PUBLIC EXPENDITURE AND TAXATION

HC Deb 05 November 1970 vol 805 cc1275-404

Order read for resuming adjourned debate on Question [4th November]: That this House approves Mr. Chancellor of the Exchequer's Statement of 27th October on Public Expenditure and Taxation and the White Papers, New Policies for Public Spending (Command Paper No. 4515) and Investment Incentives (Command Paper No. 4516).—[Mr. Barber.]

3.57 p.m.

Mr. Harold Wilson (Huyton)

I beg to move to leave out from "House" to the end of the Question and to add instead thereof: condemns the policy of Her Majesty's Government, as outlined by Mr. Chancellor of the Exchequer on 27th October, as being mean and unfair between different sections of the community, particularly in the social services and housing; and notes that the resulting tax changes will mean big remissions for the richer taxpayer at the expense of those living on lower incomes, who will bear the brunt of the social service cuts and charges and the main burden of the Government's policy of raising prices. The debate so far has concentrated on the Chancellor of the Exchequer's statement last week, and inevitably many of the speeches have been directed to the basic Conservative philosophy of, in the words of the Amendment, the "mean and unfair" cuts directed towards enabling the Government to improving the living standard in cash terms of, roughly speaking, families with an income of£3,000 a year or more.

I am glad to see the Prime Minister here today. There were suggestions that he did not have the stamina to listen to his Chancellor of the Exchequer right through to the long, bitter end. I sympathise with him. If he has read HANSARD—

The Prime Minister (Mr. Edward Heath)

I thought the right hon. Gentleman knew that I was engaged in talks with the Prime Minister of Israel which were arranged some weeks ago. I thought it was only right that I should continue those talks.

Mr. Wilson

No, Sir. I did not receive that message from the right hon. Gentleman. But if he did meet the Prime Minister of Israel—and I am delighted to hear that he was meeting her yesterday afternoon—he will have found her a better man than any of the nonentities on his own Front Bench.

But if, not having been able to be present yesterday, he has read HANSARD, as I am sure he has, he will have formed a resolve never again to leave a matter of great moment to the hands of his right hon. Friend. Indeed, many of my right hon. and hon. Friends felt that yesterday's speech by the Chancellor was the most incompetent performance by a senior Member that they had heard for 25 years. I am bound to say that he did not hold the record very long.

But there is one further point for the right hon. Gentleman. When, in very different circumstances from these, the previous Government had to make serious reductions in Government expenditure for the purpose of strengthening Britain's balance of payments, not to make tax changes, and when the expenditure programme which had to be outlined covered the whole range of Government activities, from defence to the social services, I did not duck the job of presenting it to the House and leave it to a colleague. In 1966 and 1968 I was prepared to tell the House and the country everything that was involved, because these decisions are the decisions not of the Treasury or its Minister but of the Government as a whole. I am sure that the right hon. Gentleman, with the reports coming to him through the Whips, will now harden his determination that never again will he leave the task of seeking to make mare plausible fundamentally indefensible policies to the troupe of Caligulan consuls of whom we have heard last week.

But there is another reason why he should have taken the responsibility, if he could not be here yesterday, to speak in the debate today. After all, he spoke this morning to the Institute of Directors He found time for that. I must remind him that he is accountable to this House as well. One reason why the Prime Minister should be speaking in this debate is that it is fundamentally about the confidence trick which he perpetrated last June. He will recall how after the Selsdon Park conference I warned—[Interruption.] Yes. We did not hear about that last June—I warned what Tory policies would mean for the social services, rents, council house rents and the tenants who suffered under the old Tory Rent Act, and for the health services, and education. The right hon. Gentleman last spring was never wanting in instant pronouncements proclaiming that that was the last thing they intended.

It is true also that during the Election campaign the hardline Selsdon theme was muted. No one could have been more ingratiating than the right hon. Gentleman. [HON. MEMBERS: "Oh."] I shall quote some of the right hon. Gentleman's remarks in a moment. Hon. Gentlemen opposite perhaps missed them at the time because they were too busy.

No one has been at greater pains than the Chancellor to say that what he has been announcing is only a beginning, but his statement is a total denial, a betrayal, of every promise the Conservatives made in the election. I could refer, for example, to family allowances, on which the right hon. Gentleman was utterly specific in his commitment. In a letter to the Child Poverty Action Group, published on 5th June, he stated: We accept that, as Mr. Macleod said in his Budget speech, the only way of tackling family poverty in the short term is to increase family allowances. It was reported that same day that: The Group,"— that is, the Child Poverty Action Group— which was worried that the Conservatives might introduce means tests for family allowances is now satisfied that the Conservatives have given a categorical pledge to the poor'". Nothing, even in the speech of the Chancellor yesterday, was more pathetic than his wriggles and evasions in explaining why, under the leadership of the right hon. Gentleman who made that promise, the Government have lost no time in reneging on that promise. It may have been that he thought that he had successfully led the Child Poverty Action Group up the electoral garden path. It seems that the Group did accept what he said, but it is wiser now, as its comments on this limited sop—means tested at that—to the most poverty-stricken members of our society have shown. But it served the right hon. Gentleman's purpose in June.

But what I think the right hon. Gentleman would most wish us to forget is the whole series of his increasingly shrill pledges about prices as the election went on. What could have been more pathetic than his denial on Tuesday that: I have never used the words 'at a stroke'."?—[OFFICIAL REPORT, 3rd November, 1970; Vol. 805, c. 847.] There is one thing that could have been more pathetic, and that was his evasive attempt to justify what he had said, in a letter to me delivered that same night, of which, of course, the Press got a copy—and I do not complain about that. What the right hon. Gentleman is now trying to say is that he did not in that sentence say: at one stroke to reduce prices. He wants to create the impression that he never said anything about reducing prices, but that he spoke about reducing the rises in prices. Does he still maintain that fiction that he did not say anything about reducing prices?

Hon. Members

Answer.

Mr. Wilson

No. I will help the right hon. Gentleman. I would not have thought it necessary in the House once again to recall that utterly misleading pledge which he issued two days before the election about prices. Or did he issue it? The letter the right hon. Gentleman sent to me seemed to dissociate himself from responsibility by referring to what he called the statement issued by Conservative Central Office. It was in fact issued by the right hon. Gentleman at the end of his Press Conference. I have it here. It is headed The Rt. Hon. Edward Heath, M.B.E., Leader of the Conservative Party. A statement on the Conservative approach to rising prices. Tuesday, 16th June, 1970. In any case, lest this was to be the right hon. Gentleman's intended escape hatch, I would remind him of the words he used in the debate on the Gracious Speech when challenged by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), the former Chancellor of the Exchequer. He said: This statement was put out with my full authority after discussion with the Chancellor of the Exchequer that morning."—[OFFICIAL REPORT, 7th July, 1970; Vol. 803, c. 518.] That is all right; he accepts that. In that case, perhaps he will have another look at the terms of the letter he sent me. Did he say at one stroke a phrase which he denied to the certain knowledge of 400 Members of Parliament on Tuesday? Did he use the phrase reduce prices"?

An Hon. Member

Get on.

Mr. Wilson

Hon. Members had better listen to what the right hon. Gentleman promised. It is necessary, because of the denials, to pin the right hon. Gentleman firmly down to what he said, words which he intended should persuade the electorate into voting Conservative, and which clearly had no little effect in doing so.

