Commons Sitting of 3 November 1969

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of Sir Gerald Wills, M.B.E., Member for Bridgwater, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
PRIVATE BUSINESS
  EDINBURGH CORPORATION ORDER CONFIRMATION
  Mr. Secretary Ross presented a Bill to confirm a Provisional Order under Section 8 of the Private Legislation Procedure (Scotland) Act 1936, relating to Edinburgh Corporation (to be proceeded with under Section 9 of the Act) : and the same was read the First time, and ordered to be read a Second time upon Tuesday, 11th November and to be printed. [Bill 10.]

  GOVERNMENT PUBLICATIONS (SUPPLY)
  Sir G. Nabarro: On a point of order, Mr. Speaker. I beg leave to give notice that at the end of Question Time I intend to raise the matter of the grave inconvenience caused to Members by the hodge-podge typewritten sheets with which they have been presented in lieu of an Order Paper.
  Mr. Speaker: Order. I understand that a statement will be made on this.

ORAL ANSWERS TO QUESTIONS
  SOCIAL SERVICES

    Supplementary Benefit
    Mr. William Hamiltonasked the Secretary of State for Social Services when he intends to publish full details concerning the methods of payment of discretionary supplementary benefits.
    The Minister of State, Department of Health and Social Security (Mr. David Ennals): A handbook, giving comprehensive information about the way the Supplementary Benefits Commission exercises its discretion under the Supplementary Benefits scheme, is in an advanced stage of preparation. It is intended to publish it in the first part of 1970.
    Mr. Hamilton: How comprehensive is comprehensive? Will it contain all the information giving the discretionary powers exercised by local officials, so that any recipient might understand what he is entitled to?
    Mr. Ennals: I think that it will give all that sort of information. It is not the "A" code, which includes a great deal of procedural instructions and could only create confusion. It is primarily designed for social workers and those who will advise claimants, so that they may know the basis on which decisions are taken.
    Mr. Fortescue: Does the Minister agree that if the "A" code were published in full it is very possible that there would be increasing abuses of the social security system?
    Mr. Ennals: I would not like to say that. It would create a great deal of confusion, because it is a detailed administrative memorandum. It would be far less helpful than the document we are to publish.

    Pensions
    Mr. Barnettasked the Secretary of State for Social Services if he will make a statement on the effect of his new pension proposals on existing local government pension schemes.
    Mr. Boyd-Carpenterasked the Secretary of State for Social Services if he will lay a White Paper setting out the adjustments in public service pensions which will require to be made on the basis that his proposals for National Insurance changes are implemented.
    The Secretary of State for Social Services (Mr. Richard Crossman): I hope to deal with this subject in a statement to the House on Wednesday, when the White Paper on partial contracting out will be published.
    Mr. Barnett: While recognising that there has been a good deal of misrepresentation of my right hon. Friend's case, may I ask him if he will note that there is genuine and understandable worry on the part of local government officers, and will he at the earliest opportunity make it clear that the pension expectation of local government officers is not in jeopardy?
    Mr. Crossman: In the last three or four weeks I have met a good number of local government officers, inside and outside town halls. On each occasion I have found that most of their fears could be allayed by a quiet talk with them. One of those fears is the one referred to by my hon. Friend. Those fears are unfounded'.
    Mr. Boyd-Carpenter: Will the White Paper or the right hon. Gentleman's statement contain information about the extent to which pension schemes in the public service will, to use the Minister of State's phrase, have to be "cut back" in order to accommodate his scheme?
    Mr. Crossman: In my statement 1 shall hope to deal with public service pensions.
    Lord Balniel: As the right hon. Gentleman must know the abatement figures now, can we have a rough estimate of the proportion of people in private occupational schemes who will have their pensions cut back and find it necessary to leave the schemes?
    Mr. Crossman: That is the kind of point which the noble Lord should put to me on Wednesday.
    Mrs. Ewingasked the Secretary of State for Social whether he will increase the retirement pension to keep up with the cost of living increase.
    Mr. Ennals: As I think the hon. Member knows, this is the Government's purpose in increasing retirement pensions this week.
    Mrs. Ewing: How are the Government able to assess whether the increase will be adequate to the rise in the cost of living, as there is no cost of living index for Scotland, where fuel and food prices are higher? Both commodities are essential for old people. Is the hon. Gentleman aware that old-age pensioners in Scotland do not share his confidence?
    Mr. Ennals: The retail price index covers the whole country, and the intention of the increases this week was to restore the purchasing power of the pension to what it was two years ago. To do that, we would require not 10s. but 9s. 5d. for the individual, and not 16s. but 15s. 3d. for the married couple.
    Mr. William Price: Is my hon. Friend aware that hundreds of thousands of old folk who thought that this week they would get an increase find that they have got only half of it? While we in this House know that they have already had part of it in terms of supplementary benefits, old people do not understand it. In future, cannot the two lots of increases be introduced at the same time?
    Mr. Ennals: We have sought to make it clear that recipients of supplementary benefits received an increase last October. Therefore, they are receiving the second half of the increase, which, in the case of National Insurance recipients, covers a two-year period. To bring it in line with National Insurance benefits we could raise supplementary benefits only every two years, which would be hard on the people concerned. That is why we brought in half the increase last October to deal with the rise in the cost of living up to then.
    Mr. Dean: When the Minister goes on television tonight, will he also mention the increases in contributions?
    Mr. Ennals: Yes, and also the issue on which my hon. Friend the Member for Rugby (Mr. William Price) raises the point about supplementary benefits.
    Mr. Boyd-Carpenterasked the Secretary of State for Social Services whether he will now make a statement

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    as to the result of his discussions with the organisations concerned with pension funds about conditions of abatement under his pensions plan.
    Mr. Croninasked the Secretary of State for Social Services what consideration he has given to representations on occupational pension schemes ; and when he expects to be able to place substantive proposals before the House.
    Mr. Deanasked the Secretary of State for Social Services whether he will now announce the results of his discussion with occupational and public service pension schemes concerning abatement.
    Mr. Crossman: I expect to make a statement on this subject on Wednesday when a White Paper will be published.
    Mr. Boyd-Carpenter: Can the right hon. Gentleman say now whether he gave any assurances to those with whom he had discussions that if abatement proved attractive and a good many schemes were abated out, that would not be used as a reason for tightening up on the terms to protect the finances of the scheme?
    Mr. Crossman: Yes, Sir.
    Mr. Cronin: In view of the widespread misrepresentations on the subject by, among others, right hon. and hon. Gentlemen opposite, will my right hon. Friend make sure that his statement or the White Paper allays once and for all the genuine anxieties of a number of members of existing occupational schemes?
    Mr. Crossman: My hon. Friend had better await the contents of the statement, which I will not anticipate.
    Mr. Dean: Does the right hon. Gentleman realise that the logic of many of his recent arguments on occupational pension schemes means a State monopoly in pensions? Will the White Paper have the agreement of the representatives of occupational pension schemes?
    Mr. Crossman: We must wait for the Write Paper. I would have thought that the statement that I am seeking a State monopoly on pensions was almost the exact opposite of the truth. I am seeking a fruitful partnership between occupational and State pensions.
    Lord Balniel: There is no need to wait until Wednesday to answer the question: "Is it agreed with the representatives of occupational pension schemes?". The answer is "yes" or "no".
    Mr. Crossman: One should try hard, but that is a feeble line for an Opposition Front Bench spokesman.
    Sir G. Nabarroasked the Secretary of State for Social Services what representations he has received from the National Association of Local Government Officers concerning his proposed pension arrangements and reform ; and what reply he has given to the National Association of Local Government Officers concerning its Association's existing occupational pension scheme and its future.
    Mr. Crossman: I would refer the hon. Gentleman to my reply to a similar Question by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) on 20th October.—[Vol. 788. c. 739-41.]
    Sir G. Nabarro: Yes, but that was in the last Session, and anyway it was a rotten answer. Would the right hon. Gentleman now apply himself to this simple proposition? Will he give the House an assurance that after the introduction of his much-vaunted national pension scheme no local government officer will be worse off as a result of the removal of part or the whole of his entitlements under his occupational pension scheme, which has been built up over the last three decades?
    Mr. Crossman: I have repeatedly said that there is no question of removing existing rights. As for the rest of the question, the hon. Gentleman had better wait until Wednesday.
    Mr. Fortescueasked the Secretary of State for Social Services why he proposes in his new pension scheme to pay more from the Exchequer to those who earn more than those who earn less.
    Mr. Ennals: No such proposal has been made.
    Mr. Fortescue: Does it not state in the White Paper on the national superannuation scheme that the Exchequer contribution to the pension scheme will remain at 18 per cent.? Since the rich,

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    the higher paid, are to receive higher pensions than the lower paid, is it not self-evident that the Exchequer contribution to their pension will be higher than the same contribution to the poor?
    Mr. Ennals: By no means. Those who pay higher contributions will get more in benefits. They will be contributing to their own higher level of pension provision. The situation will be almost the reverse of what the hon. Gentleman states, because one of the cases for an Exchequer contribution to the new scheme roughly on the same proportion as the present scheme is the redistributive element by which lower paid workers will get a higher proportion of their earnings as pension than higher paid workers.
    Mr. Hastingsasked the Secretary of State for Social Services what consultations he has held with trade unions and other bodies representing employees in occupational pension schemes regarding his proposed national superannuation scheme.
    Mr. Crossman: My main channel of consultation with employees' representatives has been the T.U.C. Meetings have also been held with representatives of the National Association of Local Government Officers and the National Federation of Professional Workers.
    Mr. Hastings: If we are right in assuming from the right hon. Gentleman's Answers this afternoon that he has not got agreement from the representative bodies to his scheme, does this not indicate that they have resisted his proposals very strongly, and will he force, or has he already forced, them to accept them against their will?
    Mr. Crossman: I am not sure that there is any relationship between the supplementary and the original Question.
    Mr. Lane: In preparing his statement for Wednesday, will the right hon. Gentleman bear in mind that, in addition to local government officers, there is great and genuine anxiety among the police and firemen and that it is urgently necessary to reassure these people, in particular, concerning their future prospects?
    Mr. Crossman: I am grateful to the hon. Gentleman for that suggestion, to
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    which I had given some thought before it was made.
    Mr. Leslie Huckfield: May I ask my right hon. Friend whether his statement on Wednesday will include specific reference to the representations that he has received from the National Association of Local Government Officers?
    Mr. Crossman: I think that we had better await the actual text of the statement. If my hon. Friend wishes to put such points to me, no doubt, if he catches your eye, Mr. Speaker, he will be able to do so.
    Mr. Fortescueasked the Secretary of State for Social Services what research he intends to undertake to establish whether or not benefit in return for contributions is what the people of Great Britain desire.
    Mr. Crossman: I do not consider that any such research is necessary.
    Mr. Fortescue: The right hon. Gentleman is bringing forward a superannuation scheme so complicated that nobody will understand it, which will entail the keeping of individual records for over 40 years in many cases, and in which no worker will know the amount of his pension until the day that he draws it. Does the right hon. Gentleman feel no obligation to discover whether the people of this country would like a simpler scheme which would lead to an adequate flat-rate pension for everybody within the foreseeable future?
    Mr. Crossman: With respect to the hon. Gentleman, no one can foresee what the flat-rate level will be before it materialises. As for the question of earnings relation, I do not think that any more research is necessary because of the pioneer work done by the private occupational pension schemes.I am surprised that this Question comes from the Opposition. Everybody has been telling me of the virtues of earnings relation, and that, surely, is undisputed between the two sides.
    Lord Balniel: Is the right hon. Gentleman aware that, whatever he says on Wednesday, if it appears to us that the scheme is designed to, and will, harm occupational pensions schemes we, when

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    we return to office, will alter it to encourage occupational pension schemes?
    Mr. Crossman: I am aware that the Opposition Front Bench, perhaps wisely, has decided to wait month after month before making up its mind and may conceivably make up its mind on Wednesday afternoon.
    Mr. Wyattasked the Secretary of State for Social Services whether he will discontinue the payment of weekly 6d. pensions in cases where the recipient is in receipt of no other pensions.
    Mr. Ennals: There is a clear obligation to pay the benefits earned by the contributions to the graduated scheme. Graduated pensions of 3s. or less a week are commuted if it is clear that there is no prospective title to a flat-rate retirement pension with which they could be paid. Where, as an interim measure, 6d. pensions have to be paid by themselves pending eventual title to a larger pension they are paid monthly, as I explained in answer to the hon. Member's Question on 20th October.—[Vol. 788, c. 152.]
    Mr. Wyatt: Does my hon. Friend realise that many of the 2,000 people whose only pension is 6d. a week think that the Government are playing an elaborate practical joke on them? As it would cost only £200 a year to raise the minimum pension to 2s., would it not be better to do that? Would it not la:, less derisory and also make the expenditure of 9s. a year for issuing each 6d. pension more worth while in terms of administration?
    Mr. Ennals: My hon. Friend should make his criticisms to the right hon. Gentleman who introduced what he calls a practical joke and what I call a swindle.

    Supplementary Benefits (Investigating Officers)
    Mr. Gresham Cookeasked the Secretary of State for Social Services whether, in order to check abuses of supplementary benefits, he will now appoint an investigating officer to examine possible cases of fraud in each of the 400 offices where supplementary benefits are paid out.
    Mr. Gresham Cookeasked the Secretary of State for Social Services
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    how many of the supplementary benefit offices have special investigating officers attached.
    Mr. Ennals: Arrangements to check abuse, including inquiries into suspected fraud, are an important part of the normal work of every local office. Cases of special difficulty are referred to investigators who work under the control of the regional offices. There would be no justification for a special investigator in every local office, but the numbers of these investigators have been substantially increased.
    Mr. Gresham Cooke: In view of the growing evidence of fraudulent claims produced to hon. Members and the Press, is this not a sign of a mounting public scandal for which the Government are responsible? Should there not now be provided an investigating officer, with experience, attached to every one of these 400 offices?
    Mr. Ennals: I do not think it is true that there is growing evidence. It is certainly true that certain organs of the Press have taken up this subject and picked upon particular cases that may have given a very wrong impression. The hon. Gentleman refers to the Press ; he released a letter to the Press which he had received a short time ago. From what I read in the Press I would not have known that the man concerned was disabled, which may very much change the circumstances. The Government are very vigilant in these matters and take increasing care to see that those who seek to exploit our State provisions are brought to book.
    Mr. Maclennan: Can my hon. Friend say whether the instructions given by my right hon. Friend the Member for Lanarkshire, North (Miss Herbison), when she was Minister, to the Supplementary Benefits Commission in, I think, July, 1968, still operate, because they represented a considerable stiffening of the investigation procedure?
    Mr. Ennals: I am grateful to my hon. Friend. This was a very important step forward introduced by my right hon. Friend. It took effect from last October when single men aged 45 and under in areas where there was employment were told that they could have benefit for up to four weeks but that they were then

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    expected to find work. It is interesting that since October there has been a total of 80,000 young people who have been put on this basis with outstanding success. This is one of a number of ways in which my Department is dealing with this question.
    Mr. Dean: Would the hon. Gentleman agree that in so far as there is abuse it does damage the social services and could well mean that innocent people suffer in that they do not get the benefit required? Can he say how many special investigators there are so that the public can be reassured that wherever there is a case of abuse it is dealt with promptly?
    Mr. Ennals: I have to point out that the special investigators are not the only people dealing with allegations of fraud. They are for very special cases requiring special examination. There is now a complement of 206. There are still a few vacancies. We have not gone up to the full 206. We have to remember that these allegations, particularly when publicly made, reflect discredit upon the system. Therefore, it is most important that we should recognise not only that authority is concerned with this and handling it but that these cases are a very small minority indeed and that the vast proportion of our resources is given to those in genuine need—the old, the sick, the disabled, the deserted family.

    Seebohm Committee's Report
    Mr. Moonmanasked the Secretary of State for Social Services whether he has now received all the evidence he requires on which to make a statement on the implementation of the Seebohm Committee Report.
    Mr. Crossman: Not quite yet. I would refer my hon. Friend to what was said by my right hon. Friend the Prime Minister on 28th October about the Government's intention to legislate on matters arising out of this Report.—[Vol. 790, c. 31-3.]
    Mr. Moonman: I am sure that my right hon. Friend will appreciate that there was great excitement when the initial announcement was made in the Queen's Speech. Will he now say, very briefly, which Government Department will be responsible for co-ordinating and
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    operating the service as presented by Seebohm? This is a simple but nevertheless essential question.
    Mr. Crossman: That is a matter for later consideration. The Prime Minister explained how the Home Secretary and I, jointly, would conduct the Bill through the House.

    Family Allowances
    Mr. Oakesasked the Secretary of State for Social Services if he will seek to amend the family allowance regulations so that young persons serving in the Voluntary Service Overseas Scheme are treated as receiving full-time education or as low-earning apprentices.
    Mr. Ennals: Family allowances are a benefit for dependent children. Young people working for Voluntary Service Overseas or other bodies in the British Volunteer Programme would not normally qualify. The circumstances of the young lady whose case my hon. Friend recently raised with me are rather unusual and steps are being taken to arrange for a formal decision to be given on her mother's family allowances entitlement.
    Mr. Oakes: Yes. But is my hon. Friend aware that if a young person is in full-time education or is in a low-earning apprenticeship, he is qualified to come within the family allowance regulations, whereas a young person doing this valuable voluntary service overseas falls between two stools?
    Mr. Ennals: This is true. The family allowance is intended for dependent children, and this includes those who are either apprentices or in full-time education. The circumstances concerning voluntary service overseas are different. In the vast majority of cases those taking part in voluntary service overseas are serving overseas, where family allowances are not available. But, as I have said, I will look into the case to which my hon. Friend referred.
    Mr. Roseasked the Secretary of State for Social Services whether, in view of the confusion surrounding means-tested benefits, especially among low-paid workers, he will take further action to increase family allowances.
    Mr. Ennals: We have at present no plans to increase family allowances.
    Mr. Rose: Would not my hon. Friend agree that a combination of increased allowances and claw-back under income tax is the best, most selective way of helping those most in need? Will lie keep this under constant review, and bear in mind the great difficulty that many people have in dealing with the problem of supplementary benefits?
    Mr. Ennals: I entirely share my hon. Friend's view. I think that the decision nol: only to increase family allowances—and there was the increase last year of 10s.—but also to do so by claw-back, and therefore to ensure that it went to those who need it, was a considerable step forward, which I notice the Leader of the Opposition, in an article in the Sunday Times, seemed not to realise had happened.
    Mr. Fortescue: Has the Minister given any consideration to the possibility of abolishing family allowances and replacing them with a negative income tax system?
    Mr. Ennals: This subject has been under review, but the arguments against are very powerful, and I can tell the hon. Gentleman that there is no such intention.
    Mr. Barnes: Does my hon. Friend agree that as the Chancellor is not prepared to extend the claw-back to the whole family allowance, and that as there is widespread, if ill-informed, prejudice against family allowances, there is a case for starting a study of the way family allowances should go in the future, along the lines mentioned by the hon. Member for Liverpool, Garston (Mr. Fortescue)?
    Mr. Ennals: As I told the hon. Gentleman, this is a subject at which we have been looking from the point of view of negative income tax, but I think that the family allowance approach is the most effective means that we have of directly bringing help to those families with a considerable number of children where there is a small income. On the claw-back technique, I do not believe that there is now as much misunderstanding as there was. I think that on the whole families have come to accept the advantage of the decision that we took last year.

    Non-industrially Disabled Persons (Aid)
    Mr. St. John-Stevasasked the Secretary of State for Social Services whether he will make a statement on the provision of aid for the non-industrially disabled.
    Mr. Ennals: The Government's proposals for earnings-related sickness benefit and invalidity pension and for an attendance allowance for the very severely disabled were set out in the White Paper published last July (Cmnd. 4124). For further details, I would ask the hon. Member to await the forthcoming Bill announced in the Queen's Speech.
    Mr. St. John-Stevas: Is not the immediate and pressing need the provision of an allowance for the non-industrially disabled equivalent to the present retirement pension?
    Mr. Ennals: This is a very important decision that we have taken to introduce this attendance allowance. It recognises that there is a need which our present social security provisions do not meet. The allowance when it comes into operation, and when it is presented in the Bill, will be seen as a very considerable step forward in the way in which our society accepts responsibility for the disabled people who are neither war disabled nor industrially injured.
    Mr. Dean: Does not the hon. Gentleman recognise that the proposed allowance will help only a very tiny proportion of the civilian disabled?
    Mr. Ennals: It will not help all those who are disabled, because this is an enormous job. It will be limited to those who are very severely disabled on whose families the responsibility for looking atfer them is heaviest.

    National Health and Welfare Services (Charges)
    Mr. Ormeasked the Secretary of State for Social Services what plans his Department has for abolishing the charges for welfare foods, such as milk and orange juice.
    The Joint Under-Secretary of State for Health and Social Security (Dr. John Dunwoody): None, Sir.
    Mr. Orme: I know that my hon. Friend feels very strongly about this matter, and I was hoping to hear from him that some funds might be available so that it could be reviewed. In the very young age group, particularly in constituencies like mine, there is a great deal of distress, and I ask my hon. Friend to look urgently at the matter again.
    Dr. Dunwoody: There has not been any increase in charges for welfare foods since 1961, with the exception of the price of welfare milk, which went up from 4d. to 6d. a pint last year. The increase in the price of welfare milk did not have any significant effect on the up-take. If new evidence comes before us we shall look at it, but at the moment I do not think that there is anything further that I can usefully say.
    Mr. Manuel: Can my hon. Friend say why he has changed his mind? I ask my hon. Friend to look not into the crystal ball but into the past before he gives his answer.
    Dr. Dunwoody: I do not think that I want to go into the past too much. Welfare food is not an issue on which I have ever felt particularly strongly. I do not support that view.

    Health and Welfare Services (Voluntary Help)
    Mr. Cordleasked the Secretary of State for Social Services what study his Department has made of the role of voluntary help in the provision of health and welfare services.
    Mr. John Dunwoody: We have recently been able to assist a voluntary body in mounting a study of great interest to the statutory services and hope increasingly to be able to help others who wish to undertake research of value to the services.
    Mr. Cordle: Is it not clear that increasingly we shall have to fall back on calls for more voluntary effort if we are to solve the social problems which now confront us? While the Seebohm Report is being dealt with will the hon. Gentleman bear that fact in mind?
    Dr. Dunwoody: Rather than using the words "fall back on voluntary effort "I would prefer to say that there is a large
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    and so on, should we not mention our viding a great deal of help to the community. It is in this area that very much more work can be done. My Department will be happy to help any voluntary body which is trying to do this.

    War Disability Pensions
    Mr. Waddingtonasked the Secretary of State for Social Services if he will seek to amend the regulations governing the grant of war disability pensions so as to remove from a claimant any onus of proving the claim which at present rests upon him in a case where relevant documents which could throw light on the claim are lost by a Government Department.
    Mr. Ennals: No, Sir. There is no onus on the claimant unless his claim is made more than seven years after his service ended. Even then, he is given the benefit of any reasonable doubt, and there is provision for accepting reliable corroborative evidence where documents have been lost.
    Mr. Waddington: In the case that I have brought to the attention of the Ministry one cannot exclude the possibility that the service records—had they not been lost—would have established Mr. Cain's right to a pension? That being so, will my hon. Friend look into the matter again and reconsider the possibility of seeing that justice is done to this man and that the regulations are amended?
    Mr. Ennals: As my hon. Friend knows, the question to which he now refers was not only carefully considered within my Department but was referred to the Parliamentary Commissioner, who investigated the case with the care that he always shows and found no evidence on which to criticise the way in which my Department does its work.

    Old-Age Pensioners (Television Licence)
    Mr. George Jegerasked the Secretary of State for Social Services what allowance is made by his local officials to old-age pensioners living alone to assist in the payment of the television licence.
    The Joint Under-Secretary of State for Health and Social Security (Mr. Brian O'Malley): As was explained to my hon.

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    Friend the Member for Cleveland (Mr. Tinn) on 3rd March, the cost of television licences is included in the index to retail prices, which is taken into account in determining supplementary benefit scale rates. As my hon. Friend will know, these scale rates are being increased this week.—[Vol. 779, c. 14-15.]
    Mr. Jeger: Will my hon. Friend consider the fact that my right hon. Friend the Minister of Posts and Telecommunications told me on 16th October that in making supplementary payments the actual cost of a television licence for pensioners living alone is taken into account? That is completely different from the reply that my hon. Friend has just given me. Will he re-establish communications with the Minister of Posts and Telecommunications, which appear to have broken down?
    Mr. O'Malley: With respect, if my hon. Friend will look again at my reply he will see that there is no inconsistency between what I have said and what my right hon. Friend said. I would remind him that the real value of the new scale rates is about 24 per cent. higher than the rates in force in October, 1964.
    Mr. Tinn: Does not my hon. Friend recognise that in the public mind and in the mind of the pensioner who has not been fortunate enough to obtain a certain category of local authority accommodation for pensioners there is very bitter feeling about the fact that those who have such accommodation have gained a privilege which that individual is not conscious of receiving himself? Cannot my hon. Friend, in consultation with the Post Office, do something to remedy this anomaly?
    Mr. O'Malley: The concession to which my hon. Friend refers is a matter for my right hon. Friend the Minister of Posts and Telecommunications. However, I must remind my hon. Friend once again. The rates of supplementary benefit have risen considerably to cover precisely this kind of item since this Government took over.
    Mr. Pardoe: Could we be told whether the amount which is taken into account in regard to television licences on the supplementary benefit scale is the one shilling which is paid by old-age
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    pensioners who live in local authority homes as opposed to the full rate paid by old-age pensioners in private homes? Will the hon. Gentleman hold discussions with his right hon. Friend the Minister of Posts and Telegraphs to iron out those anomalies?
    Mr. O'Malley: The hon. Member must bear in mind that the rise in supplementary benefits in recent years has taken us far beyond the position of providing merely subsistence income. It is not possible to break down the payments into component parts, since people's spending habits vary widely.

  HOSPITALS

    Nurses (Meal Allowance)
    Mr. William Hamiltonasked the Secretary of State for Social Services what further representations he has had in the last month concerning the inadequacy of the meal allowance of £48 per annum payable to nurses, in view of the fact that it is regarded as taxable income.
    Mr. Crossman: None, Sir.
    Mr. Hamilton: Is my right hon. Friend aware that that is very surprising? Does not he find it intolerable that the militancy of people like dustmen, firemen and coal miners can obtain for them far in excess of the 31 per cent. laid down by the Government in their incomes policy, but because the nurses cannot or will not exercise that kind of militancy they must be kept strictly within the 31 per cent. Will he give an assurance that he is urgently reconsidering this matter?
    Mr. Crossman: That is a very different question. I was asked about the £48 increase made with regard to a specific complaint by the young student nurses, a complaint which was met and that was appreciated. A new wage claim is being initiated. I am glad that the nurses are responsibly working for a claim which is expected to be announced in February, rather than rushing into violent action.
    Sir J. Langford-Holt: Has the right hon. Gentleman noticed that this amount is very similar to the untaxable 3s. a day allowed to any typist? What plans has he for ending what is probably regarded as the unfairest anomaly of all?
    Mr. Crossman: I do not agree. This was a specific extra amount of money that it was felt student nurses needed for their special meals allowance. This does not apply to typists.
    Mr. Hamilton: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of those answers, I beg to give notice that I will raise this matter on the Adjournment.
    Sir G. Nabarroasked the Secretary of State for Social Services in what form and when the new meal allowances at £48 per annum are to be paid to nurses, and whether on a daily, weekly, monthly, or annual basis in cash, or in kind, by vouchers or otherwise ; and whether he will make a statement.
    Mr. Crossman: This allowance is already being paid to the appropriate nurses where meals are paid for as taken. It is paid in cash, monthly or weekly according to local pay arrangements.
    Sir G. Nabarro: Is the right hon. Gentleman aware that any woman obtaining a job in an establishment which does not have a canteen and who has, in lieu of a canteen meal, a luncheon voucher obtains the voucher free of tax at a maximum rate of 3s. per day? Would he not agree to concede the same point to student nurses, to afford them at least parity with all other occupations of a roughly equivalent kind?
    Mr. Crossman: I would not take that assumption of equivalent occupations altogether for granted. The reason why vouchers were not given was that the Whitley Council agreed to a cash payment, because vouchers would have been more difficult to absorb into the basic pay in due course as is intended.
    Mr. William Hamilton: Is my right hon. Friend aware that last week a Treasury Minister admitted that there was an anomaly in this situation? Since my right hon. Friend has a responsibility to protect the nurses, will he say what representations he has made to the Treasury to remove the anomaly?
    Mr. Crossman: If my hon. Friend would read the second part of my answer to the previous Question he will find that I have answered him, too.
    Sir G. Nabarro: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I will seek to raise this matter on the Adjournment at the earliest opportunity.

    Psychiatric Hospitals Warley and Runwell (Staff-Patient Ratios)
    Mr. Moonmanasked the Secretary of State for Social Services if he is aware that the medical staff to patient ratios in the Warley and Runwell psychiatric hospitals in Essex are 1·08 and 1·76 respectively, compared to Oxford where it is 2·75 ; and what plans he has to rectify this position.
    Dr. John Dunwoody: Yes, Sir. These are the ratios per hundred in-patients. The national average is 1·49. The ratio of medical staff to in-patients is not a reliable indicator of the standard of psychiatric hospital care.
    Mr. Moonman: Would my hon. Friend not agree that a common theme of the reports and inquiries on the mental health service is the highlighting of the importance of the staff-patient ratio? I repeat, therefore, what sort of help and advice can he give to these two very fine hospitals, which, I maintain, are still under-staffed?
    Dr. Dunwoody: I accept what my hon. Friend says, but he must remember that certain psychiatric forms of treatment require a very much higher number of skilled medical staff than do other sorts. This explains some of the differences. In this case the management committee has applied to the board to appoint further medical staff. This is under consideration and if the board proposes this to my Department, we will consider it very seriously.

    Road Accident Victims, South Hampshire (Neurological Services)
    Mr. Juddasked the Secretary of State for Social Services whether he will make a statement on the neurological services available for road accident victims in Southern Hampshire suffering from severe head injuries.
    Dr. John Dunwoody: The neurological and neurosurgery centre providing specialist treatment for this area is at

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    Southampton General Hospital. Neurological and neurosurgical services are available to all major accident and emergency departments.
    Mr. Judd: While thanking my hon. Friend for that reply, may I ask whether he is aware that there are no services whatsoever in the City of Portsmouth and that there is widespread concern in Southern Hampshire at the long distances in overcrowded traffic conditions that critical cases may have to travel before appropriate treatment becomes available?
    Dr. Dunwoody: There is a major accident and emergency department at the Royal Portsmouth Hospital. As my hon. Friend will realise, it just is not practicable, nor in the interests of medical efficiency, to provide neurosurgical units more frequently than at somewhat greater distances than major accident centres. In our view, the arrangements for this area provide an adequate service to the general public.

    Pharmacists
    Mr. Juddasked the Secretary of State for Social Services what has been the official establishment of hospital pharmacists in each of the past five years; what has been the actual strength in the same years; and what are the estimates for the current year.
    Dr. John Dunwoody: The information is not available. Individual hospital authorities have staffing complements for hospital pharmacists but these are not fixed centrally.
    Mr. Judd: Does my hon. Friend agree that the shortage has been adversely affecting the efficiency of the hospital service and that it is highly distressing that a career in the sale of cosmetics should be more attractive to a qualified pharmacist than a career in the essential hospital service?
    Dr. Dunwoody: I agree that there are real problem in this sphere. As my hon. Friend probably knows, a working party, under the chairmanship of Sir Noel Hall, is looking into the whole matter and it is expected to report early next year. I think we should wait for its report.
    Miss Quennell: It the figures for these essential professional people are not
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    available centrally to the hon. Gentleman's Department, how can that Department tell whether the services are likely to break down or not?
    Dr. Dunwoody: We are in contact with the departments in different parts of the country through the regional hospital boards, but the individual hospital authorities should, quite rightly, be given a degree of freedom in the staffing of these units. This is the position today.
    Mr. Maurice Macmillan: Does the hon. Gentleman really mean that he does not know how short of pharmacists any hospital or group of hospitals is? Surely he ought to know that, and know what to do about it.
    Dr. Dunwoody: I did not say that. We do know. I said that we do not carry all the information for the whole country, but we know of particular problems in particular areas through our contacts at regional hospital board level.

    Mentally Handicapped Persons (Visits and Outings)
    Mr. Michael McNair-Wilsonasked the Secretary of State for Social Services whether he will take action to encourage contacts such as visits and outings between the community and hospitals for the mentally handicapped.
    Dr. John Dunwoody: Most certainly. The many individuals and members of local and voluntary organisations who already help in this way perform a most valuable service for these patients.
    Mr. McNair-Wilson: Does the hon. Gentleman agree that more should be done to encourage the families of mentally handicapped patients to visit those patients in hospital because of the known beneficial effect of such visits? In particular, should not the parents of mentally handicapped children consider taking children back into the family circle, rather than leaving them in hospital.
    Dr. Dunwoody: Where it is possible for children to leave hospital, we want them to do so. I agree that we should do all that we can. We do a great deal to encourage families to visit their relations in hospital. We want to throw the doors of these hospitals open to the public as a whole. I think that in this

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    connection hon. Members on both sides of the House could probably fulfil a useful function in their own areas.

    Mental Hospitals
    Mr. Cordleasked the Secretary of State for Social Services what consultations he has had concerning the condition of mental hospitals in this country ; and if he will make a statement.
    Mr. Crossman: I have discussed many aspects of this subject with representatives of hospital authorities and staff and with other bodies and individuals.
    Mr. Cordle: Can the Minister say whether or not arrangements can be made for more voluntary services to be taken up in this field, especially in respect of mental homes, which are now making a valuable contribution?
    Mr. Crossman: Yes, but I would add that whenever I go round the country I am struck by the extent of the existing voluntary organisations and the invaluable work that they are doing. Everything that the Ministry is doing has the object of trying to make it easier for them and to make easier the access to hospitals through the appointment of organisers, which is important, and on which we have recently advised hospitals.
    Mr. Leslie Huckfield: In view of the increasing evidence of more efficient methods of treating many categories of mental patient now being adopted in smaller hospitals, can my right hon. Friend say whether in the near future he will be able to make a statement showing that he has given serious consideration to this policy?
    Mr. Crossman: I am not quite sure to what policy my hon. Friend refers. In psychiatric hospitals—to which I think he is referring there has been a tremendous break-through in the last four or five years, and all the new methods are being used. Unfortunately, in hospitals for subnormality there is much less availability of treatment at present and I hope that more medical attention will be given to this so that more progress can be made in that area.
    Lord Balniel: I agree with the right hon. Gentleman about subnormality, but is he aware that his own departmental projections until 1972/73 showed that
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    only 4·7 per cent. of all capital building project starts during that time was being devoted to subnormality hospitals? Will he increase this proportion?
    Mr. Crossman: I am seriously considering this and I hope in the new year to publish a fully considered statement on the whole treatment of the subnormality problem. I cannot commit myself before that. I take the view that part of the solution is to be found in a great expansion of community services outside hospitals. It is the right balance between the spending inside and outside which is important. I do not want to rush people into building new subnormality hospitals when they may not be the right solution.

  HEALTH

    National Health and Welfare Services (Charges)
    Mr. Frank Allaunasked the Secretary of State for Social Services if, in view of the high administrative costs in checking claims for free prescriptions, the difficulties facing the low-paid worker as shown by the survey of post offices in the Greater Manchester area, and the minimal revenue the charges have yielded, he will abolish these charges.
    Dr. John Dunwoody: No, Sir. I will send my hon. Friend a copy of my letter to my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) about the availability of leaflets in post offices in Manchester.
    Mr. Allaun: Does my hon. Friend now regard these prescription charges as temporary? If so, how temporary? Since 87 out of 203 post offices in that typical area of Greater Manchester could not produce the correct forms for low-paid workers, is not this an additional argument for abolishing the charges, as the Labour Party conference has twice asked?
    Dr. Dunwoody: I am informed that the Post Office inquiries in the Manchester area and subsequently throughout the North-West Region revealed no case in which the postmaster did not know of the forms in question and their use, nor any instance of those forms not being available. I do not think that I can look

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    into the glass bowl and foretell the future at this stage.
    Sir T. Beamish: Will not the hon. Gentleman answer the first part of the supplementary question put to him by the hon. Member for Salford, East (Mr. Frank Allaun)? Is the imposition of these charges a temporary measure? If so, for how long will they be imposed?
    Dr. Dunwoody: Perhaps the hon. and gallant Gentleman did not hear what I said in reply to my hon. Friend. I said that I could not look into the future in that way.

