between Government and industry. The Government can set the context within which industry is able to operate and to seize the new opportunities which may be presented.
  In our industrial production we must go through a psychological revolution. We are still in the process of change from the period when we were the centre of a great empire, when, not unnaturally, there was the tendency for people in Britain to believe that what was satisfactory produce for them must be acceptable to people elsewhere in the world. If we are to survive and prosper, we must increasingly accept that we must, as consumers, discipline ourselves far more into enjoying what is acceptable by the rest of the world. Our industry must become geared to export markets and we must adjust our consumer markets accordingly.
  Sometimes some rather sad observations about exports are made to me by business men friends who say that they are keen to join in the export drive but that they find our trade attachés in embassies abroad too passive. In my limited experience. I have been very impressed by many of our trade attachés. The
  1430
  answer which I always give to such business men is that when Volkswagen decided to seize the North American market it may have had advice and guidance from very good trade attachés in the German embassy but that Volkswagen itself decided to organise its marketing in such a way that it would be able to beat the others and seize the North American market. I accept the point made by the Opposition that it is no good just lecturing, but the point which we must get home to our business men is that this will not happen in an easy, painless way. They must gear themselves to take the initiative and to seize the opportunities.
  Greater efficiency is essential for the success of our export drive. Some of us on this side of the House were therefore a little disappointed that more specific support was not offered in the Budget for reinvestment in improved methods and efficiency in industry. More tax assistance in this respect would have helped to bring us more into line with some of our principal industrial competitors. We are anxious to hear the Government's thoughts and reflections on this matter.
  Some of my hon. Friends—and I am sorry that there are not more of them present while I comment on their arguments—deploy two arguments about the Government's policy in the context of the Budget. They argue, first, that it is regrettable that the Government have not taken more specific steps to stop the unfortunate outflow of capital; and, secondly, that it is unfortunate that the Government are too preoccupied and worried about the balance of payments problem and that we can look at it in a more relaxed way and not become too ambitious.
  In the situation in which we find ourselves, there are only two ways in which we can go for economic recovery. One is to take the revolutionary approach. I have not heard anyone in this debate argue for the revolutionary approach. It is a logical and honourable approach—a siege economy, tighten the belt, man the barricades and try to recover on our own. The second approach—and it seems to me the only alternative—is to recognise that until we have recovered fully economically the financiers and our creditors abroad will have a good deal to say about the

  1431
  way in which we run our economy. They will have many observations to make.
  It is only reasonable and sensible to accept and explain to the country that until we have reached the stage of economic recovery this is something to which we cannot turn a blind eye. It is a political reality which we must face and with which we must deal.
  I do not claim to be an economist, but as a layman I have never quite understood what sense there is in cutting off overseas investments which in the long run are an insurance for the British economy. I think that the Government have done well to find the right balance in this respect. There is one qualification which I wish to make about overseas investments.
  Things are relative, there are no absolutes, but it seems to me that sometimes a Government who base their policy and philosophy on certain principles must ask themselves about the areas in which they are allowing capital investment to take place. I hope that the Minister will understand if I raise this matter in the context of this debate. It seems to me unfortunate that we should have an increasing stake in the social and economic system of South Africa as a means of ensuring our economic well being. This is unfortunate in a moral and philosophic sense, but it is also unfortunate because I foresee great instability in that area in the future, and for the sake of short-term interests we may be building up trouble for ourselves in the future.
  I am glad that the Government have made it clear that they intend to abide by the principles of their prices and incomes policy. In any Socialist approach to the management of the economy this policy is an essential pillar, because when organised labour and organised employers get together to make a bargain the Government have a responsibility to look after the interests of the people in other sectors of society. They have a responsibility to look after workers in the more vulnerable sectors of the community, old-age pensioners, and so on, and to make sure that their interests are not overlooked when a bargain is struck between other workers and employers.
  1432
  Some of the most articulate and hard-hitting arguments against the prices and incomes policy come from those unions which do very well out of the law of the jungle, those unions which represent key workers who can be withdrawn if there is a dispute and thus bring an operation to a standstill. I can understand that the leaders of such unions see the advantages of not being subjected to the principles of a prices and incomes policy, but I do not think that their views are in keeping with the principles of Socialism or socially responsible government.
  Some will argue that the prices and incomes policy has not yet been fully effective. I suggest that the policy has so far been applied in an unnatural way, because, as my right hon. Friend the First Secretary of State said, it has been used to freeze, as far as she could, increases in incomes. My right hon. Friend has not been altogether successful, especially with prices, but the policy has really been to achieve an overall brake in increases in incomes. I hope that we can move on to the stage at which the policy can be used positively and progressively to achieve a redistribution of incomes and to begin to sort out the jungle of differentials which threaten the whole structure of our economy. We must do something to try to introduce some rationality in this respect.
  One way in which we should all agree the prices and incomes policy has been highly successful, in spite of the special circumstances in which it has been applied, is that of productivity. Here there have been immense steps forward of which the Government can be justly proud.
  My next point relates to the Government's proposals for industrial relations. First, I do not believe that there is any hard evidence of widespread dissatisfaction throughout the country with these policies. It is understandable, and it is right, that trade union leaders who have carried the main responsibility of looking after their workers should be hesitant and suspicious; it would be absurd of them to throw away the hard-won achievements of decades. But there are two aspects of the trade union movement now which we must recognise. First, it is potentially immensely powerful. Second, it does not always manage to gear its activities in

  1433
  such a way that it can effectively use the potential power at its disposal.
  I welcome these proposals in terms of industrial relations because I believe that they are designed to give the trade union movement an opportunity to fulfil a rôle now of genuine partnership within industry. I worry sometimes when I see what seems to be a negative restrictive rôle within trade unionism, an attitude which says that it must somehow accept a second-class status within industry, that its rôle is to beg a bit more from the bosses, to try to win another concession from the bosses.
  It seems to me that the trade unions now, having the experience and the qualifications, are in a position to come into industry and make a positive contribution in terms of the management of industry and look to the wider interests of their workers by seeing that they have a stake in the success of the economy; and, what is more, they have a great deal to offer in this respect.
  When all the arguments have been stripped away, the great opportunity which is offered by the Government's proposal in this connection is one which the trade union movement should seize. There are, naturally, genuine doubts and misgivings about the sanctions proposed. I can understand them. But it is a contradiction in terms to talk about legislation unless one accepts that, ultimately, there must be legal sanctions as a corollary of that legislation. In my view—I say this in all humility—what we have to decide on this front is whether we want legislation or not. If we want legislation to change the situation, to give the unions, as I suggest, a new opportunity as written into the proposals which the First Secretary of State has made, we have to accept that, ultimately, there will have to be sanctions involved. It is clear to anyone who studies what the First Secretary of State has said that, if all the procedures which she has otlined were fulfilled, the sanctions would be most unlikely ever to be applied.
  I congratulate the Chancellor of the Exchequer on a positive and fair Budget in difficult circumstances and on a Budget speech which, in the context of the present situation, managed to spell out a commitment to what I regard, in terms of prices and incomes policy and industrial relations policy, as a positive step forward.
  8.43 p.m.
  Mr. F. A. Burden: I shall not follow the hon. Member for Portsmouth, West (Mr. Judd) very far. At this point, I comment only on what he said at one stage regarding something he had not heard during the debate. He was here only five minutes or so before he got to his feet; so it was not possible for him to hear very much of what had taken place.
  Despite all that has been said, this Budget introduces some swingeing tax increases. In my view, it will not help the balance of payments. The new taxation will be seriously felt over the wide range of articles which have been brought for the first time into the 13¾ per cent. Purchase Tax, including the whole spread of household textiles, piece goods—including wool, cotton and silk—plastic sheeting and man-made fibres. On all these there will be an extra 2s. 9d. in the £ in tax on the wholesale price of every item newly covered by the Purchase Tax.
  To this will be added the effect of the increase in S.E.T., which amounts to an additional 10s. 6d. for every male employee over 18 and 5s. 3d. for boys under that age and for women. With Selective Employment Tax at 37s. 6d. and the present National Health contributions, every male employee over the age of 18, before he is paid his wages, currently costs the sum of £3. With Selective Employment Tax increased by 10s. 6d., that sum will rise to 70s. 6d. There has still to be added to that the contributions arising from the proposed pensions increases, about which the Chancellor has been very backward in giving us any information. Neither wholesalers nor retailers can go on absorbing these constant increases in costs, and the point has now been reached when they must pass them on to their customers.
  We all welcome the proposed increases in pensions and the additional help to the elderly. However, the Chancellor made it clear that it must be paid for and that another £250 million will have to be raised. He must have some idea of how it is to be paid for, and he should have come forward and stated how it was proposed that the country should find the money when he announced the increases.
  The right hon. Gentleman has estimated that only £30 million in taxes will come