After setting out his own fanciful version, on his own responsibility, of what a continuance of Labour's economic policy would mean, he went on in his statement of 16th June: But there is a very real alternative which ought to be pursued immediately. That alternative is to break into the price/wage spiral by acting directly to reduce prices. This can be done by reducing those taxes which bear directly on prices and costs, such as the selective employment tax,"— He said that this was to be done immediately, but we have heard nothing about it being done immediately— and by taking a firm grip on public sector prices and charges such as coal, steel, gas, electricity, transport charges and postal charges. This would, at a stroke, reduce the rise in prices… I do not think that the right hon. Gentleman will now deny that those were the words he used. [An HON. MEMBER: "Hurry up."] I am sorry. The P.P.S. to the Chancellor is anxious to hear this, I should not like him to be disappointed. It will take a minute or two longer than I intended.

There was a period in the earlier weeks of this Government when there was an attempt to suggest that it was not the right hon. Gentleman but a humble official of the Conservative Central Office who was responsible for the statement. I think that the right hon. Gentleman's acceptance of responsibility in the House and again this afternoon must dispose of that attempt. In any case, if he really wanted to repudiate the Central Office official, he would have sacked him—like the unwise gentleman who, at the beginning of the campaign, told Hampstead Young Conservatives that there was no reference to a value-added tax in the Tory manifesto because, to quote his words, … it might lose us votes. He said that when he was asked why there was no commitment in the manifesto to a value-added tax, and went on to say that they would listen to the Treasury when they got in. That was the point.

However, the right hon. Gentleman did not sack him. I gather that, having been promoted, he is happily at work in the Cabinet Office—[Interruption.] If the Prime Minister does not know, he must have slipped in when he was not looking—perhaps the Secretary of State for Wales wanted to get rid of him.

There we have it. An alternative to be pursued immediately … to break into the price-wage spiral, to act directly to reduce prices. If the right hon. Gentleman had spoken in this debate he would no doubt have gloried in telling the House how he has, at a stroke, taken action directly to reduce the rise in prices, or perhaps he would have told us how he has pursued immediately this alternative to act directly to reduce prices. I am sure that he would have gloried in telling the House how it has been done, because some of us are ignorant about the process that he has followed. We have not seen evidence of it yet.

The governing adverb in this statement was "immediately". The right hon. Gentleman said that he "immediately" intended to reduce taxes which bear directly on prices. He specified the selective employment tax. I have not heard from the Chancellor that this was to be reduced immediately. It is not among the collection of financial Bills which we have been told will be before us next week. All that I have had from the Chancellor, after repeated pressure, is a refusal to give an assurance that the Government will not increase indirect taxation.

As for the selective employment tax, I am pleased that the Chancellor and the Prime Minister are at one in denying the Prime Minister's statement last February that S.E.T. will be not reduced but abolished in the first Budget. The right hon. Gentleman said that last February.

I have given the facts and the quotation to the House. I do not want to weary the House by giving it again. If the right hon. Gentleman does not agree, I will gladly give it again—[Interruption.] I gave the evidence to the House. It is for the right hon. Gentleman to choose his own moment, either in this debate or on some other occasion, to say whether he accepts that quotation as being accurate. I have quoted from the official transcript, and I heard him say it on a certain television programme. I will not weary the House by giving it again, unless he wants me to. If he continues to deny that he said it, he must make it clear and I will see that the House has it. I have it here if the House wants it. He said it. I have given the evidence to the House. He has had four months to rebut what I then said to the House. He has not done so, and we know why.

An Hon. Member

He is a twister.

Mr. Andrew Faulds (Smethwick)

Twisty Teddy.

Mr. Wilson

The right hon. Gentleman also offered a new policy, which sounded plausible, for intervening in the process of price inflation. The passage which I have just quoted was his pledge to take a firm grip on public sector prices and charges such as coal, steel, gas, electricity, transport charges and postal charges. He had hinted at this policy earlier in the election, and I pointed out in reply to him that to hold down public sector prices and charges so that the profit rate and, therefore, the payment to the Treasury of interest on borrowed capital by the industries concerned would fall below the targets set by the Treasury and embodied in the Treasury's financial plans and the Budget.

If the right hon. Gentleman did what he said on 16th June, it would mean a subsidy by the Treasury—that means the taxpayer—pound for pound to the extent that public industry profits and repayments to the Treasury fell short of those targets. The Chancellor of the Exchequer will not deny that that is what he has found. We warned the right hon. Gentleman that this was the result of his policy. He denied it at the time. Now perhaps he will tell us whether he has learned the facts. He was not long in office before the Treasury taught him the facts of life, though he would not accept them from me during the election. If he had done, perhaps he would not have given that misleading pledge to the electorate and we would have been denied the pleasure of seeing some hon. Gentlemen opposite in this House at all, let alone on those benches.

It is now clear why he rejected, in one of his instant opposition exercises, my proposal before the election that his policy should be costed by the then Chief Secretary to the Treasury. In the election, he knew that he could only win by misleading the British people.

It is not an assertion for which I will deny the necessary evidence to the House. But it is worth while pausing for a moment, however painful to right hon. and hon. Gentlemen opposite, to consider the prices and charges of those commodities on which he was to take a firm grip. First, we have coal prices, which the Government now agree should rise by 16 cent., slanted against the domestic consumer. Then comes steel, where they have given a big increase and apparently there is more to come, for a reason which I shall examine in a moment. Gas and electricity, which had kept prices steady for three years under the Labour Government, are now to be permitted, or I should say encouraged, to raise their prices. Then we have transport charges. How I remember the right hon. Gentleman at one of his Press conferences saying that a year or two more of Labour Government would involve not only a 3s. loaf but a 1s. minimum fare. But a 2s. loak—towards his 3s.—was promised us in the Tory Press yesterday to be coming before Christmas. Perhaps the right hon. Gentleman will give us a guarantee that it will not rise further on its way to 3s. Price control of bread has gone now under this Government. But what about the 1s. minimum fare? That was inflicted in urban transport on London Underground travellers in August of this year, when the right hon. Gentleman had been in office just a month—[interruption.] I wish that the travellers could see the laughter on the faces of right hon. and hon. Gentlemen opposite. We did not agree with this decision. It was a decision made by the Tories on the G.L.C. and opposed by the Labour opposition on the G.L.C., and the right hon. Gentleman and his Government could not move fast enough in their rush to fall over themselves to endorse it in August.

The right hon. Gentleman should know that we announced that we did not accept the arguments in favour of it, or the figures which were related to decimalisation in their first formulation. He will know, because it is on the record, that we had announced that it must go to the National Board for Prices and Incomes for impartial assessment, and I have little doubt that any impartial investigation would have reported that these charges at this time were not justified. No wonder right hon. and hon. Gentlemen opposite are in such a hurry to wind up the National Board for Prices and Incomes.

On postal charges, again we did not accept the Post Office Board's proposals and stated in this House, as the record shows, that we saw no justification for them. We said that they must be referred to the National Board for Prices and Incomes. The Post Office raised them without any Government authority. It jumped the gun—[HON. MEMBERS: "Oh."]—and we said—[Interruption.] Hon. Gentlemen opposite had better listen—

Mrs. Elaine Kellett (Lancaster)

Would the right hon. Gentleman do this House the courtesy of remembering that not all hon. Members are hon. Gentlemen?

Mr. Speaker

As a feminist, I think the hon. Lady has a point.

Mr. Wilson

I apologise to the hon. Lady. I should make it plain that I am really paying her a compliment because my reference to "hon. Gentlemen" was to those hon. Gentlemen—whom I can see plainly are hon. Gentlemen—who were barracking. I naturally assumed that the hon. Ladies in this House were too much ladies, or gentlemen, as the case may be, to be barracking.

It just happens that every "public sector price and charge" which was quoted by the right hon. Gentleman in his statement of 16th June has either gone up or is due to go up. If I have missed any of them, perhaps the right hon. Gentleman will remind me.