    Immigrant Births
    Mrs. Renée Shortasked the Secretary of State for Social Services if he will publish the figures relating to immigrant births in his next quarterly return.
    Dr. John Dunwoody: The Registrar General informs me that he intends to publish some figures at the first opportunity but that information may not be available in time for his next Quarterly Return.
    Mrs. Short: As research indicates that in the West Midlands at least the birthrate among immigrant families is falling, is it not essential to publish this information and so spike the guns of these who would use it to stir up political unrest?
    Dr. Dunwoody: I think that it is important that we should have this information. A number of changes were made in the birth registration form as from 1st April of this year. Obviously it will take time before this information can be published, but I assure my hon. Friend that this will be done.

    Family Planning Services
    Mrs. Renée Shortasked the Secretary of State for Social Services what steps he intends to take to ensure that all women who need it are able to receive family planning advice.
    Mr. Crossman: As I have made clear on many occasions, I am taking every opportunity open to me to develop family planning services under the National Health Service.
    Mrs. Short: Will my right hon. Friend, therefore, request all local authorities
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    to introduce family planning clinics, and will he make sure that this information is available in all hospitals under the National Health Service and controlled by him?
    Mr. Crossman: Every local authority has been told of our urgent request that it should do so and, with one exception, every one has provided a service of a kind. As for hospitals, I regard this as an important issue, and I hope to take action on it in the near future.

    Mental Health Care
    Mr. Maurice Macmillanasked the Secretary of State for Social Services whether the proposed expansion of mental health care will involve a transference from the present funds of the regional hospital boards.
    Mr. Crossman: The extra money being devoted to hospitals for mentally handicapped this year represents a reallocation of resources by regional hospital boards. I have also urged them to review their expenditure on all long-stay hospitals, including geriatric and psychiatric, to see that they are getting their fair share.
    Mr. Macmillan: Can the right hon. Gentleman say to what extent this reallocation is leading to a slowing-down of development in other ways, and, in some districts, to the closing of beds?
    Mr. Crossman: There is no evidence of the closing of beds or of a slowing-down. I hope that the regional hospital boards, which have large sums of money at their disposal, are able to make economies in other areas and so make more money available in these high priority areas.
    Mr. Arthur Davidson: In view of the desire to improve the quality and standard of treatment at mental hospitals, will my right hon. Friend look urgently at the pay of doctors who stand by in the evenings and at weekends? Is my right hon. Friend aware that there is great dissatisfaction about pay amongst many sections of doctors which is causing a disinclination on the part of general practitioners to perform this very important duty?
    Mr. Crossman: 1 will look at that point. However, I do not think that

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    in my peregrinations this problem, which is general among general practitioners, has been called to my attention in relation to long-stay hospitals.
    Mr. Tom Boardman: Does that reply mean that no extra resources will be provided? If it does, contrary to the right hon. Gentleman's reply to me earlier, some hospital building schemes will be cut back.
    Mr. Crossman: It does not mean that no extra funds will be provided.

    Cigarette Smoking
    Mr. Croninasked the Secretary of State for Social Services when he expects to introduce legislation to discourage cigarette smoking.
    Mr. Crossman: Not this Session.
    Mr. Cronin: In view of the circumstance that the right hon. Gentleman's Department indicates that more than 50,000 people are killed per year by cigarette smoking, would he at least during this Session commence some preliminary work in introducing legislation so that it can be brought in after the next election?
    Mr. Crossman: We have been very seriously considering the basis of legislation and whether legislation against advertising is the most effective. Meanwhile I have asked the Health Education Council to concentrate its activity this year in the first place upon an antismoking campaign, which I think has begun, on the hoardings, and which will last for three months. We will assess the results of this campaign very carefully before spending further money.

    Industrial Deafness
    Mr. Oakesasked the Secretary of State for Social Services how many persons in England and Wales suffer from industrial deafness ; and if he will now include this condition as a prescribed industrial disease.
    Mr. Ennals: I regret that the information requested in the first part of the Question is not available.
    On the second part of the Question, I would refer my hon. Friend to the reply I gave to my hon. Friend, the Member for Manchester, Gorton (Mr. Marks) on 22nd October.—[Vol. 788, c. 270-1.]
    Mr. Oakes: Is my hon. Friend aware that there are many thousands of people in their fifties and sixties suffering from a disease which has clearly arisen from the course of their employment? Will he ask the advisory committee to reach a decision in a matter of months, not in a matter of seven years?
    Mr. Ennals: It was because we were aware of the problem to which my hon. Friend refers that the report was not only requested but rapidly referred to the Industrial Injuries Advisory Council, which is now studying it. The council will be aware of the urgency of the problem, but it must take evidence. However, I am certain that it will note the point made by my hon. Friend.

    Immigrants (Leprosy)
    Mr. Peelasked the Secretary of State for Social Services what steps are taken or proposed to ensure that immigrants suffering from or who might have contracted leprosy abroad do not enter this country.
    Dr. John Dunwoody: Immigrants are subject to medical examination either in their country of origin or at our ports and airports. Examining doctors have been asked to look out particularly for leprosy. If the condition was discovered, entry would normally be refused except in the case of dependants with an entitlement to enter the country, who would be required to report to the medical officer of health at their destination.
    Mr. Peel: Does this not show that it is absolutely essential that all intending immigrants coming from countries where this kind of disease is still prevalent should have a compulsory medical examination before being given visas for this country to save the expense of travel and disappointment when they get here?
    Dr. Dunwoody: This would present considerable difficulties. We should remember that leprosy is sometimes difficult to diagnose in the early stage and impossible in the incubation stage. On the other hand, the number of new cases notified in this country in the whole of last year was 45, and the number of cases this year so far—and we are near the end of the year—is 24. Therefore, I do not think that we should let the problem get out of perspective.

    Private Hospital (Lisson Grove, London)
    Mr. Hugh Jenkinsasked the Secretary of State for Social Services whether, when the proposed private hospital is constructed at Lisson Grove, London, he will arrange to acquire it so that its facilities may be used according to need and not according to ability to pay.
    Mr. Crossman: Additional hospital provision of the kind reported in the Press is not required for National Health Service purposes in this locality.
    Mr. Jenkins: If this proposed hospital goes ahead with a charge of 15 guineas a day, plus treatment, and is projected to produce a profit of fi million a year, will it not divert to private purposes treatment facilities and skilled labour which ought to be employed in the National Health Service?
    Mr. Crossman: I agree with my hon. Friend that admission to hospital should depend on need and not on ability to pay, but we have that private sector in this country, and it is legal.

    Dispensing (Rural Areas)
    Mr. Deanasked the Secretary of State for Social Services what steps he is taking to bring about a meeting between the pharmaceutical and medical professions to discuss the question of dispensing in rural areas.
    Mr. Crossman: I have made clear that in my view it will be best if in the first place any discussions are arranged by the professions themselves. My Department will be glad to take part as soon as the professions consider that this would be useful.
    Mr. Dean: I am obliged to the right hon. Gentleman for that answer. Can he give any indication about any help that he might be giving to the professions, or using his good offices, to try to bring them together on this?
    Mr. Crossman: No, Sir. What I said in my answer is literally true. I think they will he better if they get on on their own, rather than that I should intervene.
    Mr. Ellis: Does my right hon. Friend agree that there is strong feeling on the pharmaceutical side that the Minister has been nobbled by the B.M.A. on this
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    question? Will be therefore go to the B.M.A. and say that there are grounds for looking at this again?
    Mr. Crossman: I think it may be true that the pharmaceutical side, which had hoped that I would impose what had previously been assumed to be an agreed solution,, was disappointed when I did not.

    Abortion Act
    Mr. St. John-Stevasasked the Secretary of State for Social Services whether he will appoint an independent commission to inquire into the working of the Abortion Act.
    Mr. Crossman: No, Sir.
    Mr. St. John-Stevas: In view of the continuing and widespread professional and public anxiety about the working of the Act, the fact that abortions are running at a rate of more than 1,000 a week, and that my amending Bill last Session was only narrowly defeated, is not there a substantial case for an impartial inquiry into the whole issue?
    Mr. Crossman: I should not have thought so. I think that if one looks at the working of the Act one sees the encouraging fact that the proportion of abortions carried out in National Health Service hospitals has increased steadily during the year from 56 per cent. during the first quarter to 65 per cent. in the third. I think that the hon. Gentleman will agree that it was the activities of the private sector about which we were alarmed. I am sure that the hon. Gentleman will welcome the increased proportion of abortions in National Health Service hospitals.
    Mr. David Steel: I congratulate the right hon. Gentleman on resisting the invitation to set up yet another independent committee, on any subject, but will he accept that it might be useful to have a report from his Department at some time in the near future on how it sees the working of the Abortion Act and the difficulties which have arisen in some parts of the country?
    Mr. Crossman: I think that that would be useful, and in preparation for it I have asked the B.M.A. and the Royal College of Gynaecologists to send a questionnaire to their members, on the basis of which I might be able to issue a report.
    Mrs. Renée Short: Is my right hon. Friend aware that there is general public satisfaction that a larger number of girls and women who require pregnancies to be terminated are now able to get that done in National Health Service hospitals, always bearing in mind that there are still some black spots where gynaecologists in the National Health Service are not prepared to carry out what is now the law of the land? Will he therefore consider setting up special units in those areas to increase the number of terminations carried out under the National Health Service?
    Mr. Crossman: I must remind my hon. Friend that it is the law of the land that each doctor's conscience must be respected, and that when a doctor does not do an abortion he is not breaking the law. This was the definition of the law. This is what gives rise, inevitably, to the differences between regions. I agree that one of the results is that private nursing homes are being established in the Birmingham region, something which I much regret, but I should regret even more the creation of special clinics in the National Health Service, because this operation, to be done adequately, must be done in a general hospital with full supporting services.

    Vapona Strips
    Mr. Wyattasked the Secretary of State for Social Services whether he will investigate the dangers to health involved in the use of Vapona Strips as outlined in the hon. Member for Bosworth's letter of 28th October, 1969 ; and if he will make a statement.
    Dr. John Dunwoody: When the Advisory Committee on Pesticides and Other Toxic Chemicals considered the use of Vapona Strips in agriculture, horticulture, food storage and home kitchens, all the available toxicological evidence was studied. The firm wishing to market the product provided sufficient data to satisfy the committee that there should be no hazard to human health. The information which my hon. Friend has sent to my right hon. Friend will be referred to the advisory committee and steps will be taken to try to obtain the unpublished evidence on which this claim that the strips are hazardous is partly based.
    Mr. Wyatt: Does my hon. Friend realise that Professor Lofroth, who is a great expert in this matter, believes that this is so serious that the stuff being emanated from Vapona Strips is the equivalent of a nerve gas, causing a reduction in the number of red blood corpuscles and perhaps leading to cancer and various other diseases? Is he also aware that the limits set by the World Health Organisation in respect of the dilution of this stuff into the atmosphere are greatly exceeded by the manufacturers' recommendations?
    Dr. Dunwoody: As I said in my original answer, the committee considered the safety of Vapona Strips and cleared them in 1967, but in view of the new evidence we are putting the point to it again. I think that it would be best to await its opinion.

GOVERNMENT PUBLICATIONS (SUPPLY)
The Chief Secretary to the Treasury (Mr. John Diamond): With your permission, Mr. Speaker, and that of the House, I wish to make a further statement about the supply of Government publications to Parliament. The House will recall that on 20th October I explained that, owing to unofficial industrial action in the London presses and binderies of Her Majesty's Stationery Office, there was interference with the supply of Parliamentary and other papers. I am glad to report that since then there has been a return to work ; but a go-slow by a section of members of the Society of Graphical and Allied Trades at St. Stephen's Parliamentary Press is continuing to interfere with Parliamentary printing. Officers of the House and Her Majesty's Stationery Office are taking steps to ensure the supply of documents essential for the work of both Houses, but I greatly regret that it will not be possible to avoid some inconvenience to hon. Members.
Mr. Higgins: Is it not most unsatisfactory that the work of the House should continue to be inhibited by this kind of unofficial action? What action do the Government propose to take to prevent a recurrence of this kind of behaviour in the future? Secondly, would

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the Chief Secretary assure the House that no business will come before it unless all the necessary papers are available for proper discussion? Thirdly, what is the situation in regard to the backlog of copies of HANSARD and other papers? Will these be made readily available and, if so, at what date?
Mr. Diamond: The backlog is being caught up with. A copy of HANSARD—not the printed edition, but a copy of the OFFICIAL REPORT, or a series of copies—is available in the Library and any hon. Member who wishes to refer to it may do so in the Library the following day. All I can do is to keep the inconvenience, which I sincerely regret, to a minimum. I was then asked what methods were proposed to prevent any worker in future ever going slow. That requires a little thought.
Sir G. Nabarro: May we be told why work of this kind cannot be put out to private tender so as to ensure reasonable continuity of supply? Why should we put up with this crass dislocation? Is the right hon. Gentleman aware that there are no Votes available and that I had no knowledge of Parliamentary Questions which I put down in the last few days? [HON. MEMBERS : "0h."] This is not the subject for a cacophony by hon. Members opposite. This is a serious matter. I have set down a number of Parliamentary Questions, which I cannot check since I have no Votes. Furthermore, may we be told why it is that copies of HANSARD are missing for 21st October, and then are available for the later dates of 30th and 31st October? If we are to put up with these strikes, cannot some continuity of supply of papers be established?
Mr. Diamond: The Order Paper is being circulated to hon. Members so that they can see the Notices of Motions and Questions. I have already explained the position about HANSARD and the steps which are being taken to minimise the inconvenience to hon. Members. I very much regret this inconvenience. I am delighted to see that at least the hon. Member for Worcestershire, South (Sir G. Nabarro) knew that the House was sitting today and has come along.
Mr. David Griffiths: Although one realises the difficulties of the dispute in regard to the publication of HANSARD
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and so on, should we not mention our appreciation of the noble work being carried out by the Vote Office?
Mr. Diamond: That is a matter for Mr. Speaker.
Mr. Boyd-Carpenter: Could the right hon. Gentleman say definitely when normal services will be restored? If the situation is not to be put right immediately, will he give consideration to alternative methods of printing, perhaps abroad?
Mr. Diamond: There is delay not attributable to the printing, but to the distribution and finishing work. The difficulty arises because a number of men in a particular chapel have decided to work to rule. I cannot say when those men will make up their minds to work more normally.
Mr. Biggs-Davison: Have the Government made any contingency plans in the event of obstruction reaching a point when Parliamentary Government cannot be properly carried on? Is it proper that the debate should continue when the official record of the last two days is not in the hands of hon. Members?
Hon. Members: Hear, hear.
Mr. Diamond: I have already explained the situation about HANSARD being available in the Library the following day. Perhaps the hon. Gentleman will let me know if he is unable to see a copy of HANSARD almost immediately—that is to say the following day, which is as early as would be the case in normal circumstances. I fully recognise that there is inconvenience.
Sir R. Cary: Could the right hon. Gentleman indicate the nature of the complaint of the members of the printing chapel who are on strike and delaying our proceedings?
Mr. Diamond: There is no strike.
Mr. Higgins: The Chief Secretary has given a very unsatisfactory set of answers. Is he aware that there is only one copy of HANSARD in the Library, that it is difficult to get hold of and that it takes time to make copies. He referred a little earlier to a work-to-rule. Is this the right description, because he appears to have changed it from his original statement? Could he clarify the matter by saying whether or not the Government

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propose to bring forward any business for which all the necessary papers are not available?
Mr. Diamond: The original statement spoke of a go-slow. I hope that I have not confused the matter by referring later on to a work-to-rule. I believe that it is virtually the same thing. The effect is that there is no strike but a particular chapel is not producing work as fast as it is sent to them, and therefore there are delays. I had understood that there was more than one copy of HANSARD available in the Library. [HON. MEMBERS: "No."] I had understood that was so. I will check up and see whether it is the case.
Mr. Geoffrey Lloyd: Following the unworthy evasion by the right hon. Gentleman in reply to my hon. Friend the Member for Manchester, Withington (Sir R. Cary), could he now tell the House the nature of the complaint which is causing the men to indulge in a go-slow, or whatever description the right hon. Gentleman wishes to place upon it?
Mr. Diamond: There is no question of evasion. I should be deceiving the House if I used the word "strike" when it was the wrong word. There was an unofficial strike, but after certain negotiations the men returned to work. A number of chapels decided to return to work, but one chapel has decided to go slow.
Hon. Members: Why.
Mr. Goodhew: Will the right hon. Gentleman now tell the House why? He cannot go on evading the issue. Will he now answer the question?
Mr. Diamond: But it is not possible to say why people go slow. [HON. MEMBERS : "0h."] It is certainly a reasonable deduction that the terms of the arrangement under which there was a return to work generally were found by some to be more acceptable than they were found by others.
Mr. Maudling: Is it to be understood that the men concerned are not asking for anything at all, or that if they are asking for something the Government do not know what it is?
Mr. Diamond: What is to be understood is that there are many reasons for
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a go-slow. Some of them are more subtle than the right hon. Gentleman would give credence to.
Mr. Heffer: Will my right hon. Friend indicate—and I think that this is the most important point—what negotiations are taking place between the workers who are going slow, for whatever reason they are going slow, and the appropriate authorities concerned with their conditions of employment?
Mr. Diamond: There have been discussions at a variety of levels with the union concerned. That is why I thought that it would be misleading the House if I said that there was a strike on. There is not.
Sir T. Beamish: In answering these questions, has the right hon. Gentleman been working to rule or going slow?
Mr. Biggs-Davison: On a point of order. In view of the entirely unsatisfactory nature of the Minister's replies, I beg to give notice that I will seek leave to raise the matter at the earliest opportunity.
Mr. Speaker: Order. I have a statement to make on the present position as far as the staff of the House is concerned. I think that I might begin by saying that I know that the House will appreciate the difficulties under which the Table Office and the Vote Office are working, and that the House is grateful for what they are doing.
I think that the House would wish to know that absolute priority will continue to be given to the production of those parts of the Order Paper which concern the business to be taken on the Floor of the House. Questions for Written Answer and notices for future days will be published as and when this can be done, but it will not be possible to avoid a certain delay.
For the time being, I think that the House will be prepared to forgo the publication of additional signatures to existing Motions and Amendments.
I would also repeat my earlier advice to hon. Members that it is unlikely to be possible to include in any paper notices which are received later than six o'clock in the evening before its publication.
It would also be of the greatest assistance if Members could submit their

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notices in typescript rather than manuscript wherever this is possible. Failing that, calligraphy helps.
Mr. Heath: We are grateful to you, Mr. Speaker, for your statement. But what you have said surely emphasises to the whole House the seriousness of the position and the inconvenience the House is suffering as a result.
Leaving aside the question of the reasons for this, would not it be possible to ask the Government for special assistance to be made available so that by the auxiliary methods you are now using you could reduce the inconvenience to the House further? If further staff were made available from the very large resources the Government have, we could perhaps not pursue a normal procedure but at any rate should not be inconvenienced to the very large extent you have just described.
Mr. Speaker: This is a matter for the Government, not for Mr. Speaker.
Mr Heath: Perhaps through you, Mr. Speaker, I could ask the Leader of the House whether he will give consideration to this and perhaps make a statement to the House tomorrow saying what he has been able to arrange.
The Lord President of the Council and Leader of the House of Commons (Mr. Fred. Pearl): I believe that what the right hon. Gentleman suggests is reasonable, and I will look into this carefully.

ORDERS OF THE DAY
  QUEENS SPEECH

    DEBATE ON THE ADDRESS [FIFTH DAY]
    Order read for resuming adjourned debate on Question [28th October]:
    That an humble Address be presented to Her Majesty as follows:
    Most Gracious Soverrign,
    We, Your Majesty's most dutiful and boyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, In Parliament assembled, beg leave to offer our humble thanks to Your Majestly for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
    Question again proposed
    Mr. Speaker: As I told some ho. Members on Friday, I have selected for today the first Amendment standing in the name of the right hon. Gentleman the Leader of the Opposition on economic affairs. and I have selected for tomorrow's debate the Amendment standing in the name of the right hon. Gentleman on housing—
    At end to add:
    But humbly regret that the Gracious Speech contains no proposals to assist the homeless, to facilitate home ownership, or to reverse the present serious decline in house building.

  ECONOMIC AFFAIRS
  3.45 p.m.
  Mr. lain Macleod: I beg to move, at the end of the Question to add:
  " But, while welcoming the recent improvement in overseas trade, humbly regret that this has only been achieved at the cost of record unemployment, a record rise in prices, a record level of interest and mortgage rates, the doubling of taxation, a vastly increased burden of not less than £3,000 million overseas debt, and the halving both of the rate of economic growth and of the growth in personal living standards."
  Since we last debated economic affairs, there has been a change both in the Treasury and in the Shadow Treasury team. I have known the Minister of State in one or two of his previous incarnations. He joins a formidable team, the only formidable team in the

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  Government, and I congratulate him on his appointment.
  I also congratulate a member of my Finance Committee who has distinguished himself in debate over a number of years, and I welcome my hon. Friend the Member for Barkston Ash (Mr. Alison) to our team and to the Front Bench. Some of the other faces remain much the same. The Chief Secretary is doing his best to prove the truth of the advertisement that "Diamonds are for ever ".
  Our Amendment is a Motion of censure. Later in my speech I wish to comment on a number of the Government series of economic figures which are not necessarily controversial between us. But I come straight away to a matter which is controversial—the question of recent trade returns.
  The Home Secretary made a meal of this last Wednesday, threatening my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) with the overwhelming case which was to be made today. He said:
  "… he will be utterly destroyed next Monday."—[OFFICIAL REPORT, 29th October, 1969 ; Vol. 790, c. 187.]
  He added that my right hon. Friend would have to apologise when the Chancellor of the Exchequer took him apart on Monday.
  It was a ferocious trailer, and I thought that the Chancellor looked a little less than enthusiastic. What was abundantly clear was that the Home Secretary, in spite of this trailer, was not going to touch this issue with a barge pole. He was backing away from the Dispatch Box and urging forward his right hon. Friend in a way that has not been seen since King David sent a message that he personally was not coming out today but would they please put Uriah the Hittite in the very forefront of the battle. We shall listen in due course to what the Chancellor has to say.
  The charge is that the presentation of the September trade figures did mislead. If we can prove that, the question arises whether it is just one of those things or whether Ministers should have done something about it.
  First, the question of fact. We do not raise the question in relation to the
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  August trade figures, because in them the whole of the truth as it was then known was put in the summary in page 1 and there was a clear statement by the then President of the Board of Trade, now a Secretary of State, which was issued to accompany the trade figures for August.
  The September trade figures are somewhat different. On page 1 there is, as usual, a summary, and the opening sentence is:
  " The visible trade balance for September, seasonally adjusted, excluding U.S. military aircraft, was in surplus by £26 million."
  There is a reference in the second sentence to special influences affecting recording, and if one toils on, not through the story but to the notes to editors on page 6, one sees that the last of these notes gives a very different figure from the £26 million, which is the false figure. Instead, it gives the real figure of £11 million.
  What I said at Swindon was that they —that is, Ministers—knew that the false figure given in the first sentence on page 1 of the Press release would be the figure flashed over the tapes and announced on television. [HON. MEMBERS : "0h."] Hon. Members may have seen an account in the Sunday Times yesterday of some of the references that were made. It is curious that it omitted by far the most important reference and the one I mentioned in my speech at Swindon.
  I sent for—I am sure that the Chancellor has done the same—what was sent out over the tapes. There were 10 messages, the first at 12.13 and the last at 1.12. Every one of those 10 messages I will make them available to any hon. Member who wishes to see them—dwelt on the false and not on the real figure. [HON. MEMBERS : "Shame."] That is what I said. It was the figure in page 1. of course, that was flashed out over the tapes. It was on that that the stories were written. [HON. MEMBERS : "Rubbish."] Of course it was. That was the information that was used.
  We come to the rest of the statements that were made. The next announcements were, of course, the ones by the City editors of the Evening News and Evening Standard, both most distinguished journalists. As the House will realise, in both cases they were writing on

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  a Government story and against time, because the editions go out every few minutes. In both cases the false and not the real figure was stated. It was exactly the same on television and radio. The impact of the first day's comment was exclusively on the false rather than the real figure.
  If one then turns to what happened the next morning one sees, from the point of view of the mass circulation newspapers, that the Daily Mirror, Daily Express, Sun and Sketch used the false figure virtually without qualification. The Daily Mail. as the Chancellor will have seen, did an excellent story on its City page and gave the real situation, starting, as it were, with the small print. The truth of the matter is that although we have—the Chancellor will at least agree with this—the best informed Press in the world, it is beyond argument that the whole of the impact on the first day and 90 per cent. of the impact on the second day was on the false rather than on the real figure.
  An excellent report was also given by the economics editor of the Guardian, but overwhelmingly, even if one looks at what are called the "heavies ", with the specialised information that they have for example, The Times Business News, which not everybody reads but which we do—one finds a good story, but if one looks at the news story in The Times one sees that it is short, explicit and partly wrong.
  In the Financial Times, there was an extremely patronising article by the political editor which said, in various stages of the article, some things that were equally rude to both sides of the House. It pointed out that the facts were known and added:
  " If the Opposition Front Bench failed to notice what was happening, the fault lies in their incompetence and in no one else's."
  We knew what was happening, because when a Government announcement comes out we start with the small print and work backwards towards the beginning. If the Financial Times knew all about it, then it is surprising that it stated in large type that there had been a £26 million trade surplus in September, which, in fact, was the false figure.
  Did Ministers know that this would happen? Did they know that what was put
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  out would go over the tapes and would mislead? Of course they did. [Interruption.] Is it a defence to say that what was done was done in the normal way? The answer is: only if the circumstances were themselves normal. But it was abnormal, surely, to discover an under-recording of exports of £130 million, abnormal to have a rushed blitz on documents, particularly in the month under reference, and it was quite wrong that Ministers allowed this information to go out without issuing special statements and without putting the real factors, not in a note on page 6, but where they would be picked up by everybody, in the first paragraph on page 1.
  Mr. Austen Albu rose—
  Mr. Macleod: I will not give way. I am making a particular point.
  I hope that when the right hon. Gentleman deals with this matter he will spare us mock anger, because that does not impress us. Would he concentrate on this? The figure that went out over the tapes and the messages and stories written by brilliant journalists on the first day were based overwhelmingly on the false rather than on the real figure, and 90 per cent. of the follow-up the next day was exactly the same.
  Mr. Albu: Is the right hon. Gentleman denying that a qualification of the figures occurred on the front page of the statement issued by the Government?
  Mr. Macleod: The qualification—I will read it to the House if hon. Members wish—does not refer to whether the re-recording was up or down, but merely said, as I said earlier in my speech:
  " Exports in September, seasonally adjusted and before allowing for special influences affecting recording"—
  then there is an asterisk
  " were £617 million f.o.b…. "
  The little asterisk refers to page 6—[HoN. MEMBERS : "0h."] and I mentioned this. [HON. MEMBERS : "No."]
  Mr. Archie Manuel: The right hon. Gentleman has drowned himself.
  Several Hon. Members rose—
  Mr. Speaker: Order. Mr. Macleod.
  Mr. Macleod: If hon. Members wish to argue that everybody should have picked up that particular reference—
  Mr. William Hamilton: They are journalists.
  Mr. Macleod: If hon. Gentlemen opposite are arguing that, then they are arguing that 90 per cent. of those who do their work in this sphere are incompetent [Interruption.]—and that is not true.
  In our Motion of censure we cite six points. Each is a matter of recording. Let us take, first, the question of unemployment. The October figure of unemployment is the worst since 1940. As my right hon. Friend the Leader of the Opposition said, for 25 out of the last 26 months the number of totally registered unemployed has been over 500,000. The single exception was in June of this year, when it reached a figure of 499,000
  Hon. Members opposite know perfectly well that if we were in Government and they were in opposition and for 25 months out of 26 the figure had run at over half a million, they would be holding protest meetings every weekend in Trafalgar Square and tearing up Whitehall and the steps of Downing Street. They know this.
  What has happened which is of profound significance is that the commitment of the Labour Party to full employment has disappeared. It is not accident that in the Queen's Speech the words are
  "… achieve a more rapid rate of economic growth, and safeguard employment."
  The words "full employment" disappeared in the Queen's Speech in 1967 —and it is not surprising.
  Some time ago, many hon. Members opposite used to concern themselves about what Professor Paish said and what Sir Leslie O'Brien said. They were deeply concerned then. They now know from these figures that this Government have gone far beyond any bench marks set down by Professor Paish. They know, and they were very surprised to hear it in the July, 1966, statement, when the Prime Minister said that after all the redeployment and all the rest of it, unemployment might be only at a level of 11 per cent. to 2 per cent.
  They know—but perhaps I can remind them—that in November, 1967, in
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  the devaluation debate the Prime Minister said:
  " The right hon. Gentleman asked me whether I stood by my statement of 20th July, 1966, about unemployment. Certainly I do, and can tell him, on the best estimates available to us before devaluation, that unemployment next autumn looked like being well within that 1+ to 2 per cent. bracket …"- [OFFICIAL REPORT 22nd November, 1967 ; Vol. 754. c. 1334.]
  The Prime Minister went on to say that as the result of opportunities offered by devaluation the figures would get better still. Hon. and right hon. Gentlemen opposite must come to terms with the truth of the matter for the Labour Party. It is abundantly clear that they have abandoned their commitment to full employment—and let them vote on that tonight.
  Our second point—
  Mr. Joel Barnett: Before the right hon. Gentleman leaves that point, he knows that I have a great deal of respect for him, but would he not agree that it would appear to be hypocrisy and humbug if he did not concede now that he gives the same priority to balance of payments? That being so, how would he achieve better levels of full employment?
  Mr. Macleod: Because these records are the worst that any Government have achieved since 1940—[Interruption.]because our record—[HoN. MEMBERS : "Answer."]—I am answering it precisely—our record over the 13 years averaged 1·8 per cent., and I see no reason why that should not be the sort of figure we have for the country.
  Our third point relates to prices. It is a fact that prices have risen—we say by record levels. Let me establish that. They have risen by 221 per cent. since October, 1964. Prices have risen, therefore, at an average rate of 4·6 per cent. a year compared with an average rate of 2·5 per cent. over the last six Conservative years. And the rise during 1968 was 6·2 per cent.—faster than in any other year since 1951.
  Of course, the right comment to make, and it should be made, is : what about the standard of living? This is the better test. Very well, let us look at that aspect. Average weekly earnings have risen by 34·3 per cent. since October 1964. The House will remember that I

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  said that there was an increase of 22·5 per cent. in prices. One can make that picture a little more favourable, as one should, by adding on 18s. instead of 8s. for family allowances for a man on average industrial earnings with two children under 11, which is the usual standard taken. But then we must take the changes in Income Tax—from 16s. 8d. to £2 18s. 7d.—and in National Insurance — from 19s. 4d. to £1 5s. 8d. The result is that the increase in net income—£3 17s. 9d.—has been 23 per cent. against an increase in prices of 221 per cent. Five years of Socialism have brought a genuine improvement of one half of 1 per cent. in people's take-home pay—and the party opposite can vote for that tonight.
  I would like to mention one matter in relation to prices, because it has an effect. I refer to the controversy that has arisen about the 10s. piece under decimal currency. Let the House be under no mistake : the fundamental error is not so much the issue of a 10s. piece but that we decimalised on the wrong unit from the beginning. We said so—and to be fair, so did people from both sides of both Houses, and from the Liberal Party, over and over again. If it had not been for a vote of the party opposite in a Committee Room—a vote which, in turn, decided whether there was to be a free vote on the Floor of the House—this disastrous mistake, and we know it to have been a disastrous mistake, would have been avoided. We know very well that a whole flood of price rises will come as a result of this error.
  Our fourth point is interest and mortgage rates. I will only say a sentence or two on that topic because, quite obviously, it belongs in more detail to tomorrow's debate. But interest rates are higher now, and have been higher for longer than at any time since the Bank of England was founded in 1694. No Tory Chancellor in all those centuries has put Bank Rate to 8 per cent. Liberal Chancellors—yes ; Labour Chancellors—yes: but, I think, no Tory Chancellor. I invite hon. Members opposite to look at their election addresses for 1964 and 1966. They will then realise in almost every case that they have broken their word to their constituents on interest rates and mortgage rates. Let them reflect on that as they vote tonight.
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  The next point we mention is the doubling of taxation. Tax revenue has more than doubled in six years. The increase in tax rates since October, 1964, has been more than £3,000 million, and that compares with tax rates, with a reduction, not an increase, of £2,000 million in the 13 years in which we were in office. Total taxation now is 40 per cent. of g.n.p.—it was 32 per cent, in 1964—and the tax burden has risen by 25 per cent. If there is a Budget next year introduced by this Chancellor we will put down Amendments, one by one, to bring back the level of taxation to where it was at the beginning of the Labour Party's period of office so that hon. and right hon. Members opposite will have an opportunity of carrying out the Prime Minister's promise that there would be no general increase in taxation in the period of this Parliament. Let them vote on that tonight.
  Next, there is the question of our overseas debt. I ask the Chancellor—not now, because I will ask him to lay a White Paper, but at some appropriate time—to deal with this question. How much really do we owe? What is the true total of short-term central bank borrowings? My hon. Friend the Member for Meriden (Mr. Speed) asked a number of Questions of the Chancellor of the Exchequer, and he was given the information that in 1963, when we borrowed £89 million, it was published in the Bank of England Quarterly Bulletin for June, 1963—the earliest possible. When we borrowed in 1961 £325 million, that was announced in the Bank of England Quarter Bulletin for September, 1961. So in those years what was happening and the debt owed, which on the whole was being repaid at that time, was known to the people of this country.
  Because this information is not now available, my hon. Friend the Member for Meriden wrote to the then Financial Secretary to the Treasury pointing this out and he replied on 19th November:
  "You correctly point out that it has sometimes been practice to publish amounts drawn on various credits after a lapse of time. This practice was discontinued in June 1966 (see page vii of Economic Trends) on the authority of the former Chancellor."
  So it was on the authority of the former Chancellor, and, of course, of the Government, that the details of central bank borrowing are now not known.

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  My hon. Friend the Member for Farnham (Mr. Maurice Macmillan) said on the first day of the debate on the Address:
  Even the most cautious and friendly estimates suggest that the real debt burden is in the neighbourhood of £2,000 million more than we have been told Is the short- and medium-term debt really decreasing? Is it matched, or partially matched by an increase in longer-term debt?".—OFFICIAL REPORT, 28th October, 1969; Vol. 790, c. 65.]
  It is not good enough for us to be told "figures of the order of" at some particular date in the year when we do not know whether any window-dressing has been applied either immediately before or after those figures are issued. We want to return to the former system. We want to know precisely how much we owe. I invite the Chancellor of the Exchequer to lay a White Paper giving us the details which were given until this practice was stopped in June, 1966. The lowest estimate we can put on it is that the additional short-term debt runs to something like £3,000 million—or, as I have put it, a a head for every person alive in every country on the face of this earth. Hon. and right hon. Members opposite can vote for that when we go into the Division Lobbies tonight.
  I said earlier that I have some general matters to raise on Government economic information. There is not a single series now being issued which is not suspect. Hon. Members opposite need not take that from me. The day after the exchange between my right hon. Friend and the Home Secretary the Financial Times—in this field perhaps the finest newspaper in the world—had a first leader entitled "Collecting vital statistics ". [Interruption.] Perhaps the hon. Member will listen to some of the examples given. Perhaps the Minister of Technology might like to deal tonight with the figures given for the engineering industry in July. Apparently the engineering figures were not available for August because the respondents were puzzled by the new form of the Ministry hand-out.
  The Financial Times said:
  " The net new order figures, which are largely derived from changes in orders-inhand and magnify any errors in the latter by about eight times, inevitably show considerable fluctuations from month to month."
  What is the use of giving us figures about a key industry, the engineering
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  industry, of that order? The newspaper goes on to say:
  " This year, though, one has been regrettably forced to the conclusion that Mr. Harold Macmillan did not really know how very fortunate he was when he complained about the difficulty of running the economy on last year's Bradshaw. On that basis one at least knew when trains were supposed to have run one year previously."
  The article goes on—this is the Financial Times which most people take very seriously—to say that there has been
  " a wholesale revision of trade figures. … The seasonal adjustment of the unemployment figures has become a poor joke… The latest Board of Trade interpretation of industry's investment intentions …"
  is wrong, and
  "Other statistics are equally suspect. The retail trade figures seldom seem to fit the actual experience of store groups. And when one gets to the national income figures one can only throw up one's hands."
  Mrs. Winifred Ewing: Will the right hon. Gentleman explain why so many of his colleagues welcome one series of figures—the Scottish budget figures? Perhaps he thinks this is one of the exceptions which is above suspicion?
  Mr. Macleod: That would make a very nice change if it were. I am sorry that the figures for Scotland's budget upset the hon. Lady. but quite frankly on that one I am in broad sympathy with the Treasury estimates. Although I had not the facilities available to me, I had made a not dissimilar calculation myself.
  The Chancellor's reply when questions on information were asked has always been the same, that he has given more than any previous Chancellor of the Exchequer. There is some truth in this, but I think that from what I have said it is abundantly clear that "more" in this case means "worse ". Let us add up what is being done to our trade figures quite apart from the earlier argument. A figure of £500 million has changed to £300 million. The calendar year has been changed to the financial year. Government and other bodies are being encouraged to borrow in Germany even though revaluation was known to be inevitable and the net result is a short-term gain which looks good in our balance of payments. What we want to know is how much that has cost ; what it means in increased interest and what the yield of redemption on the loan would be.