  1435
  from the impost on the goods brought into the 13¾ per cent. range. Certainly the housewife will have to pay very much more than that, and it would be interesting to know where the Chancellor got his figures leading him to think that it will bring only £30 million to the Treasury. As a result of these increases, I estimate that the price of all the articles included in this range will rise by between 25 and 25 per cent. when purchased from retail shops. This will affect a great many families.
  Then we must consider the tremendous impact that it will have on hotels. The increase in the Selective Employment Tax and the considerable increase in the cost of all household goods, including blankets, furnishings, bedspreads, table linen and sheets, will cause the cost of hotel accommodation to rise steeply. It must not be forgotten that our hotels are considerable earners of overseas currency as a result of encouraging visitors to this country. If hotel costs go on increasing, foreigners who are thinking of taking a holiday will go to other countries rather than come here.
  The new Purchase Tax arrangements are to come into operation on 27th May. I gather that there are now about 2,000 wholesale traders registered for Purchase Tax purposes in the textile trade. There will have to be a great many increases in the number of Purchase Tax registrations to take account of companies which are dealing in commodities which are not taxed at the moment but will be brought in. The need for Purchase Tax registration or the point of purchase is obvious. Unless there is Purchase Tax registration, a great many firms will have to pay tax on the whole of the merchandise they buy at the time of purchase. They will also have to carry stocks for a considerable period, and they will only get the Purchase Tax back when they release stocks to individual customers.
  This could impose serious financial hardship upon companies that are not registered. They will not be able to borrow the finance for this Purchase Tax at the point of purchase unless they are registered, because of the restrictions on lending. It could bankrupt a considerable number of companies. I wonder whether the Treasury or the Board of Trade thought of that and I wonder what they will do about it.
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  I should like to know about the position of importers. I know that the Chancellor is not greatly concerned about importers, but many importers will now have to get Purchase Tax registration or will have to pay Purchase Tax on all their imports at the point of importation. This again could bring great hardship upon them, especially as they also have to find 50 per cent. deposit on the value of the goods.
  Can the staff of the Inland Revenue cope with the new applications which will be received? Will they be able to vet them before 27th May? What additional staff, even if they are sufficient at this stage, will be required to carry out the inspections that Purchase Tax officers carry out on firms registered for Purchase Tax? Is the staff available? Will it be available? Will there have to be more civil servants to carry out this work?
  The Tories removed Purchase Tax from household textiles and piece goods in the period between 1955 and 1958. The Chancellor said that this was for regional purposes. It was. The textile industry needed a stimulus, and it still needs a stimulus. This Budget will impose hardships on the industry, and there might be considerable unemployment in it. The Conservative Government relieved a great many people who had been paying Purchase Tax on these articles, of their responsibility for paying it. This Government have now restored Purchase Tax on them, and the public will have to pay.
  I promised to be brief so that my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), who has been waiting a long time, can make his contribution. However, I hope that he will bear with me for a little longer.
  In my view, the Government's action in imposing these new taxes on pet foods and on household goods will not reduce imports. It will not release in these areas of manufacture any goods which will expand our share of the markets of the world. I doubt whether increasing the price of pet foods and thus, I presume, endeavouring to cut home consumption on them—heaven knows how that will happen—will help the export trade.
  The deliberate policy of this Government is to increase prices. The Chancellor made this clear in his speech on

  1437
  devaluation when he said that some things have gone better than we expected, some have gone not so well, and prices have not risen as much as we expected.
  It is the essence of hypocrisy for Ministers to talk about taking every possible step to keep prices down while the Chancellor, the Prime Minister and other Ministers know that they really want to increase them and make it impossible for people to have the money to buy the goods that they have been able to afford in the past. It is the deliberate policy of the Government to increase prices, and the general public are now fully alive to this hypocrisy. On the one hand the Chancellor says, "Because we have increased S.E.T. and Purchase Tax it is all the more important for us to keep prices down", when it is clear that the Government want to increase prices.
  There is much more that I could say, but since my hon. Friend the Member for Harrow, West (Mr. John Page) has been waiting patiently and as I have had about 15 minutes in which to speak, I willingly give way to my hon. Friend and hope that the same amount of time will be available to him.
  8.56 p.m.
  Mr. John Page: I am grateful to my hon. Friend the Member for Gillingham (Mr. Burden) for his generosity. This is the third time running that I have been the night watchman, and the strain is bringing a thrombosis nearer.
  Last weekend I thought it would be a good idea to get a little fresh sea air before hearing the turgid Budget; so I went to the constituency of my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), whom I am glad to see in his place, and took a hovercraft trip. However, I could not get away from the Budget. As I looked out of the window I noticed a sign on a cylinder attached to the hovercraft which read, "In emergency throw life raft overboard. Inflation is automatic". Year after year the Government have found themselves in that position, and I fear that the same result will emerge after this Budget.
  I wish briefly to deal with three separate but particular aspects of the Budget, and while on a suitable occasion these matters could be amplified, I will
  1438
  compress my case. First, I was extremely disappointed at there being no mention in the Budget of measures to encourage the personal export scheme for tourists visiting this country.
  The figures of personal export transactions will surprise the House in their starkness. In 1960 there were 41,500 such transactions. By 1966, the last year for which figures are available, the number had dropped to about one-third, to 16,300. This personal export scheme is a way in which tax is remitted on goods purchased and sent, so to speak, in bond to ports and airports for individuals to collect when they leave.
  This scheme is too complicated, and the main reason for the decline in what I am sure the Chancellor agrees is an important, useful and easy way of earning foreign currency is that visitors who wish to buy goods here cannot use them while they are here. A visitor wishing to take advantage of our excellent golf courses may buy a large bag of clubs at Lillywhites but he cannot use them. If they are used, Purchase Tax must be paid. The same applies to other articles, including jewellery.
  The difficulty is that people do not like to be definite about the ports from which they will leave the country. It is difficult for them to know the date and the time when they will be leaving. Furthermore, the PT/40 scheme is costly, and it is difficult for the ordinary shopkeeper to arrange. On another occasion I shall try to put forward a suggestion for a voucher scheme or some other scheme under which people who change currency can get special opportunities to buy, which would be a wonderfully easy way of increasing our foreign currency as invisible exports.
  I would inform the right hon. Gentleman that, by the end of my speech, the suggestions which I shall make may save him in one year a minimum of £312 million. I come now to the £12 million feature which I had expected to see in the Budget. The right hon. Gentleman may remember the debate following the Report of the Public Accounts Committee about fraudulent claims by immigrants for families domiciled abroad. It was worked out on the sample taken that 55 per cent. of claims were fraudulent and that it would cost between £5 and £7