The 16th June statement which he seems so anxious to forget, even to deny, was not his only statement. I should have to make a speech as long as the speech of the Chancellor of the Exchequer yesterday, and longer than the House would be prepared to put up with, if I listed all his other pledges on prices. But there is just one I will mention. I was deeply moved by his appeal to the housewives of Leicester. I happened to see it on television at the time. I am sure he will be eternally grateful to me that in the Labour Party political broadcast last night we devoted a considerable part of our allotted time to ensuring that his imperishable words should not be too quickly forgotten. He told the housewives of Leicester what the housewives had been telling him. He said: Is it any wonder that housewives keep telling me, as they have done again and again in the last few months, that they are having to cut down on the family's weekly joint, getting cheaper meat, smaller cuts? That they are having to buy standard eggs from the supermarket, instead of large ones? To make the children's shoes last just a little longer? I wonder if he will not state categorically the result of his action "at a stroke" The cheaper meat and smaller cuts on which the Leicester housewives were counting are now giving place to larger and higher quality cuts of meat at the same price. On the question of eggs with which he was so concerned I have read estimates that egg prices, seasonal variations apart, and comparing like with like, will be on average 2s. 6d. a dozen higher next year than they are this year. Does he deny this, or confirm it, or does not he bother himself any more with such details? I should not like to think that the housewives of Leicester who were counting so much on it will have to subsist on pullets' eggs from now on.

We all know that care and compassion have always been the right hon. Gentleman's stock-in-trade. We remember the Minister of Posts and Telecommunications in a Conservative political broadcast saying "I care and Ted cares, too". One thing which he cared about in June was children's shoes. I should like to know today what action he has taken to ensure that they "last a little longer". It will be difficult for him, in the light of the total abdication of the Government from any issue where private enterprise can take the decisions or make higher profits. Obviously he cannot ensure better quality for children's shoes, but the House will always be ready to give him a generous hearing on that subject.

A housewife in my constituency told me only this week that the price of "Jumping Jacks"—that is a brand of shoes, not fireworks—has not been reduced. I have no doubt that this question is already before the multidiscipinary Central Capability Unit. If the right hon. Gentleman's experience is different from that of my constituent and others who have spoken to me, no doubt he will tell me. My constituent unfortunately had to take back to the retailer a pair of these shoes. It was not that they were not lasting longer, they did not fit. The shop assistant said, "We were waiting for you, madam. That particular pair of shoes bore the wrong price tag. They have now gone up. You were charged 29s. 11d. and they are now 32s. 6d., but we had not had a chance to change the label". Nobody expected the result of 18th June. The labels were not printed at that time.

Apparently, there was nothing he cared about more in Leicester than the price of school meals. The right hon. Gentleman said: the dinner money at school takes more out of her purse —that is, the housewife—but apparently not enough for the right hon. Gentleman. He will not deny that the increase in school meals in two stages announced by the Chancellor of the Exchequer will take out of her purse about 5s. per week per child.

The right hon. Gentleman and his colleagues made no secret of their tactics in the election. They were to go all out for the women's vote—even to try to persuade them to vote differently from their husbands. The right hon. Gentleman became a temporary supporter of "women's lib" during the election, and even Lysistrata was not more eloquent than he was. He reminded them of the secret ballot. I think the House will agree that he had some success in arousing a separatist housewives' vote. His present policy of dividing the nation began in his election plan of dividing the family. But he now shows a remarkable impartiality between husband and wife, as he should. As he attacks the housewife by the prices part of his policy he has made it clear that any attempt by the husband through his trade union to stand on his own feet—that is the "in" phrase—and to fight for higher wages will be most rigorously resisted.

I do not think that anyone will dispute the resolve of the right hon. Gentleman to make nonsense of his pledge that a Conservative Government would not have an incomes policy. Of course they have an income policy—not incomes but wages, particularly the wages of the lower paid.

On the very day that he made his pledge on family allowances, the right hon. Gentleman attacked the Labour Government for not giving 30 per cent. to the doctors—and he ratted on that one as well. He has now declared war on wages in the public sector. It is true that his policy has not been very consistent. [Laughter.] This is why the streets and rivers are polluted—because of the right hon. Gentleman's policies. It is nothing to laugh about.

In early August Ministers were proclaiming that, while they would not intervene in private enterprise wage settlements, they would jump heavily on public sector increases. Yesterday the Chancellor of the Exchequer made it clear that there was no discrimination in the Government's policy and, in one of the few lucid passages of his speech, proceeded to explain how that discrimination would be applied. In August we were told that a pattern of wage increases exceeding 10 per cent. must at all costs be reduced to single figures. In October, last week, we were told that 14 per cent. was the criterion. Should there be a settlement of the public employees' dispute on the lines reported to have been recommended by Sir Jack Scamp, there will be a rush on the part of Ministers to prove that 10, 14, 18 and 19 per cent. are all the same thing and that Ministers have had a glorious victory.

The right hon. Gentleman's incomes policy defies rational economic analysis. I do not know whether the multidisciplinary Central Capability Unit includes a psychologist. It really needs an expert, probably in morbid psychology, to understand the Government's behaviour over wages and industrial negotiations.

In July we had a totally unnecessary dock strike and state of national emergency. There could have been the same settlement without a strike, but the strike happened because of the stiff-necked attitude of the Prime Minister, for it prevented him from intervening to break a procedural deadlock which it was his duty to break. [Interruption.] The result in cash would have been the same, but without the damage of a strike. Hon. Gentlemen opposite hoped—this was said at the time—that their stubbornness in resisting the dockers would deter other unions from putting in claims I wonder if they still think that?

The most sustained message emanating from the Government on these wages questions has suggested that the higher wisdom of the Government's incomes policy is to choose one wage claim this autumn, preferably one where the unions concerned are weak—and it would help if their members were chronically underpaid—for a showdown.

In their total ignorance of industrial conditions and union problems, they believed that if they could hold out to the bitter end in this selected strike, and inflict humiliating defeat on this selected union, that would deter stronger unions from pressing their claims and all would be well. It would be masters and men in harmony—the old Tory philosophy. But there had to be a showdown. They were hoping it would be the miners or the railwaymen, but the timetable slipped and it had to be the public employees.

We have had the showdown—bravery and courage—not on the beaches this time but in the sewers and garbage heaps. [HON. MEMBERS: "Cheap."] But this is fantasy. If they had won such a battle, against the public service employees, do they really believe that other unions with a strong claim would converge on Downing Street with white flags of surrender?

When the Government chose this particular strike on which to have a fight—and we have drawn attention to some of the more unsavoury methods with which it has been fought—they only succeeded in placing public sympathy behind the men and women whose service is indispensible to the very life and health of the country. The Government are coming to realise that.

Where Government conciliation officers were withheld, Sir Jack Scamp was called in. I was wondering whether it is part of the Prime Minister's policy to examine what things now done by Government should be performed by private enterprise. Certainly Sir Jack Scamp has shown that he can do it better than the Prime Minister. The reason, of course, is that Sir Jack Scamp wanted to achieve a settlement—[Interruption.]

Knowing his reputation, I am sure that the Prime Minister will take this, what can only be a total humiliation, like a gentleman. I am sure that there will be no more threats to the local authorities about what will happen if they pay more than the figures that have been set. I hope that the right hon. Gentleman will give an assurance that the rate support grant negotiations will not be used as a means of punishing those undisciplined, mainly Tory, local authorities which made it clear in advance that they would accept Sir Jack Scamp's findings. I take it that he is ready to make it clear that there will be no recriminations for local authorities if they pay a higher figure than that set.