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  There can be no doubt that the revisions taking place at the moment make a farce of these figures. The Treasury issued on 11 th September a revision for the years 1964 to 1968. I take the old estimates for 1968 and the new estimates for 1968: current balance, old estimates £419 million, new estimate £265 million. That is good ; that is the under-recording in exports. Long-term capital was minus £39 million and is now put unbelievably at minus £142 million, so that is bad. Overall balance, because the first is greater than the second, dropped from £458 million to £407 million, but the balancing item goes from £60 million to £130 million. The net result is that we are £19 million worse off as a result of those revisions.
  There is an important point which I would be grateful if the Chancellor would reply directly to which affects the question of under-recording. I have made clear in my speeches, and I make clear now, that I accept the account of what has happened, and naturally the basis of the figures that have been produced. That is not in dispute. I have said this before, and it does not affect either our debts or the level of our reserves. In so far as it has a cosmetic effect on balance of payments, this of course is at the expense of the balancing item. For many years, because of a persistently favourable item, we have assumed in all our calculations a plus of £50 million as a consistently favourable figure because of undiscovered errors and omissions in the balancing item. Now we claim—I do not dispute it—that the figure is of the order of plus £130 million. It therefore follows that there is an error of minus £80 million, either in relation to imports or in relation to capital, in the balancing item. Either way the figures are now absurd. The Treasury has said nothing, or virtually nothing, about this, and once again good news is being oversold and bad news unrecorded or unremarked.
  The main reason for all these failures—the rise in prices, the record level of unemployment, and the rest—traces back to one basic cause, namely, the failure to achieve growth. In the last economic debate—on the cost of living of the 1964 Parliament, the then Shadow Chancellor of the Exchequer—the present Home Secretary—said this:
  " I want to make it clear that on this side of the House we recognise that our pro
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  grammes cannot be achieved until we are maintaining a growth of 5 per cent. or 6 per cent." —[OFFICIAL REPORT, 20th July, 1964 ; Vol. 699, c. 75.]
  It was on that undertaking to do 50 per cent. better than the Tories that the Labour Party won the 1964 General Election.
  Then the Labour Government tried the National Plan. Then they went, not for 50 per cent. better, but for the same figure as the Tories-3-8 per cent. growth over the years. It was on the basis of this that they won the 1966 General Election. We now know what has happened to those six years—four of them from actual figures, and two I take from the forecast from the National Institute Economic Review of August, 1969. I am making the detailed calculation available this afternoon to the Press and to any Member of Parliament who wants it. The shortfall between what has been achieved in those six years and either the National Plan figure or the Tory figure—whichever you like, because they are the same —is no less than £12,000 million. That is the cost of Socialism ever since they came to office.
  Mr. James Dickens: The loss of £12,000 million is anything but the cost of Socialism. Is it not the high cost to Britain of defending a sterling parity rate of 2.80 dollars to the £ for three years, plus vastly excessive military expenditure overseas, and a vast outflow of private capital abroad?
  Mr. Macleod: That is an argument that the hon. Member will have to take up with his own Front Bench. I am recording the detailed promises that right hon. Members oppoiste made, pushing every one of them down their throats—they do not like it—and comparing them with what has been achieved.
  Now we have a new story. At the Labour Party conference the Chancellor of the Exchequer said this:
  "If we could, in the next five years, step up our growth by 1 per cent. above the average for the past ten—not an impossible improvement by any means—that will give us … a continuing increase of £400 million a year."
  When the Chancellor gives a figure like that, it is always necessary to ask : Why ten? The answer is—so that he can count five good Tory years in as well as five lean Socialist years. It is only in

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  this way that he can get his figure. What he is saying now is that they will try to achieve the figures that we tried to achieve ; and this in another way is the National Plan promise again. I do not think that the country will fall for it a second time.
  Almost every Labour M.P. who won at the last two General Elections was elected on a false prospectus, and he knows it. Five seats were fought at by-elections last week. Three of them were for seats that in the normal course of events would presently be redistributed, if redistribution were allowed. The other two—normal size seats with General Election size polls —show in the one case a majority of 12,000 reduced to 1,000 and, in the other, a Tory victory in a seat which had a Labour majority of over 10,000.
  On the average of these two swings half the Cabinet would disappear. The Foreign Secretary would go. The Home Secretary would go. The Secretary of State for Defence would go. The first Secretary of State would go. Both overlords would go. That is a cheery thought as we vote tonight. This debate primarily concerns the Prime Minister, the Chancellor and the Home Secretary?—
  " Send for my pipe and send for my bow, And there are the fiddlers three."
  There is no more fascinating exercise than to watch the care with which the Prime Minister constructs a grenade only to have it turned into a booby trap. I wonder if the House recalls the peroration to that rambling speech of his on the first day of the debate on the Gracious Speech. Only somebody with the Prime Minister's delicate sense of timing could have picked this week to attack the Tories for a lack of democracy in their constituency associations.
  The Chancellor and the Home Secretary are different. I recognise their abilities. The position is not affected by any caustic comments that we may exchange in debate. However, they know full well—both of them—that they bear the scars of what they have done in this Government. There are many matters on which we would wish to, and will gladly, listen to the Chancellor with the respect due to his office ; but we know very well also that he was the man
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  who fiddled the London borough elections. When we listen to the Home Secretary talk about Ulster and many other matters, we know very well that he was the man who fiddled the Parliamentary boundary constituencies.
  The credit rating of this Government is disastrously low. It will not recover with a brightening economy, because the doctrine that "a week is a long time in politics" is one of the nastiest of modern times. It argues that the public can be brainwashed. It argues that a flood of extra P.R.O.s can massage the news so that anything can be forgiven or at best forgotten. The by-elections should have shown the Prime Minister that he cannot fool all of the people all of the time. People wait for a General Election so that they can echo the same verdict on a disreputable Government.
  4.30 p.m.
  The Chancellor of the Exchequer (Mr. Roy Jenkins): The right hon. Member for Enfield, West (Mr. Iain Macleod) has made what is in many ways a characteristic speech, with a very unhappy beginning when he endeavoured to come to the support of his right hon. Friend the Leader of the Opposition, with a middle part in which he dealt with certain economic issues in a somewhat selective way, but only warming to his stride and only feeling real enthusiasm and feeling at all at home when at the end he got down to the personal exchange of petty abuse and party politics.
  This Amendment with which we are dealing today is a good deal longer than the one which the right hon. Gentleman moved in the debate last year. I think it has to be. The Opposition case last year was simple ; it was wrong but it was simple. It was that the Government's economic policies were not working and would not work. Now the case is equally wrong, but it is a good deal more convoluted. Last week we had the Leader of the Opposition dealing with an extremely complicated metaphor about my trying to keep five plates in the air. Today we have got his Amendment, a great deal more turgid than the one the right hon. Gentleman felt able to move last year. The reason for this is obvious. First, hon. Members opposite have to admit that the central policy is working, and then have to try

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  to explain it away, with a lot of cover-ups.
  We had the brief but so-called welcome to the trade improvement and then we had the long-drawn-out humble regrets. Just how warm, heartfelt and instinctive in the Tory Party that welcome to the trade improvement is we saw from the right hon. Member for Altrincham and Sale (Mr. Barber) last week. The right hon. Member for Enfield, West referred to it, and I think the rest of the House will be glad to know that I intend to deal with this in considerable detail in the course of my speech.
  The allegation which the right hon. Member for Altrincham and Sale made —I leave aside the right hon. Member for Enfield, West ; he was trying to cover up for his right hon. Friend in a most unhappy way—was one which, if true, would be a most serious matter for the Government. I also suggest that if it is not true it is a most serious matter for the right hon. Gentleman. I shall return to that. I know that the right hon. Member for Enfield, West likes to claim that the improvement in our balance of payments is something which he always expected. I am bound to say that he has expressed that expectation with varying degrees of confidence in our debates at various times in the past, but at any rate he does not appear to have communicated that view to his colleagues in the Conservative Central Office.
  As recently as the Brighton conference, a little booklet was, I am told, distributed to every delegate, entitled "Words for Eating." Glancing through it I saw that I was offered quite a number of morsels for mastication. They appear to me to be singularly easy to digest. I will take one example of several:
  "Mr. Jenkins, Washington, October 2nd, 1968: 'I cannot predict the exact time at which we shall break even and cross the line from deficit into surplus. It should come in the first part of next year'"—
  That is 1969—
  "'and so permit us to be earning a substantial surplus and repaying debts in the second half of the year'".
  What am I supposed to eat? The prediction—somewhat by luck, no doubt—is almost uncannily accurate. We crossed the line just about the middle of the first half of the year. We have since been in substantial surplus. As for debt, we
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  have, as it happens, on balance been paying off a substantial amount net since the beginning of the year.
  I stress the word "net" as the right hon. Gentleman the Leader of the Opposition, no doubt by inadvertence, got this wrong in his Brighton speech. He said that part of the money for repaying debt came more from borrowing from the I.M.F. That is not the case. The figure of nearly I billion dollars which I mentioned on 18th July and to which he was then specifically referring was, as I said at the time, net—in other words, before taking account of our drawing from the I.M.F. In other words, our repayment without taking account of this would have been nearly 1,500 million dollars. I am sure the right hon. Gentleman will be glad to know that the position was better than he thought and will wish to make it clear that he accidentally misled his very large audience.
  Sir Keith Joseph: Should not the Chancellor explain that the country has benefited, as it often does, from sterling area surpluses which have enabled us to repay debt during the first half of this year?
  Mr. Jenkins: Of course, this has been one factor in the situation, just as sterling area deficits and sterling area outflow have often been a factor in incurring debt. I think that I was a little over-courteous in giving way to the right hon. Gentleman, although I would gladly have given way to the Leader of the Opposition, who I imagined would certainly have wished either to ask for a further explanation or to admit the error which he put out to a very large number of people.
  As I see that the right hon. Gentleman wishes to do neither, I come to the terms of the Amendment itself. What it amounts to is saying that the balance of payments has come right but at a cost which no Conservative Government would have paid. I make two comments. First, no Conservative Government since the war has ever succeeded in achieving a balance of payments of anything like its present strength.
  Mr. Edward Heath: We were not in debt.
  Mr. Jenkins: Hon. Members opposite were not in debt, but they left us in

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  debt. What did the right hon. Gentleman think the 1964 deficit was if it was not debt?
  Mr. Maurice Macmillan: Will the right hon. Gentleman give way?
  Mr. Jenkins: No. The best year of the lot was 1958—
  Mr. Macmillan: Give way.
  Mr. Jenkins: The hon. Gentleman must contain himself. The best year of the lot was 1958 when the current and long-term capital account, the basic balance as it is called, amounted to plus £148 million. There were two other years in all the 13 when it exceeded £50 million. The current balance performance was better with three years in excess of £200 million and one year in excess of £300 million. But in each of these years the capital account substantially eroded the current account. This year there is no sign of it doing anything of the sort.
  Mr. Macmillan: The right hon. Gentleman dare not give the annual average.
  Mr. Jenkins: The hon. Member for Farnham (Mr. Maurice Macmillan) will not get me to give way by losing control of himself.
  Mr. Reginald Maudling: Is the Chancellor suggesting that it is wrong over the years to use the current surplus for overseas investment?
  Mr. Jenkins: I am not saying that it is wrong to use the current surplus for overseas investment, but I am suggesting that it is wrong to use substantially more than the current surplus for overseas investment ; and the net basic deficit, that is current and capital, for the last five Tory years was £1,158 million, and for the last ten Tory years it was £1,251 million.
  Mr. Peter Emery: Where would the present Government have been without the invisibles?
  Mr. Jenkins: I hope, therefore, that account will be taken of that.
  Second, we have paid no net deflationary price since devaluation. On the contrary, the rate of growth in output, which, I believe, will continue and
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  strengthen in the months ahead, has been good. Industrial production is up by 8½ per cent. since devaluation. This is very much one of the better growth performances of the past 20 years, and it is the only one—this is the significant point —which has been accompanied by a rapidly improving balance of payments.
  The Conservative performance was exactly the reverse. There were periods of good growth-1963–64 was one, and 1959–60 was another—but they were both periods of almost disastrous balance of payments decline, culminating in an overall deficit of £744 million in 1964 and £457 million in 1960. There were also periods of balance of payments improvement, though weakening as the period of Conservative office went on. There were periods of improvement in 1955–56, leading to an overall surplus of £21 million in the latter year, and in 1960–61, leading to a surplus of £64 million in the latter year. But in both those periods a real deflationary price was paid. Industrial production became almost stagnant, and in the second year of each period unemployment increased substantially, with a corresponding fall in unfilled vacancies.
  I come now to what is always one of the main points of the speeches of the right hon. Member for Enfield, West, the present level of unemployment, and I meet it head on. The absolute level is higher, but, as I have pointed out before and as, I believe, most people in the country accept, a substantial change has occurred in the structure of the labour market, and it is sheer blindness to ignore it.
  Unemployment is still far too high in the development areas. It would be higher still without the policies which this Government have pursued, mostly in face of complaint encouraged by the Opposition. But over the hulk of the country it is earnings-related benefits and redundancy payments more than slackness of demand which has influenced the unemployment figures. If this is doubted, I suggest a careful study of the figures of unfilled vacancies.
  Mrs. Ewing rose—
  Mr. Jenkins: No, I must get on. These were 197,000 at the latest count, a figure previously compatible not with 550,000 unemployed but with about 380,000 in

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  the previous cycles ; and, as the vacancy figure has shown no decreasing trend, no more has the unemployment figure shown an increasing trend during the past 18 months of balance of payments improvement, which is quite different from previous Conservative experience.
  I turn now to another point—
  Mrs. Ewing rose—
  Mr. Jenkins: No, if the hon. Lady will allow me.
  Mr. Iain Macleod: Will the right hon. Gentleman permit me one point on unemployment? I have not prophesied, and I do not expect the figures to go vastly higher, apart from winter considerations, which we cannot foresee on either side of the House, but will the Chancellor, either now or through the First Secretary of State in due course, make some comment on the question of the seasonal adjustments, which have become increasingly suspect, as we all know? Could a statement be made on this matter fairly soon?
  Mr. Jenkins: The right hon. Gentleman is perfectly right in saying that there is no party point on this at all. It is a matter which gives some concern, and there is no desire to confuse the position. I shall consider with my right hon. Friend the First Secretary of State what the position is and whether a statement could be made. There is certainly no question of dissimulation. Indeed, my right hon. Friend the Prime Minister drew attention to a certain apparent discrepancy in the seasonal corrections some time ago.
  Mrs. Ewing: Will the right hon. Gentleman give way now?
  Mr. Jenkins: No, I must get on. I have a duty to the House not to make my speech over-long.
  Now, another point in the right hon. Gentleman's case, the level of interest rates. Interest rates are high. Naturally, they affect mortgage rates, although, as my right hon. Friend the Chief Secretary pointed out last March, the proportionate cost of a mortgage to an average borrower with an average home is now less in relation to his wage or salary than it was 10 years ago, and it is slightly less today than it was last March when he made that statement.
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  These high interest rates, though certainly not welcome, are not a British phenomenon. They are not a unique price which we are paying for getting our balance of payments right or for some alleged mismanagement in the past. The British Bank Rate is 8 per cent. The United States discount rate is 6 per cent., the French bank rate is 8 per cent. ; the Belgian 7½ per cent. ; the German 6 per cent. ; the Dutch 7 per cent. ; the Swedish 8 per cent. ; the Danish 9 per cent., and the Canadian 8 per cent.
  Just over eight years ago, in 1961, the British Bank Rate was 7 per cent., under the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd). [An HON. MEMBER : "Not for so long."] I agree, not for SO long. [HON. MEMBERS: "0h."] Yes, one has to consider these matters. The United States discount rate was then 3 per cent. Even if one took the period in which Bank Rate was 6 per cent. and not 7 per cent., the discrepancy is enormous. The United States discount rate was then 3 per cent., and the other bank rates were as follows: France 3½ per cent., Belgium ¾ per cent., Germany 3, Holland 3½, Sweden 5, Denmark 6½, Canada 2½.
  The comparison was then immensely less favourable to us. Unless the Opposition wish to take the view that we can contract out of world capital markets—which would be totally alien to the whole basis of their financial thinking—there is no validity in this point at all.
  I come now to the point about the general standard of living deployed by the Leader of the Opposition last Tuesday and by the right hon. Member for Enfield, West today. I have never pretended that the balance of payments could be put securely right without considerable restraint in personal consumption. Indeed, this was manifestly accepted by the right hon. Member for Enfield, West, who spent a large part of last year attacking me for not curbing it stringently.
  Restraint in consumption has been necessary, has worked, has been worthwhile, and will continue to be necessary. But to pretend that, even with the need to secure this massive balance of payments turn-round, the period of the Labour Government has meant anything like a frozen standard of living is utter nonsense.

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  Here are some figures for the percentage of households with certain key consumer durables or amenities. [An HON. MEMBER: "What about television? "] Television is not mentioned. Between 1964 and 1968, the number with cars rose from 37 to 49 per cent., with refrigerators from 35 to 55 per cent., with washing machines from 54 to 63 per cent., with the telephone from 22 to 28 per cent. and with central heating from 13 to 23 per cent. Not much indication of a standard-of-living freeze there.
  The fact is that each part of the Amendment, the former and the latter, is as unconvincing as the other. The "regrets" are as ill-founded as the alleged welcome to the improving trade trend is synthetic and unconvincing. The alleged welcome brings me to the right hon. Member for Altrincham and Sale. We all know the contributions which he has made to the warmth of that welcome. To some substantial extent, he has already been answered by the responsible Press. I cannot believe that, if he has much regard for the integrity of his own words, the Financial Times in two places on Friday morning, and the Daily Telegraph leader of the same morning, or the Sunday Times yesterday, made very pleasant reading. But he asked for a full answer in the House. His right hon. Friend the Member for Bexley endorsed that request on Wednesday, and so did the right hon. Member for Enfield, West today, and I propose to give it.
  First, let us be clear exactly what is the essence of his charge. His right hon. Friend slightly moved away from it this afternoon. It is that Ministers misled the public over the August and September trade figures. In his speech in his constituency on 24th October, the right hon. Gentleman did this in the form of giving his endorsement to an article in the Daily Express by Mr. Pincher. He did it in the following form. He said:
  "The allegation which he "—
  Mr. Pincher—
  " makes is as stark as it is simple. It is that for the past two months the official figures have been deliberately designed to deceive —that the British people have been sold a pup ".
  At the end of his speech he said:
  "… What he "—
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  Mr. Pincher—
  "is saying is that Ministers have deliberately cheated the nation. And on the face of it that would seem to be just what they have done ".
  I want to be clear what the charge is. Last Wednesday, the right hon. Gentleman said:
  " If what I have said is true, as I believe it is, it follows that unless the Press and television commentators are regarded by the Government as quite stupid, they were grossly and inexcusably misled by Ministers."—[OFFICIAL REPORT, 29th October, 1969 ; Vol. 790, c. 173.]
  The charge is extreme and specific—gross, deliberate misleading by Ministers. That is the charge which the right hon. Gentleman has to be prepared to sustain.
  It can best be examined in detail by a reference back to Mr. Pincher's article which the right hon. Gentleman chose to endorse. That made three allegations. The first is that the export of Spey engines which subsequently come back here distorts the monthly trade balance. That is a plain untruth. They are excluded before the monthly visible trade balance is struck. So much for that bit of Mr. Pincher's "searching analysis ", in the right hon. Gentleman's own words.
  Secondly, he said that the imports of U.S. military aircraft are concealed and are a further distortion. So far from being concealed, they are clearly published in each monthly statement and the import figure is then described overtly, regularly, repetitiously, almost as a boring refrain, as "excluding U.S. military aircraft ". The payments under this item are then taken fully into account in calculating the current account component of the balance of payments outturn. In the second quarter, for example, with its favourable current account result of £75 million seasonally adjusted, £146 million seasonally unadjusted, these figures were struck after a minus item of £15 million on United States military aircraft account.
  It is true that it is the payments and not the arrivals that are taken into account for this purpose, though the arrivals are shown clearly in the monthly trade figures. This method was adopted in the spring of 1967. For the purpose of clarity this may or may not have been wise, but it was done on the best statistical advice, and what is certainly the

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  case is that it was not done for purposes of concealment or to produce a bogusly better result.
  If hon. Members want proof of that, I will give it to them. The effect was to produce a markedly worse balance of payments for 1967, a somewhat crucial year, than if an arrivals basis had been chosen. It is hardly likely that Ministers would have chosen that for its own sake and even up to the end of September 1969, from the date when progress payments were first made in 1964, these payments have exceeded the dollar contelt of the aircraft arrivals by approximately £15 million.
  Finally on this, arrivals in August and September this year, so far from being erratically high, were the lowest in any two months together during 1969. So that on no basis could they have distorted the recent trade improvement. So much for the second allegation.
  Mr. Peter Blaker rose—
  Mr. Jenkins: I will give way to the Opposition Front Bench on this, but I propose to put a detailed argument and so I will not give way to the hon. Member.
  I come now to the third and much the most serious charge—the alleged concealment of the fact that the August and September export figures contained some old documents and also some which would not under the former system have come in until the following month. They did, to the extent, as we can best estimate, of £22 million more than the underrecording—£7 million of it in August and £15 million in September. But this, of course, does not begin to prove the right hon. Gentleman's point. For it to do that it would have to be shown both that we tried concealment and that the commentators were in fact deceived. Both are the reverse of the truth. But before I come to exactly why this is so, I must make one or two observations about the £22 million.
  First, some of it came from old documents which should have come in during the previous months, but there is no double-counting here. These exports had not been counted in before striking the deficits for May, or June, or July. They would have been had the documents been lodged properly, but they were not.
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  The deficits for these months were bigger and the previous ones were bigger than they should have been, as we knew, but we none the less published the figures as they came in. These were the figures which were flashed out on the tapes about which right hon. Gentlemen are so concerned. The deficits of £20 million for May, £28 million for June and £37 million for July were worse than they should have been and they were worse than we knew they were, but we published them, as is the practice, on the basis of the documents actually received. The figures for August, plus £40 million, and for September, plus £26 million, are strictly in line with this series.
  I therefore do not know what the right hon. Member for Enfield, West means when he talks about false figures. What did the Opposition want us to do in these circumstances—suppress altogether the exports which were not counted in for the earlier months but which eventually came in to be counted? This is the only possible other way in which we could do it. As for the early lodging element ; let there be no misunderstanding about this. This does not mean that we were counting in August or September exports which were not going to occur until October or November. They had all gone out before they were counted, but they were beginning to be counted more quickly and accurately. The fact that this is so is clear proof that we were right when we said in June, although some people—not the right hon. Gentleman—tried to be sceptical about it, that exports were not being fully and properly recorded.
  Let me return to the July figure, a deficit of £37 million. That was put out as it came in although we knew that because of the under-recording it was too unfavourable and we explained this on the third page of the notice. The right hon. Member for Altrincham and Sale professes to be very concerned about misleading "flash" news headlines. The first effective news to the public of the trade figures comes on the B.B.C. one o'clock sound news.
  The news headline on 13th August was: "Britain's trade gap widened to a corrected figure of £37 million last month." Nothing about under-recording and a good deal more misleading I would have thought than the headline

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  announcement of the September figure which was: "Britain's trade surplus fell by £14 million last month." What did the right hon. Gentleman or any of his hon. Friends do in August? Did they protest to the B.B.C. or to anyone else about the misleading headlines? Of course they did not, not a squeak out of any of them.
  There is another point about the July figures. They fell to be published five days after French devaluation, when the £ was very vulnerable, as a result of the backwash from that event. They were not too bad in themselves, but they were the worst of the last five months. Also, as it happened, we had to publish the bad April figures—the second worst result this year—during the D-mark crisis of last May. Last year we had to live through the Bonn crisis just after publishing the bad October figures, the second worst result in the last half of 1968. If, in view of this history, anyone believes that we would either think it right or be able to mould trade figures to suit our convenience they would, in the words of the Duke of Wellington in a different context, believe anything.
  I return now to the August and September trade figures and the right hon. Gentleman. He says that we have tried to mislead. What are the facts? With the August figures, my right hon. Friend the then President of the Board of Trade published a special statement in which there were two key sentences. These were:
  "Exports in August were clearly irratically high; and the fall in imports compared with July largely reflected a fall in the variable category of food, drink and tobacco. We cannot rely on as good a figure next month."
  In a note to editors published at the same time, he specifically referred to the bunching of exports. In my Labour Party conference speech I said, referring to the second quarter figures :
  "Since then we have had the August trade figures ; in themselves I think they were probably a bit of a freak."
  Then September, which I must say began to make the freak look a little less freakish. But the summary specifically asterisked the export figure, drawing attention to the note to editors trying carefully to quantify the extent of the freak. Let me ask the right hon. Gentleman this: last Wednesday he made a great deal
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  of the alleged concealment of the £22 million for the two months. Where did he get that figure from? Will he answer?
  Mr. Anthony Barber: If the right hon. Gentleman looks at what 1 said at column 173 of my speech last Wednesday he will see that I referred to two deductions, which I believed ought to have been made if the true figure was to be given. I asked a simple question of his predecessor and I ask the right hon. Gentleman now—does he agree that those deductions should be made to arrive at a true figure?
  Mr. Jenkins: The right hon. Gentleman knows perfectly well that I have already dealt with the £22 million. So far as the trends were concerned, that was there. He misunderstands my question. What I asked him, and I ask him again, is where did he get the figure of £22 million? Why did he say £22 million? Why not £20 million or £25 million?
  Mr. Barber: Because that is the estimate which I believe should be deducted from the £66 million, being the figure for August and September, and which I believed should be deducted in respect of a large number of export returns which belonged to previous months. I asked the Home Secretary last week whether this was right. He declined to answer me then, although he said he had studied the figures.—[Interruption.]
  Mr. Jenkins: We all know what the right hon Gentleman asked the Home Secretary last week. What is at issue is what I am asking him now, which is where did he get the £22 million from? If he decided that a sum should be deducted from the £66 million, why did he decide it should be £22 million?
  Mr. Barber: As I have just told the right hon. Gentleman—
  Hon. Members: Oh.
  Mr. Barber: I am willing to answer the right hon. Gentleman, because I assume that after five days he will answer my question—[Interruption.] If the right hon. Gentleman says that I am wrong, then let him say so specifically. What I am saying to the right hon. Gentleman is—
  Hon. Members: Answer the question.
  Mr. Barber:—that there were a large number of export returns which belonged

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  to previous months and they totalled, on the best estimate I could make, £22 million. The right hon. Gentleman can say if that is right or wrong.
  Hon. Members: Answer the question.
  Mr. Jenkins: The right hon. Member for Bexley knows perfectly well—
  Hon. Members: Answer.
  Mr. Jenkins: It is no good at all hon. Gentlemen thinking they can do that. They know perfectly well that I have answered this specifically earlier. I will find in a moment the words which I used and give them again. But I am not leaving the right hon. Gentleman, indeed I am not. What I want to know is where did he get £22 million from? Did he get it by means of his own researches or did he arrive at it by intuition, or did he just pick it out of Mr. Pincher's article, or did he make it up?
  Mr. Barber: It is my estimate—
  Hon. Members: Oh.
  Mr. Barber: If it will give any comfort to the right hon. Gentleman, it is my estimate after consulting an individual who used to work in the Treasury—
  Hon. Members: Oh.
  Mr. Barber: —an estimate of a large number of export returns which belonged to previous months and which should have been deducted from the £66 million. If the right hon. Gentleman says that that is wrong, that the estimate should be less, that it should be £15 million or £10 million, I will accept his word.
  Mr. Jenkins: There is nothing more for me to tell the right hon. Gentleman. If he had listened to what I said at the beginning of this passage when I outlined his charge that there was some bunching here, I said, "Yes, there was bunching, to the extent that we can best estimate of £22 million "—[Interruption.] It is no good right hon. and hon. Gentlemen opposite thinking that they have got away from it on this. The right hon. Member for Altrincham and Sale clearly did not get his statement from what I said in my speech two minutes ago when he made it on Wednesday afternoon. Is he now seriously telling us that he
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  made the estimate himself, or got it from some ex-Treasury official?
  Mr. Barber: I have said to the right hon. Gentleman that I believe that £22 million should have been deducted. The right hon. Gentleman has now confirmed it.
  Mr. Jenkins: The right hon. Gentleman has been unwilling to tell us where he got the figure. Of course he has been unwilling. But he is right on the narrow point, because he got the figure from the Board of Trade announcement published on 13th October—[HON. MEMBERS : "0h."] There is no other conceivable source from which he could have got it. His story about a concealment in the notice of 13th October is based on figures which he got from that notice and from nowhere else.
  Mr. Barber: Since the right hon. Gentleman agrees that the answer to the first question which I raised five days ago is in the affirmative, will he now answer the second question?
  Mr. Jenkins: No, because the right hon. Gentleman—[Interruption.] I think that the second question was, would the surplus have been £10 million.
  Mr. Barber: No. I will remind the right hon. Gentleman. Five days ago, the Home Secretary promised me that his right hon. Friend the Chancellor of the Exchequer would reply to these questions. The second question was:
  "… is it or is it not true that the August and September figures did not include the import of American military aircraft, and that if these had been included the joint surplus for August and September, splashed by television and newspapers as £66 million, would have dropped by a further amount to bring the surplus not to £66 million but to something nearer £20 million?"—[OFFICIAL REPORT, 29th October, 1969 ; Vol. 790, c. 173.]
  Mr. Jenkins: As the right hon. Gentleman knows perfectly well, the first part of the question has been answered in detail and without interruption or fear of contradiction. On the second part of the question, I will answer precisely what is there involved in a moment, as soon as I have disposed of this point.
  So much, therefore, for the subjective charge that we tried to mislead. What about the objective one, that people were misled?

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  Once again, this is the reverse of the truth. The next morning,early in their main stories, The Times, the Financial Times—which the right hon. Gentleman went out of his way to praise as being the most intelligent newspaper — the Daily Telegraph, The Guardian and the Daily Mail all referred to the £22 million. The Guardian and the Daily Mail made it the main point of their stories. One of the few papers which did not get it right was the Daily Express. So that all that Mr. Pincher's brilliant coup, his "searching analysis", the right hon. Gentleman called it, his close questioning of Board of Trade statisticians, Customs and Excise officials and others involved amounted to was that, ten days late, he enabled the Daily Express to catch up with what six other major newspapers had understood and presented honestly from the beginning. But he did not present it honestly and nor did the right hon. Gentleman and his friends who have based themselves on this ridiculous story.
  The distortions did not stop there. What was the position in August and September, even on the assumptions of Mr. Pincher, now endorsed by the right hon. Gentleman? Apart from the clear untruth about the Spey engines, he reduced the average visible surplus for these two months to £10 million. What would that mean? Ten million £s a month of visible surplus is equivalent with invisibles to a good £50 million a month of surplus on current account. That is a rate of £600 million a year. When have I, when has my right hon. Friend the Prime Minister or any other Minister of the Government even begun to suggest that we were doing better, even temporarily, than £500 million a year?
  Mr. Barber: That is why I described the figures as "excellent ".
  Hon. Members: Oh.
  Mr. Jenkins: Even on the assumptions of Mr. Pincher and the right hon. Gentleman, so far from exaggerating our performance in August and September, we have understated it by £100 million.
  Could any relatively uninformed reader have begun to assume from that article in the Daily Express or from the right hon. Gentleman's speech in his constituency that all that that speech could ever claim to show was that our surplus in August
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  and September was at a rate no higher than £600 million? Who was the right hon. Gentleman accusing of deliberately misleading and of designing to deceive the British people—to sell them a pup?
  My right hon. Friend the Home Secretary said last week that he thought that the right hon. Member for Altrincham and Sale would need to apologise today. I am sure that he ought to. He has been responsible for one of the nastiest little political stunts that I can ever remember. But I do not expect him to apologise. I would not value it much if he did.
  However, I have a more serious question to put to the right hon. Member for Bexley. I watched him on television when he said in his speech at Brighton that he genuinely welcomed the improvement in our trading and balance of payments position. He gave a good reason for doing so. I believed him. What does he say now? Will he get up and repudiate his right hon. Friend and give an assurance that in future there will be no more of these stunts, no more malicious denigrating of figures, admittedly complicated, which are produced with the most scrupulous care and impartiality in order to give the country and the world the most accurate possible picture, good or bad, about what is happening to our trading accounts? The integrity of these figures is a national asset and the right hon. Gentleman ought to be very careful, even under the stress of by-elections, about trying to undermine it.
  So much for that little incident.
  Mr. lain Macleod: The Chancellor will recall that a few moments ago, picking up the points of what commentators said, he started with the weight of evidence the next morning. Will he deal with my point of the first impact across the tapes and that brilliant journalists on the day were in fact misled?
  Mr. Jenkins: I have already referred to the first mass information means, which is the B.B.C. 1 o'clock news, which I would think the best of the lot. Really the right hon. Gentleman is making nonsense of it.
  So much for that little incident. I now turn briefly and finally to the balance of payments prospect. I can reiterate the view I have previously expressed, that

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  we are making very good progress towards our immediate target of a surplus of £300 million on current and long-term capital accounts combined in this financial year. The first quarter of the financial year, the second quarter of the calendar year, took us £100 million of the way there. The full figures for the next quarter—the third quarter of the calendar year, to which the right hon. Gentleman the Leader of the Opposition, when welcoming the second quarter figures, referred as always the most difficult—will not be published in detail for another month. But enough is already known about their main components to show that they will be still better, substantially better, than those for the second quarter. Indeed, I can say with confidence that they look sufficiently good to bring us close to another target, to which the right hon. Gentleman referred on June 25th, and I believe again this afternoon, as having been previously abandoned by me. That is the most ambitious target I ever set, and I set it soon after devaluation—a surplus at the rate of £500 million in the second half of 1969. I believe that we have achieved that rate for the middle two quarters of 1969. In other words, we look like being three months ahead of our most ambitious figure—[Interruption.] I note the enthusiasm that this news arouses from the Opposition. I ask the House to reject the Amendment.
  5.24 p.m.
  Mr. Peter Hordern: I was somewhat surprised to hear from the Chancellor that the third quarter will be better than the previous two quarters, recalling that he refused to increase the travel allowance only a fortnight ago. I should think that there was a clear case, with the prospect for the third quarter apparently being so good, for the travel allowance at least being increased. But he refused to increase the travel allowance in direct contravention of our obligations to the International Monetary Fund.
  The figures given by the Chancellor on this vexed subject of the trade returns are still not comparable with those that obtained a year ago because, through the researches of the Board of Trade, some items have now been identified from the balancing amount, amounting to about £120 million, so the total
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  balance of payments has been helped at least to that extent.
  I do not know how much notice we should take of the Gracious Speech as a whole, but I suggest not very much if the last one is any guide.
  I wonder whether hon. Gentlemen opposite remember the Prime Minister on the last occasion saying:
  " A Parliament containing a House whose greatest charm is that its form and composition still whisper the last enchantments of the Middle Ages stands in urgent need for more fundamental reform."—[OFFICIAL REPORT, 30th October, 1968 ; Vol. 772, c. 33.1
  There the House is, still whispering, and whispering its way to some effect. Enough, at any rate, to throw out the Boundaries Bill—that contemptible piece of gerrymandering.
  So the Bill to reform the other House was withdrawn to make way for trade union legislation. And then that was withdrawn as well. So the other House still whispers its enchantments while the Secretary of State for Employment and Productivity behaves like Old Macdonald on his farm, scattering largesse here, there and everywhere, as one unofficial strike after another breaks out in the public sector.
  But worse is to come. For such legislation as there will be on trade unions in this Parliament will be only the benefits of the original deal which was offered to the trade unions in exchange for accepting legislation on unofficial strikes.
  The Government have, therefore, established a record in making a threefold surrender, although, to be fair, I suppose they can at least offset the conquest of Anguilla against those three. The Government have surrendered control of the economy to the International Monetary Fund. Our accounts have to be presented and passed every quarter by the I.M.F. Incidentally, when the Chancellor last answered Questions in this House, he appeared to know nothing about the report of the managing director of the International Monetary Fund on 23rd September. In that report the managing director said:
  "In the case of the United Kingdom in particular, the need to repay a large amount of indebtedness in a rather short period of time is likely to compel it to adopt policies that may even exceed the requirements of long term adjustment."
  I do not know why the Chancellor did not refer to this particular passage during