  1439
  million a year for the Exchequer. In total the claims amount to £12 million. Surely the time has come when the Chancellor should take steps to plug this loophole, for this matter causes great annoyance in mixed communities of immigrants and the native population. Unless this hole is stopped up, there will be increasing anger and rancour.
  To turn to the prices and incomes aspect, surprisingly the First Secretary of State appeared yesterday afternoon to give an outline of new legislation on industrial relations, a matter which had no direct bearing on a Budget debate. It obviously was necessary to find an opportunity for the Government's policy to be proclaimed, but it was a strange time and place to pick. Therefore, the last two days have been somewhat of a muddle. One cannot have a debate on industrial relations interposed into a proper Budget debate.
  Hon. Gentlemen opposite and the country at large have tended to throw their hats in the air at the news that the Prices and Incomes Act is not going to be extended at the end of the year. I should like to point out that any reference or direction which is made in December, 1969, will last until December, 1970. The legislation as it stands, without activation of Part II, can carry right through to December, 1970. Any references after 1st January, 1970, can be frozen for four months—not three months, as the right hon. Lady mentioned yesterday. She has a month in which to act, and then there is a further three months' period in which the can report. As from the end of the year under the new situation, anything confirmed in January would mean that the wages would be frozen until then.
  The right hon. Lady will lose power to compel reduction in prices, but she says that she is going to extend or blow out Part II to prevent increases in dividends or to prevent or regulate rent increases. This will make it into quite a big Bill and there will be quite a big debate in the November-December period when it will be brought into force.
  My hon. Friends and my right hon. Friend the Shadow Minister of Labour have never believed that legislation alone will have a magic wand effect on the
  1440
  incidence of unofficial strikes. We have always said that there must be a complete framework, which we produced in our policy statement, "Fair Deal at Work", covering all aspects of industrial relations. It is a pity that the Government, through their own inefficiency, have got themselves into a corner where it is necessary for them to legislate on just one aspect of industrial relations. That legislation will be less effective, and legislation on one aspect will be much more offensive than a carefully thought out and presented Bill covering the whole range of industrial relations.
  The statutory right of every worker to belong to a trade union, one of the points the right hon. Lady raised, has been Conservative policy for many years, but when the Bill is published we shall look very closely to see what provisions there are to protect the individual from difficulties that can arise over a closed shop or union shop.
  Mr. Nicholas Ridley: Does my hon. Friend agree that each individual should have the right to join the trade union of his choice, and not one forced upon him?
  Mr. Page: In tabloid form, I might have gone on to say something like that. When a man is given the privilege that he must be allowed to join a union, the privilege of choice must apply equally, as an obligation on unions, in the context of the closed shop.
  Another aspect is the power to compel an employer to recognise a trade union. This was mentioned in paragraph 57 of the White Paper "In Place of Strife", which says that the C.I.R. can recommend that a particular union in a plant or industry will he recognised provided "it has reasonable support". I believe that it is the sense on this side of the House that "reasonable support" is not enough, and that there should be a majority on a ballot in the bargaining unit or constituency delineated by the C.I.R., in which the workers can vote for which union they wish to represent them, and that it should also be compulsory that the ballot paper should give people the opportunity to vote for no union to represent them.
  Finally, I come to the saving of over £300 million that I mentioned earlier,

  1441
  with the question of unemployment pay for those laid off. I have a worry about the philosophy of this. I believe that many hon. Members opposite wonder exactly what might result from unemployment pay for those who are at present, so to speak, too close to strikers to be eligible for it. Might it not lead to the following situation? Three or more men go on an unconstitutional strike and their colleagues say that they do not support it. They draw unemployment pay and supplementary benefit, have their rent paid and so on, with the result that there is no incentive for them to press for agreement with the management, which is what I think should occur in such strikes.
  I wonder whether what I am about to suggest would be a fair way out. If this unemployment pay is to be given, together with supplementary benefits for the families of those on strike, should not these payments be subject to Income Tax over the whole period, as pensions and family allowances are? If unemployment pay is to be given to individuals for a particular purpose and for a particular time, should not their tax coding over the year be adjusted to take account of the payments?
  Unemployment and supplementary benefits were the subject of a Question to the Treasury on 1st April—a rather strange day—and the reply was that these benefits would produce a yield of several hundreds of millions of pounds. If these new concessions on unemployment pay are being made, there should be a quid pro quo look at the possibility of including such emergency payments in the Income Tax year of those concerned.
  Although this Budget may not appear to hurt as many people as was feared beforehand, as the year goes on the effects of the arrows which will come from so many different directions will really have an impact.
  9.11 p.m.
  Mr. Patrick Jenkin: It is my pleasant task to congratulate the only maiden speaker of this debate—my hon. Friend the Member for Walthamstow, East (Mr. Michael McNair-Wilson). He made a very able and moving speech about the plight of the elderly in his constituency. He comes fresh from a recent election and from contact with the electorate, and therefore
  1442
  he knows what he is talking about. He held the attention of the House—and fully deserved to—with a firm and sympathetic speech. It augurs well both for himself and his constituents, and I for one, and I know the House, look forward to hearing him again.
  The significant thing about the Budget is that the comment which has emerged from the Press in the last two days has become increasingly hostile. Initially, many people outside, and indeed many hon. Members opposite, greeted the Budget almost with relief.
  Mr. Roy Roebuck: Still do.
  Mr. Jenkin: The hon. Gentleman will soon learn. As the impact of the increases in Purchase Tax and in the S.E.T. work through, as there is a recognition of the effect of throwing so much of the burden on to business, as it becomes apparent that the Budget has little relevance to our problems—the problems of exports and import-saving and of investment—I believe that the criticisms will get louder and louder. It is significant that in its considered statement on the Budget the C.B.I. has used very strong language in describing it as damaging, retrograde and incompetent. These are comments from a highly responsible body which the Chancellor should take seriously.
  The right hon. Gentleman has succeeded in getting the worst of all worlds. The public find the Budget lacking in inspiration, with no hope or encouragement—merely one more instalment of higher taxation; while more sophisticated commentators in the Press and in business regard it at best as irrelevant and at worst as a gamble, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) pointed out.
  The reliance which the Chancellor appears to be placing on the money supply makes this Budget "a dangerous gamble", as Mr. Peter Jay said in The Times this morning.
  It is significant that a number of commentators having studied the Budget in some detail are now regarding it as being not beyond the bounds of possibility that it is aimed at an autumn election. It is taken for granted that there will be another package in the autumn. We will have rising consumer expenditure, the end