Here we have a Government who are determined to divide society inviting all the consequences of that division. They can threaten their American-inspired industrial legislation, but any improvement in industrial relations in this country must depend on all concerned thinking that what is being done—this applies not only to industrial relations but to a very wide sphere—is just and fair. I wonder if the right hon. Gentleman has thought what would happen if the industrial workers decided to acquiesce in his legislation—I do not think that they will—and simply worked to rule? That could do more damage than all the strikes imaginable.

The Leader of the Opposition has an obsession—[HON. MEMBERS: "Hear, hear."]—I meant to say the Prime Minister is obsessed. In making this mistake I am in harmony with his right hon. Friends, many of whom seem to believe that I am still the Prime Minister. [Interruption.]

The Prime Minister is obsessed—this applies to all his colleagues on the Government Front Bench—with the idea of one down, everybody down—one union down, all union resistance will end. Strange that a Government who owe so much to industrial political contributions should be equally occupied with this decimation theory for private enterprise, and not just trade unions.

The Government have this obsession with bankruptcies. Week by week we read that what is required is a squeeze so tight that it results in the spectacular bankruptcy of a very large firm. Last week one Conservative newspaper was speculating which large firm would go—would it be British Leyland, Cammell Laird or Rolls-Royce? Apparently the theory is that one major firm must go into bankruptcy pour encourager les autres. [Interruption.] One of my hon. Friends tells me that the Prime Minister is nodding in assent. Let me make it clear what I am saying so that he knows with what he is agreeing.

The Prime Minister

I wish to make it plain that I was not nodding in agreement with the allegation the right hon. Gentleman was making about firms going into bankruptcy. I was thinking that after five and a half years of his administration many great firms in this country find themselves in difficulty.

Mr. Wilson

Whereas we were able to intervene to save firms which had a great future, the present Government would not have intervened—and now there will be no money available for them to intervene in future. All the time we are hearing in speeches from hon. and right hon. Gentlemen opposite—still more do we read about this as a result of the stuff they feed out to the Press—that there must be bankruptcies.

This seems an extraordinary doctrine for a Government who believe in private enterprise. I remind the right hon. Gentleman that I was saying that he and his hon. Friends believe that one spectacular bankruptcy will terrorise other firms into more efficiency and more efficient business methods.

This is not an economic policy. This is economic totemism. It is a tribal assertion of the need for individual sacrifices to appease the gods, in this case the gods of greed and privilege and economic success, regardless of the methods and motives of those whose philosophy is not service to the State, not concern for the community, but the private profit of those who seek their reward by exploiting society.

That is the essence of their policy, but I was even more worried—I had to apologise to the Secretary of State for Trade and Industry last night for not being able to return in time to hear all of his speech. But the philosophy which he enunciated last night comprised extraordinary strictures about the lame ducks of British industry—[Interruption.]—not fear but the hope of profit would lead them to increased efficiency and increased profit. Now we are told that it is bankruptcies that will drive them into efficiency.

The Secretary of State might have been better advised in his homilies on competition to tell us about things which he really knows; for example, how competition works in the oil industry—[Interruption.]

Mr. John Gorst (Hendon, North)

On a point of order. I wonder, Mr. Deputy Speaker, whether you would kindly give guidance to new hon. Members. Is it in order for right hon. Gentlemen to read both their jokes and their speeches?

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

That is not a point of order.

Mr. Wilson

It would be helpful if the Secretary of State would explain how competition works in the oil industry to keep prices down, because some of us in the House are ill-informed on how competition operates in that industry. How with such spontaneity one firm takes the lead in raising prices and others follow 24 hours later. And now the right hon. Gentleman has taken over responsibility—and I congratulate him—for monopolies and mergers, I suggest he might refer to the Mergers Panel the take-over of the British Government by Royal Dutch Shell.

Mr. Ian Lloyd (Portsmouth, Langstone)

The right hon. Gentleman is fond of using the oil industry as an example of the failure of competition. Could he give the House one example of any commodity which has risen in price in real terms, less taxation, more than the price of a gallon of petrol?

Mr. Wilson

I must confess that the point had not struck me the way the hon. Gentleman puts it. To be fair to the oil industry, I would think that some others in competition and in monopolistic industries have risen more than the price of oil. The hon. Gentleman said "more". Did he mean "less"?

Mr. Ian Lloyd

On a point of order. I did make a mistake. I meant less. [HON. MEMBERS: "Oh."] The tight hon. Gentleman knows the point I am making and it is a serious one.

Mr. Wilson

I do not want to tell the hon. Gentleman. He has made the point.

Hon. Members

Answer.

Mr. Wilson

All I can say on the matter is that studies I have seen have shown that a number have risen less in public industry—[HON. MEMBERS: "Which ones?"] It depends on the period of years one takes. I would include gas and electricity over a considerable period, and in terms of productivity and price also the coal industry. But if the hon. Gentleman, who knows the industry so well, does not know the difference between "more" and "less", we now understand that the price went up when it was intended to go down.

I should like to put to the right hon. Gentleman the Secretary of State for Trade and Industry one or two points for the occasion on which he next addresses the House—and may I say that we all look forward to hearing him. He made comments about the lame ducks of industry. Perhaps he might name them.

Last Friday morning he announced arrangements for the ending of I.R.C. I think that it was the right hon. Gentleman's personal decision to wind up that Corporation, and I very much regret it. He should have thought twice about it. He should not have taken the heady atmosphere of the Tory Party Conference too much to heart, for they are always nice to new Ministers. Nor should he be driven into a major decision of policy as a result of being inebriated with the exuberance of his own velocity.

It is not only I.R.C. that has played a major rôle in restructuring and modernising industry, as I hope he would acknowledge. There will come a moment when he will wish it was there, put out his hands to find it and find that he has slit its throat. If in dealing with the difficult problem of financial relations between Government and industry, which is a difficult problem in every Government—and the Prime Minister has set up a new Department of State with literally nothing else to do, the Ministry of Aircraft Supply—there is a great deal to be said for an instrument, provided, it is carefully chosen, interposed between Government on the one hand and industry on the other, to take the decisions in individual cases.

I know some right hon. Gentlemen—this was the old theme song of the Chancellor of the Exchequer—regarded I.R.C. as nationalisation by the back door. That is what he used to say. If that is what he still thinks, and I am sure he does not, then he or the Secretary of State for Trade and Industry should tell the House whether they think that industrialists and financiers of the calibre of Sir Joseph Lockwood, Lord Stokes, Mr. Charles Villiers, Lord Kearton, Mr. Michael Clapham, Vice-Chairman of I.C.I. and Sir Maurice Bridgeman, until recently one of the towering figures of the British oil industry, would really lend themselves to a policy of clandestine nationalisation? Or, for that matter, would inject capital into firms where it meant wasting public money.

I will tell the right hon. Gentleman, and also the Prime Minister, where his policies will lead. Is he prepared to face up to the bankruptcy of Rolls-Royce or British Leyland or will he not find that he himself, not I.R.C. because it will have gone, will have to find the money? Perhaps he has already made up his mind that come what may, whoever may be involved, the Government will harden its heart. [Interruption.] I ask the right hon. Gentleman not for whom the bell tolls—it tolls for him. The question of the bankruptcy of Rolls-Royce and British Leyland is not a laughing matter and the Prime Minister knows it.

The Prime Minister

I am not laughing at that.

Mr. Wilson

Whatever he may have said to the Institute of Directors this morning, I am telling the Prime Minister that, if this were to happen, the Government would either have to find the money themselves directly instead of finding it through the I.R.C. Or, if not, the first result of their decision not to do so would be the takeover of a firm that is vitally necessary to Britain in peace or in a national emergency, vitally necessary to keep British—a takeover by predatory American interests, who would be only too glad to have it. That is where the right hon. Gentleman's policies are leading.