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  the course of his speech. It would have been interesting to know whether he agreed with it in view of the improvements in our balance of payments position which he has talked about in the third quarter.
  So the economy is now being run by the I.M.F., and, with its emphasis on monetary policy, rather well run at that. That is the first surrender.
  The second surrender has been to the trade unions, and the third surrender has been to the Left wing of the Labour Party.
  Three surrenders in one year, and legislation in this Gracious Speech designed only to please their own supporters, quite irrelevant to the needs of the country. That is the record of this Government, and it has not gone unobserved by that large group of politically motivated people—the electorate.
  The economy certainly seems a good deal more hopeful than it did some months ago. It looks, from what the Chancellor has said today, as if we shall get our required surplus of £300 million with something to spare. But that sum is not on a strictly comparable basis, because the Board of Trade has discovered about £120 million of unrecorded exports which would normally have formed part of the balancing item. But let us suppose that we achieve this surplus. Where does that leave us in relation to our debt?
  The position about the short-term indebtedness to the central banks is unknown, and the Chancellor failed to answer my right hon. Friend's challenge to produce a White Paper explaining what the debt position was. On what has been revealed, it seems to be the case that on 1st January of this year we owed about 7,500 million dollars, of which 2,500 million dollars were owed to the I.M.F. The Chancellor said recently that we had repaid one-sixth of our debt. That must have been one of those little slips to which the Chancellor is sometimes prone. According to the official figures we have repaid 1,000 million dollars, leaving 6,500 million dollars. It is true that the S.D.R.s will become available next January and that under those arrangements we shall have a right to draw £440 million over three years,
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  of which 70 per cent. will be non-repayable.
  But suppose we deduct the full £440 million. That still leaves nearly £2,300 million, and it means that we are obliged to get seven years of such surplus as we shall have to get this year. It means seven lean years to make up for the rake's progress of the last five. Perhaps "rake's progress" is not the right phrase because it is not as though we have had any fun during the last five years. Our overseas portfolio has disappeared. We have had £3,000 million of extra taxation. We have a debt of another £3,000 million, we have had devaluation, and the travel allowance has been restricted to £50. I believe that only Egypt has a lower travel allowance hardly a rake's progress. In fact, we have had no progress at all under this Government. All that we have had is the bill.
  It rather reminds me of the difficulties in which the Liberal Party finds itself. It is a pity that none of its members is here. The bill has not only to be met in terms of overseas debt, but has to be paid in terms of years of stagnation, both of production and of industrial investment. I think that it is the low level of industrial investment that gives the most cause for concern for the future.
  Two weeks ago the Chancellor said that the underlying trend for manufacturing investment had been strongly upward over the past 18 months. Let us look at that for a moment. What happened was that manufacturing investment rose in the last quarter of last year because the higher rate of investment grant was about to come to an end. It fell sharply the following quarter. But averaging that quarter with the following one, manufacturing investment stayed flat for the last three quarters, from October, 1968, to June, 1969. The figure was £350 million on average, compared with £316 million 18 months ago. Manufacturing investment is no higher than it was in the second quarter of 1967, and it is about the same as it was in 1961. Instead of claiming that manufacturing investment was strongly upward, the Chancellor should have said that manufacturing investment had been strongly flat since the second quarter of 1967.
  Mr. J. Bruce-Gardyne: My hon. Friend said that manufacturing investment was no higher than it was in

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  1961. Are not those money figures, and is it not a fact that, taken as a percentage of the g.n.p., manufacturing investment is now substantially lower?
  Mr. Hordern: My hon. Friend is right. The figures show that in the third quarter of 1961 fixed capital investment amounted to £3435 million. In the second quarter of this year the figure was £348·8 million. Those are money figures, and not figures in real terms. In fact they are a great deal less in real terms than they were in 1961, and this in spite of the fact that investment cash grants have ben at an unprecedented level.
  The trouble is that not only is the amount of capital investment at a very low level, but so is its quality, measured in terms of investment per employee and the average age of equipment. Sir Steuart Mitchell, at the last meeting of the N.E.D.C., said that in 1968 Britain had the lowest rate of capital investment per employee of any major industrial country and was bottom of the league in a comparison of machine tool consumption. He said that in the United Kingdom the number of machine tools which were under 10 years old was 38 per cent. The figure in Germany was 50 per cent. and in Japan 64 per cent. On present forecasts, 1969 should see investment in the United States rising by between 8 per cent. and 11 per cent., in Germany by 10 per cent., in Japan by 15 per cent., and in the United Kingdom by about 3 per cent. This growth overseas is reflected in our export demand for machine tools. But the latest figures show that home demand for June, July, and August, was 1 per cent. higher than in the previous three months, but those in turn were 10 per cent. lower than in the first quarter.
  The evidence suggests that we are not going to be able to increase production or productivity significantly during the next year or two, in contrast with our competitors. As the Minister of Technology knows, the worst of it is that the value of these new numerically-controlled machine tools is that they can perform so much better than the ones that were produced only about five years ago.
  But there is a further factor which affects the level of manufacturing investment, namely, the high rate of corporation tax and the squeeze on money supply. Whether the money supply theory
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  is becoming acceptable in economic circles is rather relevant, since our creditors believe in it, and we therefore have no choice but to apply it. But one point about the theory which seems to have escaped attention is that there is always a time-lag of about a year between the imposition of a policy of strict monetary control and its effect, so that the real drop in liquidity could occur at the beginning of next year just when the taxpaying season is at its height.
  I think that the majority of companies will have to cut back their investment programmes at the beginning of 1970, and that they will not be in a position to grant very much higher wages. I guess that since the Government have abandoned all restraint in the public sector, the number of unofficial strikes will continue to increase rapidly. In all probability, therefore, this will be a winter of real discontent.
  One of the main reasons for our appalling record in unofficial strikes is that trade union leaders have not been allowed to perform their job properly. The number of these strikes is merely a reflection of the lack of confidence that trade unionists feel for their leaders. This is one of the worse effects of the prices and incomes policy. The damage that has been caused is likely to remain with us for a long time, and to those many unofficial strikers who have tasted success the idea of a binding obligation or even a contract actionable at law is not one to strike terror into their hearts.
  I think that other measures will be necessary. First, union leaders must be allowed to negotiate freely for their members. The idea that there can be such a thing as planned growth in incomes is as absurd as was the National Plan. Wages are not only too low on an international comparison, but their rate of growth has been very disappointing. What is more, wage restraint merely makes for an uneconomic use of resources, because workers cannot be attracted to efficient companies by the prospect of higher wages and better conditions.
  Then there is the simple fact that a wage freeze has never worked in any country in which it has been tried. The country that has never tried it has the best economic record, namely, West Germany. Finally, there is something

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  peculiarly nauseating about urging a shift from direct taxation to indirect taxation, and yet at the same time refusing to allow wage earners the advantage of such a shift.
  I hope, therefore, that we have seen the end of the prices and incomes policy. But while it is surely right that trade union leaders should be able to negotiate quite freely, I see no reason why unofficial strikers should receive social security benefits from the State. After all, they are striking not only against their employers, but against their own leaders, and I see no reason why the community should support them.
  I see nothing in the Gracious Speech that will encourage savings. On the contrary, there is a lot that will discourage the capital market. Through high taxation, capital-intensive industries—both the very old and the very new—are having to turn to the Government for assistance since the ordinary resources of the capital market, both in respect of companies and individuals, are being sequestrated by the Government. There is no need for the Government to go in for overt nationalisation. All they have to do is to starve the private sector into submission. I am glad that we have promised to get the Government off the backs of the people. I hope to hear my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) give a categoric assurance that we shall abolish the I.R.C. and rid ourselves of this interventionist, busy-body, Little Englander concern. We do not have to concern ourselves overmuch about better Government ; it could scarcely be worse. What we want and what the country needs is less Government.
  Finally, I want to say something about floating the rate of exchange. The opponents of floating always show a most touching concern for the difficulties of businessmen and traders. I cannot imagine why. Every time such a person wishes to import or export he deals on the forward exchange market, where the rates differ every minute of the day. I recognise the difficulty of floating unilaterally, but could not we at least give a lead? At present sterling is strong in comparison with its position in recent years. Why not widen the quotation be-
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  tween which sterling moves? Why not allow it to move between 2·30 dollars and 2·50 dollars. It is absurd to allow our meagre resources to be put at such risk. As it is, we have borrowed £3,000 million to try to defend a fixed rate of exchange, which was eventually found to be impossible.
  I should have thought that the Chancellor would be much better advised to play down the improvement in the balance of payments outlook. He will never be able to compete with the Prime Minister in euphoria in any case. if only the Government had once understated the degree of recovery which they expected confidence may by now have returned. But the Chancellor has not the look about him of dedicated austerity which Sir Stafford Cripps had, nor has he been found quite so reliable when his statements have been checked after he has made them. He said the other day, of one of my hon. Friends, that he did not think much of big words from small men. Perhaps not. But they are a good deal to be preferred to the big promises at a Labour Party conference of a rather portly social climber. There is no confidence in this Government. It is time they went.
  5.42 p.m.
  Mr. Frederick Lee: I want to say a word about the demise of the Department of Economic Affairs. I know that a Department that deals with longterm economic planning can never seem to be of great assistance to the Tory Party. But in this movement, dedicated as we have been and still are to the proposition that only by careful longterm planning can we bring this nation to a permanent surplus of balance of payments and a healthy and expanding economy, I should have thought that a Department such as the D.E.A. was utterly essential. I, therefore, believe that the decision to disband it was wrong.
  I may be conditioned by the fact that I worked inside it for 24, years, when I learned to admire the dedicated and highly efficient staff men who have served not only this Government but the nation extremely well. One of the facets of their work concerned regional policy. Because of the enlightened approach made by the D.E.A. to regional policy we now seek, despite the squeeze, a farand-away more healthy position in each

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  of the major regions than could have been the case without the work of the D.E.A.
  I had some intimate knowledge of the Northern Region, which is the most difficult of all in terms of unemployment. The three main regions are the Northern Region, Scotland and Wales. I looked at the problems of the Northern Region and wondered why they had never been tackled by the Conservative Party. It was an utterly coal-intensive region. The only other main industries were shipbuilding—utterly in the doldrums—and iron and steel, which is due for reorganising. There was not a single plus to be seen. Had it not been for the policies of this Government and for the enlightened way in which the D.E.A. and other Government Departments tackled these problems the Northern Region would now be practically derelict.
  Reference was made to the unemployment figures. The hon. Member for Horsharn (Mr. Hordern) followed faithfully on the lines of his leader at Croydon not only in deploring unofficial strikes—we all deplore the necessity for them—hut also in trying to make the case that because this Government did not go ahead with their proposed 28 days cooling-off period—or whatever it was—the high rate of unofficial strikes resulted. The hon. Member for Horsham said that this was caused by the prices and incomes policy. I wonder whether it was the prices and incomes policy which, in 1957, 1959 and 1962 produced respectively 8,157,000 lost working days, 4,880,000 lost working days, and 5,980,000 lost working days.
  The speech of the Leader of the Opposition at Croydon was almost as irresponsible as the statements of the right hon. Member for Altrincham and Sale (Mr. Barber) and was designed for the same purpose. When the Government decided to go ahead with the 28 days cooling-off period I confess that as a member of that Government I violently disagreed with the decision and said so inside the Government. I opposed it not on any issue of principle but because I did not believe that it would work. I still do not believe that it would work. Hon. Members opposite cheered their hon. Friend for talking about trade union officials being given carte blanche to negotiate what they can. I wonder
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  what they would make of their own policy—a policy far and away more stringent than anything that my right hon. Friend the First Secretary was proposing.
  I believe that the decision arrived at between the Government and the T.U.C. —a decision described by hon. Members opposite and their Press as a surrender by the Government—was a momentous and historic decision which resulted in a step forward within the trade union movement—a step which should have been taken 20 years ago.
  To me there is something ridiculous in bringing into being a central authority —in this case the T.U.C. General Council—and leaving it without any kind of sovereign authority within the movement. The outcome of the discussions between the Government and the T.U.C. has been that for the first time the trade unions themselves have surrendered a certain amount of sovereignty to the General Council. I believe that this can do nothing but good.
  When the Leader of the Opposition at Croydon tried to denigrate the work of the T.U.C. Council, he was being both ignorant and shockingly unfair. Indeed, it was the speech of a desperate man whose certainties had suddenly become mere possibilities. Somebody once spoke about statesmen thinking about the next generation and politicians thinking about the next election. What does one think of a leader of a party whose thinking does not go beyond the next by-election?
  The start which has now been made in the trade unions in surrendering greater sovereignty to the T.U.C. can be of incalculable good not only to the trade unions but to the nation as a whole. I will give the House the benefit of my experience. On many occasions we had to meet the T.U.C. General Council or their Economic Committee, most members of which were my personal friends. They would come along to discuss a T.U.C. resolution on a certain subject, but all they had the power to do was to disagree with us. If we were to suggest a compromise of some kind, they had not the authority to accept it.
  I do not want to overdo my argument on this matter since in the main the unions would probably give them support after the event. But surely in this

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  day and age, when the trade union movement is looked upon as a constant adviser of Government, it is wrong that such a central authority cannot be given the power to agree or disagree with Government purely on the principles which are being discussed. None of those T.U.C. members would sit round a conference table with employers if those employers had no power to settle. But Ministers must do precisely that.
  The 28 days cooling-off period and the development of the work of the General Council do not amount to a surrender. As one who has worked for this kind of system for a long time, I want to see far more authority given to the General Council by the trade unions. If there is to be proper discussion and if advice is to be sought from specialists within the trade union movement on a thousand issues which face the Government of the day, whatever Government it may be, then it is right and proper that the Council should be given sovereign power by its own trade unions.
  On the whole question of the prices and incomes policy, the trouble is that people are never interested in the matter until there is a crisis. But once a crisis has occurred it is the wrong time to introduce such a policy because the policy becomes the creature of the crisis. This is what has happened during the past few years.
  Those of us who have been concerned in this subject for a long time have never regarded such a policy as a short-term cure for an emergency. It is a refinement of collective bargaining which has been made necessary by the great industrial changes which have occurred. One was arguing for some sort of logic to be brought into the matter instead of the crazy "horse dealing" nonsense with which I used to have to contend when I was in charge of a great factory. We should aim at reasoning the matter through, not with any restrictive purpose in mind but to ensure that the rewards which industry can offer are determined, not merely on a basis of economic power, but on the worth of the jobs themselves. That kind of environment was lacking throughout the period of emergency.
  The Government have stated that they will bring back Part II of the 1966 Act. A man who cannot drive a coach and
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  horses through that provision must be a half-wit. If any industrialist or trade union wishes to employ me in my present state of semi-employment, I am at their disposal. [An HON. MEMBER : "No advertising."]
  The issue must be looked at in the light of the exposition of incomes policy which I have tried to outline. It is not now a question of either Part II or a free-for-all. I invite those who denigrate the prices and incomes policy to give an alternative. Is the alternative a free-for-all?
  Mr. R. B. Cant: Yes.
  Mr. Lee: My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) is brave enough to say that he wants a free-for-all. He and the right hon. Member for Wolverhampton, South-West (Mr. Powell) will be marching in step on that matter. I do not merely want to see the resuscitation of something which is bound to be restrictive. I want to see the next phase of prices and incomes policy a phase entirely constructive and far more just and scientific—as a method of determining the rewards which industry can offer.
  The Amendment of the Conservative Party mentions a record level of unemployment. Unemployment at present is confined to the three regions which I have mentioned. There is no real reason, in terms of economic planning, that that unemployment should be as heavy as it now is. The area of heaviest unemployment is the Northern Region. The Tyne, for example, has suffered badly. Two years ago the Swan Hunter people had a small order book. Their order book now amounts to £164 million. The Weir, in the area of Sunderland where there is heavy unemployment, has orders amounting to £70 to £80 million, and the Tees area is in the same position. In these areas there are vacancies for many hundreds of skilled people in shipbuilding.
  The restructuring of industry, which is a great accomplishment by this Government, has meant that in those areas of heavy unemployment there are now far more people working in the developing industries than in the contracting industries. But new skills are required in those areas. Ex-miners have been

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  trained and then re-employed to undertake splendid work in those regions. But it is no good some of my trade union colleagues in those areas arguing about having so many hundred skilled men on the dole if their skills will never again be required when there are hundreds of vacancies for skilled men.
  Therefore, I do not make a plea for more training facilities, since there are ample. I visited Maryport a few weeks ago and it was no more than half full. Yet there is a need for this kind of training. I urge the trade unions in those areas to get their members to accept retraining rather than that their members should be unemployed. My background is that of a man who has served an apprenticeship. It is not enough for skilled men to sit back and refuse to be retrained. That is a stupid attitude in days when many skills will never again be used and when the nation is nevertheless seriously short of highly skilled labour.
  The coming of new methods in industry means that the ratio of the skilled to the unskilled must increase and continue to increase for years. The demand for unskilled labour is rapidly disappearing. What a shocking tragedy it would be if we reached a position in which there was a major problem with unskilled unemployed and a great demand for nonexistent technologists and craftsmen. That is the alternative to wide retraining of skilled men whose crafts will no longer be necessary.
  The Leader of the Opposition spoke about unofficial strikes. Unofficial strikes signify one great change—that power is departing from the national executives of trade unions and is going to the shop floor. Our task is to ensure that responsibility follows that power. Some of us have worked on this problem for many years—I did so before I came into the House and that was a long time ago. Wherever there are workshop organisations, no matter how complicated the firm—and in my firm we dealt with 20,000 or 30,000 people—if it can be accepted that power resides in the factory and that responsibility is the concomitant of that power—this is almost a paraphrase of Stanley Baldwin's historic statement—there will be a relatively strike-free organisation and discussions
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  between management and shop stewards will be constructive.
  Practically every trade union rule book which I know forbids power to go to the shop floor and forbids responsibility to follow. These rules were right for the time when the rule books were drawn up, but the books lay down a negotiating procedure which is now obsolete. It is a crime that the York Memo of 1922 should still be the negotiating machinery of the engineering industry.
  I was unhappy about the approach to this subject by the Leader of the Opposition. Instead of trying to obstruct the passage of power to the shop floor, we as a Parliament must do everything in our power to facilitate that transfer, but also to insist that the responsibility necessary for these vital functions goes with it. The C.B.I. is even worse than the trade unions in this respect. I cannot think of many large firms which take much notice of the C.B.I. and there is not much use in one side of the equation making the necessary changes if the other side does not.
  The Government were right, and the Press and the Tory Party were utterly wrong to talk in terms of surrender. The work of Mr. Vic Feather and his colleagues has been exemplary. As yet, they have not been able to settle the machinery necessary for them to have wider power, but I want to see that settled. The idea that we can remain stationary in collective bargaining and about where power resides in the industrial complex and that we can still depend on old skills to pull the nation through is 19th century thinking.
  In these respects the Government have done an enormous job. Abandonment of the prices and incomes poicy would be fatal. There would be no hope for many millions in the lower-paid brackets if the theory were abandoned. But I am pleading not for a resuscitation of the negative approach, which was necessary at a time of emergency, but for an acceptance of the need to transform a system inherited from the past into a constructive system which many millions of trade unionists would readily accept. This would be a great contribution not only to continuing balance of payments surpluses but to new industrial development and highly skilled, even automated processes with

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  the necessary skills and techniques required of our people to work them.
  This is the greatest guarantee of the end of the days of worrying ourselves sick about next month's trade figures. It is the best way to ensure that such fears become merely relics of the past and to ensure a new progressive, science-based industrial economy which would be the best appeal which the Labour Government could make whenever they decided to go to the country.
  6.8 p.m.
  Mr. J. Bruce-Gardyne: It is a privilege to be called to speak after the right hon. Member for Newton (Mr. Frederick Lee), although I must confess that I did not find much in his speech with which I was intellectually prepared to agree, although I did agree with many of his interesting comments about the need to shift power and responsibility to the shop floor. The only trouble about that is that I should have thought that it would have led him to suspect, as I sometimes suspect, that we might be better off without the C.B.I., about which he made some reasonable strictures, and the T.U.C. and genuinely allowed democracy to assert itself at shop floor level without the structures which we have built upon it.
  The matter which concerns me most in our consideration of the economic aspects of the Queen's Speech is the way in which the Government are pursuing the policy of control of the money supply. There is remarkably little in the Queen's Speech about the management of the economy. There is the one ritual phrase, about the first priority being the balance of payments, which we have had in every Queen's Speech since the Government came to power, although with a little variation in the reference to employment, which my right hon. Friend the Member for Enfield, West (Mr. lain Macleod) mentioned.
  I am reminded of an early Bob Hope film called "Road to Rio" which began with a small group of cavalry men cantering across the screen with their leader saying, "We are nearly there, boys ". The scene dissolved into something quite different, but at regular intervals throughout the film this group of cavalry men would appear accompanied by their
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  leader saying, as they charged across the screen, "We're nearly there, boys". This film concluded with the group charging across the screen once more, and although the action of the film had had nothing to do with their appearance, their leader said, finally, "We nearly made it, boys".
  Considering the statements made about the balance of payments in successive Queen's Speeches under Labour, I am inevitably reminded of that film. I see the Minister of State smiling with what appears to be satisfaction. Perhaps he considers that his cavalry men are approaching their objective. But we must be concerned with the spurs and methods they are using to get there.
  In his Budget speech in April the Chancellor said that he had not been suddenly converted
  "… to some obscure foreign cult. Important but arcane arguments go on among professional economists about the nature of the casual relationships between the money supply on the one hand and demand on resources on the other ".—[OFFICIAL REPORT, 152h April, 1969 ; Vol. 781, c. 1007.]
  Some hon. Gentlemen opposite and, I admit, some of my hon. Friends, were sceptical of the absence of this conversion, but I do not believe that Milton Friedman would regard the Chancellor as a serious convert to his theories, for the right hon. Gentleman does not begin to understand them and, in so far as he is applying them, he is not applying them in a method which Friedman would support.
  We had a welcome acceptance of the idea of the existence of a need for the control of money supply in the first Letter of Intent published by the present Home Secretary. We had an assurance that
  "… bank credit expansion will be sufficiently limited to ensure that the growth of the money supply will be less in 1968 than in the present estimate for 1967, both absolute and as a percentage of the g.n.p. despite the expected recovery of reserves."
  The last part of that statement was crucial, because there was no substantial recovery in reserves in the coming year and, on a D.C. basis, there should have been no increase in money supply, either. By the second quarter of 1968, it was rising at an annual rate of 10 per cent. Were the Government worried? Not in the least. In August the I.M.F. had to send over a team to give the Treasury a

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  pep talk about how the control of money supply worked; and still we strode blithely on without the message having got through.
  On 21st January the right hon. Gentleman who is now the Paymaster-General told my hon. Friend the Member for Barkston Ash (Mr. Alison) that the consequences of changes in money supply depended on the reason for those changes, and as late as 15th April the Chief Secretary told me, in an Answer, that the increase in money supply in 1968 was only two-thirds of the increase in 1967 and rather less than the rise in the g.n.p., so that we had nothing to worry about. As so often with the Chief Secretary, he missed a brief or two, because literally within hours of his making that statement, the Chancellor said in his Budget speech that he did not agree with the Chief Secretary that we could be smug about the rate of increase in money supply in 1968.
  Then the full glory of the conversion to what the Chancellor conceived to be the control of money supply was spelt out in the May issue of Economic Trends, and the Treasury had the grace to insert a phrase in that document which we all recall:
  " It is becoming practicable to make use of It "—
  that is, of controlling money supply as guides to policy—because of improvements in documentation. That was certainly one way to get over the change of attitude which had occurred. Of course, the crucial development had not been an improvement in the Treasury's statistical resources, but the regular visits of Mr. Richard Goode. As my hon. Friend the Member for Horsham (Mr. Hordern) pointed out just now, the theory of the coltrol of money supply, whether right or wrong, had to be adopted because our creditors considered it to be right and because we were not in a position to argue with them.
  The Treasury has an enduring characteristic. It is mighty slow to make conversions but once it has undergone one, it is prepared to apply self-flagellation to an ex tent which earlier converts would never endure. This is happening today. In the July Letter of Intent we had the precise target for the increase in the supply of money over the current financial year. Although my hon. Friend the
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  Member for Barkston Ash had been told earlier in the year by the Paymaster-General that it was impossible to state a precise target, the Chancellor made one ; and £400 million was to be the limit of the growth of D.C.E., to be checked quarter by quarter. By the time the second Letter of Intent had been dispatched, as we learnt subsequently, there had been not a further expansion of domestic credit but a contraction of £77 million. For the first time since the 1930s money supply was contracting.
  Hon. Members will recall what followed. The I.M.F. met in Washington and its managing director announced, as my hon. Friend the Member for Horsham pointed out, that because of its excessive short-term indebtedness, the United Kingdom economy would have to suffer more severe restraints than the need for the normal adjustment process necessitated. When we questioned the Chancellor about this, he seemed blithely unaware that that statement had been made.
  In other words, in September the managing director of the I.M.F. was already saying that the disciplines which we were applying were more severe than the underlying state of the economy required. This fact must not be overlooked. The crucial fact which I wish to advance concerns the announcement which the Chancellor made—made then to the echo of cheers from hon. Gentlemen opposite—that the import deposits scheme was to be continued.
  Various explanations have appeared in the Press for this unexpected decision. The Economist, which is almost as bemused as the right hon. Member for Newton with the glories of the income policy, feels that all this has occurred because the incomes policy has broken down—as if it ever existed. It is clear that the reason for the Chancellor's decision to renew the import deposits scheme had nothing to do with inflationary increases in wage settlements about which The Economist had become so scared. The Chancellor gave his explanation in an Answer to the hon. Member for Heywood and Royton (Mr. Barnett). who asked :
  " When the Chancellor gave the first figures for domestic credit expansion, did he take into account the fact that he intended to continue the import deposits scheme? If not, to what extent is the figure which he promised the I.M.F. now changed because of keeping

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  on the import deposits scheme and has he not now a figure of domestic credit expansion very much tougher than that which he originally announced?"
  The Chancellor replied:
  "I did not take it into account because had not decided whether to recommend to the House that we should extend the import credit scheme. To that extent it is the case that it is a factor on the stiffening side".
  He added:
  "Countering that must be the fact that the banks are very substantially above the planned ceiling."
  I think that here we have the explanation which is that the Chancellor is completely obsessed by the banks being above their planned ceiling. If he even began to understand the arcane theories to which he referred in his Budget speech he would realise that this glorious ceiling is quite irrelevant.
  Interestingly enough, I notice that when the latest bank lending figures were announced, the Bank of England took a rather different line. Its attitude was more, "Boys will be boys ". The arcane theories seem to be applied there with rather more sense than in the Treasury. For the Treasury and the Chancellor of the Exchequer it is "Flog on. We have the money supply falling, we are already way beyond any target we gave to the I.M.F., but we must operate the squeeze still further because the banks are above their ceiling." This seems to me to be an extremely dangerous failure to understand a theory which has been applied, and in its short-term implications it is extremely dangerous for the management of the British economy.
  Here, I will quote briefly from an article about the control of money supply which appeared in the latest issue of the Lloyds Bank Review. It is by a lady called Anna Jacobson Schwartz, who is on the staff of the I.M.F. She says:
  "Even if the banks hit the target—or, to use a more exact metaphor, get under the ceiling—control of advances would still be a poor way to control the money supply. The links between advances and the money supply are too loose. To curb the rate of growth of the money supply, the essential requisite is control of the monetary base."
  This is quite fundamental, but the Chancellor of the Exchequer does not even begin to understand it.
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  As a result, we could face a very acute squeeze on the money supply in the spring, leading, perhaps, to widespread bankruptcies, and leading to a quite unnecessary disruption of production and a quite unnecessary increase in unemployment, just because the Chancellor of the Exchequer is in a tizzy over the banks. It is appalling that we can see such ignorance in the right hon. Gentleman, who is supposed to be in charge of the management of our economy.
  I realise that what will happen next spring, as the first bankruptcies come in, is that we shall immediately get a sudden turning on of the tap, perhaps an acceleration of payment of investment grants, then a substantially lower Bank Rate and then, above all, we shall have those glorious "lollies" in the 1970 Budget. But all that we will have achieved will have been a very substantial reduction in productive manufacturing investment, for the reasons given by my hon. Friend the Member for Horsham. compensated by another huge give-out to the consumer in the 1970 Budget. It may be good politics, but to me it seems to be mighty bad economics.
  What depresses me most is that we never seem to learn ; that, every time, the Treasury invariably does too much and does it too late. When I was in the Army I used to have to drive an armoured car. I do not know whether other hon. Members have driven the Daimler armoured car, but the principal characteristic of that vehicle is that it goes as fast backwards as it does forwards. When it is being driven backwards, its commander has to sit looking through a tiny slit and ordering the driver when to turn right or left, and when to brake or accelerate. There is always a certain time-lag between the giving of the order and the driver's response. Invariably, one saw the tree coming towards one. One shouted to the driver, "Turn left." As he did not seem to hear, one shouted, "Brake." He did not seem to hear, and then began to turn left. One then shouted, "For God's sake, brake." Finally, brake he did, and brought the car to a complete halt.
  I believe that the Treasury is no better at running the economy than we were at running our armoured cars.
  Several Hon. Members rose—
  Mr. Speaker: Order. I remind the House that many hon. Members wish to speak. Brief speeches will help.
  6.25 p.m.
  Sir Geoffrey de Freitas: The hon. Member for South Angus (Mr. Bruce-Gardyne) began by speculating on what industry would be like if there were no C.B.I. and no T.U.C. It is a fair speculation, but I would not risk it: I hesitate even to think of the situation that would arise.
  He also accused my hon. Friend the Financial Secretary of smiling at something he said. My hon. Friend asks me to say that he did not smile. The only explanation I can think of is that the Financial Secretary has a naturally pleasant face.
  My right hon. Friend the Member for Newton (Mr. Frederick Lee) referred to development areas and their problems. I have a development problem which is entirely different. In my constituency there is no unemployment and it is not a development area. In it, there is the new town of Corby. Corby was a company town until about 20 years ago. Then it became a new town and it was saved by a progressive urban district council and an efficient development corporation of great drive. They built houses, a civic centre, a theatre, shops, schools, gardens, and all the infrastructure for a town of 80,000 people. Then there was an unexpected development. The efficiency of the steel plant at Corby was such that there was a large increase in production but only a small increase in labour. So, with all the enormous capital put into a town built for 80,000 people, we found ourselves with a population of little over half that number, with empty houses and with under-utilised facilities.
  I thought that in these circumstances the Government would have encouraged other industries to come to Corby and to use the existing infrastructure there, but that did not happen. A year or so ago I went to the Board of Trade, where I was told that no I.D.C.s could be issued because Corby was not a development area. At the same time, another Government Department was encouraging the development corporation to spend thousands of pounds on advertising the
  710
  attractions of Corby for industrial development. The refusal to grant industrial development certificates meant that industries went elsewhere or were discouraged and went elsewhere without even applying. There was an obvious lack of co-ordination between Departments.
  I put down a Parliamentary Question to the Prime Minister, and although I did not get what I considered to be a satisfactory answer the news about I.D.C.s was better. I want to know whether, in future, the position of Corby New Town will be considered before I.D.C.s are refused on some rule-of-thumb basis. It is in the national interest that the enormous capital investment in this town should not be wasted.
  Of two factories which I recently opened in the constituency, one is in Corby, where it will employ about 1,000 people. The firm makes cosmetics which are sold from door to door. I want the Government to take a great deal of interest in this method of selling from door to door. It is increasing greatly. Avon Cosmetics, the firm in my constituency, imposes a very high standard on its saleswomen, and the question is whether the Government should not give this method the backing of the law.
  Internationally, the standards of this firm are the basis of a scheme followed by the European Direct Selling Federation, which covers door-to-door sales in a wide range of products—electrical equipment, clothes, books, furniture, etc. —in Belgium, France, Germany, Italy and in this country. The sales of firms in the Federation, come to the staggering total of £800 million a year. The Council of Europe is considering the possibility of a European charter to control this method of sale, and I hope that the Government will consider what should be done here at home. The figures—and these do not cover all countries, of course, and France is by far the biggest market—show sales increasing everywhere by 15 per cent. per annum. This is not liked by retailers, but it brings quality goods more cheaply to the consumer.
  It is not only new methods of selling that I want the Government to consider and to keep an eye on, but new trade routes. Take, for example, the question of the docks. From the East Midlands

  711
  today more and more trade is going to the East Anglian ports because they avoid all the nonsense which happens in the London Docks and the efficiency of these smaller ports is recognised, but what about the roads from the East Midlands to East Anglia? It appears that in thought and action various Government Departments are as much London-based as their predecessors. Roads go to the North, South, East and West from London, but the question of an artery from the Midlands to the East Anglian ports should be considered.
  I am encouraged by the fact that the Minister of Technology will reply to the debate tonight. I believe that the Ministry, and the Minister particularly, have a real interest in our efficient new industries. The motor-car industry is about as lacking in imagination as those of our competitors whether on the Continent or in North America because they are still thinking primarily of the internal combustion engine. This smelly, unhealthy and inefficient engine is far from ideal. The aero engine has gone far beyond it. I want the Government to consider whether they are doing enough to encourage the production of electrically-propelled vehicles. I was disappointed to hear that only one British electric vehicle is at the show being held this week in Phoenix, Arizona. I was appalled to learn that it has a 35-mile range and a speed of only 40 m.p.h. Such figures were talked about 10 years ago. What has happened since?
  I will give an illustration of what I am worried about, the lack of interest—I hope that the Minister of Technology will be able to answer—in the development of a light-weight battery for electrical propulsion. I have had an electric outboard motor for 10 years and I have sought to get a lighter battery for it. It is a perfect thing to use on quiet backwaters, for there is no noise and it causes no pollution. One can go among the wild life without disturbing geese and ducks. We should be thinking of such a development, especially as next year is the Council of Europe's Conservation Year. I have tried to see what development there is in batteries to make them lighter. I am told that manufacturers have not even continued research into this problem. I should like to know what is
  712
  being done by the Government. I understand that the Ministry is supporting the Lucas zinc-air batteries research, but what about the work of Electric Power Storage?
  If the Minister cannot reply on these points tonight, I hope that he will let me know about them later. Here we have a very strong modern Ministry with a strong Minister. I hope that they will not concentrate only on old industries such as those concerned with the internal combustion engine. The future does not lie in them.
  6.34 p.m.
  Mr. Gwynfor Evans: Perhaps this Labour Government will be seen as the last hope of maintaining in Wales a London-centred system of government. For a long time many people in Wales have felt that there is very little to commend the Westminster system there. In the last half century the failures have been attributed by the majority of people in Wales, who are Labour in politics, to the fact that the majority of Governments have been Conservative Governments.
  It was not surprising, therefore, that in 1964 when Labour brought 13 years of Toryism to an end hopes in Wales ran very high indeed. Thirty-two of the 36 seats returned Labour Members and the new Government was confidently expected to prove that Wales could be well governed from London. The poor record of the previous 13 years had been well and truly rubbed in by the Labour Party there and there was a sense of something like ecstatic relief that a hopeful new epoch was opening. In the event the deterioration in Wales accelerated. Even solid Labour supporters have now been depressed and disillusioned.
  Bringing the Tories back would obviously be no solution for Wales. The failure is increasingly seen there as the failure of the system and the determination grows to bring the life of Wales under the control of Welsh people, to replace Westminster and Whitehall government by a Welsh government. The English system of government has always been seen as desperately bad for the non-material side of life in Wales, the language, culture and traditional life. In all fields, other than the economic, London government was recognised as

  713
  a calamity for Wales. It was obviously less democratic than a Government of the Welsh people for Wales would be. But the Establishment's justification was uncritically accepted, that economically this Government was a marvellous success. What is happening now is that the glaring economic failure of the system is forcing itself upon public attention.
  Employment is a decisive test. It is significant that when we think of Wales we do not think in the first place of employment, but rather of unemployment. In the early 'thirties unemployment in Wales exceeded 30 per cent. Since the war Welsh unemployment has been consistently about twice the English level, despite the blighting migration which syphoned hundreds of thousands of young, vigorous people out of their land.
  During the last year unemployment in Wales has been higher than at any time since the war, despite the fact that we have had this outward drain. There are today over 40,000 registered unemployed there, 16,000 more than when Labour came to power. This is because for the first time we have had a Government which deliberately created unemployment. Deliberately creating unemployment in Wales is a crime which the Welsh people will never forget and never forgive. The Welsh situation calls for growth and we have been given deflation.
  The Secretary of State for Wales has spoken eloquently in this House and outside many times of Wales as a Government success story. Let this claim be tested by the stern but fair standard of jobs. The crucial fact is that there are 64,000 fewer men at work in Wales today than when Labour came to power in 1964. Those 64,000 lost jobs for men make Labour's claim to be a success story in Wales look like a bizarre hoax. Whatever the verdict will be on Labour's management of the English economy, the 64,000 lost jobs for men are the measure of their failure in managing the Welsh economy. Now only 4·9 per cent. of the population of the United Kingdom live in Wales. Therefore the British equivalent of 64,000 would be 1,300,000. What would happen to London Government at the hands of the electorate if it had lost in less than five years 1,300,000 jobs for men?
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  An excuse commonly made for this situation is the closure of coal mines. It is of course true that those closures have been speeded up in recent years. It is also true that no care was taken to provide alternative employment for the miners, but, if not a single mine had been closed during Labour's term of office, there would still have been an absolute drop of 33,000 in the number of jobs for men in Wales. Professor Edward Nevin, who is a well-known and very able economist in Wales, prophesied that, if the Government did nothing about the situation between 1964 and 1970, there would be a drop of 59,000 in the number of men in employment. But we see a situation which is considerably worse than this. It is just as if the Government had been active in actually reducing employment.
  Nevertheless Labour is not backward in staking claims. In a pamphlet recently published, entitled "Labour Achievements in Wales ", it stated:
  "Figures of estimated employment created in Wales from 1965 to 1968 are startling—61,300 new jobs ".
  This is wholly misleading and in fact untrue. The number of jobs estimated for the industrial building approvals issued during that period may have been, and I think were, 61,300, but the actual number of jobs created by completions was only about 16,300, 45,000 fewer than the number claimed.
  We have heard ad nauseam from the Government about the advance factories that they have been building in our country. These are very welcome but are no substitute for a determined, resolute and intelligent development policy. By the end of June the tenanted Board of Trade advance factories in Wales built since 1964 employed only 770 men and 490 women, just about the number who lose their jobs when one coalmine is closed. It is little wonder, therefore, that migration from Wales is so heavy and that the Welsh Central Council on Education has said that out of 730 technologists trained each year in Wales 530 have to leave their country to find work outside. In the last 50 years, in fact about three-quarters of a million people have had to leave Wales to find work outside. The equivalent number for Britain as a whole would be 15 million.