  1443
  of the import deposit scheme, at least we assume it will be the end of the import deposit scheme; it will be the end of the stringent prices and incomes powers. Perhaps I could insert, in parentheses, that part of the real damage that this policy has done is that the ending of the powers is bound to be a signal for unbridled increases. It looks like being a period of international instability.
  The truth of the matter is that the Chancellor was faced with the unenviable task of grappling with the consequences of his predecessor's disastrous three years of failure. Last year I praised the Chancellor for what I and many others thought a courageous and tough Budget. It has not worked, this is the awful thing. But the only recipe he is able to offer is the same again, the same dose of the same ineffective medicine.
  In his Budget broadcast the Chancellor claimed the virtue of perseverance in the painful policies which he was inflicting upon the nation. Faced with growing hostility from industry, the Press, and the public, the perserverance looks like that of "the boy who stood upon the burning deck". We may find that this is indeed the Casabianca Chancellor. He claimed that he had no alternative, but, of course, he always has the alternative of resignation.
  The burden of the Chancellor's complaint as to why last year's measures failed was that there was too much private consumption, not enough investment. But what is the main burden of his Budget? His two main tax increases, Corporation Tax, with a net increase in a full year of £105 million, and S.E.T. with a £130 million increase, both fall directly on industry. I find it totally incomprehensible that, when he should have blamed consumption for failure in the past year, it should be industry which takes the brunt now—70 per cent. of the new taxation imposed by the Budget. He goes further, and claims for this the virtue that by putting his taxes on to industry it harms consumption least. What else can he mean by saying that this has the least effect on the cost of living?
  Even by his own test of virtue he has chosen diametrically the wrong victim. It is small wonder that industry is suffering from sensations similar to those suffered by those two French Ambassadors of Henry IV of France who, in 1595,
  1444
  when the King finally renounced Protestantism were sent to Rome. They knelt at the Portico of St. Peter's singing the Miserere, and at each verse they were struck a blow with a switch, upon their shoulders. This is the whipping boy with a vengeance.
  He is not only getting the wrong target, but he is aiming in the wrong direction. It is not private consumption which is the difficulty. The real millstone which he has inherited, and with which he is now having to grapple, is the soaring programme of public expenditure. If I may quote a figure to the House to put this into context, between 1964 and 1968 consumer expenditure, private consumption, at constant prices rose by about 8 per cent. Public expenditure, and by that I mean the current expenditure by public authorities on goods and services, at constant prices, rose by 14 per cent.
  Therefore, when the Chancellor seeks to put the blame on private consumption he is wide of the mark. When the National Plan was produced the Government, in the popular version, said that the increase in public expenditure:
  "… of 4¼ per cent. a year … will depend on the achievement of the planned rate of growth by the economy as a whole."
  We all know that the economy grew at a rate far slower than the planned rate; yet in these years, and in 1967 in particular, public expenditure grew very much faster. I have no doubt that we shall hear during the debate the arguments put forward by Professor Hill of East Anglia University in an interesting article in the Westminster Bank Review in February. He has sought to make the case that private consumption is to blame, but even he in his article says this:
  "In retrospect it can be seen that the increases (in public spending) have been too great in relation to the slow growth in national product in the last few years."
  He went on to say:
  "There are obvious dangers in trying to engineer a substantial reallocation of expenditure when national product is growing slowly."
  The case from this side of the House, which has been made again and again, is that not only has public expenditure grown faster than the national product but, because it has led to vastly higher taxation, it has actually been the cause of the failure of the Government to

  1445
  achieve their growth target. There is no mystery about this, there is nothing arcane about the arguments; there is a simple connection. If tax absorbs a higher and higher proportion of the national product, the public are faced with the choice of curtailing their living standards or of cutting their savings. For many people it is almost impossible for them to cut their living standards at short notice; they have a mortgage, rates, household expenses and an accustomed pattern of life which make it impossible, and therefore it is savings that have been cut.
  There is no dispute that since 1965 the savings ratio has fallen steadily. In 1965 it was 8·3 per cent.; 1966, 8·1 per cent.; 1967, 7·2 per cent.; 1968, 6·9 per cent. and, in the last quarter of 1968, 6·5 per cent.
  Two results have stemmed from this. It has led to still higher taxation, because what is not saved has to be taken in tax. Perhaps the most striking figure of this was the Parliamentary Answer given by the Financial Secretary on 21st January to my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) who asked what was the level of new net National Savings in 1968 compared with the last Tory year of Government in 1964. The startling figure was that in 1968 it was £70 million and in 1964 it had been £357 million. New net National Savings had fallen by four-fifths during the period of this Government. If that represents the willingness of the public to lend to the Government, there cannot be much confidence in the Government's policy, and that figure by itself is a veritable slap in the face for the Government's administration. But, of course, since National Savings have been lower, taxation has had to be put up.
  The second argument is that, because taxes have had to be put up, this has cut incentives. Incentives to work, to invest, to innovate, to take risks, have all been blunted as a result of higher taxation. As a result of this, investment, as a proportion of the national product, has fallen each year of the Labour Government's Administration.
  Despite the soaring imports of manufactures, despite the elaborate and expensive system of investment grants, despite all the wise advice of the inspir-
  1446
  ing circus of amateur management consultants with which the Government surround themselves, industry has obstinately refused to be impressed, and investment has fallen in each year. 1968 was a very bad year for investment; the Chancellor in his Budget speech was a little coy about this. He said:
  "For fixed investment as a whole the estimate was a rise of 5·7 per cent., the outturn was somewhat lower."—[OFFICIAL REPORT, 15th Apri, 1969; Vol. 781, c. 999.]
  Had he given the House the figure it might have been rather a shock; it was 1·9 per cent.; exactly one-third of what he estimated last year. Yet this year the growth in the economy was 4 per cent. but investment grew by under 2 per cent.
  This cannot be other than gravely disquieting. It represents not only a failure to increase capacity but a failure to innovate, because often new investment involves technological advance; and as a result we fall further behind in exports and import savings. On the prospects for 1969 he shows repeated optimism. In paragraph 23 of the Financial Statement and Budget Report, 1969–70, he estimates a 6 per cent. increase between the first half of 1969 and the first half of 1970, but he adds a cautious note that this leaves the Budget out of account. I believe that caution is amply justified.
  A number of my hon. Friends made clear that the increase in Corporation Tax to 45 per cent. is bound to have an effect on the propensity of businessmen to invest. It deals a further wicked blow to confidence, and its harmful results will be seen in the months ahead. The Chancellor's misleading defence was
  "At the new rate our Corporation Tax will be in no way out of line with the rates in force in the main trading nations of the world."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1026.]
  He went on to talk about the rate of tax on undistributed profits; but this is an exploded fallacy. It is not the tax on undistributed profits that matters but the tax on total profits, distributed and undistributed. Schedule F tax is as much a tax on the profits of a business as is Corporation Tax and no other country in the world has a withholding tax of 41¼ per cent. on top of the Corporation Tax as we have it of 45 per cent. This is what distinguishes the burden in this country and I put it firmly on record that in my