There is something else which, in default of a speech by the Prime Minister, the Secretary of State for Trade and Industry might have explained last night. He might have explained the Prime Minister's thinking, or indeed his own thinking, on the subject of prices. In the private sector the first decision was to stop reference to the National Board for Prices and Incomes and ultimately to abolish it. They stopped the early warning system and so their first action was to have no control on private enterprise price increases, whether justified or not. They would rely on competition. That is what we were told from the Front Bench in July. But by September it was not merely a rejection of any form of price control. It was a policy of actively encouraging any price increases.

The Chancellor of the Exchequer will not deny the accuracy of Press reports suggesting it was his policy at a time when company liquidity is low—and it may become lower as a result of his recent Measures—that industrial liquidity should be improved by the simple method of raising prices and taking it from the consumer. I am now quoting the words attributed to him. I think it was the day that the Chancellor flew to the Commonwealth Finance Minister's Conference that what purported to be his thinking—I do not think he will deny that it was his thinking—was headlined in a number of national newspapers. The headline in The Guardian was Tories to let prices go free". In the Daily Telegraph: Price rises to rebuild working capital in order … Companies may raise prices with tacit Government blessing". In The Times: The shortage of company liquidity is acknowledged; and it is argued that the solution lies in raising prices where this is necessary for maintaining profits, investments and working capital. That was the message that went out from the Treasury at that time: The solution lies in raising prices". But it is not what the right hon. Gentleman said in Leicester. It is not what he said two days before the election or at any time. It is now not only a question of permitting prices to rise, but a question of encouraging them.

There has been a similar development of new thinking on public sector prices. The Prime Minister promised action to hold them down, and yet he will not tell us whether when he made the promise he knew that this would be impossible. Did he know that he would not be able to do so but that prices would go on rising and in many cases rise still faster? Did he or did he not know that when he gave the pledge to the country in June? If he did know it—and he told us in the House that he did not—then it is impossible to acquit him of grossly and totally misleading the country.

If, on the other hand, he says that he did not know, that he thought he would be able to do it, that it was all so easy, it had all been worked out at Selsdon Park, and he comes in and finds that he cannot do it, he cannot be acquitted of total incompetence. The right hon. Gentleman can make his choice. He must tell us what the real position is. Perhaps he will one day when he summons up courage to address the House.

But there has been a spate of speculation, which I do not believe entirely originated in the fertile minds of financial journalists, that the right hon. Gentleman wants public sector prices to rise more than they have as well as private sector prices. This seems to be what we are reading—[Interruption.] Yes, this is the message which is coming through, and for this reason: that the Secretary of State and, no doubt, the Prime Minister and the Chancellor have decided to appease their more hawkish supporters by bringing private capital into the ownership of our great nationalised industries. But, knowing as they do that private capital will not flow into these industries at their present level of profitability, this means a decision, for doctrinaire reasons, and no others, to raise public sector rates and charges presumably in all those sectors listed by the right hon. Gentleman—coal, gas, and the rest—in his speech at Leicester. So that we have in the public sector, as in the private sector, first, a willingness to tolerate the price increases which he said he would stop, and, in addition, an encouragement to the entrepreneurs in the private and public sector alike to raise their prices above the present level.

I conclude with this observation. I am sure that right hon. and hon. Gentlemen opposite will be very pleased. They do not like to be reminded of what the right hon. Gentleman has said. If I inflict on hon. Members opposite a certain vicarious squirming for the right hon. Gentleman, I apologise. But the Chancellor's package, as my right hon. Friend made clear yesterday, is an exercise in fiscal regression—I will not argue that again, because he gave the facts and figures—the more you have, the more you get. If you are at the very bottom of the scale, there will be a public relations exercise for your relief—[HON. MEMBERS: "Oh!"] We will be debating it next week—if you are willing to accept the indignities of the new means-tested State, which many of our people are not. But for most of our people, those below and those around the average industrial earnings and the corresponding levels of salaries, they will pay the price of the promised tax cut.

The right hon. Gentleman the Foreign Secretary, when he was Prime Minister, once spoke in his bountiful way about donations when he had to answer a question about increases that were urgently necessary for old age pensioners. I am sorry that I criticised him for that, because he was ahead of his time compared with the doctrine of the Government of which he is now a member. The right hon. Gentleman spoke six years too early, and all to enable a Government infatuated with their own ideology to make tax cuts which, because of the basis on which these cuts have been financed, will help no families save those who live in conditions much more tolerable than the mass of those to whom the right hon. Gentleman was appealing in his meretricious pronouncements last June.

So their course is set clearly. Fiscally, it is a policy to divide the nation between those who already have and those who vainly, after the right hon. Gentleman's election promises, hoped that they might have. It is a division, too, between regions. It is essentially a divisive philosophy.

The right hon. Gentleman, who invoked Disraeli in his euphoric postelection pronouncements, is now set on a course to create two nations within Britain: two nations in social terms; two nations in regional terms. He must know that the problems of this nation can be solved only by the creation of a single community where the problems of each individual are the concern of all. When he says that the freedom of any individual must be the responsibility of that individual—that is what he says—he must recognise that concern and care for that individual must be the responsibility of the community and of the Government.

But Her Majesty's present Government are not only turning their backs on the creation of a fair and just society in which it is possible to make this appeal; they are actively encouraging the doctrine of greed and self-interest in every speech that they make which will make such an appeal impossible.

The philosophy of this Government is not even, to use a familiar American expression, one of shared greed; it is a doctrine of unfairly selectively shared greed.

An Hon. Member

Why is the right hon. Gentleman writing his memoirs?

Mr. Wilson

I am writing a short history—[Interruption.]—to give the real facts of those six years in place of the twisted misrepresentations by right hon. Gentlemen opposite. I hope that when they read the real facts, instead of those that have been given through Tory Central Office, right hon. Gentlemen will be ashamed of what they said. This is where we on these benches assert the doctrine of shared concern, of commonly shared burdens, to assert the responsibility of all of us for the problems of every member of our community. It is on that issue that we shall be dividing tonight.

4.57 p.m.

The Chief Secretary to the Treasury (Mr. Maurice Macmillan)

This is only the second time that I have had the pleasure of addressing the House immediately after the right hon. Gentleman the Leader of the Opposition. The first was the occasion of my maiden speech in a debate opened by a Tory Chancellor of the Exchequer with whom I was not, if I remember rightly, in quite such close accord as I am with my right hon. Friend. I appreciate the reference made to me in my right hon. Friend's speech. In turn, I should like to pay tribute to the work of my hon. Friends the Financial Secretary and the Minister of State both in recent weeks and, indeed, while we were in Opposition. On that occasion I apologised to the right hon. Gentleman for not following his argument more closely. I am almost inclined to do so today, for the House has learned that what he leaves out is as important as what he puts in; that what his famed memory recalls so aptly for the occasion is no more relevant than what, with equal aptness, it rejects.

The right hon. Gentleman remembers, for example, almost everything that my right hon. Friend the Prime Minister has said; but he has apparently forgotten a great deal of what he himself did while he was occupying that position. The right hon. Gentleman has forgotten the total failure of his statutory wage and price freeze with the resulting escalation of inflation as a result of that measure. He has forgotten the failure of his voluntary incomes policy. He has taunted my right hon. Friend with the possibilities of American take-overs, but has forgotten that it was under his Government that Rootes became controlled by Chrysler.

All the same, it is, I think, difficult—I see his point—for the right hon. Gentleman to keep to the subject in this debate and to attack closely the Government's actions, with the possible exception of the rather spurious attack on family income supplement with which my right hon. Friend will deal later, should he catch your eye, Mr. Deputy Speaker.