  715
  It is not only the number of registered unemployed that indicates the Government's failure. Indeed, the extent of their failure is shown even more clearly by the very low employee activity rate. This has not only fallen sharply since 1964, but the difference between the Welsh and the English rates has considerably widened. When I asked recently how many more people there would be at work in Wales if the Welsh activity rate equalled that of England, I was told that the number was 200,000. These 200,000 people in Wales can be regarded as the hidden unemployed and they must be added to the 40,000 who are registered unemployed.
  The basic reason for this failure of the Government is their lack of any strategy of development in the country, their lack of a plan of development. It is not that they have not promised a plan of development. We have heard a great deal in recent years—before I came to the House at all—about the plan that the Government would produce, and even after I came here the right hon. Member for Anglesey (Mr. Cledwyn Hughes), who was then Secretary of State for Wales, said this:
  "In the last two years, through the agency of the Welsh Economic Council, the Welsh Planning Board, and the departments concerned with economic and social planning, the whole fabric of industrial and social life in Wales has been subjected to the most detailed examination ever known. The result of this work will be contained in the National Plan which will be published later this year. It will provide guide lines for development in every aspect of life in the Principality as far ahead as the early years of the next century."
  What eventually emerged was not even the shadow of a plan. It was a complete and utter fiasco. When one read that pathetic little White Paper that was produced, one knew that this Government would never be responsible for anything but the most shoddy treatment for Wales. It was an abdication of their responsibility for developing the Welsh economy.
  Another indication of the Government's lack of seriousness in regard to the Welsh economy was their abandonment of their promises made in 1964 to establish a Welsh Water Board. They may have to pay a very heavy political price for these failures in the near future.
  716
  Everybody concerned with the Welsh economy knew that the key to development lay in communications, especially road and rail communications. Since the present Government have been in a position to reduce expenditure on roads in Wales they were not in that position until a few years after they came to power—they have done so. From 1966 to 1969 they have reduced the annual estimates of expenditure from £19·3 million to £15·2 million. Indeed, the Secretary of State told me here a fortnight ago that the figure for this year would be £14·8 million. In the same period the English estimates have risen by £63 million to £266 million, although we have far greater need for road development in Wales than there is in most parts of England.
  During the term of the Government's office, too, we have seen a continued rundown in the Welsh railway system, and the Government have failed to produce any figures to show that railways in Wales as a whole are losing money—a point I have often made. £181 million have been spent on electrifying railways in England, not a penny in Wales.
  To add insult to injury, those who uphold this system, a system which has so roughly mismanaged the economy and ravaged our society, the society of a country which is unusually wealthy in natural resources and in natural ability, turn on its people and tell them that they cannot afford to govern themselves, that they would suffer a reduction in their standards of living if they looked after themselves.
  The fact is that any evidence that can be produced of the alleged inability of the Welsh nation to maintain standards at least as high as those which obtain in England is bound to be evidence of the failure of English government to develop the very great potential of Wales. Those who know Wales best know how great that potential is, how great her possibilities are. They know that, given 10 years of self-government, Welsh standards would be comparable with the standards of any one of the Scandinavian countries.
  The essential condition for success in Wales is the achievement of self-government. Only a Welsh government will follow policies specifically designed to benefit Wales. London government has never

  717
  done this. It does not do so now. It does not show any concern to ensure the development of the Welsh nation and of the Welsh economy. Its main concern is to maintain Britain's status and prestige as a great Power in the world. To this end the present Government have raised expenditure on defence from £2,026 million in 1964-65 to £2,450 million in 1967–68.
  This outlook goes a long way to explain the Government's anxiety to get into the European Economic Community. If Wales goes as a part of the United Kingdom into the Economic Community in Europe, the economic effect upon our country will be absolutely disastrous. To the Government here in London this is as nothing. Wales is valued here, not for herself, but only as an exploitable adjunct of England. But this political order is now due to be swept away, because we now have rising in Wales a generation of people who are determined to rebuild their nation in freedom.
  6.48 p.m.
  Dr. Jeremy Bray: When one strays from the safety of the fold on the Front Bench and finds oneself on the back benches, one is not among the agreeable geese and ducks of Kettering but among a bunch of ravening wolves who want to catch the time of the House. So I shall endeavour to limit my remarks to the shortest possible compass. In particular, I will not detain the House by repeating arguments which I have spelled out at length elsewhere. I will put in a commercial—people will be able to read it for themselves very shortly.
  I want to apply some of those thoughts to two fronts with which obviously I was not able to deal as a member of the Government—incomes policy and development area policy. One is bound to have a tremendous amount of sympathy with many of the points made by the hon. Member for Carmarthen (Mr. Gwynfor Evans), but, speaking from this side of the House and representing a constituency in the Northern Region, it seems to me that he has his nationalism and his development area policy confused.
  The Government have almost crucified themselves on incomes policy. The question I ask the House is: has this been masochism or has it been martyrdom? An important analysis by two very distinguished economists, Lipsey and Parkin,
  718
  has been sent to the Treasury and the Department of Employment and Productivity, but it has not yet been published. It has a major bearing on the business of this Session and the House ought to know about its conclusions. Lipsey is the author of a standard text book through which aspiring economists struggle in their first year at university. The technical standards of their econometric analysis in this paper would put the right hon. Member for Enfield, West (Mr. Iain Macleod) to shame and are certainly as high as, if not higher than, the analysis available to successive Governments in shaping their economic policies.
  Their conclusion is bold, not to say startling. It is, in effect, that incomes policy has been counter-productive. They analyse the data on wages, prices, import prices, productivity, unemployment and trade union activity from 1948 to 1968. covering periods with and without incomes policy, and including the latest experience. They show that below about 1·8 per cent. unemployment, incomes policy has helped to keep down what would otherwise have been an excessive rate of wage inflation. But above 1·8 per cent. unemployment, when unemployment has tended to keep down wage increases, the effect of incomes policy has been to cause higher wage increases. The effect of incomes policy is thus to maintain a steady rate of wage inflation less dependent on the level of unemployment.
  If one sets a norm, people are liable to come up to it or a couple of per cent. above it, which they regard as reasonable, as well as to come down to it. This means that either incomes policy or unemployment can be used to restrain wages, but to add incomes policy on top of unemployment is to accelerate wage inflation. That seems to have been the state that we have been in since 1966.
  The first defence against any such upsetting conclusion as this—and I hope that after today Ministers will ask their officials to examine this evidence rather closely because it is extremely important —is to call for more research. That is fair enough. It will be pointed out that since 1966 the number of registered unemployed seems to have been higher than the level of economic activity would suggest, due perhaps to redundancy pay, higher unemployment benefits, industrial

  719
  restructuring and a great many admirable reforms implemented by this Government.
  Because inflationary pressures have been higher than the level of unemployment would indicate, it may be argued that incomes policy has kept in check what would otherwise have been a runaway inflation. I must say I doubt it. Allowing for a different measure of the level of economic activity—one can take vacancies or g.n.p. by comparison with the underlying growth of productive potential—wage increases still seem to have been as high or even higher with incomes policy than they would have been without.
  I sincerely hope that the level of unemployment will fall. But if we are to stick with present methods of economic management, over the next one or two years the balance of payments constraint is unlikely to allow unemployment to fall to a level where an incomes policy norm would begin to restrain wage increases. Therefore, I cannot see any economic reason for statutory sanctions on wages in this Session of Parliament. I see some mischief. If at this stage the Government insist on the legal forms of wage restraint, the trade unions will exact that much more in actual wage increases. Let us concentrate on the substance rather than the form.
  None of this is to deny the need for reasonable wage restraint and a fairer distribution of incomes. I do not accept the argument that the trade unions can do nothing to secure a fairer distribution of incomes nationally. Economists who have argued this have concentrated too. much on the change in income distribution over time, which I accept has been disappointing. They say that the share of workers in national income has not been increased by trade union activity. But they have given too little attention to what makes for better income distribution in the local bargaining situation.
  It is extraordinary how little analysis there has been on incomes policy in particular sectors of the economy, even in such an important sector as the motorcar industry. In the local attention given to wage bargaining, productivity, training, retraining, and manpower policy generally there is an important and successful field of Government policy which
  720
  still needs much more attention, and the Government would make a very good start by increasing the pay of their own lower-paid employees.
  Whether we should stick to present methods of economic management is a different matter to which I shall return briefly. What is evident is that the pace of structural change which the Government have successfully created is having a disturbing effect on national economic management. But first, is the structural change going far enough, and smoothly enough, and are the measures effective?
  I should like to return to development area policy which two lion. Members have already mentioned. I shall talk mainly about the Northern Region, but similar points could be made about Merseyside, North Lancashire, the South-West, Scotland and North Wales. Unemployment in the Northern Region at 5 per cent. is still over double the national average, although the policy has been more successful in other regions. If it is any comfort to the hon. Member for Carmarthen, the level of unemployment and the rise of unemployment have been substantially less in Wales than in the Northern region. But unemployment would have been much higher but for Government measures in the Northern Region, for example on shipbuilding. With 7·9 per cent. unemployment in Con-sett, 74 per cent. in Bishop Auckland, 6·8 per cent. in Peterlee, 6·7 per cent. in Sunderland, 6·6 per cent. in Chester-leStreet, and 6·1 per cent. in Hartlepool, the level of unemployment is still much too high, as the Chancellor said.
  The Government have had an effective fuel policy aimed at giving the country the most economic supplies of energy. But it has not been matched by the equally effective policy for the redeployment of miners, and the Northern Region has suffered most. No one knows the difficulties more than my right hon. Friend the Member for Newton (Mr. Frederick Lee), who has had responsibility in both fields.
  The first reply is that a great deal of money has been spent, and this is true—but how effectively? The most expensive component of development area assistance is the investment grant differential which accounts for over 40 per cent.

  721
  of the total of development area assistance. In many cases the effect of this indiscriminate hand-out, given without any test of the number of jobs created, is actually to reduce employment in the development areas. I.C.I., probably the biggest single recipient, has received £106 million in investment grants in the last three years, of which perhaps £40 million represents the development area differential. Yet employment in I.C.I., net of acquisitions, has remained steady at around 127,000 for the past four years. In effect I.C.I. has been given £40 million for making no contribution to development area policy.
  Of the £285 million paid in investment grants in 1967–68, £110 million went to the chemical, oil and steel industries. Easily the greater part of the £55 million paid in the Northern Region must have gone to these industries where the final effect will be actually to reduce employment in these industries in the region.
  The Government development area subsidy to create one job at one particular plant often runs at well over £20,000 per job created. And even then this often calls for the closure of other plants actually destroying jobs. It would be cheaper to invest the money and pension off the workers to live in the South of France, taking into account foreign exchange costs.
  Nor is there a spin-off in other satellite employment. If anything, a steel mill, or an oil refinery, or a chemical plant, or an aluminium smelter repels other employment, both because of its effect on environment and because—and this perhaps more important—the wages structure and the industrial relations generated by highly capital intensive industry are an uncongenial environment for labour-intensive industries.
  The Leader of the Opposition has lately been questioning the efficiency of development area grants and presumably he has been thinking of the investment grant differential. Before hon. Members opposite start rubbing in the salt on this side of the House, they should reflect that it was the right hon. Gentleman himself and the right hon. Member for Barnet (Mr. Maudling) who launched the indiscriminate capital subsidy in the free depreciation scheme for development areas. When on 6th February, 1964, I
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  asked the right hon. Gentleman, who then rejoiced in the title of Secretary of State for Industry, Trade and Regional Development and President of the Board of Trade, whether he was aware of the waste in the subsidy to the Shell Refinery on Tees-side, the best he could do in reply was to say that my constituents would not be pleased with my question.
  Yet Shell at that time, or shortly afterwards, published studies showing why it had placed the refinery there. Recently, when Mr. David Barran, the Chairman of Shell, spoke at an open day at this refinery, he confirmed that Shell was not influenced by the subsidy in coming to Tees-side and that it did not want capital subsidies. Furthermore, as a result of the capital subsidies, the refinery was so designed as to have a higher degree of automation and to employ fewer men than any other comparable Shell refinery, including other refineries being built at the same time outside development areas. The same story can be repeated over and over again with other plants in this highly capital-intensive sector, not only in the Northern Region, but in Scotland and Wales as well.
  The right hon. and learned Member for St. Marylebone (Mr. Hogg), bless his heart, when he was Minister for the North, thought that all it needed was ironmongery and concrete. The North is littered with new dockside cranes, rusting unused because they failed to anticipate the container revolution, and the lamp posts on empty industrial estates as monuments to his vision of the future of Andy Capp Land. He could have spent the money on the much greater need for expanding education and creating the university of which we were deprived in the Northern Region, or even on building the training college which Tees-side is unique among conurbations anywhere approaching that size in not having.
  Despite this colossal degree of capital subsidy, the recent Labour Party pamphlet on social strategy identified Middlesbrough, of which, Mr. Speaker, you are a native, as suffering the greatest inadequacy and deprivation of social provision of any English borough. In the North we have seen too much money which is meant to be going into social development and raising employment

  723
  levels going straight into the pockets of absentee shareholders and subsidising customers as a bribe to do what they were going to do anyway.
  I know that investment nationally should be higher; I know that if there were reductions, even in the investment grant differential, I.C.I. would find itself in financing difficulties for its investment programme ; I know that the British Steel Corporation would have further trouble with steel prices ; I know that the Government would get into trouble with E.F.T.A. over the aluminium smelters. But it is a squalid misdirection of public funds to use the human problems of the development areas as a cloak for dealing with industrial problems which have nothing to do with their needs.
  The Government must show greater sensitivity in their development area policy, particularly in the North. Industry could have no cause for complaining, given two years' notice, of a cut-off in the payment of the investment grant differential at the level of £5,000 per job created on projects costing more than £1 million, which is enough in all conscience. As this would apply only to perhaps 20 or 30 sites in the whole of the United Kingdom, the administrative problems, which are important as one realises all too readily in government, would not be unmanageable.
  This would release perhaps £20 million per annum in the Northern Region alone for more effective policies. To deal with the most acute problems of local employment following major closures in isolated districts it is no good relying on general incentives which may or may not produce the answer in time. The only answer is public enterprise and an admirable example is the creation of the bus factory in Cumberland.
  But this should be set on a regular basis, properly provided for, through an Industrial Development Corporation, perhaps developing the Industrial Estates Corporations in many ways which people much more able than I could work out. But if this is needed to deal with the most acute problems
  Mr. Robert Sheldon: My hon. Friend is making a strong case, but its weakness, of course, is the link between investment grants
  724
  and actual jobs created. Can he say how he could make sure that the two were closely related?
  Dr. Bray: By keeping it directly under the administrative control of the Government in these public enterprise projects in isolated areas like Millom, Workington, Skinningrove, Ashington and one or two others, making sure that the jobs were created. I would much prefer to see the use of the machinery of the Local Employment Act with employment as the base for the grant, rather than as an indiscriminate adjunct to the basic investment grant. There are more generalised areas of chronic or high unemployment, like Sunderland and it is unreasonable to deny to such areas the special development area facilities just because their particular problem has not been caused immediately by pit closures.
  In the Northern Region as a whole the priorities must be creating the human resources for growth, and these human resources are the quality of the leadership in industry and, for the population as a whole, education. The root of the problem in the North-East, unlike that in Scotland and Wales—and all the different development areas have their own characteristic problems—is its quality of leadership in the area, not least industrial leadership.
  That is why it was such a disgraceful act on the part of the British Steel Corporation, aided and abetted, I am ashamed to say, by the Government, to put the headquarters of its General Steels Division not in the North-East, where most of their operations lie, but in Scotland where there is not one-sixth of the output of this division. I am wholly in favour of development in Scotland and, as a member of the Government, was proud to take an active part in it in many ways, but there is no sense or justice in robbing the poorer Peter to pay Paul.
  Unemployment in the North-East is 1·;3 per cent. higher than in Scotland. Clerical employment in Glasgow, as a measure of the character of the population, is 17·8 per cent., over the national average of 17·1 per cent., whereas on Tees-side it is only 13·5 per cent. The need for industrial leadership is much better met in Scotland than it is in the North-East. To point to the physical development of

  725
  the steel industry in the North-East as compensation is to add insult to injury, suggesting that we are fitted only for the mucky work.
  I do not know how the British Steel Corporation General Steels Division expects to be able to recruit high calibre management for the North-East when it will not work in the centre of its own operations. This whole episode is a dismal start to the new regional responsibilities of the Ministry of Technology. It is redeemed only by the fact that most of the dirty work had been done before the Department took this over. The Department will, I am confident, set about redeeming its image and there is ample scope for its activity.
  We want to see an additional £10 million per annum spent on social development in the North-East, financed if necessary by a new selectivity in the investment grant differential. Because of the needs of the area the priorities should be higher education—the more rapid development of Durham and Newcastle Universities, the creation of a third North-East university on Tees-side and the development of the polytechnics. This will still leave the North-East well below Scotland and Wales, well below the United Kingdom average in the provision of student places. It is no more an answer to say that the expansion of student places is planned elsewhere than to say to a hungry man that there is plenty of food in the country. I must warn the Government that we have had enough in the North and we shall not be put off by gimmickry or by chicken-feed and the time for decision is very soon.
  The economic and the social development of this country are inextricably intertwined. There is a need for greater sensitivity and effectiveness, not only in industrial development and development area policy but generally in nurturing the structural changes in the economy and our society.
  But judged purely by the performance of the national economy without consicleration of the quality of life, the pace of change has already passed beyond the point where the economy can be kept on an even keel by present methods of demand management. From Dow's analysis up to 1960 we know that the effects of Government policy under the
  726
  previous Government was de-stabilising. The Musgraves in the Brookings' Institution study carried the analysis up to 1965 and concluded that the net effect of Government policy was perverse, even for the balance of payments.
  I know that efforts are being made, much work is being done to improve the control of public expenditure, to improve statistical sources and analysis, and to improve forecasts. What is lacking is the strategy for economy management itself that could even in principle cope with the changes in the economy, or even a plan for the development of economic management methods. There is no question of breakdown or crisis but there is just a continuing inability on the part of Government—any Government; and hon. Gentlemen opposite found just the same when they were in power and would find the same if they returned—to control the economy. It is an inability to keep up with events causing greater frustrations and upsets for the people than need be.
  The answer is easy enough to state. If we have an economic system undergoing continual structural changes then the economic management system must be able to follow the changes in the structure. This means going down into the economy, into particular industries and regions and occupations, seeing what is happening, providing means by which these events can be considered in the central decisions of Government, through a workable system. I know that the Government can develop such a system. I am sorry not to be helping from the inside. But I am sure that none of us knows all the answers. We must work them out together and in public debate. I would be happier if not only the Government but this House were more insistent in asking the questions.
  7.15 p.m.
  Mr. Tom Boardman: There was much in the speech of the hon. Member for Middlesbrough, West (Dr. Bray)—particularly the early part with which I found myself in con? siderable agreement. There was much of it which echoed the speech made by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) at Brighton last month. I must correct the hon. Member on his comparison between the free depreciation to which he referred, which

  727
  was granted when we were in government, and the form of subsidy which is now applied. It is one thing to allow people to retain some of the tax they would otherwise pay, or to concentrate their depreciation over a short period, but it is another thing to make a disbursement to them out of general revenue.
  There has been much discussion, some of it rather angry, about the trade figures. I confess that I was considerably confused by the explanation put forward by the Chancellor. There can be no doubt that the way in which they were presented fell short of the standard that would be required in commercial accounting.—[HON. MEMBERS : "Nonsense ".] We know that when companies have to present their preliminary figures to be posted on the board at the Stock Exchange it is imperative that they should show clearly, and on the figures, any adjustments of an exceptional nature which are made.
  There is a second point, which has not been answered and which I will not labour. It is that, if by some error the Press or financial writers or the like, misinterpret any figures, then it is the duty of the directors concerned to obtain a correction, given equal publicity, immediately. I would have hoped that the Government would have operated to the same standard set by the Stock Exchange, much-maligned as it is. They ought not to fall short of it.
  I turn to the general economic theme. Ever since the Prime Minister got his hands on the levers of power he and his colleagues have played with them rather like children playing with toys. After five years of pulling and pushing they suddenly feel that they have found a combination which produces the desired result. There is great jubilation. They have found a combination which produces results fairly consistent with those produced year after year when we were in power. They have forgotten the casualties on the way.
  The Chief Secretary to the Treasury (Mr. John Diamond)indicated dissent.
  Mr. Boardman: The Chief Secretary is shaking his head in disapproval but he knows the record. The casualties on
  728
  the way were, first, unemployment with all its hardship. We have heard from hon. Members and we know how much this is alleviated by earnings related benefits and so on, but unemployment is unemployment and these figures are unacceptable to us and should be unacceptable to hon. Members opposite. The other casualties include the massive debt, followed by high taxation, the devaluation of the currency and, perhaps most serious, the devaluation of the word of the British Government.
  Lest it be suggested that I am not being suitably jubilant about the trade figures, or am being unpatriotic in some way, let me say that I am delighted, and if we are round the corner and going the right way this is good. However, at the risk of appearing pessimistic I would remind the Government that any set of figures or the results of any trials, unless completed in a vacuum, must depend largely upon the environmental circumstances. We must ask ourselves the extent to which the improvement is due to conditions in other countries, the influence of the Deutschemark and other world factors in America and elsewhere. All of them have an effect, and we cannot assume that, because the Government have pulled one lever so far and pushed another so far to produce this result, it will necessarily continue.
  The Government believe that they know the levers which they should pull and push. They believe that they have to pull the one marked "Unemployment" down to the figure of 500,000, or whatever it is. They believe that they have to pull the one marked "Taxation" to the point which says "Permanently increased ", and that they must pull the "Money Supply" lever to where it says "Permanently squeezed ". They reckon that that should do the trick and should produce the result which they seek.
  However, there are two other levers about which they are extremely cautious. The first is marked "Prices and Incomes—only to be used against the weak ". The second is marked "Industrial Relations ". In the Government's view, that should have a label on it marked "Dangerous. Only to be used for overseas exhibition purposes ". Those are the levers which the Government do not touch but, although the hon. Member for Middlesbrough, West agrees with me

  729
  that the one marked "Prices and Incomes" is not all that relevant, the one marked "Industrial Relations" is extremely relevant to the economy and is probably the one which requires adjusting more than any other.
  Having said that the Government believe that they know the levers which they should pull and the end product which they seek, which is a favourable balance of payments, I turn to one very important omission from their knowledge. It is what happens to the delicate mechanism in between those levers and the balance of payments. By that, I mean the millions of workers of all skills, management at all levels, and those whose savings provide the capital without which industrial investment and progress cannot be made. What has been the effect upon them?
  Workers and managers are growing more discontented with and frustrated by rising prices and the increasing taxation burden that they must carry. Those who work hard share the impression that there are scroungers taking much more out of society than they contribute. Workers and managers are frustrated by the lack of opportunity to get on in the world.
  Basically, there are three fundamental ambitions among people employed in industry and commerce at all levels. The first ambition is to own one's home, and we know how much more difficult that has become with the Government applying the lever on interest and money supply. Then there is the ambition to save, accumulate some wealth, and invest it. We know how much more difficult that has become in the last five years. Then there is the ambition to be able in one's working life to provide a pension for one's retirement. In that context, we all know the threat that is hanging over our heads. We shall hear more about it on Wednesday.
  That is one part of the mechanism which is frustrated in its wish to provide a better way of life, and the Government must be blind or deaf if they do not know the damage to morale which is being done. To revert to my analogy about levers, in running a machine it may be a short-term economy to stop lubricating it, but the resulting damage is enormous and permanent. The
  730
  Government's lack of lubrication to the mechanism of commercial and industrial life is having a grave and damaging effect, much of which will take years to remedy. The Government must be deaf if they do not hear the screeches and groans coming from the mechanism as a result of their working of the machine.
  Industry is seriously affected by the desperate shortage of cash. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) said earlier that cash would become extremely short this spring. It is very short now, and the shortage will become more acute when firms have to pay their tax bills in the New Year with the hank restrictions which are now imposed remaining with us.
  The final blow came when the Government went back on their implicit assurances about import deposits, and this is a most difficult decision to understand. The Paymaster-General said on 28th November, 1968, that import deposits would be temporary only and would come off, he expected, within 12 months when we came into surplus. Is the Chancellor of the Exchequer right when he says that we are now in surplus? If he is, one wonders why the import deposits have not come off. Why has he not honoured the assurances given time and time again last year?
  I ask the Government to bear in mind the hardship which import deposits impose on industry. Companies plan ahead what they will be spending next year and the year after. At this time last year, having suffered the blow of the import deposit scheme, which took a large slice out of the capital allocated to their expenditures for the past 12 months, they were obliged to "roll over" much of the necessary expenditure for 12 months, with the assurance that the money would then come back to them. Now it seems that they will have to roll it over again or cut it out altogether.
  The consequences for industry are grave. It means cutting out essential investment plans, continuing with old plant when foreign competitors are modernising, and running down research and design teams. It may not appear in statistics, but industry has to conserve cash from sources which it much regrets having to cut. If it is to pay the bills, the taxes and the wages, it must look

  731
  for what it can cut. The longer-term essential or desirable projects such as research and design are having to go, and they cannot be built up again quickly.
  There is a reduction of stocks in the pipeline, apart from those which are building up on certain shelves because consumer demand has dropped. The effect on an exporting industry which does not have stocks to meet the quick deliveries which are required can be extremely serious.
  There is delay in paying bills, and one of my hon. Friends has referred already to the bankruptcies which will follow. It is the financially weaker firm which faces this terrible dilemma. Such firms are having to buy goods, they are not given credit, and their own customers are not paying. Many of them are being squeezed out. They are not necessarily the inefficient firms. They are the firms which are weaker financially, the reason being very often that they are newer. The firms which survive are the older, fatter ones which are hoarding cash. The younger firms are put into a desperate plight because of this starvation of cash and the burden imposed upon them by the Government. To add insult to injury we get the burden that has been placed on much of the engineering industry by the Steel Board. It gives no credit. It imposes a term of payment which no one, other than a monopoly, dare apply.
  Coupled with that, we have delay in the payment of investment grants which is causing considerable concern and seems to apply particularly to those companies which are financially vulnerable at the moment and where much hardship is current.
  The answer sometimes given by the Government when we complain of being short of cash is to cut dividends. I anticipate that by saying that, if they think that is the answer, then they are kidding themselves. Many companies have had to cut their dividends and many more will have to cut them, but it is not the solution to a thriving industry that wishes to get on and to raise more capital. Cutting dividends means cutting off much of the potential for raising new capital. It is a step down the slippery slope to bankruptcy. I hope that is not the answer that is trotted out.
  732
  I was surprised to read in the Gracious Speech that the Government will
  " continue to develop policies for promoting the efficiency and competitiveness of industry."
  It is sufficient to say that I would have been gratified if I had read "will start to develop policies ".
  In the last five years the Government have been sitting on the back of industry plastering it with forms and bureaucracy, cutting off its cash, and taxing its earnings. Now it has hanging over it the threat of "Labour Economic Strategy ", a document which must strike a cold chill into the heart of anyone who wishes to share in competitive society and to develop the policies which this country needs.
  The Prime Minister, in his speech on 28th October, said that the exports achievements could be made only because of the efforts of the I.R.C. and the Minister of Technology. Not one word of tribute did he pay to the men and women who have made and sold the goods and provided most of the capital which has enabled those achievements to be obtained. It was a most regrettable omission on our affairs.
  Of course the I.R.C. with £50 million of cheap capital and the Minister of Technology with an annual vote of £32 million a year, or whatever it might be, have made some contribution, but it is insignificant against the effort made by the combined forces of British industry and the private enterprise sector.
  I ask that the Government take a fresh look at their economic policy. They should get some of these levers working in different order. Of course we want a good balance of payments and we want success, but the solution that the Government appear so jubilant about having found is, I regret, at a price which will not produce any permanent salvation for this country's ills.
  7.34 p.m.
  Mr. Robert Sheldon: The hon. Member for Leicester, South-West (Mr. Tom Boardman) wondered why we were maintaining import deposits at a time when we are coming into surplus. It is only under the close and continuing squeeze that my right hon. Friend the Chancellor of the Exchequer can be quite sure of maintaining that

  733
  surplus. We must all hope that the position will change over the coming months, when there will be some relaxation.
  I am most concerned about the problem of bringing about change, in particular economic change, during the lifetime of any Parliament. This is the dilemma of this Government and it will be the dilemma of future Governments. The main economic problems with which the Government were faced were those of the regions, prices and incomes policy, balance of payments, exports, and taxation, to name but a few. It takes a long time to bring about changes in all of these matters. There is the preparation of the legislation, the enactment of it, seeing how it takes effect, the bringing about of consequent changes, and so on.
  Given that a Parliament lasts only five years and that the Government will be judged on their performance in these crucial areas, clearly the Government need to move very rapidly if they are to produce results which they can present to the electorate as having satisfied the promises that they made before their election. The difficulty that we are now beginning to understand is that these kind of changes that the Government can bring about are becoming longer and longer, though the length of Parliament remains the same. So we have the great difficulty, which will face all Governments, of how to bring about change in the lifetime of a Parliament, given the electorate's lack of understanding of some of the complex problems involved.
  The Government have started off with the long-term aims of improving regional development, to which my hon. Friend the Member for Middlesbrough, West (Dr. Bray) referred, of trying to create a prices and incomes policy, of trying to bring about a restructuring of industry, of trying to bring about reforms in taxation, of trying to bring about a change in our export pattern, and of trying to bring about a change in our trading system from that of a Commonwealth producer to that of producer for other countries.
  Faced with these essentially long-term projects, the amount of success in five years, which is what they have had available, is bound to be rather small. So the Government naturally found themselves compelled to force the pace. From
  734
  these essentially long-term aims they hope to get short-term successes. The best example is the prices and incomes policy. I was a very strong advocate of a prices and incomes policy. This is something that is slowly developed. Over the years it is added to, and in that way a basis of confidence is built up with the trade unions and employers, and perhaps after 10 years it becomes significant.
  I genuinely cheered it, because it was a long-term, mature approach to an evolving scheme of changing the basic relations between employer and employee. But no sooner was the project launched than we found ourselves in 1966 in great economic difficulties due to the failure to devalue the pound. We found ourselves having to jettison the long-term aims of the prices and incomes policy to try to cash in on some short-term bogus benefits, and we achieved nothing. We got no short-term benefits and we sacrificed the long-term aims also, and it is almost impossible now to get responsible trade unionists to understand that this really is important. I do not mean the way it was introduced or the way it has developed, but what was behind the original thinking, which was valid and remains valid, but has now become discredited.
  What we saw in the prices and incomes policy we see in other things. We see it in the restructuring of industry. This is, of course, right, and there has been an enormous need for it, but we must not fool ourselves into thinking that we can bring about these changes within a matter of a year or so. These are fundamental changes of enormous significance, but the benefit will not be felt—assuming that these changes are followed through, as I hope they will be—for the next 10 or 15 years.
  There has been a change in the pattern of Commonwealth trade. At one time we supplied the Commonwealth with everything that it needed. I remember, and perhaps there are other hon. Members who do, too, those enormous catalogues that used to be sent to every part of the world in which we offered to sell everything from pins to pianos. I understand that these catalogues are now being reprinted as period pieces.
  Our rôle was to sell to the Commonwealth. There were people abroad who owed allegiance to this country, who came

  735
  from this country, and who knew the manufacturers here. We were in the position of having buying power as well as having governmental power, with the result that trade was directed to this country even though it should not always have been so directed. But as the Commonwealth countries became independent so they looked elsewhere for trade, and we have had a massive proportional decline in our exports to the Commonwealth. We have had to concentrate on those things that we can do best, and not rely on those things in respect of which we had special advantages because of our position.
  Although we are right to take credit for the restructuring of our industry, the fact is that the impact of this change on the economy is very small. When we talk about how we are bringing about improvements in our standard of living or in our g.n.p., we must realise the very small effect that these changes have had, and we must be careful not to overstate the amount of change that we are bringing about. The effects will grow if the policies are followed for a period of years, and this is the way in which we, hope this Government and successive Governments will operate the economy.
  The great difficulty is that when we come to the end of a Parliament we find ourselves having to justify to an electorate, not success, but certain movements along the road that has to be followed. To be able to do this successfully we need a well informed electorate, or to have some way in which people can be made to understand the issues at stake and what can be achieved by any political party when it is in power.
  Unfortunately, we do not have that. If we had, we would not have had the kind of speeches that we heard at the beginning of the debate, when both sides were making points concerned not with the real problems at stake, but with cashing in on some of the bogus misrepresentations made by the Opposition.
  It will be very difficult to run the economy in the way that it will need to be run to enable it to grow and to create the readjustments which are necessary to take us from a nineteenth century mode of operation of supplying the Commonwealth countries to the point of supplying those areas where we can hope to be
  736
  more efficient and effective unless we follow the right policies.
  The fundamental need for readjustment came about as a result of the post-war years. The 'fifties saw the end of our rôle as a super-Power. The 'sixties, which are now coming to an end, brought us to an economic understanding of the aftermath of Empire. We have to come to terms with this transition from the country that we were at the end of the war to the country that we are now.
  As a concomitant of the change that has taken place, it has been necessary to take a realistic view of sterling, to devalue our currency, and to diminish our responsibiliies in the world, particularly east of Suez. The Government realised and accepted that. The pity of it is that the Opposition did not do the same, and that they are still committed to policies that will take us backwards. They had not realised the change that has taken place over the past decade.
  I propose, now, to deal with the question of the Department of Economic Affairs, following what was said by my right hon. Friend the Member for Newton (Mr. Frederick Lee). I always felt that the concept of the D.E.A. was somehow inadequate. The idea that there could be a Treasury and a D.E.A. fighting at loggerheads, with the Cabinet as arbiter, was the wrong view of how economic policy should be determined, but I do not think that the present position is the right one, either.
  I do not believe we can leave the Treasury alone to carry out our economic policies. As economic policy becomes more and more important a part of the government of the country, one realises that there is far too great a concentration of power in any one Department. There must be some other view, and if one looks for that other view there is only one place where it can be. There must be an economic planning department attached to the Prime Minister. Those who say that the Prime Minister already has too much power must accept that we cannot have one Department such as the Treasury responsible for day-to-day as well as long-term planning requirements which impinge on all other aspects of our economic and social life.
  We must realise that this accretion of power in one Department is too great,