  1447
  view no other single measure of tax reform will do more to galvanise industry than that we should restore incentive to investment by recasting the Corporation Tax.
  A second burden he has imposed on industry is S.E.T. with a 28 per cent. increase, on top of a 50 per cent. increase last year. That has generated despair in the industries that are affected. Not only does it greatly magnify the burden, but it gives rise to doubts among those who seriously question whether a Tory Government will be able to honour its pledge to get rid of the tax. Many hon. Members were delighted when my right hon. Friend renewed unequivocally yesterday the pledge that this would be part of our tax package. The hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris), who apologised to me for not being with us till the end of the debate, recognised that the only way to do it would be by an added-value tax which would probably he the means of honouring this pledge. He raised the anguished cry that we would be taxing food. I would remind the House that my right ton. Friend publicly, in a major policy speech in Blackpool, made clear that if we introduced an added-value tax—and there is no commitment on that yet—we would be extremely unlikely to tax food. But glory be! What is the S.E.T. if it is not a tax on food?
  Ask any of the Co-operative Members opposite who have spoken in this debate. Ask Lord Sainsbury; ask every small butcher, grocer and candlestick distributor in the country! Ask the wholesalers who have to bear the cost. Ask the transport firms whether the S.E.T. is a tax on food. Of course it is. It is a savage tax on the cost of the distribution of food and this is a new swingeing increase this year. I would ask the House to contemplate that if there were a substitution of added-value tax which exempted food, for S.E.T. which imposes charges on the distribution of food, it may well be that one might actually be able to reduce the amount of tax on food.
  This would be part of a general package involving as well farm policy. If we are to get British agriculture into shape we need to save imports and the Select Committee recognised that imports could be saved if we have a new agricultural policy. This may, of course, represent
  1448
  a small increase in the cost of food but it will be a policy which will be sound and from which the farmers, when they appreciate it, will benefit.
  The House has been intrigued by the Chancellor's defence of S.E.T. The right hon. Gentleman claimed bigger productivity increases in retail distribution; but this is standing the tax on its head. It was introduced with the idea of switching resources to manufacturing because the productivity potential there was higher than it was in services. Now we are told that it will increase productivity in the service industries. This has been the silliest tax of the century, if not beyond. Even sillier has been the Government's twists and turns in their effort to seek economic justification for it.
  The Government have at last exempted the scrap metal and waste paper trade from the tax. What about the textile waste trade, which is in precisely the same case? Indeed, what about investment grants for these? Will exemption follow? I sought an interview with the President of the Board of Trade some time ago, and asked him to receive a deputation. No reply was received and I took the view that the delay was because of the pending Budget. Now that the Budget has been presented, I trust that the right hon. Gentleman accepts that this question is a matter of the utmost importance, as an article in The Times Business news made clear today.
  I turn from industrial to individual taxpayers and I will deal briefly with the disallowance of bank loan interest. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said that this was unsound in principle, and that has been denied by the Government. However, my right hon. Friend was absolutely right. A man's taxable capacity rests on the basis that one taxes the income from his assets and grants allowances for the payments on his liabilities. That is simple, logical and equitable; but the Government are departing from that principle.
  The real point, however, is that this is but one example of a long chain of anti-avoidance devices that stem from practices which are perfectly acceptable when tax is at a reasonable level but which become regarded as avoidance devices because of the unparalleled high rate of tax which we now have.
  Mr. Molloy: Ah.
  Mr. Jenkin: I do not know why that remark should cause the hon. Member for Ealing, North (Mr. Molloy) to say, "Ah". It is obvious. Our taxing statutes are littered with any number of anti-avoidance matters; settlements, covenants, expenses and aggregation, to name a few. They are all aimed at top rate tax payers, but, in fact, they hit people of modest means as well.
  Aggregation is a good example of what I mean. Consider what it means with a minor's income, by the provision which they introduced last year and which came into effect this year. If we assume that a wife is separated from her husband and gets £3 from her husband and £2 for each of two children and she earns £4 at part-time work, she will have an income, of £7. Under the new rates she will pay no tax; that is, until aggregation takes effect. Then she will pay £13 a year or 4s. 8d. a week on that income, which, of course, is miles below the national average income. That is what the Government have done with aggregation.
  I do not get emotional when speaking about tax matters, but when I contemplate this outrageous and callous provision and the consequences that it is having on tens, if not hundreds, of thousands of people who justly claim the sympathy of the House, it is clear that Treasury Ministers have taken leave of their senses. My hon. Friends and I will return to this matter in Committee.
  The Treasury have for long had a hostility towards married women. Its view is unchanged from the days when wives were regarded as their husbands' chattels. For example, a wife must declare her income to her husband, but he is not obliged to tell her his. If a wife pays P.A.Y.E., she may pay more than her share, but any reliefs go back to the husband. Without his agreement, she cannot ask for the reliefs to be apportioned, and even if she claims a separate assessment, that can have no effect on any relief due to the husband based on the date before the claim. It is high time that these. Victorian provisions were changed and that we recognised the modern view of marriage, which is that it is an equal partnership.
  It is no answer to say that the aggregation applies only to Surtax payers. If it is
  1450
  right to give, as we do, a special incentive to wives working at the lower level, it is wholly nonsensical to impose severe disincentives higher up the scale. It is not all that higher up. A man earning £3,500 a year, a modest executive salary and a wife who is a competent secretary earning about £1,500 a year are penalised by the aggregation. I am not talking about the wealthy. These are ordinary, moderate incomes. This is a significant disincentive. My party is pledged to take steps to improve the position of these people. I could give many other examples, but I will not do so now. We shall return to this matter in Committee.
  On Estate Duty, we welcome the changes to the slice system and the relief to be given on the lower levels. There is, however, one question which I hope that even now the Chief Secretary will answer because it has caused great anxiety. What is the position of the widow with a life interest? Is duty to be charged on the death of both husband and wife, or does the widow's relief still stand? Perhaps the right hon. Gentleman will be able to answer that on Monday.
  The Chief Secretary to the Treasury (Mr. John Diamond): The short answer is that the relief remains.
  Mr. Jenkin: I am most grateful. That will be widely welcomed outside the House because there has been anxiety about this matter.
  This is a dead end Budget without hope, without encouragement and without incentive. It is the dying kick of a discredited Administration. In the past, the Socialists scoffed at the "chicory" Budget and the "sweets and ice cream" Budget. My hon. Friend the Member for Harrow, Central (Mr. Grant) described this as "the Kit-e-Kat Budget". He is wrong. It should be described as the "Pal" Budget, because, as every television viewer knows, "Pal" prolongs active life, and that is the object of this Government.
  The Prime Minister hoped to secure the loyalty of his hon. Friends by issuing them with dog licences. Now the Chancellor of the Exchequer asks them to swallow his patent pet foods. But it is no use. Their tails are between their legs, and they have the sullen and whipped look of the defeated, disillusioned and demoralised creatures that they are. It is

  1451
  time that they retired to the kennels from which they should never have come.
  9.37 p.m.
  The Secretary of State for Economic Affairs (Mr. Peter Shore): Before I comment on the speech of the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) and on some of the other speeches which we have heard from the Opposition Front Bench, I should like, as the House would want me to do, to congratulate the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) on what I think we all thought was a very distinguished maiden speech. We liked the style and the subject matter. The hon. Gentleman can sleep well tonight in the knowledge that he has passed his test with flying colours, and we all look forward to hearing from him on other occasions. [HON. MEMBERS: "Hear, hear."]
  I do not intend to follow the hon. Member for Wanstead and Woodford down the highways and byways of tax avoidance and tax evasion. There is no point in pursuing these matters at the moment, because they will be tackled with just that expedition which was demonstrated a moment ago by my right hon. Friend the Chief Secretary when he gets a chance either on Monday or during the discussions on the Finance Bill. I do not think that hon. Members would wish me to take up time on what I would call the small change of the debate.
  What the House is interested in, and I think should be interested in, on the second day of this general Budget debate is the relevance of the Budget and the judgment which we make about it in relation to our central economic problems. Does it help or not? That is the kind of question which we would expect Members on the Opposition Front Bench to address themselves to and which I think my hon. Friends would expect me to take up.
  I was very surprised that the right hon. Member for Enfield, West (Mr. Iain Macleod), the Shadow Chancellor of the Exchequer, in his speech, which set the tone for a number of speeches from the Opposition Front Bench, did not chance his arm on a Budget judgment. That was the one thing that was missing. The right hon. Gentleman did plenty of beef-
  1452
  ing, and he had plenty of complaints about the particular measures that my right hon. Friend announced, but he could not bring himself to risk a judgment on the total impact of what my right hon. Friend had proposed. Last year the right hon. Gentleman suggested that the Chancellor had gone in for an overkill Budget, and his subsequent discovery that he had been wrong perhaps warned him off this time from even making the attempt.
  It is impossible to discuss the Budget proposals without bringing in the economic objectives, because it is only in relation to these objectives that the Budget can be judged. The basic objective of the Budget is to help to achieve a strong economy and to help us to do what is necessary to improve our rate of growth. The overriding priority in order to achieve both those aims is. I think the House accepts, urgent improvement in our balance of payments, and vital to that improvement is a switch of resources, a switch of goods and services from home consumption into exports and into import saving. It is on whether or not the Budget helps or hinders that task that it must above all be judged.
  I think that it does help, and I want to take up, first, the general effect of the Budget on growth. The estimates that accompanied the paper that was issued at the time of the Budget make it clear that the central estimate of growth between the first half of this year and the first half of next year is just on 3 per cent. and that consistent with that growth in the economy is a substantial increase in the goods going into the balance of payments. We are also expecting a considerable increase in investment—I shall have a further word to say about investment in a moment—but it is clear from the forecasts that we are expecting a considerable increase in activity in terms of more goods going into the balance of trade, and in terms of an increase in investment.
  The evidence that we have—and I am thinking not only of the Government's own evidence, but of the forecasts that we have had from the C.B.I. and elsewhere—is that a great deal of our manufacturing capability is at present pretty well near capacity. In many ways there are some surprising elements in this, but much of our industry, and much of the industry from which we expect the