It is difficult for the right hon. Gentleman to attack the Government's actions on public expenditure, which in some ways are similar to his own, so he has confined his attack to our reasons instead. He says that our motives—that is the motives which he chooses to impute to us—are evil. That is his view. He has created a strange mythical monster, the Selsdon man, who I thought would intrude into the debate today, but he did not quite do so. The right hon. Gentleman created him as evidence for his allegations, just as the Piltdown man was created as evidence for a theory. But the Piltdown man was a fraud. The British public have so judged the right hon. Gentleman's creation—that is all it is, a fraud—and they have so judged his view of the Tory Party. They have shown that they do not accept it, and his hustings speech is a little late in the day.

The right hon. Gentleman seems to think that he will be believed if he goes on saying the same thing over and over again. Three times recently he has said his piece—in a speech at Camden Town on Sunday, 14th October, in a broadcast on Sunday, 1st November, and last night in a party political broadcast. Is the right hon. Gentleman trying to usurp the rôle of the Bellman? Just the place for a snark I have said it twice That alone should encourage the crew Just the place for a snark I have said it thrice What I tell you three times is true". But it is not true, not even when the right hon. Gentleman tells the same story all over again to the House of Commons for a fourth time just to make sure.

Most of the right hon. Gentleman's speech was devoted to the classic complaint of all bad losers, "we was robbed". forgetting, or choosing to forget, just how much of the events that he described immediately following the election were caused by the follies and incompetence of the Government which he headed. The right hon. Gentleman is doing the country and, indeed, his own party, no real good by trying to obscure the real issues in this way. If the changes that we are making, if the charges which the right hon. Gentleman has described, are really a savage attack on social justice, then so were the same sort of changes and charges made by his Administration.

Let us look at the facts. We are making savings in education, so did the right hon. Gentleman when he headed the Government. We are going to raise the price of school meals in April, 1971, and in April, 1973. So did the right hon. Gentleman in April, 1968, and in April, 1970. But we are making free school meals available for more children than before.

There are some things which right hon. Gentlemen opposite did in Government that we are not doing. We are not cutting the capitation grants to direct grant schools. We are not putting off raising the school-leaving age. We are not cutting back on school building. On the contrary, we are increasing the school building programme and giving priority to extra new starts, as we said we would. We are replacing old primary schools and providing new primary school places.

Mr. James Callaghan (Cardiff, South-East)

My hon. Friend the Member for Hitchin (Mrs. Shirley Williams) intervened in the debate last night to say that she understood that the total amount to be spent on schools and on education was the same next year, 1971–72, as it was last year,£186 million. Can the hon. Gentleman say in what way, if the figures are the same, the education programme has been increased? Is it not the case that resources have been switched from one area to another, and there has been no increase in the total amount that it is proposed to spend?

Mr. Macmillan

The school building starts programme for 1972–73 already existed, although it was not announced. The Government have added an extra£21½million starts to it. That is the Great Britain figure. This addition will lead to a net increase of£28 million in expenditure on educational building. The total school building improvement starts programme for 1972–73 went up from£13 million to£44 million. These again are Great Britain figures. In addition to the£21½ million there has been some switch of priority within the educational building programme, and that is precisely and exactly the situation.

There has been an increase in starts, as I said quite categorically, and I say it again, of£21½million, a net increase in starts of£21½million. This is leading to extra school building of£28 million. In addition, there has been some switch of priorities so that we have, extra to the buildings,—

Mr. Callaghan

What are the reductions?

Mr. Macmillan

The reduction is due to—

Mr. Callaghan

I do not want to know what it is due to. What is it?

Mr. Macmillan

It is a lowering of the amount planned for what is called basic needs, which is simply a figure put into account mathematically and demographically for the number of extra children born in any year. It fluctuates from year to year on a calculated basis according to the birth rate. It has nothing to do with choice, and is known as "roofs over heads". It is a factor which allows for the increase in population. Apart from that we have, as I have said, made extra starts of£21½million over and above all that, leading to an extra spending on education of£28 million over the period.

Mr. Callaghan

I am grateful to the hon. Gentleman for his explanation, but I wonder whether he would clear up one point. Will he make it clear that there is no increase in the proposed total to be spent, but that there has been a switch, which means that there are some increases, and some decreases? The total is the same. Why did the hon. Gentleman go on trying to give a misleading impression?

Mr. Macmillan

There will be an increase over that previously planned of£28 million spent over the period resulting, as I have said before, from£21 million extra starts in 1972–73. There is an increase in school building, and if the right hon. Gentleman finds his sums difficult to do perhaps he will put down a Question for Written Answer so that he can read at leisure the answer which he will receive from my right hon. Friend the Secretary of State for Education and Science who can give him a long, detailed explanation which he will be able to study and understand.

We are increasing school building and giving extra priority to new starts. We are not, as the previous Administration did, cutting back local health and welfare programmes by an average of£5 million a year for three years, which they did. We are making additional provision for health and welfare, including hospitals and the care of the old, of£110 million over four years,£20 million of it in the first year.

Right hon. and hon. Gentlemen opposite cannot pretend that by their nature our savings are more damaging to the effectiveness of the Welfare State than were theirs. They cannot do so with arty degree of objectivity. They can pretend, but they can do no more than that. Nor is this true of the amount. In January, 1968, alone, leaving aside all the other cuts they made, the previous Administration reduced expenditure for the year following in education, health and welfare, by£68 million. The changes that we are making in these programmes amount next year to a net reduction of£70 million.

There are some very important differences. First, our savings have not reduced the resources available for main line activities, nor do they cut capital programmes. Secondly, these are not panic cuts, made in response to a series of crises, but the first part of a considered policy—a policy designed to ensure that public spending increases, but at a level which is socially effective without becoming economically damaging; a policy to maintain a consistent level of social and other expenditure which is not crippling to the economy but which keeps the Welfare State developing while preventing it from becoming a spendthrift society.

We are increasing the real resources, public and private together, which will be devoted to education, health and welfare. We are making increased public provision for primary schools and the health and welfare services. I make no apologies to the House for these increases; we shall continue them. But we can do so only by the most careful control of public sector expenditure as a whole. The right hon. Gentleman the Leader of the Opposition knows this quite well. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) himself made the need for control quite clear when he addressed his party's conference in 1968. On that occasion he said: Since we came to power public expenditure has risen nearly four times as fast as the national income … but it is not a process which can go on without limit, at least it cannot go on without limit unless we seriously believe that people, ordinary people, our people our supporters are indifferent to how much tax they pay, and I do not believe that that is the fact. The right hon. Gentleman is correct. Just look at the record. In the financial years 1964–65 to 1965–66 public expenditure was rising by 6.7 per cent. while the gross domestic product was rising by 2.6 per cent. only. No wonder public expenditure cuts had to be announced in July, 1965. But they were not enough. Between 1965–66 and 1966–67 public expenditure was still rising by 6.6 per cent. I am leaving out of account investment grants and additional payments under the S.E.T. system. During the same period the gross domestic product was rising by 1.7 per cent., so there were again cuts in public expenditure in July, 1966—but still not enough. Between 1966–67 and 1967–68 the rise in public expenditure was 9 per cent.—leaving out of account investment grants, S.E.T. payments and regional employment premiums. If I were to include them the increase would be 11.7 per cent. Let us leave it at 9 per cent. The gross domestic product rose by 1.8 per cent., with the same results. No wonder the economy was under pressure.