  737
  and that somebody else must look at the planning requirements to enable a different view to be brought to bear on what is required. I hope that we shall evolve a planning department under my right hon. Friend the Prime Minister, a Department which will not necessarily vet the work of the Treasury, but will continue to produce information for the Prime Minister as and when he requires it, and thus provide an alternative view to that put forward by the Treasury.
  Those who believe that the Prime Minister has too much power already will obviously think that their case is made stronger if what I have suggested is done, but we should not resist efficient economic management merely because we cannot find a political solution. We must, instead, find political safeguards. In this way we can hope to achieve economic success which is the necessary prelude to most other kinds of success open to us today.
  7.48 p.m.
  Sir Frederic Bennett: Being a constitutional lawyer, I found the earlier part of the speech of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) very interesting. He touched on an important problem, that of a democratic government being able to complete its programme within a five-year period. Where I think the hon. Gentleman went wrong was to underrate the intelligence of the electorate. I believe that it is a good deal higher than the hon. Gentleman thinks it is. I am not speaking in the context of this or any other election, but I have a feeling that the electorate of this country are well able at the end of five years to decide, not so much the degree of accomplishment, but whether things are going the way they would like, whether, if there are trends, they are trends that they want to see. If they do not like what they see, as happened with us in 1951, and as I think will happen with the Government at the next Election, they deal with the situation in the appropriate way. I do not think that lengthening the Parliamentary period would do more than delay the downfall of any Government who had lost the confidence of the electorate.
  I agree in part with what the hon. Member said on another point. He was disappointed by the Front Bench speeches of both sides. I was certainly disappointed
  738
  by the Chancellor's treatment of the Opposition's Amendment. I do not complain about the passion—justified or not —which he devoted to his attack on my right hon. Friend, because I have been here long enough to realise that all Governments always present any political or economic situation in the most favourable light to themselves. Everybody in the Chamber knows that quite well. Everybody also knows that when a Government present an economic or political picture in the most favourable light the Opposition invariably suggest that they have not presented a fair or true picture, and the Government, in turn, repudiate any such suggestion.
  I have been here since 1951 and I have heard this done over and again by both sides of the House. We need not be too thin-skinned about it. I am not going to talk about motivations, because that would lead me on to dangerous ground, but I was disappointed that the Chancellor did not spend more time on our Amendment, which he described as turgid. I listened to almost every word he said and only once did he make any attempt to counter what my right hon. Friend had said ; that was in reference to the point about the growth of personal living standards. He said that my right hon. Friend's comparison was not a fair one. He did not deny the figures on which it was based but he said that there had been many more refrigerators and motor cars bought and that this proved that the Opposition's Amendment was not justified in that respect.
  Back benchers are not able to obtain access to the detailed information which is available to the Front Benches, but there are many facts and figures on which I should like some clarification. I am not self-important enough to suggest that the Minister should make time to answer them in detail tonight, but I hope that a note will be taken so that this point, which I regard as requiring factual clarification, can be clarified in due course by the usual methods.
  One point that is not made in the Amendment concerns the state of our reserves and what has happened between 1964 and now. This sort of thing gives cause for suspicion about motivations, even if those suspicions are not always justified. It is very difficult to obtain information, and all too often at one's

  739
  first attempt to do so one receives misleading information which one subsequently finds has another slant when one goes more deeply into the matter.
  A little time ago I asked for a direct comparison between the state of our reserves just before the Conservatives went out of office and the position in 1969. My researches gave me a figure of £876 million for 1964 and £1,014 million in 1969. That would appear to be a pretty dramatic improvement under the Labour Government, but if we look at the situation more closely we find that the figure of £876 million for 1964 had attached to it, as it were, in small print, the fact that it did not include no less than £445 million worth of dollar securities in Her Majesty's Government's dollar portfolio overseas. Adding that to the figure of £876 million one gets a total of £1,321 million. One sees from that preliminary piece of investigation how misleading such a comparison is.
  If one goes into the matter further one find that the figure of £1,014 million is based on a completely different value for sterling from that in 1964. I stand ready to be corrected, but if we do our sums we find that the true figure for our reserves, if we want to make a real comparison, is £862 million. That has to be compared with the figure of £1,321 million for the outgoing Conservative Government. In other words, there has been a drop of over 40 per cent. That fact does not emerge until a little preliminary work has been done.
  Secondly, I turn to the question of the £50 travel allowance and how much it is reputed to have saved. I have heard various figures given. The latest one, given authoritatively by the Chancellor, was £25 million. I have done my best to discover how this figure was reached. As far as I can see the only way to arrive at it is, first, to discover the amount of foreign currency and travellers' cheques issued to United Kingdom subjects for holiday travel abroad.
  I have made inquiries of both the Bank of England and the Treasury, and I find that no record is kept of the amount of such travellers' cheques and foreign currency issued. I therefore find it difficult to understand how the Government can say that £25 million has been saved. It seems to be a figure that has
  740
  been thought of without there being any explanation for it. It may be that I am wrong. There may be some information which, for one reason or another, I cannot be given. Apart from that, I cannot see how the information can be provided. I should like to know whether, when the Chancellor came to the conclusion that £25 million had been saved, he took into account the amount in respect of travellers' cheques and foreign currency issued for business purposes and to business men when it was £250 and when the restriction was brought down to £50. I should like to know whether those figures were taken into account at the same time.
  It is clear that when the restriction was the rather substantial one of £250 a business man would often not try to get anything over and above the amount because he could do a whole series of jobs abroad without requiring anything extra. Has that point been taken into account in arriving at the figure of £25 million? Similarly, what about the allowances given on health grounds? Have those allowances increased over the years? I have a shrewd suspicion that the amount of such currency claimed on medical grounds has risen markedly since the £250 allowance was reduced to £50. Under the former restriction many people would be content with the sum allowed. If two people went abroad, £500 would often be quite sufficient.
  In addition to the £50 allowance it is also possible to take £15 in sterling abroad. I think that the pretence has now been given up that that £15 in sterling is meant to be spent in purchases on the aircraft or ships on the way out. Everyone knows that it is added to the £50 allowance and changed into foreign currency on arrival at one's destination abroad. Every hon. Member knows that when the travel allowance was £250 it was not advisable to take the maximum amount of sterling abroad as well and change it abroad because in Switzerland, for example, one got a much poorer rate of exchange for a £1 note than for a traveller's cheque. There was no inducement to take extra sterling abroad.
  At some time in the future, if not tonight, we are entitled to be told on what basis the alleged saving of £25 million has been arrived at, and also whether the other factors that I have

  741
  referred to have been taken into account in arriving at that figure.
  The Prime Minister recently made a pronouncement about the amount of overseas investment aid and the Government's record in that respect. We await a possible further statement by the Prime Minisaer, but I understand that he was attempting to get out of the difficulty of facing the claim that no improvement had taken place by saying that he had been looking at official aid rather than private aid. There was some reference to the percentage of gross national product. I was recently in Trinidad with the Commonwealth Parliamentary Association, and the Prime Minister may like to know that during an economic debate which took place there delegates from Commonwealth countries which are the recipients of aid from this country were not concerned about whether the figure was an improvement or reduction of –01 of g.n.p. or whatever it may be. They were concerned that since devaluation their countries have suffered a real cut in the amount of aid.
  These figures are hard to obtain, and there was a Parliamentary Question on this subject the other day. Therefore, I hope that when the Prime Minister tries to clarify the situation to the House, he will make it clear that fiddling around with g.n.p. has had a very damaging effect on recipients of overseas aid. Far from there being an upward curve, there has in real terms been a downward curve. I am sure that Her Majesty's Government know this fact quite well.
  Were it not for Mr. Speaker's directive for hon. Members to keep speeches short, I should like to read some of the remarks made by the Prime Minister on 19th June this year. He then announced that there was to be no question of legislation on industrial relations but that we were to have what he referred to as a solemn and binding undertaking by the T.U.C. to deal with the matter of unofficial strikes. Almost every Conservative who cast any doubt on the ability of the T.U.C. to be effective in this matter was almost snarled at by the Prime Minister. He said that it was improper to suggest that the great trade union movement was not capable of doing what they said they would do.
  I have now received the final figures of industrial stoppages, which I should like to give to the House. The figures
  742
  are to be looked at in the light of the solemn and binding declaration, which was to make such an outstanding difference to labour relations and unofficial stoppages. The last four months has seen the biggest increase on record in the number of working hours lost by unofficial stoppages. In June, before the Prime Minister announced his tremendous forecast about a change in labour relations, 189,000 working hours were lost through unofficial strikes, and 170,000 hours were lost through official stoppages. Then in July, after the Prime Minister's statement, the figure of hours lost through unofficial stoppages rose to 294,000, whereas hours lost due to official strikes fell to 88,000. That does not sound very much like a trend in the right direction. In August the number of hours lost through unofficial stoppages rose to 433,230, and hours lost through official strikes were 88,000. The only other figure I have been able to obtain, which runs slightly against my own argument, is that for September when 358,000 hours were lost through unofficial strikes.
  The reason I produce these few small points is to back up my statement that Ministers do not have a right to come to the House and be indignant that there should be suspicions about the validity of facts and figures which they have given. In my short speech I have been able to show at least four occasions on which the House has been seriously misled by the Government of the day. The Prime Minister has certainly not cone to the House and said, "When I spoke in June I was more optimistic that I ought to have been. In fact, things have not been going the right way ". [Laughter.] I share the amusement of hon. Members opposite that the Prime Minister would come to the House and say that. But Ministers cannot act in a pious way and claim that nobody has the right to examine carefully the sort of information which the Government give to the House, for it can be shown that over and again figures have been given which do not present an accurate picture of the economy.
  8.4 p.m.
  Mr. James Dickens: The House always listens with interest to the hon. Member for Torquay (Sir F. Bennett) but I hope that he will forgive me if I do not comment on the points

  743
  he made since I want to advance a radically different argument. Before I turn to the main content of my remarks I should like to refer to two points that were made by the right hon. Member for Enfield, West (Mr. lain Macleod) in the course of the poorest speech I have heard him make in this House since my election in 1966.
  He said that the level of unemployment under a Labour Government was intolerable. He is right in saying that, but the criticism comes ill from him. We all remember that he was Minister of Labour in the winter of 1958–59 when unemployment topped 620,000. We remember, too, that he was a Tory Cabinet Minister in the winter of 1962–63 when the level of unemployment rose to over 900,000. Moreover, were he now Chancellor of the Exchequer he would be pursuing an economic policy which would result in the same level of unemployment as we have now.
  He then made the point that there had been a loss of production since 1964 amounting to £12,000 million and this was the high cost of Socialism. I dispute that figure. The true figure is nothing like so high. There has been a loss of production because of deflation since 1966 of perhaps £5,000 million if one compares the result of a rate of economic growth of 4 per cent. per annum as against what has been achieved since 1966. But it is absolute nonsense to argue that the £12,000 million loss or any other loss is the consequence of Socialism. It is primarily due to the cost of defending for three years a sterling parity much above the country's resources. It is the cost of the heavy foreign exchange cost of overseas military expenditure plus the heavy outflow of private capital to advanced industrial countries abroad. Unlike the Opposition, I do not take an attitude of sour grapes on the achievement of a balance of payments surplus. I welcome that achievement which should give the Government much greater room for manoeuvre in economic policy in the 1970s. This may be the last debate on the economy that the House will have this year and it may therefore be useful to look back, however briefly, at some of the main economic trends in the 1960s and to try to diagnose the basic economic ills of the country in the recent past.
  744
  The balance of payments statistics show that in the four years 1965 to 1968, the basic balance, current account and long-term capital account, is an accumulated deficit of £1,124 million. The net foreign exchange costs of overseas military expenditure in the same period came to £1,082 million. This somewhat confirms the view expressed by the present Home Secretary when he was a very new Chancellor of the Exchequer, in November, 1964—that the country would not have had a balance of payments crisis were it not for the heavy cost of overseas military expenditure. To that must be added the net outflow of private capital of £503 million in those four years, and this makes due allowance for the reinvestment of locally earned profits abroad and the raising of currency on the Euro-dollar market.
  If the country had not had these two enormous external burdens on its balance of payments, burdens which no other comparable country would contemplate shouldering for an instant, there would have been a basic balance of payments surplus in each year of about £100 million on average.
  I am not suggesting that on taking office in 1964 we could have totally eliminated all overseas expenditure, or totally cut off the net outflow of private capital, but in the winter of 1964–65 we could have said that we would be out of east of Suez by, say, 1968, which would have meant that the tremendous savings in foreign exchange which will now accrue to us in 1971 would have been accruing to us now. Secondly, we could have taken much more stringent action much earlier to cut down on the export of private portfolio investment to advanced countries within the sterling area. I note with some concern that even in 1968, allegedly a crisis year, £124 million found its way to those countries.
  For the first nine months of 1969 the country had a basic surplus of £48 million. But, judging by the most recent Treasury information for the second quarter of the year, overseas military expenditure is continuing to run at the same level as that of the preceding year, so that in the first six months of this year it would have cost about £130 million, while the net outflow of private capital is still at about £50 million a year. If the Government had taken radical steps in 1964, the basic balance

  745
  in the first six months of this year would have been about £200 million to £250 million and not the £50 million for which the Chancellor of the Exchequer can claim credit.
  But it is true that this balance of payments surplus has been bought at a cost, riot the notional £12,000 million mentioned by the right hon. Member for Enfield, West—I hope that whoever is to wind up for the Opposition will give chapter and verse to show how that figure was reached. The cost is rather £5,000 million, which I calculate the country has lost since deflation began seriously in the summer of 1966. This is equal to a total year's spending on the National Health Service, education and housing combined. Perhaps the figures can be more readily appreciated in those terms.
  Secondly, it has meant for Britain, for the Labour Party and the Labour Government an acceptance of a much higher level of unemployment than has ever been the case since the war. The figures in this respect are striking. Taking the figures for the October of each year, and including Northern Ireland the level of unemployment rose from 344,000 in 1965 to 468,000 in 1966, immediately after the deflationary steps of July 1966, to 599,000 in 1967, to 586,000 in 1968, to 607,000 this year. It is a fact that the Labour Party has come to accept a figure of between 500,000 and 600,000 people out of work as a permanent feature of the British economy.
  I say to my right hon. Friends on the Front Bench that for many of us on these benches that is a totally unsatisfactory position. We are not prepared to see the Labour Party abandoning the concept and practice of full employment. We are not prepared to see full employment as the option of last resort in the balance of payments equation.
  I speak here not of prosperous Lewisham, but of the Merseyside, and industrial North, of the mining valleys of South Wales and of my native Scotland. Let us always remember when people are talking about how earnings-related benefits have cushioned unemployment under the Labour Government that unemployment is unemployment, and that when a man is out of work, it is not only gross social waste, but a needless human tragedy. Many of us on this side of the
  746
  House simply will not accept this as a basic feature of British economic policy for the 1970s, and the sooner the Government say that they are returning to full employment, the better.
  How can that be done? It cannot be argued that for the last five years the British people have been spending too much on themselves. I have often quoted statements to the contrary by distinguished men like Mr. Catherwood. This evening I use a source somewhat nearer the centre of power in Whitehall, my right hon. Friend the Paymaster-General speaking when a Treasury Minister. When he was at the Treasury, he always gave the impression, to misquote a Thurber aphorism, of being an expansionist struggling to get out. However, he said this before he got out when discussing the great load of short-term debt which the country had accrued since 1964. He said:
  " This great load of mainly short-term debts in no way represents the overspending of the British people, nor is it evidence that they have enjoyed a standard of living beyond what they have earned."
  I wish to goodness that he would say that to the right hon. Member for Southwark (Mr. Gunter), a former Minister of Labour, who in his sermons and other outpourings from time to time referred regularly to the allegedly selfish nature of the British working man.
  The present Paymaster-General continued,
  " Over the last 15 to 20 years, after meeting our heavy and always growing defence and aid commitments, we have earned a modest aggregate surplus on current account. The debts to the Central Bankers and I.M.F. originated in a conversion of privately held short-term debts accrued over a period of years to finance the balance of our export of capital."
  In short, when hon. Members opposite are telling us about the marked increase in invisible earnings in the recent past, the House should remember that this has been gained by the export of capital from Britain, and this in large measure has been paid for by foreign borrowing.
  I now turn to the sort of policy on which the Government could embark now at the end of the 1960s in order to sustain a much higher rate of economic growth in the 1970s. I begin by reminding the House of the heavy burden on the British economy caused by the foreign

  747
  exchange costs of overseas military expenditure. I welcome the fact that we are to leave east of Suez and the Persian Gulf by 1971. But I want the Government to launch a new drive to cut the cost of British arms spending in Europe. This must mean making a more positive response to the new overtures for a European conference coming from the Warsaw Pact Powers. I note with concern the fact that in the current financial year we shall be spending £212 million on the so-called British Army of the Rhine, £90 million of it in foreign exchange.
  Let no hon. Member be deceived by the ragbag of arrangements with the West Germans to offset this cost. For example, it is nonsense to argue that the Germans should be encouraged to give a loan to this country over a 10-year period so that we can finance the maintenance of 55,000 to 58,000 British troops in that country to carry out a fatuous open-ended commitment made by Lord Avon when he was Foreign Secretary in 1954 under the Tories. We must, therefore, first make further cuts in overseas military expenditure.
  Secondly, we must recognise the fact that coming into surplus enables us to look again at our massive resources abroad. I do not apologise for again drawing attention to the fact that Britain is an immensely wealthy nation. Our international assets far exceed our liabilities. Thus, our portfolio investment at the end of 1968 was worth £5,800 million.
  I have previously argued that rather than deflate the economy and reduce the rate of economic expansion we should—we should have done this before—mobilise these assets, take them into public ownership and use them for the benefit of the nation, paying fair compensation in sterling to the existing owners. I have never argued this as a short-term measure. But it could be done as part of a five-year programme designed to acquire for the Government as much of the overseas portfolio investment as the Government from time to time think it necessary to acquire to protect the balance of payments and to add to our reserves.
  I am fortified in my advocacy of this course by the fact that organs of Centre
  748
  and Left opinion in the country have come round to this way of thinking. I not only welcome the conversion of The Guardian newspaper to this view, but I note that the New Statesman has followed suit, for what that is worth. I also note that Mr. Peter Stephenson has advocated this course in the current issue of Socialist Commentary, a journal not normally distinguished for its advocacy of Left-wing policies.
  Thirdly, I hope that the Government will not remove the import deposits scheme. We recall what happened in the winter of 1966 when the import surcharge was removed. During October of that year the President of the Board of Trade announced that it could be removed with safety and that our balance of payments were moving into surplus following the July measures.
  There followed a massive upward surge of imports early in 1967 and this was a major factor causing the sterling crisis of that year. Let us ensure that the economy is much more efficient and productive before taking steps to remove the import deposits scheme. Indeed, I hope that it will not be removed between now and the winter of 1970–71.
  Fortunately, I referred to the need to place further restrictions on the private outflow of capital. It is nonsense that we, with the lowest rate of capital formation of any advanced industrial country—and this position has pertained in Britain for many years—should persist in the idea that we are in some way responsible for building up other industrial countries abroad. This is particularly true of the heavy outflow of capital to Australia, a country which has a stable political democracy, and the prospect of speculative gains in gold-mining and ore production. I hope that we will apply at least the restrictions that we currently apply to North America. Such a policy could defend the balance of payments while we proceed to greater economic expansion.
  I turn now to prices and incomes policy, I warn the Government that if they go ahead with reactivating the prices and incomes legislation of recent years they will meet with a predictable response not only from these benches but throughout the Labour movement. In short, they will meet strong, militant hostility.

  749
  I issue this warning because we now recognise that the policy as it has operated has been damaging to many people, and particularly the lower paid in the public sector. Do not let anybody run away with the idea that the prices and incomes policy of recent years has protected the lower paid. The dustmen have given a dusty answer to that, London's firemen have something to say about it too, and the school teachers, some of whom have been taking home £13 a week net after three years' full-time training, have made it equally clear what they think of the policy by their wholly justifiable claim for an interim award of £135 a year.
  My hon. Friend the Member for Middlesbrough, West (Dr. Bray) pointed out that the policy has not worked. The increase in money wages measured in terms of average weekly earnings year by year in the late 'sixties has been almost identical to the increase of the early 'sixties. In the first eight years of the 1960s, real average weekly earnings rose by 20 per cent. Productivity increased by about the same amount over the whole period.
  Thus, the increase in money earnings has been almost exactly equal to the rise in the index of retail prices, plus the increase in gross domestic product per employee. This position is not exceptional to this country. One need only consider what has occurred in Scandinavia and other Western European countries to see that virtually the same position has prevailed.
  The case for a prices and incomes policy has been seriously damaged by the fact that the Government introduced it initially as a voluntary policy but were pushed into operating it as a statutory one in a period of economic crisis. Such a policy on a statutory basis simply has no credibility in the British Trade Union Movement or among the British people.
  We want to see, within the framework of sustained economic expansion, a voluntary prices and incomes policy discussed between the Trade Union movement and the Government, with the Government setting guidelines about the way in which the economy is moving or should move in, say, the following 12 months, or it could be taken over a longer period. By this means one might obtain a measure
  750
  of response, given that the Government were willing to sustain a policy of expansion combined with a fiscal attack on the growing inequality which has been such a feature of British society in the 'sixties. Without this there can be no possibility of such a policy operating.
  I warn the Government that if they return to a statutory prices and incomes policy or use the National Board for Prices and Incomes, any such policy will be doomed to failure. In my view, the Board's future role should be confined to, first, a consideration of the problems of export competitiveness and import substitution ; and, secondly, to conduct an efficiency audit in the public sector and large private corporations. It ought no longer to be concerned with agreements for increased wages by groups of workers, as has been the custom. If this approach is combined with a reform of collective bargaining on the lines proposed by the Donovan Commission, giving the Commission of Industrial Relations an opportunity to work, one might be able to operate a voluntary prices and incomes policy in a much more favourable climate.
  Finally, I make a very brief reference to a remark made by the Chancellor of the Exchequer, speaking at the Labour Party conference, dealing with the conception of public expenditure. He said:
  "I draw the broad conclusion that in the seventies we should look forward to expanding public services. Certainly they are vitally necessary, but expanding them roughly in line with and not ahead of the growth in national income."
  I state my total opposition to that view. It is a complete negation of Socialism, because it accepts as a fact that the present relationship between public expenditure and private consumption is satisfactory and unchangeable. That is not so. The Government's social achievements since 1964 could never have been attained if we had not been prepared to allow public expenditure to develop much more rapidly than the increase in national income that we have had in the last five years.
  The Government now have the opportunity, with the present balance of payments surplus, of developing an economic policy on the lines I have suggested which could provide the country in the 1970s

  751
  with a much higher rate of economic growth whilst protecting the balance of payments, and which could make possible a voluntary prices and incomes policy combined with a strong fiscal attack on social inequality and a rising total of public expenditure.
  8.30 p.m.
  Mr. Peter Blaker: I shall be exposing later the full extent of my naivety, but at least I can claim that in one respect I have improved ;n the last five years. I used to believe that the Scots were dour, silent and slow spoken. I certainly do not hold that view any longer. The hon. Member for Lewisham, West (Mr. Dickens) is always very good value : his fluency is remarkable, and he is very entertaining. Unfortunately, I almost always disagree fundamentally with his premises, and I disagree with most of what he said this evening. Limitations of time prevent my dealing with it all, but I will make just two points.
  The common thread in both is that one can never tell what would have happened if the policies recommended by the hon. Gentleman had been adopted. He refers to the decision taken by the Government of the present Lord Avon in 1954, and the undertaking given to the Western European countries about stationing troops in Europe. I was in the Foreign Office at that time, and a member of the Department responsible for that area. I remember the agonising factors which had to be weighed up before that decision was arrived at.
  It is all very well for the hon. Member to say that this decision has cost us a lot of money. It has cost us less than if we had still the same size of forces in Europe as we then had, but it still costs us a lot. But the cost of having adopted the hon. Member's solution might have been quite incalculable, and certainly very many times more than the price we have had to pay.
  The hon. Gentleman referred, secondly—
  Mr. Brian Walden: I do not necessarily disagree with the hon. Gentleman and I do not necessarily agree with my hon. Friend the Member for Lewisham, West (Mr.
  752
  Dickens) on that point, but what is more important than the original decision to send the forces—and I would very much like to hear the hon. Gentleman speak about this, as he was then at the Foreign Office—is the open-ended commitment to keep those forces there for so long. Secondly, there is the fact that the West German Government have persistently dishonoured their pledge to give us an adequate foreign exchange offset.
  Mr. Blaker: I agree with that last point. We can certainly look to the Germans to do better than they have done over the last few years. I entirely share that view.
  As to his first point, the commitment, as I recollect, is not open-ended, though it is long. The calculation then made was that nothing less would secure the holding together of Western Europe at that time, because there was a very real danger that the whole structure of Western Europe, which was gradually cohering, would fall apart as the result of the defeat by the French of the proposal for a European Defence Community. However, I had better not allow myself to oe taken further along that very interesting road, as I have other things to say, and I know that other hon. Members want to speak.
  The hon. Member for Lewisham, West referred to the charge made by my right hon. Friend the Member for Enfield, West (Mr. lain Macleod) about the loss of output in the last five years. The hon. Member said that this was not the result of Socialism ; but it has happened while the Socialists have been in power. We cannot prove what would have happened if the Conservative Party had been in power in those last five years, but I believe that the balance-of-payments problems of 1964 would have been cured within two years, as tended to happen when there were balance-of-payments difficulties under Conservative Governments. Within that period we should have been on a much higher level of economic activity and should have had a very much greater stability than we have had under the period of Socialist rule.
  One of the things for which Socialist Governments have been responsible and which, more than anything else, has led to this loss of output is destruction of confidence. This is a factor for which the

  753
  hon. Member never seems to allow, but which one must allow for in the working of a mixed economy which is at least half private enterprise.
  I make no apology for following at least two of my hon. Friends who have mentioned the retention of the £50 travel limit. I echo the remarks of my hon. Friend the Member for Horsham (Mr. Hordern), who found this astonishing in the light of what the Chancellor said about the balance-of-payments performance of the last six months. Not only is it astonishing, but it is thoroughly wrong. I think it one of the most deplorable decisions which this Chancellor has taken. It is bad because it limits the freedom of movement of people. Lord Denning had some very aposite things to say about the right of movement, the natural right of the individual to travel, during a recent case before the Judicial Committee of the House of Lords. He was not referring to this spending limit, but his remarks were very much on the point.
  I agree with my hon. Friend the Member for Torquay (Sir F. Bennett) that the claim which the Government have made that the saving in foreign currency is £25 million a year is very suspect. I hope that on a future occasion we shall have a chance to examine that claim a little further. The £50 limit—I prefer to call it a limit and not an allowance, because it is not an allowance—has taught the British overseas tour operators many lessons which they will find most valuable when the limit is raised. Speaking as a representative of a seaside resort which depends for most of its livelihood or tourism, I do not think my constituents particularly welcome the retention of this limit, because they feel that in the long run it will be damaging.
  One of the reasons why it will be damaging is that it is a breach of our international obligations. When I raised this matter with the Chancellor he said that he had had a word with Mr. Schweitzer of the International Monetary Fund and had made clear to Mr. Schweitzer the general lines along which his mind was moving. I hope that we shall hear a little more from the Government about the discussions which they have had with the Fund about retention of this limit, because it is contrary to this country's obligations under the Articles of the Fund. While an exemp-
  754
  tion has been given by the Fund in relation to past years, I suspect that the patience of the Fund's members must be becoming increasingly worn as we continue the limitation year after year, especially when we claim that the economy has been mended.
  Not only is it a breach of our obligations but it is an infectious example, and it has been followed. Lord Geddes, Chairman of the British Travel Association, pointed out the other day that the rules and recommendations which the American Government have adopted since our imposition of this £50 travel limit have, according to the estimate of the Association, lost us 100,000 American visitors, and the foreign exchange which they could have brought to this country he estimates at £7 million. The example has also been followed by France.
  A Government who go on breaking their international obligations, who go on sailing close to the wind, to put it at its mildest, make the position of the next Government, whatever Government that may be, more difficult in the matter of their relations with their international friends and neighbours. The next Government will have more difficulty in the negotiations they must have from time to time and will be less able to carry credibility.
  Other countries will remember the assurances which the Chancellor gave a year ago about the import deposit scheme not being renewed—because they were listening, just as the House was listening. They will remember the 15 per cent. import surcharge. I have no doubt that they have been making representations to the Government against the retention of the import surcharge and the retention of the £50 travel limit.
  I said that during the course of my remarks I would expose the extent of my naivety. In contrast to my hon. Friend the Member for Torquay, I am still sufficiently naive to believe that it should be expected of Governments that they should present their figures in a fair and straightforward manner; because, after all, the object of the presentation of figures is to enlighten the public, not to confuse them.
  I make no apology for returning to the question of the figures for imports of American military aircraft and missiles.

  755
  Earlier today the Chancellor took a very high moral line about the fact that payments for them were in many cases made in advance of delivery. He said that payments had been made in 1967 and 1968 and that this was embarrassing for the Government, because there was a deficit on the balance of payments anyway, and it was rather a bad time to have the deficit increased.
  I do not remember the Chancellor pointing out that these aircraft and missiles are in fact being paid for out of a loan from the Ex-Im Bank in the United States. Therefore, so far from these payments being a burden on the balance of payments in 1967, 1968 and 1969, they will be a real burden on the balance of payments only after the lapse of seven years from the time that the advances were taken from the Ex-Im Bank. I hope that whoever winds up the debate will be good enough to concede that the Chancellor's speech should be modified in the way I have described.
  In any case why are the figures for the imports of aircraft and missiles shown separately in the monthly trade figures? Incidentally, it is not true, as I thought I heard the Chancellor say, no doubt inadvertently, that the figures for monthly imports of aircraft and missiles are shown in the monthly trade figures. This is not so. It is possible to deduce the figure by doing some arithmetic, but those who write the headlines, those who put out the messages on the teletapes, those who put out broadcasts on television and radio, on the whole do not have time to do the arithmetic, fairly simple though it may be.
  My hon. Friends and I raised this matter in the House almost exactly a year ago and received totally unsatisfactory answers from the Government as to the reasons why these figures are separately shown. It was said in reply to our questions that it was because the aircraft and missiles were being bought on credit and should therefore be separately accounted for. This is an unjustifiable argument. Many things are bought on credit—big items, and on longterm or medium credits. For example, why are not aircraft purchased by B.O.A.C. separately accounted for, if it is necessary, which I do not believe, to list separately imports of military aircraft
  756
  and missiles? If these imports must be treated in this way, why not treat comparable exports in the same way? Why are not exported capital goods which are paid for by long-term or medium-term credits separately shown?
  Is it possible that the Government worried in case the fact that the figures were separately shown might lead the public to believe that the export figures were less than they really were?
  I think it is clear why, in relation to these figures, the headlines and the commentators have regularly failed to show the full picture. The figures are important. As I understand them, from April to June this year these imports amounted to £22 million a month and from July to September £15 million a month. Taking those six months, the imports of military aircraft and missiles amounted to £100 million in total, but few people realise this because the constant repetition of a lower figure of imports has a cumulative effect on the impression which is formed in the public mind. I see no reason why the figures should not be presented in a different way. Why should not the figures show that the balance of payments amounted to £X, including £Y on the debit side for imports of military aircraft and missiles? That seems to me to be a perfectly satisfactory way of presenting them and one which would be much less misleading to the public.
  8.47 p.m.
  Mr. Joel Barnett: I hope that the hon. Member for Blackpool, South (Mr. Blaker) will forgive me if at this late hour I do not follow him entirely. I am sorry that he felt it necessary, after all we had at the commencement of this debate, to refer once again to the statistics. This is a bogus issue. It is a sham, and I am sure that that is how it appears to everybody outside this House. What matters is the economy.
  The trouble with this bogus argument that we had at the beginning of the debate is that it helps to sustain balance of payments in the wrong priority. This is the trouble with the way in which the debate opened today. I should like to quote my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) in a speech which he made to the

  757
  Press Club when he was still Financial Secretary. He said:
  " The annual balance of payments statistics should not be used as the only criterion for assessing whether or not we have deployed our country's resources so as to ensure that we pay our way in the world."
  He is quite right. Quite apart from it being not the only criterion, it is not the highest criterion. The real issue is what underlies the economic problems that are discussed in these debates.
  I should like to consider some of the economic indicators, taking first of all the vital indicator of manufacturing investment. I should like to refer to a statement by my right hon. Friend the Chancellor of the Exchequer in a speech which he made recently to the City. He said:
  "Equally, we have to accept that we cannot within one and the same year both achieve a massive swing in the balance of payments and make good years of inadequate capital investment which have gone before."
  I would have put it very much the other way round. One must ask how mach this philosophy, this idea of putting balance of payments first and manufacturing investment second, has cost us. To my mind, the vital priority is investment, and manufacturing investment in particular.
  The right hon. Member for Enfield, West (Mr. Iain Macleod) quoted a figure without any source. According to him, we had probably lost about £12,000 million of the growth that we might have had. My hon. Friend the Member for Lewisham, West (Mr. Dickens) gave a figure of £5,000 million. Frankly, I do not believe that one can calculate in real terms what we have lost in growth over the years, but that we have lost a great deal in the past, and today, from putting the priorities wrong, from putting investment second to balance of payments, is clear. For the last ten years and more, the present Government and their predecessors have put the priorities in the wrong order, and, even if we cannot give an exact figure, it has certainly cost us many thousands of millions of £s in economic growth.
  The next economic indicator is the level of productivity. It is true, as the Chancellor said today and in past debates, that the level of productivity hos grown, together with an improvement in the balance of payments. This is a
  758
  very welcome sign. But one must look at it in comparative terms. It is better than bad, but our growth in productivity is not something of which we can be particularly proud. Moreover, can we be sure that, when future squeezes come, given the priority afforded to the balance of payments, we shall still continue to have a sustained level of increasing productivity?
  The Government have done a great deal to help rationalisation. Their setting-up of the I.R.C., for example, is very welcome. But, as my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) asked, can we expect anything substantial in the short term, can we feel that what has been done is of sufficient importance in our present economic situation that it will achieve a great deal in the short term? In particular, can we be sure that it will achieve it in the context of the priority still accorded to the balance of payments?
  I turn to the question of employment and unemployment. I intervened in the speech of the right hon. Member for Enfield, West to point out that the Opposition's policy here seems a little hypocritical. We know that the priorities entertained by the Opposition Front Bench could have no real effect on employment if they decided to go ahead on that line. I accept what my right hon. Friend the Chancellor said: the unemployment figures today are misleading, and we are not in the same sort of situation as in the days when there was no redundancy pay or earnings-related benefits. At the same time, however, none of us can be happy at a situation in which we still have our present levels of unemployment in development areas. We cannot be satisfied that we have solved the problem of employment or be sure that, when future squeezes come, as they inevitably will, the levels of unemployment in development areas will not continue.
  Another vital economic indicator is in management. The Brookings Institution of Washington reported last year serious failings in management. I shall take only one aspect of it today. On 16th October, there was an important article in The Times by Hugh Stephenson on the question of stocks carried by industry. There has been sonic comment about stocks being squeezed, as it were,

  759
  by the present financial squeeze on industry. The article referred to some research done by Norman Cunningham of Liverpool University School of Business Studies, and I should very much welcome comment from the Government, either tonight or at a later stage, on what it shows.
  Mr. Stephenson refers to Mr. Cunningham's findings and says:
  "Stocks as a percentage of national income over an eight-year period were 24 per cent. in the United States, 25 per cent. for Sweden, 28·5 per cent. for France and Germany. For the United Kingdom the figure is 45 per cent."
  That is a serious commentary on stock management or stock control by management in this country. I have not time to quote some of the things Hugh Stephenson said in that article, but clearly the carrying of such a large excess of stocks, if those figures are accurate, is something about which we should all be concerned. It indicates an inefficiency of management about which we cannot be very happy.
  I come briefly to the other main economic indicator, that of incomes. I did not vote for the 1968 Act, because I thought that it would not work and would give us the worst of all worlds. I am not very happy that I was proved right, because I am not opposed to the principle of an incomes policy. But we are now reaping the reward of trying to achieve too much. The tragedy of the 1968 Act and what we have done since 1965 is that now we cannot even have the modest 1966 Act. The incomes policy, of which I never expected a great deal and so am not terribly disappointed, results in our having not to return to the 1966 Act, but, tragically, to go back to square one and to start all over again because we tried to do the impossible.
  It will be clear from this brief examination of the economic indicators that we still have a long way to go with the economic problems we face. The road will be made easier if we have the changed priorities of which I have spoken. That does not mean that the choice is between devaluation and increased investment. But if it did I should be inclined to say, "To hell with hysterical obsession and opt for increased investment."
  760
  I would refer again to the speech by my right hon. Friend the former Financial Secretary to the Treasury in which he spoke on this subject. He said that what he had in mind in contemplating increasing world living standards was a
  "… greater willingness of countries to be realistic on parity changes …"
  One cannot agree with him more. This is clearly what we need.
  If by our policies we can help to stop the neurotic phobia about an economic regulator which does less harm to ordinary people than many of the other economic regulators that have been used by Governments for decades, we shall have done ourselves and the world a great deal of good.
  It will be clear that I am an unrepentant Harold Leverite. It is a tragedy that his refreshing influence has been removed from the Treasury. I can only hope that from his bottom seat in the Cabinet he will be able to bring some influence to bear on the Treasury briefs that come before that body.
  My right hon. Friend also said:
  "No Government will be able to pursue the continuous policies of well-directed expansion, reconstruction and modernisation of our country if we are again to have these policies disrupted by the exchange pressures we have experienced in the past."
  He is absolutely right. He went on to refer to the need for the funding of our debts, which is what the Government were trying to do. I hope that now that he has left the Treasury the Government will not stop the policy of endeavouring to achieve a funding of the debts which would relieve the burden of the reserve currency which we have had for so long. Unless we get away from the exchange pressures of which he spoke we have a long way to go before we see a banishment of the stop-go policies which we have had in past decades.
  9.0 p.m.
  Mr. James Dance: I am grateful to the hon. Member for Heywood and Royton (Mr. Barnett) for allowing me a moment or two. In those few moment I merely wish to refer to an Amendment tabled by myself and my hon. Friends to the Gracious Speech. We have heard a lot about the strength of the economy and there have been a lot of interesting arguments between the economists. To the man in the street the

  761
  economy means one thing—what will happen to him and what benefits will arise from the strength of the economy. One of the reasons why we tabled this Amendment was the very arrogant and unsympathetic Answer which I received the week before last from the Secretary of State for Health and Social Security to a Question about my hospital in Redditch.
  The Amendment we put down read:
  " But humbly regret that there is no mention in the Gracious Speech of provision of hospitals for new towns and overspill areas."
  This is an important matter. Is it not a fact that the money is just not there? The rather arrogant and unhelpful reply by the Minister did not tie up with the helpful reply which I received from the former Minister, the hon. Member for Lichfield and Tamworth (Mr. Snow), who kindly received a deputation from my constituency and could not have been more helpful and sympathetic. He did not promise us anything definite, but he gave us some encouragement.
  The problem of the hospital at Redditch is not new, but it is a growing problem. More people are coming to this new town week after week. We have no maternity facilities and only about 24 beds for this large and expanding town. I hope that in these few moments I can bring to the Minister the urgency of this problem. Will he please do something about it? I wish that I had more time to develop the argument but I must give way now to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) who is to wind up the debate.
  9.3 p.m.
  Sir Keith Joseph: I welcome the fact that the Minister of Technology is to follow me, because I can take up some rather teasing references that his right hon. Friend the Paymaster-General made to me at the end of last week. The Paymaster-General sought to suggest that I had described my party's industrial policy as one confined to demand control and to keeping the roads clean. There is a great chasm between the policies of the Government and those on these benches on industrial matters and it needs to be said clearly now. We accept that any Government must be deeply involved in a handful of industries for which either they are
  762
  important clients or which other Governments subsidise or support in such a way as to make competition unfair without some sort of involvement by us. We accept that the Government must concern themselves with industrial matters and with the infrastructure.
  Apart from that, we believe that for the vast mass of British industry the Government's job is to create conditions in which, under the pressure of competition and incentives and within the framework of law, industry in its own interests serves the interests of the public. If we can have a Government—and we shall not have such a Government until after the General Election—that puts that thesis into practice then there will be no need for interventionist Ministries or for such bodies as the I.R.C. as it now is.
  With that as a background, I turn to the Gracious Speech. As my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) emphasised, the principal economic factor in today's industrial affairs does not appear in the Gracious Speech. It is the unprecedentedly fierce credit and money squeeze affecting industry and commerce. I share with my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) some doubts whether the Government understand the consequences of the intensity of the present squeeze.
  It was the hon. Member for Ashton-under-Lyne (Mr. Sheldon) who said, bleakly, that he is frightened of the Treasury, with its present policies. The Chancellor of the Exchequer has proclaimed that the Government have embarked on a policy of domestic credit expansion—under the influence of the I.M.F., as we all know—
  Mr. Sheldon: May I remind the right hon. Gentleman that I pointed out also the need for a planning department under my right hon. Friend the Prime Minister to act as an alternative viewpoint on economic affairs?
  Sir K. Joseph: Yes. Both those propositions were included in the notes of the hon. Member's speech supplied to me by my hon. Friends. However, the hon. Gentleman still said that he was frightened of the Treasury. I think that he has every right to be, embarked, as it is, on credit squeeze a routrance.