  1453
  greatest contribution to the balance of payments, is working at very near capacity, so we can expect the pressure of demand to continue during the coming year.
  That has its implications for employment. The central estimate of growth is entirely consistent with no deterioration in the employment situation. As the House knows, when the Government consider the question of employment—and we are most anxious, as we always have been, to achieve full employment as soon as we can—we pay more attention to the importance of getting the right regional balance than any other Government have done. Drawing on the experience of the last two years, I think we would all come to the conclusion that just as we can have full employment coupled with substantial and unacceptable unemployment in large regions of the country, so we can have, even with a rather higher level of employment than we would wish, an improvement in the distribution of employment between the regions. I shall not weary the House with figures, but I have one set here which are striking in that they show what we have managed to achieve in the past four years. In the period 1961–64—and 1964 was a good year—the total of industrial development certificates issued, with jobs attached, as it were, in development areas was 155,000. In the following four-year period, 1965–68, the number of I.D.C. approvals issued in respect of jobs and firms in development areas was 267,000, an increase of 72 per cent.
  When hon. Members opposite complain, as they regularly do, about the cost of our regional policies, they should recognise what is represented by those figures. They are part of the results which are well worth paying for. I add only that this increase of 72 per cent. has taken place during a period when, as we hear so often in another context—and we regret it—national growth rates until last year were low. We have made this improvement in regional balance in spite of this difficulty.
  I have never taken the view that regional policy is simply development area policy. It is much more than that. I have always considered that our regional policy must be sensitive to, and become increasingly sensitive to, changes in circumstances and needs in different
  1454
  parts of the country. As the House knows, the Hunt Committee was appointed in 1967 to examine the situation in many areas which were anxious about employment and about their future prospects. I can tell the House now—I was to reply to a Question on this earlier this afternoon, but it was not reached—that the Hunt Committee's report is to be published on 24th April, and I shall be making a statement then. I do not imagine that the House will wish me to say more at the moment about regional policy. We shall continue to give a clear priority to the development areas, the needs of which still are the most pressing, as those who have read the Economic Assessment to 1972 will know.
  I have spoken about the prospects for growth and the pressure of demand during the coming year. Clearly, the big shift of resources into the balance of trade which we need will be the most important concern of all those who have responsibility in the different sectors of the British economy. My right hon. Friend the President of the Board of Trade gave the House an account this afternoon of what was happening in the export trade and of the prospects ahead there. I have nothing to add to that. He dealt also with imports, and I have a few words to say in this connection. Most of those who ask what the Government are doing in this Budget to help exports and import saving should remind themselves that it is not only the Budget and budgetary measures which help to determine export performance.
  Looking back over the last 18 months, what British industry has gained by devaluation on the import side has been equivalent to a 16 to 17 per cent. tariff virtually around all British goods which are competitive with foreign exports to Britain. Our exporters—we may argue about the precise gain net of changes about which we know—have had a cost advantage of about 10 per cent. or, as the C.B.I. would say, 8 per cent. Nevertheless, I do not think that any hon. Member on either side of the House could think of a single measure a Government could introduce in a Budget that could have anything like the same effect, or give the same advantage to industry, as the effects of the change in the parity of the pound. In addition, we

  1455
  have a very strong system of investment incentives for industry.
  Against this background, the unusual growth in world trade last year and the continued strong growth in world trade this year, it is disappointing that imports rose last year to the extent that they did. I certainly hope that during the coming year a greater response to the advantages of the greater competitiveness of the Sterling exchange rate will be shown by British industry, and that we shall be able to win back more of our own market from foreign exporters. This would make a very valuable contribution.
  Mr. Tom Boardman: The right hon. Gentleman started by speaking about aid to investment and exports. What single part of this year's Budget aided either investment or exporters?
  Mr. Shore: I am making the point that the advantages that accrue to exporters and manufacturers do not necessarily come from a single Budget, and I am pointing to the fact that in the past 18 months very great natural advantages have accrued to British exporters and manufacturers as a whole the advantages derived from devaluation on the price and cost side, and the advantages provided by a period of unusual growth in world trade. All I am saying is that the response has been a delayed one, certainly on the import-saving side, and that I very much hope we shall get more of that response during the coming year.
  The Leader of the Opposition asked on Tuesday what the Government were doing about import saving in particular, and he cited agriculture. That was a very odd example for him to choose, because we have just made what every independent observer accepts as about the third most generous award in the farm Price Review for two decades, which is firmly based on the recommendations of the E.D.C. and designed to save up to £160 million a year in food imports by 1972. My right hon. Friend gave other examples today, of aluminium smelters and so on, which will undoubtedly help us on import-saving.
  But the oddest thing about the Leader of the Opposition's complaint about us
  1456
  not doing anything for import substitution is that when he considered the question of savings in public expenditure, as he did on an occasion a few weeks ago, the first item that seemed to come to his mind as a candidate for a cut in Government spending was the Industrial Expansion Act and the I.R.C. This is extraordinary, because it is under the Industrial Expansion Act powers that the aluminium smelters are now being financed. That is an example of Government expenditure directly helping the balance of payments in the way we would want. The work of the I.R.C. is very much geared to helping projects that directly help the balance of payments. To date we have had about 30 mergers with which it has been associated. Some of them, if we consider the industries in which they have taken place—the heavy electrical industry, the motor car industry, electronics, cranes, pumps etc.—are sections of industry of crucial importance to the balance of payments.
  I take up two recent examples. First, the Bowater-Reeds joint acquisition of the Donside paper mill. This was only made possible by I.R.C. action. The market for coated papers is an area where we need to supply more ourselves.
  The second example is the trawling interests of Associated Fisheries and the Ross Group being brought together. That is important because we are heavy importers of fish and fish products.
  Our major aim in the period immediately ahead is to work out with industry much more clearly what it can do and how we can assist it in the central purposes which we have set ourselves.
  We are following up the publication of the economic assessment to 1972 with detailed discussions with the E.D.C. of the five or six major industries involved in this switch of resources exercise. We shall be working with industry in this constructive sphere. The dialogue will begin with the Government suggesting to industry what kind of export or balance of trade improvements are required, working out with it what this implies for increased investment, skilled labour and the other input factors, and then considering together how we can each alter, extend or adapt our policies to help achieve the results that we need.
  The Opposition have funked the central issue on which we should have

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  wished to engage them. They have not risked a statement whether they think the Budget has taken out too much or too little. If they are not prepared to come out and fight on the main battlefield all we can do is to chase them around on these small points of tax avoidance and tax evasion.
  One major point on which the two Front Benches are totally opposed is the crucial importance of private consumption and expenditure. The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) elaborates a philosophy of defeatism about attempts to curtail private expenditure not because he believes it is possible to slow it down along the lines indicated in the Chancellor's strategy, but because he deeply dislikes public expenditure and all that goes with it in terms of welfare and social services with which the Labour Party and this Government are so closely identified.
  To sum up, I repeat the sentiments of my right hon. Friend, that we are half way through a two year period in which the switch of resources into the balance of payments has to take place. We have made progress, we shall continue to make progress, and in our economic policies we shall continue the pursuit of social justice, for which we stand.
  Debate adjourned.—[Mr. Concannon.]
  Debate to be resumed Tomorrow.