There followed devaluation and further massive cuts in programmes in July, 1968. The Leader of the Opposition was at least consistent in his blindness, if in little else. The emergency action that he was forced to take—and about which he is now boasting—in 1965 and 1966 proved ineffective, for the simple reason that he would not face the fact that public expenditure cannot, without disaster, be allowed to rise regardless of the state of the economy. Even the admittedly more effective action taken in January, 1968, did not prove enough to restore the situation fully, which is one reason why we are having to take action now. Every time the right hon. Gentleman was blown off course, just like the Bellman all over again: But the principal failing Occurred in the sailing And the Bellman, perplexed and distressed, Said he had hoped at least When the wind blew due east, That the ship would not travel due west. I suppose that it is too much to hope that the right hon. Gentleman, in opposition, will not retreat even further into his world of fantasy in the accusations that he makes of Government policies and programmes. His right hon. Friend the Member for Coventry, East (Mr. Crossman) has a more realistic, if more cynical, point of view. Speaking on the air on 1st October, he said: The ironical fact is, you know, that in the period"— of Labour Government— we indefatigably went on increasing our public expenditure sector, despite the lack of growth, and therefore had to tax the worker in ways which probably lost us the Election. And some taxation it was!The right hon. Member for Cardiff, South-East (Mr. Callaghan) and the right hon. Member for Stechford between them—I think I am right in saying this—put up taxes by almost£3,000 million.

That is the third big difference between our policies. We have set our hands to reducing taxation, and we have made a start, even if it is not a very big start. I am not saying that 6d. off income tax will have a measurable immediate effect in terms of extra work. Hon. and right hon. Members on both sides of the House recognise in their more objective moments that very high marginal rates of taxation are a disincentive. It is no good the right hon. Member for Stechford trying to blur the issue with comparisons of average rates, with or without social security contributions—which in other countries tend anyway to fall on the employer and so, through the price of goods, on the consumer.

The right hon. Gentleman must have had the real problem at heart—the problem of marginal rates of tax—when he said, in his Budget statement in 1969: I have carefully considered whether, even in a year as difficult as this, it would be justifiable for incentive reasons, and for the encouragement of savings, to mitigate slightly the rates of tax on high earned incomes."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1031.] He was not able to do it. I am sorry that he was not, for we would seek to reduce the marginal rate of tax whether on managerial salaries or shop floor overtime. This is because enterprising people at every level undoubtedly feel overtaxed. They feel that they are carrying too big a burden of escalating public expenditure, some of which, at least, is not spent as effectively as it should be. In the same way, industry and commerce feel, with a certain amount of justification, that public sector investment and wasteful public help for private lack of enterprise, is taking too much; with the result that the private sector takes the burden in falling profit margins and credit squeezes while the public sector remains relatively unchecked and sometimes inadequately controlled.

Of course public expenditure must increase to develop necessary programmes, but there is a limit—as hon. and right hon. Gentlemen opposite found to their cost—to the burden that can be put upon productive enterprise. I believe that the things that the public sector must do, and do more effectively, are those things that need to be done and that, in the words, I think, of the late Lord Keynes, it is not reasonable to expect individuals or groups of individuals to do for themselves. It depends on what we mean by "reasonable". No doubt if one took the economies of scale to the limit it would be more efficient and cheaper—and probably better for all concerned in terms of nutritive value for money—if we were to abolish the kitchen in all town houses and feed the people at British Restaurants. But very few, even among hon. Gentlemen opposite, would go quite so far as that in extolling the virtues of public enterprise. It is, as the right hon. Gentleman is fond of quoting, a question of priorities.

There are really two questions—first, how much must be provided wholly or partly by the State and how much must be left to individuals or groups of individuals, and, second, of that which the State provides, in whole or in part, how much should be paid by the user and how much by the taxpayer. Some right hon. and hon. Gentlemen were at least asking these questions earlier on, but the Leader of the Opposition made no real attempt to answer them. He did accuse us of not facing the real choices, but, as I have shown, in that sorry record of mounting public expenditure, cut regardless to meet a need which he could not control, it is they who have failed to face the real choices and it is their Government, in their failure, who have sharpened the problem which faces the British people and the Government today.

Perhaps I could digress for a moment and take up a point made by the right hon. Member for Stechford yesterday. I know that it is important that Ministers should seek to answer a debate, and it is also reasonably important that those who open the debate should address perhaps a little more than 10 per cent. of their speech to the subject of the debate. Perhaps a little about the policies rather than abuse of the people would also help towards a more constructive debate.

What I should like to do is try to answer a serious point made by the right hon. Gentleman. He appeared to think that the sole or main purpose of the reductions in public expenditure was to allow the Chancellor to take sixpence off the Income Tax. Of course that is absurd. The purpose of the reduction in public expenditure was to keep it going in future at a rate which could be contained within the expansion of the economy. In the course of his argument, he expressed some doubts about the demand effect of the totality of the Government's Measures, basing this on the analyses by Mr. Wynne Godley in the Financial Times, which suggest that the package will increase total demand by about£150 million.

The right hon. Gentleman doubted whether the change in the programme and in taxation would be broadly neutral in their effect on demand in 1971–72, as my right hon. Friend had told the House on 27th October. First, I would remind the right hon. Gentleman that higher charges have a considerable demand effect. The extensive reductions which we are making in direct purchase of resources by the reductions in expenditure and by the higher charges will have a big effect on demand.

Some other measures, like the abolition of the I.R.C., will have a smaller demand effect. Of course, on the other side, on the taxation side, it is a question of calculation, to some extent of judgment, as to what would be the demand effect of the reductions in income tax and corporation tax, but in particular the cut in corporation tax will have nothing like a pound for pound effect on demand. Taking all this into account, it is entirely justified to conclude that the net effect of the package will be broadly neutral in 1971–72.

Mr. Roy Jenkins (Birmingham, Stechford)

Can the hon. Gentleman make it clear what he regards as the demand effect of the cut in income tax?

Mr. Macmillan

I am not prepared to go into a detailed argument on this. It has never been disclosed before.

Mr. John Mendelson (Penistone)

An incredible Treasury team.

Mr. Macmillan

The method of calculating these things has never been disclosed by any Government. The right hon. Gentleman knows that there is no reason why my right hon. Friend should disclose this, any more than he himself did. But the method of calculation used by Mr. Wynne Godley was not precisely that used in the Treasury.

Mr. Roy Jenkins

Would the hon. Gentleman then tell us what is the difference between the methods used by Mr. Godley and the methods used by the Treasury?

Mr. Macmillan

Certainly not. The right hon. Gentleman is either more dishonest or else more naive than he appears if he thinks that I will say things which he in this position would flatly refuse to say himself. But I do understand why this debate has been in parts stormy. I understand why right hon. and hon. Gentlemen, having lived so long in a world of illusion, find it difficult to face reality and accept policies appropriate to our real situation, which have to be brought in.

But our purpose is clear to achieve a steady increase in real wealth over a period, so that everyone may, within a reasonable time, see their own prosperity increasing in real terms. We have made it clear that the Measures which my right hon. Friend announced last week represent the first necessary part of a new strategy. It is one which involves searching and continuing examination of every function of Government itself, of every activity which places a burden on the nation's resources and of the return which we get in financial and other terms from each. It means a rigorous examination of the priority which each activity should have in competing for a share of those resources.

Several of my hon. Friends have referred to the large capital programmes of the nationalised industries. We are studying ways in which private capital will play a much larger rôle than in the past, because we believe that this will both improve decisions on investment and ensure that the best use is made of resources.

The right hon. Gentleman the Leader of the Opposition seemed to think that this was the reason for some sinister forcing up of prices. He must have forgotten that, earlier in the debate, he had decided that it was necessary to force up prices to prevent a burden being put on the taxpayer. He must choose which prong of the fork he is going to prod us with.

Mr. Harold Wilson

I am sure that the hon. Gentleman is not trying to misrepresent me; if he reads my speech in HANSARD tomorrow, he will see where he is wrong. In the earlier part of my speech, I said that his leader, the Prime Minister, had said that they were going to hold back prices in the public sector. I said that he had found when he got into office that he could not do it, because it would place an additional burden on the taxpayer. I did not say that it was a question of pushing up prices still higher to save taxes: that is a very different argument.