  763
  So far, we have not had domestic credit expansion. We have had domestic credit contraction. Does the Minister think that these money and credit conditions are such as to encourage enterprising innovations in business?
  We have had a Bank of England warning that the money crunch has reached nothing like its fiercest proportions. Industry was expecting that the ending of the import deposit scheme would release over a few months several hundred million £s of their own money or that of their suppliers, many of them overseas, to help expand the money supply. The Chancellor of the Exchequer has knocked away that hope. Does the Minister accept that this winter we shall see record numbers of company failures, especially among middling-size and small businesses and especially in the development areas where businesses have been tempted to open—often with the aid of Government support —which will be quite unable to continue in action under the present financial conditions?
  Will the right hon. Gentleman also say what will be the influence of the money supply position on investment? The Treasury already has told us that fixed investment is lower than expected. It may be that in his own mind the Chancellor does not want investment to expand at all. He must recognise that if investment expands at the same time as exports expand, there may be a serious danger of lengthening delivery dates and rising prices.
  The Government are committed to creating conditions in which investment rises. So far, they have failed in that objective. In a very good speech, my hon. Friend the Member for Horsham (Mr. Hordern) pointed out the failure of the Government's investment policies. Despite the expenditure of well over £1,000 million of the taxpayers' money in investment grants, investment is still at no higher level in money terms and at a lower level in real terms than it was in 1961. The hon. Member for Heywood and Royton (Mr. Barnett) rightly commented on the Government's failure to secure any expansion in investment.
  Mr. Barnett: The right hon. Gentleman has misunderstood me, too. I quoted the speech of my right hon. Friend the Chan-
  764
  cellor of the Exchequer in which he gave our balance of payments a higher priority than manufacturing investment, but I did not say that such investment had not expanded.
  Sir K. Joseph: Certainly the implication was that investment had not expanded.
  The hon. Member for Middlesbrough, West (Dr. Bray) gave us a notable speech. I thought that his diagnosis of the error of subsidising capital intensive projects in development areas was admirable, though I differ from his conclusion that the answer is to have nationalised industries in their place. We hope that the Minister will give us his comments on investment. It is by itself no panacea. but the Government have put it in the forefront of their aims and have so far totally failed.
  I turn to the balance of payments. First, I should point out that the Government, by attacking in such wholesale terms the 1964 balance-of-payments out-turn, have made a rod for their own back, because there is a sharp distinction between capital and current account. There is nothing unhealthy in an occasional capital deficit if it represents investment overseas, provided that confidence in the country can sustain it over a short period. But the Government, by their then attitude to the 1964 out-turn, have been more or less forced to continue their vendetta against overseas investment.
  We on this side of the House know that immense advantages accrue to Britain from her role as an international distributor of capital. We know that without some continuing overseas direct investment the competitive position of our industries can be eroded. We doubt whether the Government's ban on overseas investment, their limitation of it, has saved the country money, because we note the steady rise in unremitted profits with which overseas companies have protected themselves.
  I want to draw to the attention of the House and of the Government a more insiduous aspect of the Government's policy. The Government have at last come to value invisible income, but the invisible income from our investments overseas, which is the largest single component of all our invisibles, is a net struck by deducting from our profits from

  765
  overseas the profits of overseas companies with investments in Britain. Since the Government imposed their restriction on outward investment, the volume of our investment overseas has dwindled compared with the investment here of overseas companies. There are obvious exceptions in the national interest, but, in general, overseas investment is welcome, provided that this country in its turn is simultaneously free to invest overseas.
  The Government have allowed plentiful investment from overseas in this country while restricting our investment overseas. The net result—and these are the startling figures—is that, since this Government came to office, our assets overseas have increased by 46 per cent. while overseas assets in this country have increased by 63 per cent. Therefore, overseas assets here have increased at a 40 per cent. faster rate than our assets overseas. At the end of that road our net income will be totally eroded.
  We welcome the balance of payments turn for the better, but we cannot stomach the Prime Minister's empty boasts of what has happened. The Prime Minister last week said that there had been a 57 per cent. increase in exports since 1964. As so often happens, the Prime Minister was using the wrong figures. He was using sterling figures. Did he forget that he had devalued the £? The significance of exports is what they can buy for the citizens of this country. In terms of what our exports can buy I will give the House the comparative figures. In the five years up till the General Election of 1964 our exports rose, in dollar terms, by 34 per cent. What have the Socialist Government achieved? An increase, in dollar terms, of 35 per cent. But at what cost they have achieved it this Motion shows. So we beg the Prime Minister not to bring his half-truths into balance-of-payments statistics.
  I was sorry to note that the Chancellor bent to misuse a figure that he plucked out of a 10-year period of Tory Government by alleging that there was over those 10 years a large deficit on balance-of-payments. As the right hon. Gentleman said in his Budget speech, the current account is the best guide to our economic performance, and during the 13 years of Tory Administration the current account showed a net aggregate
  766
  surplus of £770 million, so please let us not have the Chancellor suggesting that capital investment overseas represents a discredit to the Conservatives under whom it happened.
  We welcome wholeheartedly the Chancellor's balance-of-payments forecast, but it is only right that we should recognise the environment which has made the improvement possible and the prospects ahead. It is fair to say that at the moment nearly all factors are in favour of a balance-of-payments current account surplus for this country.
  Let me enumerate them. There is a stagnant home market, which in itself limits imports. On top of that stagnant market there is a double extra limitation on imports, first by the import deposit scheme and, secondly, by the credit squeeze. There is a booming world market, so we have world trade expanding exceptionally fast, while the United Kingdom's economy expands slowly. The bulge in engineering export orders has not collided with an investment boom at home because, against the Government's apparent wishes, there is no investment boom at home. That is the background against which the Government have at last, after five terrible years, achieved a balance-of-payments surplus, which we welcome.
  Let us look at the prospects ahead. First, there is the backlash in double counting, of catching up on past under-recording as a possible danger ahead. I am sure that the Government, particularly after what has happened today, will do their best to make clear what under-recording and what double counting has been netted out in the monthly figures.
  Second, consumption may rise. The public sector is at the moment very turbulent. We on this side of the House are not against high earnings. As my hon. Friend the Member for Horsham said, we are in favour of high earnings. But we are in favour of low unit costs. The trouble at the moment is that the public sector seems to be completely out of control. It is not caught by the credit speeze. It can raise money through monopoly pricing, or through rates, or subsidy, while the private enterprise sector is caught fiercely by the money crunch. I hope that the Minister will come clean with us tonight on the

  767
  whole subject. The Government are being vague, coy, slippery and evasive. What is their policy to deal with public sector incomes?
  Third, before we come to the terrible climax of the prices and incomes policy, whether it is going to emerge again, or finally be put to death, we need to know that the Government are going to get a grip on costs in their own sector, the public sector. If this does not happen, if public sector prices continue to rise, there is surely a serious danger that private enterprise will be affected and that imports will be sucked in once again.
  Will the Minister tell us whether the Government expect the world boom to turn down? Last month Economic Trends suggested that world trade in manufacturers is expected to slow down significantly, and I do not think that the Government should take too much comfort from German revaluation, because so much of their competition with us is in capital goods where prices are not the main factor.
  Against those dangers in prospect, we have a Government who are still engaged in window-dressing. We have suppliers' credit bulking large in our balance-of-payments accounting, maintained by keeping on import deposits. We have nationalised industries encouraged to borrow overseas. We have three years of deferred service of the dollar debt, and next month the Government will have to tell the country and our creditors whether they will take a fourth bisque. While we are glad of the trend, and welcome the Chancellor's confidence, we shall share his views even more when he feels able to carry out his pledges to the I.M.F. and to remove the import deposit scheme and the travel restrictions.
  I turn to a part of the debate which the Chancellor almost completely ignored. As my hon. Friend the Member for Torquay (Sir F. Bennett) said, the Chancellor scarcely referred to the Motion that we are debating. The Minister has no excuse for avoiding answering the Motion. It sets out to describe the price that this country has paid for the five-year journey through disaster to the surplus that the Govern-
  768
  ment can now show. The Chancellor's comments were astonishingly weak. First, he said not a word about prices—not one word. Secondly, he said not a word about taxation—not a word. Thirdly, he said that high interest rates were all the fault of other people. Our interest rates, including mortgage rates, rose long before the interest rates rose in France and America. It was this Government who set the bad example.
  What about hot money? The hot money has gone, thanks to their previous performance. [Interruption.] It is not childish ; it is a fact. The Chancellor's excuse about high interest rates was that other countries had started it. That is not true. The tendency towards high interest rates started here.
  The Chancellor then said that he had to cope with the debts left by the Conservative Government. I do not know what debts he meant. The only debt that I can discover that the Conservative Government left was a £71 million swap obligation contracted at the end of 1964 with the New York Federal Reserve. Surely the Chancellor—a member of the Government who have involved us in £3,000 million worth of debts—is not complaining because he had a £71 million debt left by us. At least his comment was a better one than that of the Paymaster-General who, on Thursday, said that the Labour Government had run up no debts at all because, said he, the assets abroad had increased. I will let the Government into a secret. The real aim is to get assets abroad without running up a debt. That is what we did.
  I come to the heart of the Motion—the standard of living of our people. The Chancellor, and the Home Secretary before him, tried to meet the charge that during five years of Socialist Government there has been virtually no improvement in the standard of living of the people by claiming that there had been an increase in car ownership and consumer durables. I want to examine the trends to know how justified such a claim is. The fact that we concede straight away is that because there has been such inflation during five years of Socialism people have tended to use their savings to get into some fixed assets like cars and durables. If the Chancellor had added that savings had fallen

  769
  we might have taken his argument more seriously.
  The Minister of Technology has to answer in dealing with the Motion tonight how he and the Government and their supporters can possibly vote against the proposition that there has been no rise in our general standard of living in the last five years. There has been an increase in earnings, but except for a minute fraction—one-half of one per cent. over the five years—it has been eaten up by higher prices, higher taxes, and higher National Insurance contributions.
  I want to give the Government the best chance to meet this claim. Assuming that they cannot deny that proposition—and the Chancellor did not try to deny it—let us see whether they have a better case within the social services. The Labour Party prides itself on safeguarding and improving social services. I do not accept that an index of spending is a proper index of successful achievement in helping people ; so much spending within the social services tends to be wasted or ineffective. [HON. MEMBERS : 0h."] Yes, that is so, if the subsidies, for instance, are going to people in housing who do not need them.
  Taking each one of the main components of the social services, I will tell the Minister the charge he has to answer. The charge is that in real terms in the last four years of the Conservative Government spending on education went up by 29 per cent. Whereas in 1964–68 spending in real terms went up by 22 per cent. I am seeking to point out to the Government and their supporters that they cannot justify the misery to which the citizens of this country have been put in the last five years by claiming that they have achieved a balance-of-payments surplus and meanwhile have protected and improved the conditions in the social services. It is not true.
  To turn from education to health and welfare, the Socialists in their four years up to 1968 put up spending in real terms 16 per cent. as against our 14 per cent. But that is no triumph to the Government because in this year, 1969, they have cut back spending on health and welfare in real terms by halving the increase in the grants to local authorities.
  770
  When one turns to pensioners, one would expect the case for the Government to be on strong ground. I will give the figures. Pensioners' incomes have increased during the Socialist Administration, including the increase due this month, by 20 per cent. in real terms. That is exactly the same rate of increase as was achieved under the Tory Administration in any five of the 13 of our years. There again, there is no improvement.
  And look at what cost such benefits as have been distributed have been made! The Amendment sets out the cost to the country : devaluation, debt, deflation, unemployment, rocketing interest rates, rocketing taxation, and rocketing prices. These are the charges which the Minister and the Government will have to answer tonight.
  I come finally to a charge which may matter perhaps more than any to the Labour benches. Let us see what has happened to the low-paid, adult, male, full-time worker during the last five years. The hon. Member for Lewisham, West rightly said that these men have suffered most from the prices and incomes policy of this Government. Low-paid, adult, male, full-time workers are generally unable to increase their earnings by overtime and generally have no opportunity for piecework. These are not just a handful of workers. At the latest count, in September, 1968, there were 900,000 of these workers earning less than £15 a week. That was not take-home pay but gross pay.
  Where did these people work? I have studied this matter as much as I can, and I have with me a Fabian pamphlet on the subject. So far as I can see, about half of these people work in the public sector —the public sector which "Agenda for a Generation" proposes to enlarge, a sector which the Gracious Speech intends to enlarge by nationalising ports and other Measures. Is it not a paradox enough to give the Government pause that, although the public sector employs only 10 per cent. of the working population, it employs 50 per cent. of the low paid?
  I concede that Labour has improved conditions in real terms more than we did for the unemployed. But, for the rest, the Amendment which tells of disaster

  771
  for the people of this country and retails the economic harm inflicted by this Government's policies on the people of this country, applies as much to the poor and to the social services as to everyone else. I ask my hon. and right hon. Friends to vote for the Amendment, the truth of which the Government are quite unable to deny.
  9.30 p.m.
  The Minister of Technology (Mr. Anthony Wedgwood Benn): This has been a very wide-ranging debate, but I feel sure that it will be remembered more than for any other reason because of the total and successful repudiation by my right hon. Friend the Chancellor of the Exchequer of the charges made by the right hon. Member for Altrincham and Sale (Mr. Barber) of the figures published of our trade position.
  Although statistics may not be best handled across the Floor of the House, as we have learned from today's exchange, the one thing that emerged from that exchange was the extent of the surplus that has been achieved by the present Government under the policies that have been pursued.
  As many references are made by the right hon. Member for Enfield, West (Mr. lain Macleod) to the Labour Party's election promises, may I quote one which he never mentions:
  "There is no easy road ahead and only the dishonest would pretend that there is. We shall take such further steps as are necessary, even if they prove unpopular, in order to achieve the rate of progress that we need".
  Last year, the right hon. Gentleman accused us of drunken optimism, a curious charge from a party so strongly supported by the brewers. But tonight we have had a very curious welcome of the improvement in the trade surplus. I have always believed in televising the House of Commons and I wish that the public outside could have seen tonight what a welcome was given by the Conservative Party to the improvement we have been debating. Hon. Members opposite have shown about as much enthusiasm for the surplus we have achieved as a delegation of undertakers being taught artificial respiration.
  The truth is that they have an absolute commitment to a pessimistic view of our economic prospects, and we have
  772
  achieved a substantial turnround in the course of the last 12 months. We have resisted a consumer boom with which the party opposite is now tempting us as part of the policy it puts forward.
  The right hon. Member for Leeds, North-East (Sir K. Joseph) says that there has been per cent. increase in the standard of living over the course of the last five years. That raises three questions in my mind—whom does he meet? To whom does he talk? Where does he go? [HON. MEMBERS : "Swindon."] Later in his speech he admitted that the pensioners had had a 20 per cent. in crease, so I take it that even the per cent. would have to be modified to take into account his contention that the only people who are better off are the pensioners. A debate conducted along these lines is hard to take seriously.
  Having come as far as we have, and the road has not been easy—somebody mentioned the by-elections ; we have paid a price for the policies we have pursued—there is no inclination on our part now to be diverted by the arguments that have been put forward by hon. Members opposite.
  The right hon. Gentleman referred to investment, and much has been said about investment. The right hon. Gentleman knows better than most, for he and his colleagues have said it in the House, that the real basis for growth in investment is the confidence of the business community that the balance of payments will go right and stay right. That is the best guarantee of future growth.
  Admittedly, much has been made of the additional indebtedness acquired, in part because of the inheritance from the party opposite. I must say that right hon. Gentlemen opposite who urge us to adopt a dash for freedom are like the survivors of the Gadarene swine scrambling ashore and setting themselves up as consultants in how to deal with evil spirits. They left us with a very serious problem.
  To talk, as hon. Gentlemen opposite do on every occasion and on every platform, as if this country were incapable of meeting its indebtedness by the new surplus that we have acquired is doing less than justice to the situation.

  773
  I come to the other parts of the Amendment to which reference has been made. First, I will deal with the question of taxation because last week we had an accusation made against my right hon. Friend the Prime Minister about the selective quotation of statistics ; and in describing what has happened as a doubling of taxation, hon. Gentlemen opposite have pioneered new techniques of selectivity.
  What has actually happened is that the percentage of the gross national product taken by taxation has risen from 33·5 per cent. in 1963 to 40·75 per cent. in 1968. To describe that as a doubling of taxation is deliberately giving a false impression of this consequence. Any table comparing the percentage of taxation taken in other countries reveals that this country is not the most highly taxed society in the world. Recent O.E.C.D. figures indicated that in Sweden the figure stood at 46·6 per cent. and in France, 45·7 per cent.
  It is one thing to argue about the distribution of taxation and the effects produced by different means of taxation. But to base a sustained public campaign on a promise to secure a drastic overall reduction of taxation raises questions which hon. Gentlemen opposite have not even attempted to answer.
  It has long been accepted that the old function of taxation—for law and order, road maintenance and the small administrative requirements of nineteenth century Governments—is totally obsolete now. It has long been accepted that the redistributive function of taxation is part of the normal process of modern government. It has also long been accepted that the use of taxation for the regulation of the economy is an essential part of modern economic management.
  There are, however, new functions of taxation to which hon. Gentlemen opposite have apparently never seriously addressed themselves, and I shall refer to some of them. One is the need to use taxation to shift resources from those who are at work to those who are not, for as automation and mechanisation proceed it will be necessary for people to remain longer at school or in full-time education. It will make it possible for people to retire earlier and there will, therefore, be a diminishing percentage
  774
  of the population at any one time at work. It is absolutely necessary in this society that taxation should play its part in redressing that balance and in providing, if nothing else, the purchasing power for the production thus Produced.
  Secondly, as the scale of modern industrial development rises and as the risk involved in very big research projects increases, so the Governments of all countries will have to share some of the risks and pay some of the costs if they want their industries to become competitive. When the right hon. Member for Enfield, West referred in this context to only a handful of industries, I assure him that he was totally underestimating the scale of the operation.
  Similarly, Governments will have, as we have done, to use public expenditure to cushion the otherwise catastrophic rate of contraction that will come to industries hardest hit by technological change. When the hon. Member for Carmarthen (Mr. Gwynfor Evans) talked about the problems of Wales, he might have given some credit for the substantial support that has been made available in Wales at any rate to cushion the effects of the contraction of the coal industry.
  Thirdly, of course, there is the element of our living standards that will depend on collective expenditure, which will inevitably rise. We will need to spend more on education, on community services, on health, on transport and, of course, more to offset the barbarities of pollution, noise and congestion which modern technology imposes on society. The plain truth is that the price tag on the quality of life is now a much higher price tag than it was, and it can only be purchased by the community collectively.
  No Government want to collect more in taxation than they have to—[Interruption.]—for the very simple reason that no hon. Member opposite or any member of the public likes to pay taxation. But I believe that hon. Members opposite make a mistake if they think that the superficial attraction of lower taxation which they are now trumpeting on posters all over the country will be sustained by public opinion when it is confronted with a less fair reallocation of taxation as part of their proposals for reducing taxation, or if there were actually to be a reduction of expenditure for

  775
  social purposes, some of which I have mentioned.
  I say to the party opposite that a party which has consistently urged higher expenditure on defence and the maintenance of higher overseas military commitments than this country can sustain or should attempt to sustain, will have a very serious job indeed in convincing the public that it will be able to discharge the responsibilities of a modern Government, and combine that with a substantial reduction in taxation.
  Another issue which is connected with the changing nature of our industrial structure is employment. A lot of hon. Members have spoken of a level of unemployment higher than that which existed in October, 1964. Undoubtedly, some of the rise in unemployment is explained by the tight control of consumer spending at home that we have had to maintain in order to achieve the present favourable balance. As exports rise the demand for labour will increase. The Chancellor of the Exchequer referred to the very significant figure of 197,000 unfilled vacancies as already offering evidence that this demand for labour is building up.
  But it would be quite wrong to conclude that the level of unemployment today can be explained entirely in terms of the general level of economic activity. Part of the rise in unemployment is undoubtedly attributable to the very rapid rate of readjustment that has occurred in some of our older industries, and most of them in the development areas. This is not in any sense a function of overall Government economic policy. The rundown is not produced by that, but is a reflection of technological change, as in the railways or the mines. Indeed, Government measures of help for the development areas have been building up to record levels—and, in part, explain public expenditure—in pursuit of regional policies from £30 million in 1964-65 to £270 million in 1969–70. I have no doubt at all that this policy which we have adopted has itself greatly reduced what would otherwise have been a quite sensational increase in unemployment in the areas where the older industries are situated.
  My hon. Friend—and my old partner —the Member for Middlesbrough, West
  776
  (Dr. Bray) made a very powerful speech on development area policy. As a matter of fact, I think that, coming as he does from the North, where sometimes they have a feeling that they are running up a down escalator, his impatience is understandable, but when he criticised the effect of the discrimination that we have adopted and was cheered for it by some hon. Members opposite, I hope those hon. Members realised what they were cheering. They were cheering an appeal for greater selectivity in the support that the Government might give in order to deal with unemployment difficulties in the development areas.
  I think also that when my hon. Friend spoke powerfully on an issue on which he has written a book—and has chosen to go to the back benches so that he may publish it about the need to balance demand in particular industries which it will now fall to my Department to try to tackle, he, too, was arguing for greater selectivity in the application of Government support. But those who advocate selectivity have to recognise that it has already begun to take effect.
  When right hon. Gentlemen opposite attack selectivity, as they do in respect of Government support for industry, but not of the social services, let them remember that our shipbuilding policy is a selective policy to deal with an industry which otherwise would be faced with total collapse. So it is with our coal policy and the policy over aluminium smelters and so on. This was the use of public money selectively to deal with the decline of employment in some older industries. I know that many in the development areas feel that jobs are going as quickly as they come, but the jobs coming in invariably have a higher skill content—as in employment in electronic industries in Scotland—than the jobs which went out.
  If the party opposite is to be serious about unemployment, it has to take into account another factor. That is, that the restructuring going on in industry, and productivity bargaining which has really taken off as a result of many of the efforts made by the Government, have undoubtedly eliminated a lot of unecessary work which previously was done in British industry and made it uncompetitive. In so far as there was wasted capacity there was an uneconomic use

  777
  of resources and the costly use of labour in our industrial system, which is why we have not done as well as we might against the Japanese or the Germans. To the extent to which we have succeeded in reducing this, we have also found the result reflected in unemployment figures.
  This brings me to another aspect of unemployment, the problem of matching skills against vacancies. The Department of Employment and Productivity devotes a great deal of attention to professional services and training and retraining schemes to try to tackle this difficulty. The measures we have taken, again involving public expenditure through redundancy payments and earnings-related benefits, have done a great deal to ease what otherwise would be an intolerably unfair and harsh burden on those affected by poor management, bad structure and inefficient organisation of the industries we inherited from the past.
  I hope that the House will keep a sense of proportion, for two-thirds of those who go on to the register are reemployed within four weeks and the average is, of course, only eight weeks, admittedly one week longer than it was in 1964. There is a residual problem, but what stands out a mile when we look at any detailed breakdown of unemployment, is the very close link between employability and a man's educational background. Why in heaven's name, at the time when this is becoming more evident than ever before, the party opposite should nail their colours to the 11–plus to exclude people from educational opportunity absolutely passes my understanding.
  The only meaning of statements on educational policy by right hon. Gentlemen opposite are that they are to go back to 1964, which would mean excluding the majority of children from access to the main stream of education. Quite apart from being nonsense—for no one in the educational world believes that at 11 one can choose—this is a serious threat to the employment prospects of generations of children in parts of the country where there is not yet access to the full range of educational opportunity.
  I turn to the one great omission from the right hon. Gentleman's speech. I
  778
  listened very carefully, but I found that he made no reference to the development of industrial policy although the party opposite have always claimed to be the party which understood industry, something I very strongly doubt, having had the opportunity of hearing many industrialists on that subject. It is true that a new sort of relationship has built up, not only in this country indeed, in many ways we have been slow in doing this—but between Government and industry in every advanced country of the world.
  It is not true that only a handful of industries are involved in this. It is the whole range of industrial activity upon which in the long run the wealth of the community ultimately depends. From the relationship between the whole range of industry and government flows the real partnership upon which welfare, strength and growth can rest.
  When I consider some of the points which have been made during the course of the debate I wonder whether they are living in the same world as the industrialists who have dealt with a number of production departments including my own. For example, the challenge the Prime Minister put out about I.R.C. was taken up today. I have re-read the reference by the right hon. Member for Enfield, West to I.R.C. He will remember saying this:
  "Our attitude towards the Industrial Reorganisation Oarporation is that of the preacher about sin—we are against it"— [OFFICIAL REPORT, 15th February, 1966 ; Vol. 724, c. 1228.]
  That represented the right hon. Gentleman's measured judgment. It was total and flat opposition.
  Since then I.R.C. has provided, or agreed to provide, assistance to 20 or more mergers or projects. What I would like to know from somebody on the other side of the House is : which of the activities upon which the I.R.C. has been engaged have in any way justified the moral condemnation of the right hon. Gentleman? Was he opposed to the Leyland-British Motors merger, to that of Kent-Cambridge Scientific Instruments, Nucleonic Instruments, to the nuclear reorganisation which followed the recommendation of the Select Committee, to the work on the G.E.C.-English Electric merger? The truth is that the evangelist for Enfield has been very loud

  779
  on sin generally but very silent on specific sins that have emerged from I.R.C. itself.
  Sir K. Joseph: We have already made it plain that, if the Government had not extracted from industry by misconceived and excessive taxation a lot of the capital it needed, and if the Government had made competition bite and had rewarded management by lowering the marginal rates of personal taxation, most of what the I.R.C. has done, including several of the mergers which the right hon. Gentleman mentioned, would have been achieved by themselves.
  Mr. Benn: That is a marvellor s argument, except that the right hon. Gentleman must explain why when it was not done when the Tories were in power we were not competitive in the areas to which I have referred.
  Let us take the evangelist on another issue—the Industrial Expansion Bill. I again quote:
  "I take no doctrinaire view about this proposal. I oppose what we know about the Bill …".—[OFFICIAL REPORT, 7th November, 1967 ; Vol. 753, c. 852.]
  That was the right hon. Gentleman's view two years ago. When a few months later, as a result of the first project under the Act, I.C.T. and English Electric came together with an agreed shareholding for the Government, to take account of our contribution, the evangelist was not even present during the debate; there was no vote; among all those who commented, it was widely recognised that the International Computer merger saved the British computer industry. What is one to make of a party which is ready to attack on general matters and which in practice is silent?
  It is the same with shipbuilding. Shipbuilding hardly comes in this handful of industries which are on the frontiers of technology. It is an old industry. With Geddes we brought together both sides and come up with a proposal involving £20 million of grants, £322 million for loans, and £400 million for credit. The Bill was not opposed by the Tories. It was intervention of the most vigorous, active and non-controversial kind.
  Total orders for the shipbuilding industry fell 26 per cent. between 1960
  780
  and 1964. They rose 45 per cent. by 1968 over 1964. Export orders for shipbuilding fell 43 per cent. in the last four years of the Tory Government and rose by 290 per cent. in our first four years in office. Quite apart from the balance of payments benefit this has conferred, is the concern of the Tory Party about unemployment to be taken seriously when we know what would have happened if the shipbuilding industry had not been given the means to reorganise itself?
  Take machine tools. The right hon. Gentleman last week, when I goaded him, said that he thought our machine tool policy was wrong. We have provided broadly £6 million to buy the latest machine tools off the drawing board. Exports are 13 per cent. up a year, on average in the four years compared to 5 per cent. a year in the four previous years. The right hon. Gentleman should go and talk to the industry. He will know that in this case, as in all the others that I have cited, it was well-placed Government intervention by consent that has achieved a growth in that particular industry.
  Take the aircraft industry that we were supposed to have killed in 1965. Exports in 1964 were £98 million ; exports in 1968 were £234 million—in an industry in which Government traditionally has intervened. Export orders in September, 1964, were £165 million ; orders in hand in June, 1969, were £547 million. Does anybody really believe that the Rolls-Royce company would have won the export order for the RB 211, or the 199 for the multi-role combat aircraft, if the Government had not supported and encouraged the merger and provided millions of pounds of launching aid?
  I could go on, but time is coming to an end. Take N.R.D.C. with £5 million for micro electronics. Is that intervention? Compare it with 40 billion dollars spent by the American space agency on getting to the moon and helping their micro electronics industry on the side. How should we compare with countries abroad where the partnership between Government and industry is close, if the claptrap from the party opposite continues?
  What is the best that the Leader of the Opposition can tell industry? I read

  781
  from the Sunday Times of 3rd September, 1967:
  "It is no good kowtowing to a Labour Government in order to get money for investment which the Labour Government taxation makes it impossible to get inside the firm or on the open market."
  Does the right hon. Gentleman say that micro electronics, shipbuilding or the aircraft industry would have been able to acquire money on any other basis than the partnership that we have built up?
  The truth is that the relationship between Government and industry today is close because there is a powerful common interest joining both together. Industry knows quite well that unless there is a sustained surplus it will not have the confidence upon which to develop. We know quite well that unless we are ready to move in to assist in certain areas, industry really will not be able to succeed against the competition which confronts it from abroad. It is absolute nonsense for the party opposite to peddle the idea up and down the country that there is a natural implacable enmity between Government and industry, because in no other country
  in the world on either side of the Iron Curtain does such an idea find any respect at all except in this country, sustained by what is said by those who moved the Amendment.
  Sir K. Joseph rose—
  Mr. Benn: I have got only a minute in which to finish what I am trying to say.
  I have heard hon. Members opposite from time to time criticise the trade union movement, or some trade unionists, for sustaining the idea that there is a necessary enmity between management and labour, but it is as nothing to the folly of supposing that there is such an enmity between management and Government. The truth is that we have adopted a twin policy—the one to go for the surplus, the other to work with industry for its modernisation. I believe in that light that the Amendment should not commend itself to the House and should be absolutely rejected.
  Question put, That the Amendment be made:—
  The House divided : Ayes 236, Noes 299.

  Division No. 1.]

  AYES

  [10.0 p.m.

  Alison, Michael (Barkston Ash)

  Carr, Rt. Hn. Robert

  Gilmour, Ian (Norfolk, C.)

  Allason, James (Hemel Hempstead)

  Channon, H. P. G.

  Glover, Sir Douglas

  Amery, Rt. Hn. Julian

  Chataway, Christopher

  Glyn, Sir Richard

  Astor, John

  Chichester-Clark, R.

  Godber, Rt. Hn. J. B.

  Atkins, Humphrey (M't'n & M'd'n)

  Clark, Henry

  Goodhart, Philip

  Awdry, Daniel

  Clegg, Walter

  Goodhew, Victor

  Baker, Kenneth (Acton)

  Cooke, Robert

  Gower, Raymond

  Baker, W. H. K. (Banff)

  Cooper-Key, Sir Neill

  Grant, Anthony

  Balniel, Lord

  Cordle, John

  Grant-Ferris, Sir Robert

  Barber, Rt, Hn. Anthony

  Corfield, F. V.

  Gresham Cooke, R.

  Batsford, Brian

  Costain, A. P.

  Grieve, Percy

  Beamish, Col. Sir Tufton

  Craddock, Sir Beresford (Spelthorne)

  Gurden, Harold

  Bell, Ronald

  Crouch, David

  Hall-Davis, A. G. F.

  Bennett, Sir Frederic (Torquay)

  Crowder, F. P.

  Hamilton, Lord (Fermanagh)

  Bennett, Dr. Reginald (Gos.& Fhm)

  Cunningham, Sir Knox

  Hamilton, Michael (Salisbury)

  Berry, Hn. Anthony

  Currie, G. B. H.

  Harris, Frederic (Croydon, N.W.)

  Biggs-Davison, John

  Dalkeith, Earl of

  Harris, Reader (Heston)

  Black, Sir Cyril

  Dance, James

  Harrison, Brian (Maldon)

  Baker, Peter

  d'Avigdor-Goldsmid, Sir Henry

  Harrison, Col. Sir Harwood (Eye)

  Boardman, Tom (Leicester, S. W.)

  Dean, Paul

  Harvey, Sir Arthur Vere

  Body, Richard

  Deedes, Rt. Hn. W. F. (Ashford)

  Harvie Anderson, Miss

  Bossom, Sir Clive

  Digby, Simon Wingfield

  Hastings, Stephen

  Boyd-Carpenter, Rt. Hn. John

  Douglas-Home, Rt. Hn. Sir Alec

  Hawkins, Paul

  Boyle, Rt. Hn. Sir Edward

  Drayson, G. B.