  MACCLESFIELD HOSPITAL (MR. DEALL)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Concannon.]
  10. p.m.
  Sir Arthur Vere Harvey: I am obliged to you, Mr. Speaker, for giving me the opportunity of raising the case of a constituent in Macclesfield, Mr. Reginald Deall, who, unfortunately, has been in hospital for several months. In debating this matter I shall refrain from mentioning the names of any doctors or officials because it is better that I do not. I should say at the outset that I have the written permission of Mr. Deall's daughter, Mrs. Harding, to disclose the facts I am about to present to the House.
  Mr. Deall was admitted to Macclesfield Infirmary on 12th or 13th November
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  last for a partial prostate operation. Things appeared to be going very well immediately afterwards, but when he went home, early in December, he still had a pain in his right leg. He was attended by his own doctor, who diagnosed sciatica. The pain became much more severe, and a specialist was called in and, according to his daughter, diagnosed disc trouble. Mr. Deall was then admitted to hospital on about 5th February and given traction treatment when weights of about seven lbs. were put on both this gentleman's legs. He became really much more ill.
  He vomited daily and had a temperature of 103 or 104 degrees for most of the week. According to his relatives he was very confused in his mind. On 21st February the house doctor at the hospital admitted that he did not know what was causing the pain. I have a letter from Mrs. Harding written to the hospital in which she says, I will not say to whom:
  "I would like another opinion on my father's condition immediately. He is a very poorly man and we feel he is being left to slip away. It is a great shock to see how ill my father was tonight, and also to learn through our own doctor that we do not know what really is the matter with my father, especially after your casual manner during the last two interviews. I feel you should have been straightforward with me. I should like the best specialist available to see him tomorrow and I would like to pay privately."
  By this she meant that she was quite prepared to pay any necessary expenses.
  Mr. Deall then had great difficulty in moving his other leg, and complained of pains in the region of his heart. Before I saw Mrs. Harding in my constituency she telephoned my agent, who took it upon himself, after ringing me, to telephone the matron of the hospital, and then something like three or four officials saw Mr. Deall. It was not until the political note came in on this that things really began to move. He then had blood tests, two X-rays and then a more detailed X-ray after an injection of dyestuff.
  On Friday, 28th February, Mrs. Harding spoke to the doctor by telephone who said that it was a kidney infection, resulting in an abcess. The doctor told her that she was making a big fuss over nothing. Mrs. Harding observed that at this time some of the injections, two daily, were not being given to Mr. Deall,

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  by a foreign doctor. I saw Mrs. Harding on the afternoon of Friday, 7th March, in Macclesfield, and having listened to her very carefully for a long time and heard what my agent had to say, I telephoned an official at the hospital.
  His reaction was: "Will you write in a letter?"
  I said that this gentleman was extremely ill and that as it was Friday I should be writing on Monday, and, with the normal procedure, the man might die in the meantime. I said "No, I will telephone you again tomorrow morning before I leave for London, expecting some sort of action." I spoke to him on the Saturday morning and he said, I am sorry to say, that most of the officials were away for the weekend. I do not quarrel with that, but I should have thought that there would have been some response, to give the local Member of Parliament some satisfaction. I did not get it. I returned to London, and on Monday morning I wrote to the Under-Secretary, who, unfortunately, was ill at the time. I did not know of that, and I am sure that the whole House wishes the hon. Member for Lichfield and Tam-worth (Mr. Snow) a complete recovery. We are glad to know that he is making progress. I wrote to him, and sent the letter to the Ministry by hand to make certain that it got there as quickly as possible. I gave full details in the letter as I had been given them by Mrs. Harding, and I have all the statements signed by the daughter, which I am prepared to hand over to the Minister after this discussion.
  Having written to the Minister on 10th March, I got no reply from him, in spite of several telephone calls, until 10th April. The Minister took four-and-a-half weeks to reply in relation to this, in my view, desperate matter. It is not good enough. It has been admitted in Macclesfield by the hospital officials that there was a breakdown in communication. That may well be because hospitals are undermanned and grossly over-worked. Mr. Deall is still in hospital today, but is now making a good recovery and will be out in a matter of days.
  I have had a happy relationship with the Macclesfield hospital during the period of over 24 years in which I have
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  been the Member of Parliament. It is a teaching hospital which has done exceptionally well, and previously I have had no cause to make any sort of complaint whatever. I attach some of the blame to the Ministry. I received a rather flippant letter from Baroness Serota, the Minister of State, in which she answered none of the questions which I put in the letter to the Under-Secretary in the previous month. She wrote that I was quite right to get in touch with the hospital. Of course I was right to do so. I did not need to be told that. I wanted an answer not within four-and-a-half weeks but within a week. Even a telephone call from the private secretary to my office would have allayed my fears in the matter. But the method of the Minister and his staff has been extremely dilatory, to say the least.
  I raise this matter today because steps should be taken in these days when a great many doctors and nurses are leaving this country—the hospital staff are doing the best they can in most difficult circumstances—to ensure that the lines of communication between next-of-kin or near relatives are kept open to give them full data about the state of the health of the individual.
  I should like to ask the Minister why it took nearly five weeks to reply to my letter. Was the case properly investigated? I should like an assurance that this sort of behaviour will not happen again. The staff of these hospitals are grossly overworked, but nevertheless they must be encouraged to try—I do not say "to be more human", for that would be the wrong word in this context—to relieve the feelings and anxieties of those who are closest to the patient.
  10.8 p.m.
  The Under-Secretary of State for the Department of Health and Social Security (Mr. Norman Pentland): I have followed the speech of the hon. Member for Macclesfield (Sir A. V. Harvey) with interest and have taken careful note of the points he has made. If after I sit down this evening he is still concerned in his own mind about some of the points he has raised, I should be prepared to have a further investigation into the matter.
  I appreciate that the hon. Member's motive in raising this case on the Adjournment originally was to ensure that

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  his constituent Mr. Deall was being properly treated in hospital, and that Mr. Deall's daughter, Mrs. Harding, may be reassured of this.
  I have of course obtained an up-to-date report from the specialist who is in charge of Mr. Deall's treatment, but the hon. Member will not expect me to reveal in public all the intimate details of his constituent's treatment: indeed I could not properly do so without Mr. Deall's own consent.
  I will however try to deal in general terms with the complaints which the hon. Member orginally raised in his letter of 10th March addressed to my hon. Friend the Joint Under-Secretary of State and those which he has mentioned tonight. The hon. Member will appreciate that if it had not been for the unfortunate illness of my hon. Friend, he would have been dealing with this matter this evening. I am certain that my hon. Friend will be grateful for the hon. Member's good wishes.
  It is correct that Mr. Deall was admitted to the infirmary branch of Macclesfield Hospital on 11th November, 1968, for an operation. Infection developed after the operation, but gradually cleared up, and he was discharged home early in December. Unfortunately he then developed severe pain in his back and right leg, and had to be readmitted to hospital early in February. This pain responded well to treatment, but the previous infection recurred and towards the end of February pain developed in the left groin and left leg. At this stage Mrs. Harding, the patient's daughter, had two successive interviews with the responsible specialist.
  Sir A. V. Harvey: Would the hon. Gentleman confirm that Mr. Deall was treated for sciatica when he was admitted? Indeed, the weights were hanging on his leg. Was not the diagnosis of infection discovered afterwards?
  Mr. Pentland: I am not certain what precise treatment was involved. As I explained, I am reluctant to develop that aspect of the matter. If the hon. Gentleman is still concerned about even this aspect of the treatment, I will be glad to look into the issue.
  As I was saying, Mrs. Harding, the patient's daughter, had two successive interviews
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  with the responsible specialist, but apparently these did not relieve her anxiety, for on a Saturday morning she and the hon. Gentleman's agent came to see the hospital matron asking how she could obtain a second opinion. The specialist was not available that day, but in his absence the matron did her best to ascertain was was troubling Mrs. Harding, and was left to understand that this would be put in writing. The matron therefore warned the group secretary to expect some kind of written complaint.
  The next thing that happened was that the hon. Gentleman himself telephoned. As the group secretary was away, his deputy took the call. The hon. Gentleman no doubt did his best to explain his constituent's anxiety, but it was still not clear what was really troubling her. When the group secretary returned, he decided, quite rightly, in my view, that the best thing would be to invite the hon. Gentleman and his constituent to a meeting at which the responsible specialist would be present. This meeting was arranged for Thursday, 13th March, and I am sorry that the hon. Gentleman was unable to attend it.
  Sir A. V. Harvey: Is the hon. Gentleman aware that I did not receive any such invitation, that there was no question of my ever seeing the doctors, that I was never invited by them or asked to see them, that I spoke to them on the telephone and that I dealt with the Ministry by letter? Will he check on these matters to clarify the position?
  Mr. Pentland: The information I have, after looking into the matter, is that the hon. Gentleman was invited to attend this meeting.
  Sir A. V. Harvey Sir A. V. Harvey indicated dissent.
  Mr. Pentland: I assure the hon. Gentleman that I will look into the matter.
  I understand that this meeting lasted over three hours and covered the ground very fully. Mrs. Harding repeated her allegation that a nurse had admitted to her that some of Mr. Deall's injections had been missed, but the group secretary assured her that inquiries had found no substance in this allegation. She also complained that a letter addressed to the specialist which she had left on a side table was still there the next evening, although it had been opened. This minor failure of communications was admitted,

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  with a suitable expression of regret. Mrs. Harding also questioned whether her father had been receiving any proper medical treatment and the specialist took pains to reassure her about this.
  At the conclusion of this meeting on 13th March, I understand that Mrs. Harding expressed herself as fully satisfied. The group secretary explained to her the proper channels for lodging any further request or complaint, but I understand that she has not since made any use of these. The hon. Member's agent was informed of this satisfactory outcome, and my noble Friend the Minister of State wrote accordingly to the hon. Member on 10th April. I regret that the Easter Recess prevented despatch of this letter until after the hon. Member had given notice of his intention of raising the case on the Adjournment. But I would point out to the hon. Member that, if he wants a quick answer to a question about a hospital matter, he would do best to write direct to the hospital authority concerned.
  We in the Department do our best to give hon. Members prompt service but inevitably an inquiry fed in at the top takes time to travel down through the regional hospital board to the hospital management committee concerned and back again. As regards the content of the letter, I am sorry the hon. Member should have found this unsatisfactory. I can assure him the aim of my noble Friend was to set out the position as we then knew it and to offer to clear up any points on which the hon. Member might feel doubt still remained.
  In the absence of any further approach to the hospital since 13th March, either by Mrs. Harding or by the hon. Member, or of any reply to the letter, I have had to assume from the hon. Member's speech that he wanted to raise the general question of communication between doctors, nurses and patients.
  Sir A. V. Harvey: At the end of the debate I will hand the hon. Gentleman a letter from Mrs. Harding dated 13th March, after the interview, which will make the point conclusively. The hon. Gentleman talks about the Easter Recess, but surely that was only a few days. A telephone call to Macclesfield Hospital and to my office might have saved the necessity of this debate. I contend still
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  that there has been negligence at this Department.
  Mr. Pentland: I take the point and I will look into this aspect. As I was saying, the question of communication between doctors, nurses and patients is very important. In 1963, my Department circulated a report about it to all hospital authorities for the attention of their medical and nursing staffs, and I have no doubt that most doctors and nurses are now very well aware of their obligation in this respect.
  I will not attempt tonight to summarise the whole of this interesting report, which is obtainable from Her Majesty's Stationery Office. I will only draw attention to the fact that it recommends in paragraph 24 that arrangements for relatives to see the doctor should be precise and made more widely known. I am assured that, in the case we are debating, Mrs. Harding has seen the responsible specialist several times and knows now that if she has any further worries she has only to ask to see him again.
  It might be more helpful if I were to explain to the hon. Member and to the House what are the proper channels for making complaints about hospitals. It not infrequently happens that a member of the public who has been aroused to complain about something that has happened in a hospital approaches an hon. Member without making any attempt to use the ordinary channels. This may well be because the ordinary channels are not sufficiently known, and if so I hope that what I say tonight may help. I am not, of course, suggesting that it is wrong for a member of the public to approach his Member of Parliament with a complaint against a hospital for which he has not been able to obtain redress through the normal channels; he is then quite right to do so. In the present case, Mrs. Harding did try to explain her worries to the responsible specialist but, not having received satisfaction, she evidently did not know what to do next. This I shall now explain.
  What are these normal channels? This depends to some extent on the nature of the complaint. For example, a simple query or complaint about medical diagnosis or treatment would best be put orally in the first instance to the house surgeon or physician, or to the consultant in charge. Similarly a simple query

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  or complaint about nursing would best be put orally to the ward sister. A more complicated complaint, or one to which an adequate answer has not been obtained at the first attempt, might be addressed either orally or in writing, to the matron or to the hospital secretary; or, in more serious cases, in writing to the secretary of the hospital management committee for full investigation. As the House will know, my right hon. Friend the former Minister of Health in 1966 issued a memorandum to all hospital authorities telling them how such complaints, however made, should be handled, and this is regularly followed up.
  What is surprising is how relatively few complaints are in fact made: in 1967 there were fewer than 8,000 written complaints from all the millions of patients who had attended our hospitals during the year. I believe that this reflects the very high opinion which the public
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  generally has of the National Health Service, and that this high opinion is generally well deserved.
  Nevertheless, I and my colleagues in the Department are always willing to give our time to looking into an individual case where something may have gone wrong, and if necessary to put it right. In the case of Mr. Deall, all that was basically wrong, so far as I have been able to discover, was a temporary lack of confidence between his daughter, Mrs. Hardy, and the doctors treating him; but I am assured that this has now been put right, and moreover, in view of the hon. Gentleman's concern, I am glad to be able to tell him that Mr. Deall is now almost fit for discharge and is expected to arrive home at any time.
  Question put and agreed to.
  Adjourned accordingly at twenty-two minutes past Ten o'clock.