  Hay, John

  Braine, Bernard

  du Cann, Rt. Hn. Edward

  Heald, Rt. Hn. Sir Lionel

  Brewis, John

  Eden, Sir John

  Heath, Rt. Hn. Edward

  Brinton, Sir Tatton

  Emery, Peter

  Higgins, Terence L.

  Bromley-Davenport,L t.-Col.SirWalter

  Errington, Sir Eric

  Hiley, Joseph

  Brown, Sir Edward (Bath)

  Evans, Gwynfor (C'marthen)

  Hill, J. E. B.

  Brune-Gardyne, J.

  Ewing, Mrs. Winifred

  Hogg, Rt. Hn. Quintin

  Bryan, Paul

  Eyre, Reginald

  Holland, Philip

  Buchanan-Smith,Alick(Angus,N&M)

  Farr, John

  Hordern, Peter

  Buck, Antony (Colchester)

  Fisher, Nigel

  Hornhy, Richard

  Bullus, Sir Eric

  Fletcher-Cooke, Charles

  Howell, David (Guildford)

  Burden, F. A.

  Fortescue, Tim

  Hunt, John

  Campbell, B. (Oldham, W.)

  Foster, Sir John

  Hutchison, Michael Clark

  Campbell, Gordon (Moray & Nairn)

  Galbraith, Hn. T. G.

  Iremonger, T. L.

  Carlisle, Mark

  Gibson-Watt, David

  Irvine, Bryant Cadman (Rye)

  Jennings, J.C. (Burton)

  Mitchell, David (Basingstoke)

  Scott-Hopkins, James

  Johnston, Russell (Inverness)

  Monro, Hector

  Sharples, Richard

  Jones, Arthur (Northants, S.)

  Montgomery, Fergus

  Shaw, Michael (Sc'b'gh & Whitby)

  Jopling, Michael

  Morgan, Geraint (Denbigh)

  Sinclair, Sir George

  Joseph, Rt. Hn. Sir Keith

  Morgan-Giles, Rear-Adm.

  Smith, Dudley (W'wick & L'mington)

  Kerby, Capt. Henry

  Morrison, Charles (Devizes)

  Smith, John (London & W'minster)

  Kershaw, Anthony

  Mott-Radclyffe, Sir Charles

  Stainton, Keith

  Kimball, Marcus

  Munro-Lucas-Tooth, Sir Hugh

  Steel, David (Roxburgh)

  King, Evelyn (Dorset, S.)

  Nabarro, Sir Gerald

  Stodart, Anthony

  Kirk, Peter

  Noble, Rt. Hn. Michael

  Stoddart-Scott, Col. Sir M.

  Kitson, Timothy

  Onslow, Cranley

  Summers, Sir Spencer

  Knight, Mrs. Jill

  Orr, Capt. L. P. S.

  Tapsell, Peter

  Lambton, Viscount

  Orr-Ewing, Sir Ian

  Taylor, Sir Charles (Eastbourne)

  Lancaster, Cot. C. G.

  Osborn, John (Hallam)

  Taylor,Edward M.(Ggow,Cathcart)

  Lane, David

  Page, John (Harrow, W.)

  Taylor, Frank (Moss Side)

  Langford-Holt, Sir John

  Pardoe, John

  Temple, John M.

  Lawler, Wallace

  Pearson, Sir Frank (Clithere)

  Thatcher, Mrs. Margaret

  Legge-Bourke, Sir Harry

  Peel, John

  Thorpe, Rt. Ho. Jeremy

  Lewis, Kenneth (Rutland)

  Percival, Ian

  Tilney, John

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

  Pink, R. Bonner

  Turton, Rt. Hn. R. H.

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

  Pounder, Rafton

  van Straubenzee, W. R.

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Powell, Rt. Hn. J. Enoch

  Vickers, Dame Joan

  Longden, Gilbert

  Price, David (Eastleigh)

  Waddington, David

  Lubbock, Eric

  Prior, J. M. L.

  Walker, Peter (Worcester)

  McAdden, Sir Stephen

  Pym, Francis

  Wall, Patrick

  MacArthur, Ian

  Quennell, Miss J. M.

  Walters, Dennis

  Maclean, Sir Fitzroy

  Ramsden, Rt. Hn. James

  Ward, Dame Irene (Tynemouth)

  Macleod, Rt. Hn. Iain

  Rawlinson, Rt. Hn. Sir Peter

  Weatherill, Bernard

  McMaster, Stanley

  Rees-Davies, W. R.

  Whitelaw, Rt. Hn. William

  Macmillan, Maurice (Farnham)

  Renton, Rt. Hn. Sir David

  Wiggin, A. W.

  McNair-Wilson, Michael

  Rhys Williams, Sir Brandon

  Williams, Donald (Dudley)

  McNair-Wilson, Patrick (NewForest)

  Ridley, Hn. Nicholas

  Wilson, Geoffrey (Truro)

  Maddan, Martin

  Ridsdale, Julian

  Wolrige-Cordon, Patrick

  Marples, Rt. Hn. Ernest

  Rippon, Rt. Hn. Geoffrey

  Wood, Rt. Hn. Richard

  Maude, Angus

  Robson Brown, Sir William

  Woodnutt, Mark

  Maudling, Rt. Hn. Reginald

  Rodgers, Sir John (Sevenoaks)

  Worsley, Marcus

  Mawby, Ray

  Rossi, Hugh (Hornsey)

  Wright, Esmond

  Maxwell-Hyslop, R. J.

  Royle, Anthony

  Younger, Hn. George

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

  Russell, Sir Ronald

  Mills, Peter (Torrington)

  St. John-Stevas, Norman

  TELLERS FOR THE AYES:

  Mills, Stratton (Belfast, N.)

  Sandys, Rt. Hn. D.

  Mr. R. W. Elliott and

  Miscampbell, Norman

  Scott, Nicholas

  Mr. Jasper More.

  NOES

  Albu, Austen

  Carmichael, Neil

  Ellis, John

  Allaun, Frank (Salford, E.)

  Carter-Jones, Lewis

  English, Michael

  Alldritt, Walter

  Castle, Rt. Hn. Barbara

  Ennals, David

  Allen, Scholefield

  Chapman, Donald

  Ensor, David

  Anderson, Donald

  Coe, Denis

  Evans, Albert (Islington, S.W.)

  Ashley, Jack

  Concannon, J. D.

  Evans, Fred (Caerphilly)

  Ashton, Joe (Bassetlaw)

  Conlan, Bernard

  Evans, loan L. (Birm'h'm, Yardley)

  Atkins, Ronald (Preston, N.)

  Corbet, Mrs. Freda

  Faulds, Andrew

  Atkinson, Norman (Tottenham)

  Craddock, George (Bradford, S.)

  Fernyhough, E.

  Bacon, Rt. Hn. Alice

  Crawshaw, Richard

  Finch, Harold

  Barnes, Michael

  Cronin, John

  Fitch, Alan (Wigan)

  Barnett, Joel

  Crosland, Rt. Hn. Anthony

  Fletcher,Rt Hn. Sir Eric(Islington,E.)

  Baxter, William

  Crossman, Rt. Hn. Richard

  Fletcher, Ted (Darlington)

  Beaney, Alan

  Dalyell, Tam

  Foot, Michael (Ebbw Vale)

  Bence, Cyril

  Darling, Rt. Hn. George

  Ford, Ben

  Benn, Rt. Hn. Anthony Wedgwood

  Davidson, Arthur (Accrington)

  Forrester, John

  Bennett, James (G'gow, Bridgeton)

  Davies, Ednyfed Hudson (Conway)

  Fowler, Gerry

  Bidwell, Sydney

  Davies, G. Elfed (Rhondda, E.)

  Fraser, John (Norwood)

  Binns, John

  Davies, Dr. Ernest (Stretford)

  Freeson, Reginald

  Blenkinsop, Arthur

  Davies, Ifor (Gower)

  Galpern, Sir Myer

  Boardman, H. (Leigh)

  Davies, S. 0. (Merthyr)

  Gardner, Tony

  Booth, Albert

  de Freitas, Rt. Hn. Sir Geoffrey

  Ginsburg, David

  Bottomley, Rt. Hn. Arthur

  Delargy, Hugh

  Gray, Dr. Hugh (Yarmouth)

  Boyden, James

  Dell, Edmund

  Greenwood. Rt. Hn. Anthony

  Bradley, Tom

  Dempsey, James

  Gregory, Arnold

  Bray, Dr. Jeremy

  Dewar, Donald

  Grey, Charles (Durham)

  Brooks, Edwin

  Diamond, Rt. Hn. John

  Griffiths, David (Rother Valley)

  Broughton, Sir Alfred

  Dickens, James

  Griffiths, Eddie (Brightside)

  Brown, Rt. Hn. George (Belper)

  Dobson, Ray

  Griffiths, Will (Exchange)

  Brown, Hugh D. (G'gow, Provan)

  Doig, Peter

  Gunter, Rt. Hn. R. J.

  Brown, Bob(N'c'stle-upon-Tyne,W.)

  Driberg, Tom

  Hamilton, James (Bothwell)

  Brown, R. W. (Shoreditch & F'bury)

  Dunn, James A.

  Hamilton, William (Fife, W.)

  Buchan, Norman

  Dunnett, Jack

  Hamling, William

  Buchanan, Richard (G'gow, Sp'burn)

  Dunwoody, Mrs. Gwyneth (Exeter)

  Hannan, William

  Butler, Herbert (Hackney, C.)

  Dunwoody, Dr. John (F'th & C'b'e)

  Harper, Joseph

  Butler, Mrs. Joyce (Wood Green)

  Eadie, Alev

  Harrison, Walter (Wakefield)

  Callaghan. Rr. Hn. James

  Edelman, Maurice

  Hart, Rt. Hn. Judith

  Cant, R. B.

  Edwards, William (Merioneth)

  Haseldine, Norman

  784

  785

  Hattersley, Roy

  MacPherson, Malcolm

  Robertson, John (Paisley)

  Haze Bert

  Mahon, Peter (Preston, S.)

  Robinson,Rt.Hn.Kenneth(St.P'c'as)

  Healey, Rt. Hn. Denis

  Mahon, Simon (Bootle)

  Rodgers, William (Stockton)

  Heffer, Eric S.

  Mallalieu, E. L. (Brigg)

  Roebuck, Roy

  Henig, Stanley

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

  Rogers, George (Kensington, N.)

  Herbison, Rt. Hn. Margaret

  Manuel, Archie

  Rose, Paul

  Hilton, W. S

  Mapp, Charles

  Ross, Rt, Hn. William

  Hooley, Frank

  Marks, Kenneth

  Rowlands, E.

  Horner, John

  Marquand, David

  Ryan, John

  Houghton, Rt. Hn. Douglas

  Marsh, Rt. Hon. Richard

  Shaw, Arnold (Ilford, S.)

  Howarth, Robert (Bolton, E.)

  Mason, Rt. Hn. Roy

  Sheldon, Robert

  Howell, Denis (Small Heath)

  Mayhew, Christopher

  Shinwell, Rt. Hn. E.

  Howie, W.

  Mellish, Rt. Hn. Robert

  Shore, Rt. Hn. Peter (Stepney)

  Huckfield, Leslie

  Mendelson, John

  Short, Rt.Hn.Edward(N'c'tle-u-Tyne)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Mikardo, Ian

  Short, Mrs. Renee(W'hampton,N.E.)

  Hughes, Hector (Aberdeen, N.)

  Millan, Bruce

  Silkin, Rt. Hn. John (Deptford)

  Hughes, Roy (Newport)

  Miller, Dr. M. S.

  Silkin, Hn. S. C. (Dulwich)

  Hunter, Adam

  Millne, Edward (Blyth)

  Silverman, Julius

  Hynd, John

  Mitchell, R. C. (S'th'pton, Test)

  Skeffington, Arthur

  Jackson, Colin (B'h'se & Spenb'gh)

  Molloy, William

  Slater, Joseph

  Jackson, Peter M. (High Peak)

  Moonman, Eric

  Small William

  Jay, Rt. Hon. Douglas

  Morgan, Elystan (Cardiganshire)

  Snow, Julian

  Jeger, George (Goole)

  Morris, Charles R. (Openshaw)

  Spriggs, Leslie

  Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

  Morris, John (Aberavon)

  Steele, Thomas (Dunbartonshire, W.)

  Jenkins, Hugh (Putney)

  Moyle, Roland

  Stewart, Rt, Hn. Michael

  Jenkins, Rt. Hn. Roy (Stechford)

  Mulley, Rt. Hn. Frederick

  Stonehouse, Rt. Hn. John

  Johnson, Carol (Lewisham, S.)

  Murray, Albert

  Strauss, Rt. Hn. G. R.

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

  Neal, Harold

  Summerskill, Hon. Dr. Shirley

  Jones, Dan (Burnley)

  Newens, Stan

  Symonds, J. B.

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

  Norwodd, Christoptopher

  Taverne, Dick

  Jones, J. Idwal (Wrexham)

  Oakes, Gordon

  Thomas, Rt. Hn. George

  Jones, T. Alec (Rhondda, West)

  Ogden, Eric

  Thornton, Ernect

  Judd, Frank

  O'Malley, Brain

  Tinn, James

  Kerley, Richard

  Oram, Albert E.

  Tuck, Raphael

  Kerr, Mrs. Anne (R'ter & Chatham)

  Orbach, Maurice

  Urwin, T. W.

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

  Orme, Stanley

  Varley, Eric G.

  Kerr, Russell (Feltham)

  Oswald, Thomas

  Wainwright, Edwin (Dearne Valley)

  Lawson, George

  Owen, Dr. David (Plymouth, S'tn)

  Walden, Brian (All Saints)

  Leadbitter, Ted

  Owen, Will (Morpeth)

  Watkins, David (Consett)

  Lee, Rt. Hn. Frederick (Newton)

  Padley, Walter

  Watkins, Tudor (Brecon & Radnor)

  Lee, Rt. Hn. Jennie (Cannock)

  Page, Derek (King's Lynn)

  Weitzman, David

  Lee, John (Reading)

  Paget, R. T.

  Wellbeloved, James

  Lestor, Miss Joan

  Palmer, Arthur

  Wells, William (Walsall, N.)

  Lever, Rt. Hn. Harold (Cheetham)

  Pannell, Ryt. Hn. Charles

  White, Mrs. Eirene

  Lewis, Arthur (W. Ham, N.)

  Park, Trevor

  Whitlock, William

  Lewis, Ron (Carlisle)

  Parker, John (Dagenham)

  Wilkins, W. A.

  Lipton, Marcus

  Parkyn, Brain (Bedford)

  Willey, Rt. Hn. Frederick

  Loughlin, Charles

  Pearson, Arthur (Pontypridd)

  Williams, Alan (Swansea, W.)

  Luard, Evan

  Peart, Rt. Hn. Fred

  Williams, Clifford (Abertillery)

  Lyon, Alexander W. (York)

  Pentland, Norman

  Williams, Mrs. Shirley (Hitchin)

  Lyons, Edward (Bradford, E.)

  Perry, George H. (Nottingham, S.)

  Williams, W. T. (Warrington)

  Mabon, Dr. J. Dickson

  Prentice, Rt. Hn. R. E.

  Willis, Rt. Hn. George

  McBride, Neil

  Price, Thomas (Westhoughton)

  Wilson, Rt. Hn. Harold (Huyton)

  McCann, John

  Price, William (Rugby)

  Wilson, William (Coventry, S.)

  MacColl, James

  Probert, Arthur

  Winnick, David

  MacDermot, Niall

  Pursey, Cmdr. Harry

  Woodburn, Rt, Hn. A.

  Macdonald, A. H.

  Randall, Harry

  Woof, Robert

  McGuire, Michael

  Rankin, John

  Wyatt, Woodrow

  McKay, Mrs. Margaret

  Rees, Merlyn

  Mackenzie, Gregor (Rutherglen)

  Rhodes, Geoffrey

  Mackintosh, John P.

  Richard, Ivor

  Maclennan, Robert

  Roberts, Rt. Hn. Goronwy

  TELLERS FOR THE NOES:

  MacMillan, Malcolm (Western Isles)

  Roberts, Gwilym (Bedfordshire, S.)

  Mr. Ernest G. Perry and

  McMillan, Tom (Glasgow, C.)

  Mr. Ernest Armstrong.

  Main Question again proposed.
  Several Hon. Members rose—
  it being after Ten o'clock, the debate stood adjourned.
  Debate to be resumed Tomorrow.

  VALUATION FOR RATING (SCOTLAND) BILL
  Order for Second Reading read.
  Bill referred to the Scottish Grand Committee.—[Mr. Ross.]

  HOUSING AMENDMENT (SCOTLAND) BILL
  Order for Second Reading read.
  Bill referred to the Scottish Grand Committee.—[Mr. Ross.]

  RURAL WATER SUPPLIES AND SEWERAGE (SCOTLAND) BILL
  Order for Second Reading read.
  Bill referred to the Scottish Grand Committee.—[Mr. Ross.]

  SCOTLAND (STATISTICAL INFORMATION)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]
  Mr. Speaker: Mrs. Winifred Ewing.
  10.16 p.m.
  Mrs. Winifred Ewing rose—
  Mr. William Hamilton: The hon. Lady is a tartan Tory. She voted for the Tories.
  Mrs. Ewing: I wish to address the House on the unsatisfactory state of statistical information relating to Scotland's economy and finances. Perhaps I should explain that this was not originally to be the subject of this debate. It was to have been concerned with party political broadcasting. However, I was told that that is a subject for which there is no Ministerial responsibility.
  I once heard a Government Minister say, "All Government statistics are accurate, but some are more accurate than others". Before this debate is over, I hope to cast doubt on whether the phrase should not be reworded, "All Government statistics may not be accurate, and some are merely less inaccurate than others".
  First, I direct a few general shafts at all Government statistics on which Scottish proportions may depend. I am in the fashion to be attacking statistics. Today, we spent 25 minutes on one statistic, with the Shadow Chancellor of the Exchequer casting doubt on the trade figures. We have also heard the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) casting doubt on overseas spending. In a recent instance, the Polish Government put the Chancellor of the Exchequer right about external trade.
  Scotland, as usual, suffers more than elsewhere on the statistical front. Unlike any other modern industrial nation, her vital statistics are shrouded in mystery or riddled with anomalies.
  I indict the Government for sins of omission. There are no figures to tell us certain vital matters about Scotland's total exports, the flow of exports and imports between Scotland and England,
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  Scotland's total consumer spending, Scotland's gross national product, or Scotland's cost of living index. It may not have escaped attention that I have been asking a number of Parliamentary Questions in an attempt to correct the Government's sins of omission and lead them down truthful and frank paths on these matters.
  Since my election, I have pressed for a Scottish cost of living index. I have received promises, but no index. I was told that inter-departmental committees were being set up to look into "regional indices". Last week, I asked how many meetings those committees had had, and where. I was told that there was one meeting on 12th November, 1968, in London. They can hardly be accused of working overtime. Can that be a satisfactory way of dealing with a serious inquiry? Without a Scottish cost of living index, how can we know whether old age pensions in Scotland have sufficiently kept pace with the increase in the cost of living? I asked the question today, but I got an answer to a different question which I did not ask.
  The signs of omission are serious if one wishes to measure the work or prospects of a nation, which is what I presume has been attempted recently in the budget for Scotland issued by the Treasury. It is necessary to fill in the gaps to correct the sins of omission if meaningful economic planning for Scotland is to be carried out.
  I turn then to the sins of commission, and I do so under a number of headings which will be limited solely by the amount of time available to me. The first of my headings concerns the wage gap. The Scottish Office claims that wage levels in Scotland are getting closer to those in England, while P.A.Y.E. statistics show a trend the other way. The latest Inland Revenue reports for any three-year period show a widening of the gap. In the last three years of Conservative Government, from 1961–1964, the wage gap was LI 15s. 8d. a week. During the first three years of Labour Government, 1964 to 1967, the gap widened to £2 9s. 7d. per week. That is, the latest Inland Revenue statistics show an opposite trend. Where does the truth lie?
  Secondly, emigration from Scotland. I have repeatedly asked for information about the gross emigration from Scotland

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  and the categories divided into professional skills, etc. The net emigration figures are had enough: 1951–61 282,000, 1961–68 272,000, and 1968–69 upwards of 25,000, making a total of 579,000—more than half a million of our people gone since the 1950s. Why could not we find out the gross emigration? Could not some method of sample survey be used? That is a cheap method. It is not 100 per cent. accurate, but neither are Government statistics.
  The Secretary of State's claim to publish the emigration figures is net only. He derives satisfaction from pointing out, quite rightly, that there was a decrease last year. But there was an increase in overseas emigration. This seems very crucial, because those who go overseas rarely come back, whereas we hope that those who go to England may come back.
  It is essential to fill in a gap in the unemployment figures. The Government claim success at keeping unemployment under 100,000 in Scotland, which is less than the highest Tory peak of about 130,000. The Government figures, however, give a distorted impression, because they fail to include the number of people who emigrated. The numbers who have emigrated are keeping the unemployment figure at its present high level, but they are artificially keeping it lower than it would otherwise be.
  It is important to look at the number in total employment, and I cannot let this opportunity pass without mentioning the shortfall of 105,000 jobs. That must De the highwater mark of how far out statistics can be. That was in the plan for expansion.
  In my examination of various Ministries, along with other Members forming the Select Committee on Scottish Affairs, I have tried to find the culprit for that gross error in estimation, but I have not been able to find the culprit. No Government Department has ever accepted that responsibility. Perhaps the error lie; with the advisers to the Secretary of State for Scotland.
  I turn to housing. The Government have a habit of giving the statistics for demolitions as if these were slum clearances. But a sizeable proportion of housing demolition one can almost be glad about in some respects, because it relates to planning work connected with roads, tunnels and work of this kind. It
  790
  is gratifying that we are having some roads, but could we have the figures clarified?
  The Cullingworth Report states that in 20 years from now there will be just as many slums in Scotland as there are now at the present rate of building.
  Secondly, the Government have failed to relate their house building to international statistics. They seem happy to relate their statistics to the Tory performance. I do not see that the measure of the barometer of the Tory performance is satisfactory—
  An Hon. Member: The hon. Lady has just voted with them.
  Mrs. Ewing: I will ignore the intervention.
  Mr. Archie Manuel: The hon. Lady is a Tory in disguise.
  Mr. Deputy Speaker (Mr. Harry Gourlay): Order. It is not customary to intervene in an Adjournment debate.
  Mrs. Ewing: I turn to the long awaited budget for Scotland. We last had one in 1952–53. We have waited all these years to get another, and we got it, perhaps not coincidentally, on the eve of a by-election in Scotland. However, we gladly got it, even though it is riddled with both sins of omission and commission.
  First, the presentation of the expenditure figures. Concerning agriculture and fisheries, Scotland is credited with 16·2 per cent. whereas our population share would be 9·7 per cent. But the Government are not taking into account that the subsidies are for the consumer and not the producer.
  Secondly, housing. We are again told that we get more than our population proportion, namely, 20·4 per cent.— [Interruption.]—I will ignore the interruption. It will merely take time off the Minister's reply. It is up to hon. Gentlemen to decide what they wish to do.
  We are told that we get 20·4 per cent. on housing, more than our population share. Scotland has a greater element of local authority housing, and England has a greater element of owner-occupied housing, yet tax rebates to mortgage holders are not included in the housing totals. This is a glaring omission, and if a correction is made for this one finds

  791
  that the figures are substantially similar for the countries, and the question arises whether they should be so in view of the fact that housing in Scotland is still a great blot on all our consciences, and is a national disgrace.
  Next, I deal with education, excluding universities. Here it is implied that Scotland gets three times her population share, yet the Scottish figures include expenditure on grants, a large item which appears under a different heading for England and Wales. If one removes this factor, one finds that central Government expenditure in Scotland and England and Wales is similar.
  When dealing with education in universities, no allowance is made for the fact that one-fifth to one-quarter of Scottish university students are English. I do not object to that. It is good to have people coming to our universities, but allowance should be made for this so that statistics are not misleading. No mention is made of the fact that expenditure per full-time student is between £180 to £200 less in Scotland than in England and Wales.
  A figure of 42·3 per cent. is shown for forestry, yet no mention is made of the fact that 60 per cent. of Forestry Commission land is in Scotland, nor of the fact that most forestry expenditure produces, or ought to produce, a long-term capital asset in terms of amenity, as well as improvements and ultimate prospects for industry.
  For sickness and unemployment, we get more per head. Is this a matter for Government congratulation, or Government recrimination?
  I put it to the House that this budget is a misleading document. I hope that it is not a fraudulent document. Statistics are difficult things, and one hopes that this document is merely misleading.
  In a television broadcast the Financial Secretary to the Treasury implied that Scotland was subsidised by England. The hon. and learned Gentleman's claim cannot be substantiated, and I should like to explain why. The amount of subsidy claimed is £466 million, and I should like to look at that figure. First, a deduction has to be made in respect of loans to local authorities and nationalised industries, including public corporations.
  792
  The figure given is £195 million. Loans are not grants. It is surely not necessary for anyone to instruct the Treasury on this simple fact. The Scots electors are a clever lot, and they know the difference between loans and grants. One has to be repaid, while the other does not. The Government are getting a high rate of interest on money lent, and to put this into the same category as a grant is misleading.
  Second, income tax and corporation tax in respect of bodies outside Scotland. In April the Select Committee on Scottish Affairs cross-examined the Third Secretary to the Treasury, Mr. Vintner. In answer to a question he said that the difficulty of dividing Scottish revenue from that of the rest of Great Britain was potentially impossible and that if one takes a tax like corporation tax it is meaningless to divide payment for a particular corporation between England and Scotland, and in that regard we have the statement from the Treasury that it does not know the profits of such companies. In spite of that statement we have a token estimate. We have a token estimate of £10 million for income tax, and £15 million for corporation tax, making a total of £25 million, yet about 30 per cent. of Scots work for bodies or companies, including nationalised industries and tax offices, which have their head- quarters in London. Dividing that up, we find that about 12·5 per cent. work for nationalised industries, and 17 per cent. for companies. To insert a token figure for tax is therefore patently absurd.
  The Goverment are at variance with the Financial Times, with the Scotsman, with Dr. Gavin McCrone the Government adviser to the Select Committee on Scottish affairs, and with the Scottish National Party. The Scotsman puts the Government figure as being out by £100 million, Dr. McCrone by about half that, and the Scottish National Party by £85 million, somewhere between the two. We take off £85 million. The balance left is now £186 million.
  As for customs and excise, the Government have made two classic blunders. First, they used two different bases—a population over 15 and a straight per capita basis in the consumption of alcohol and tobacco. Secondly, they failed to allow for the fact that Scotland's consumption of alcohol includes more

  793
  spirits and less beer in contrast to England. We allowed for bias under the first factor—the population. We then took two extremes, Scotland and England drinking the same proportion of beer and spirits per capita or alternatively, Scots consuming only spirits and English consuming only beer. Our conclusion was that the truth would lie approximately half way between. That means that another £36 million has to come off, leaving £150 million.
  In defence, the Government created a basic confusion by implying that an independent Scotland would have the same expenditure on defence. They then contradicted themselves by admitting that aproximately £100 million to £150 million would be reasonable. On another point, it is a difficult question because the Treasury is chalking up a £222 million defence expenditure for Scotland, but in a Parliamentary Answer in December gave the answer—less £50 million. The Treasury budget starts with an erratum of £50 million, so perhaps one cannot be surprised at all these other matters.
  My party's estimate, in accordance with other similarly sized and placed countries is £100 million—or it was in the year of this budget. I am afraid that we therefore have to take off another £122 million. This is what the Treasury admits in the document to be reasonable. I also indict the Government for failing to take into account the true comparison which should be made—which should be between Scotland and similarly sized and placed countries, and not between Scotland and Britain.
  On allocated capital expenditure, we know that there must be various headings involved in the pursuit of the mirage of prestige and power, in which Scotland is not interested. Under this heading we have a mixed bag, including the Fl1ls, and enormous embassies abroad, which apparently we have to own for some reason. We are not prepared to regard it as reasonable that Scotland would be interested in such grandiose schemes or would attribute this to a Scottish budget, whichever party was running an independent Scotland.
  Is it reasonable to charge Scotland with £111 million in debt interest? It is known that Scotland has not had a full
  794
  share of the capital expenditure which created the debt. The example of £250 million recently written off London Transport's debts comes to mind, and the strange comparison with the Forth Road Bridge. Scottish Members should find these facts distasteful. The £111 million is perhaps the most unfair part of the budget. One can say that one must be thinking of a number here, to some extent, but we think that a very small figure would be fairer. We are prepared to take half the figure given. We estimate that after taking off the necessary £16 million in respect of allocated capital expenditure, the balance left is £12 million, and after reducing the debt interest by £56 million we are £44 million in the black.
  Mr. William Hamilton: The hon. Lady should be on the London Palladium.
  Mrs. Ewing: I am taking note of what the hon. Member said, and Scotland will take note of it, too.
  In all this no allowance is made for the fact that wherever there is centralised Government a certain amount of money is bound to be spent where the Government is situated. A huge proportion of my salary is spent in London, not by any wish of mine. There are numerous other examples of persons in this kind of position. There are the assets—[HON. MEMBERS : "Too long ; give the Minister time ".] Hon. Members have taken five minutes of my time with interruptions. The assets of Scotland's financial institutions amount to £7,000 million. [Interruption.] I find it difficult to concentrate. I am trying to help the House by getting on, as hon. Members will appreciate from the speed at which I am speaking.
  Another wealth indicator which has not been included is the attitude of the people. It is strange that this should be excluded, because the Prime Minister is always reminding us that economic success depends not on material resources, but on the purposiveness and resolute will of the people, and I agree with the Prime Minister about that.
  The present Government have produced more statistics than any other. That is the only bouquet which I can throw at the Government Front Bench. throw at the Government Front Bench.

  795
  criticise specifically the basis of the Government's statistics. How can we have economic planning without the basic statistics? To attempt to do so makes no sense to any logical person or politician or economist.
  The proposition that the Government are suggesting to the Scottish electors, that they are parasites, when they know that they are paying for everything they get is a double insult. It is insulting in itself, but it is also insulting—
  Mr. Manuel: The hon. Lady is a parasite for drawing her salary for doing nothing.
  Mrs. Ewing: I regard that as an insulting remark which is unworthy of the House, but typical of much of the treatment I have received from many hon. Members since I took my seat. It was a most insulting remark and I am not prepared to accept it. This is just abusing the time of the House. I will sit down in order to give the hon. Member a chance to apologise.
  Mr. Deputy Speaker: Dr. Mabon.
  Mrs. Ewing: I have not concluded my speech. I sat down to give the hon. Member a chance to apologise.
  The Minister of State, Scottish Office (Dr. J. Dickson Mabon): I have less than eight minutes now.
  Mrs. Ewing: I am sorry ; I have done my best—
  Mr. Deputy Speaker: In an Adjournment debate it is customary for the Minister to be left ample time in which to reply. While the hon. Lady has been interrupted on one or two occasions, the amount of material she has put before the House has taken longer than is customary.
  Mrs. Ewing: I am sorry, but I was distracted. I understand that it is the custom not to interrupt an hon. Member during an Adjournment debate, but that custom has not been observed tonight.
  I was saying that it is a double insult to suggest that Scotland is a parasite nation and that Scots will be influenced into changing their thinking so that they are glad to put their hands out for the
  796
  hand-outs. The true reaction of the Scots is that this is not just a bread and butter cause, but that they want to run their own affairs at the earliest opportunity.
  10.38 p.m.
  The Minister of State, Scottish Office (Dr. J. Dickson Mabon): None of us thinks that because the figures in the budget are what they are that Scotland is thereby to be inferred to be a parasitic country. Our country needs substantial investment both on social and economic grounds. It is not on the basis of Goschen or anything else that that investment should be given. It is right that the Scots should be developed as any other people in these islands and that the same high standards of living should be enjoyed in all parts of the country. I do not accept the view that because we have high investment, we are a parasitic people, nor the absurd claim that we can pretend that we give a lot to the English. That is nonsense, as has been demonstrated quite well in the budget which the Treasury has produced.
  I cannot deal with everything in the six minutes which the hon. Lady the Member for Hamilton (Mrs. Ewing) has left to me, and so I will answer only a few points. I accept her bouquet that we have produced more statistics than ever before. That has been our constant endeavour. To be fair to our predecessors, they, too, have sought to add to the statistics. We have more statistics about and more knowledge of Scotland than of any other part of the British Isles, with the exception of Northern Ireland. Northern Ireland has a customs frontier with Southern Ireland and is separated from the United Kingdom by the sea. These physical and political facts explain why Northern Ireland is able to have more statistics than we have.
  I should like to deal with some of the points made by the hon. Lady the Member for Hamilton in her Alice-in-Wonderland arithmetic in which £192 million was thrown out of the window, followed by another £120 million and so on until she ended with the proud boast that we were £44 million in the red—[HON. MEMBERS : "In the black."]—in the black—even more staggering.
  The hon. Lady said that loans should be excluded from the budget, but how-

  797
  ever one finances investment, it is a charge on currently produced resources and must be matched by savings, either in Scotland or elsewhere in the United Kingdom. No serious commentator outside the hon. Lady's party has challenged the point that lending of this kind must be included in any comprehensive budget for Scottish revenue and expenditure.
  She went on to say rightly that loans are not grants. On the other hand, loans bear interest and that interest is credited to the Scottish budget. Lines 17 to 19 of the relevant page of the Treasury Report point out that £83 million is in the form of interest on loans. Loans must be repaid and those repayments are deducted from the net lending figures debited to Scotland and that is made clear in lines 31 to 35. Let us conduct this debate on a rational basis. I trust that the hon. Lady will, on reflection, appreciate the position and put back the £195 million which, earlier in her remarks, she managed to dump.
  It is on the question of defence that the hon. Lady and her party make another false argument, although I give her credit for changing her mind on this subject. Although the hon. Lady said that her party's estimate on this score was £100 million, only three weeks ago the Chairman of the Scottish Nationalist Party published an estimate of £152 million ; and a difference of £52 million in only three weeks is not bad.
  However, her party's estimate was related to defence expenditure in Scotland and not for Scotland. As we know, a large part of defence expenditure unfortunately occurs overseas, but this is inevitable—that is, unless one were prepared to decide that one should not spend anything outside Scotland in defence of Scotland. Thus, before the hon. Lady can make such a deduction on this point, she has an assumption which must be proven, and it is up to her to prove it.
  When discussing the question of debt interest, the hon. Lady considers that £111 million is not the figure and that it should be more or less halved to about £56 million. However, on 9th October the chairman of her party thought it should be £66 million ; but that is a mere £10 million different, we need not bother too much with it. The hon.
  798
  Lady put forward no evidence for her claim on the question of debt interest.
  The hon. Lady will, I am sure, not disagree that we in Scotland are now getting a fair share of total investment—not a per capita share but a fair share according to our needs and not according to our people, and these needs are, proportionately, higher than our total number of people. If she is to be listened to, the hon. Lady must prove that there has always been a less than per capita investment in Scotland ; in other words, that in early Victorian times the Liberals and Tories never maintained capital investment on a proportionate basis. It is not for the Treasury but for her to prove that, or to try to do so, and she will have a job doing so at the drop of the delicate and rather sartorial hat that she is wearing.
  Like me, the hon. Lady pays her income tax to Cardiff, because she is an hon. Member, but many London workers make their income tax payments in Scotland. Indeed, twice the number of public sector staff in England and Wales are paying their income tax through Scottish offices than there are Scottish public sector workers paying their income tax through offices outside Scotland. If the hon. Lady doubts this, she can confirm it from the Treasury's Report. Indeed, we approached a number of firms and asked them questions about the payment of income tax. We were surprised to learn of the large number of firms which pay their employees in Scotland.
  Then consider the question of whisky, a beverage which I much enjoy. The hon. Lady estimated the duty on beer and whisky as a fascinating exercise into higher absurdities. First she made the assumption that the Scots and English drink the same amount. Then she said that the Scots drink all the whisky and the English all the beer. But since, unfortunately, there are 10 times more English and Welsh than Scots, one must agree that "Facts are chiels that winna ding".
  However, she went on to speak of what she called the "middle balance ", and somehow worked out that the Scots drink 55 per cent. of all whisky produced in Scotland. If that, in the view of her party, is what should happen, and if that is their general policy, then we and the Tories must surely lose. She may think

  799
  this to be a very good argument to have as part of S.N.P. policy, but it is fundamentally wrong and the House cannot put up with it.
  Question put and agreed to.
  Adjourned accordingly at a quarter to Eleven o'clock.