Mr. Macmillan

The right hon. Gentleman made it clear that, in his view, success in holding prices would transfer the burden from the consumer to the taxpayer. He made it plain that there was no doubt about it. He then said that we were referring to keeping down prices and now says that we are putting them up on purpose. He must be clear whether it is failure of will or of intent that he is accusing us of.

This strategy that the Government have adopted means that simply because something should be done it must not necessarily be done at the taxpayer's expense. That is why our policy towards industry and commerce, with the same objective of increasing the national wealth, is to reinforce success. It is the reverse of the sort of 1914–18 policy of the previous Government, to support failure at a considerable cost. The whole of this process of critical examination has been started in the Measures already announced.

As my right hon. Friend the Prime Minister made clear in the White Paper on the Reorganisation of Central Government, the necessary organisation to carry it forward as a continuing and rigorous discipline has already been done. As the further stages in this development of policy unfold, so also will the effects on our strategy, on increasing the nation's wealth, sharing its benefits and providing properly for those in misfortune.

Above all, the aim of all our policies is to awaken the country to a new sense of responsibility for its own destiny. There has been too much reliance on the readiness of Government to intervene, to provide, to act as a substitute. There has been too much baling out of inefficiency, too little opportunity and scope for those who can plan and provide for themselves and save. It is too often taken for granted that whatever antics industry gets up to, on the high financial wire, the Government's safety net will always be there.

As a result, there has grown up a warped judgment of the economic incentives which are so necesary to our prosperity and of the social services which are vital both for the relief of poverty and for investment in the health and education of the nation. They have both become, in the eyes of all to many, resented for their cost; despised for their protection of the feckless, the cynical and the relatively prosperous; cluttered with anachronisms and too thinly spread to make the most effective impact where the need is greatest.

We are as dedicated as anyone to the presentation and strengthening of the social services as our increased provision for them clearly demonstrates. Where-ever there is poverty we shall seek to cure it; where there is unavoidable stress we shall try to ease it; where there is real need we shall seek to meet it; where there is social gain, in health and education, and in incentive to work and save, we shall invest in it. But we shall also consider that those who can be reasonably expected to work and strive and provide for themselves and their families for their business and for their country shall have more, both of the rewards and of the responsibilities of doing so.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. I am sure that the House will forgive me if I remind it that an enormous number of hon. Members are most anxious to speak in this debate. It will greatly facilitate their position if all hon. Members try to keep their speeches short.

5.33 p.m.

Mr. Greville Janner (Leicester, North-West)

It is a kindly custom of this House that a maiden speaker should pay tribute to his immediate predecessor as Member of Parliament for his constituency. I understand that this is the first time in the history of this side of the House that any maiden speaker has had the privilege of paying such a tribute to his own father. I do so with delight because, for over a quarter of a century, with my mother at his side, he served first the citizens of Whitechapel and St. George's and then those of Leicester, West and then of Leicester, North-West with tremendous enthusiasm, great energy and abundant good humour.

I have been told by hon. Members on all sides that his elevation to the other place has given great pleasure. It certainly has in his constituency, where they were delighted that he took the style of Janner of the City of Leicester, thus combining the name which I am proud to bear with that of the constituency which he was honoured to serve and which I am now so pleased to represent. May I, as his son and successor, be permitted to wish him many happy and energetic years of service in his new and youthful career.

Leicester achieved political fame even before the ill-fated election speech of the Prime Minister. Parliament was held there in 1414 and Cardinal Wolsey died in the ancient abbey not very long afterwards. I sometimes wonder whether he would have allowed himself to do so had he known that the abbey would one day become the most picturesque polling station in England, the ballot box of which would serve to send to Parliament an hereditary series of Socialist Members of Parliament. I learned very quickly that Leicester has earned its reputation as a prosperous city made prosperous by the hard work of its people. I also learned that there is a great deal of hardship, need and poverty and loneliness in that city, along with all others.

It is precisely because these Chancellor's measures make worse the position of the under privileged that I am grateful for the opportunity to make my maiden speech upon them. It is clear that the old and the ill will suffer as a result of these measures. They cannot but suffer when food costs more, fares cost more and drugs are to cost more. They will not benefit from the 6d. off income tax which they do not pay, still less from the reduction of 22½per cent. in corporation tax. The older they are and the more ill they are, the more they will suffer and the less the Chancellor's measures will do for them. When the standard of living of the ordinary man is affected, he will go to his union and fight against a reduction in his standard of living and his union will fight this Government, and any other, that attempts to clip its wings and prevent it from doing its job.

The old people have no union and the ill have no one to fight for them. They have no weapons with which to strike. What are they to do? Are they to say, "We will not buy food because it costs more, we will not take drugs because they cost more"? There will be those who do not buy drugs and do not eat the food and none of us will take pleasure in that. But they have no weapons and the Government are not afraid of them. Not one crumb of comfort has the Chancellor given to them. It is these people who need help and who ought to receive it.

There is one part of these measures which does not appear to have been noted. For the first three days that a man is genuinely ill, he will not receive sick pay. Why not? The answer given by the Chancellor was that circumstances had made this anachronistic. Among the circumstances he referred to was the Redundancy Payments Act. Does he not know that this Act does not help old people, that when a man reaches 65 and is made redundant he gets no redundancy pay? Does he not know that a woman, an honourable Lady even, who reaches the age of 60 gets no redundancy pay? Is he unaware that the sick are not helped by this great Act?

A man who is dismissed as redundant and gets a job the next day, losing not one penny, will get his redundancy pay and quite right, too, because then his period of continuous employment starts all over again. But a man who is ill, who suffers an accident, who has worked for the same company all his life gets nothing. He gets no compensation of any sort as a result of this Act yet it is to be made the excuse for removing sick pay from an ordinary person who is ill and cannot work.

The philosophy of this was summed up a long time ago: Unto everyone that hath shall be given and he shall have abundance, but from him that hath not shall be taken away, even that which he hath. The answer which has been given is, "Well, we will help the needy." May I quote from a statement in the remarkable speech last night of the right hon. Gentleman the Secretary of State for Trade and Industry. He said: …our policy …is to make sure that those who really cannot fend for themselves get real help, tailored to their needs …the poorest among us were effectively helped by the Chancellor's measures."—[OFFICIAL REPORT, 4th November, 1970; Vol. 805, c. 1214.] The poorest among us are the elderly and the ill, and they are not helped. What the Chancellor means is that if a person is poor enough and can satisfy some official that he is poor enough, and if he humbles himself and asks for it, he will receive supplementary benefit. This does not work.

May I give an ordinary example? After a meeting there I was asked to go to the house of a constituent who had fallen ill, a young married man with two children. He was not able to get benefit and the inspector had come to his house and asked what his income was, what his capital was, what he could show for himself. He could show nothing. He had nothing but debts and a little home that he was building up. When he said that he had nothing, the inspector asked, "What's in that?" and pointed to the little boy's piggy bank on the mantelpiece. My constituent told the inspector to get out of the house: he was not interested when he had to say how many pennies there were in his little boy's bank. He called me in, and I told him to tell the inspector, who was to return the next morning, that such nonsense would not be allowed by this House, and that if the inspector wanted to know what was in the child's piggy bank the matter would be raised elsewhere. The inspector returned, and I am happy to say that the piggy bank was not examined and my constituent got his money.

But this is a "piggy bank" budget. It pinches pennies from the pockets of the poor and puts them in the pockets of the prosperous. Supplementary benefits are not good enough. It is not good enough to say to someone: "You are poor. Prove the extent of your poverty and we will give help tailored to your needs." People will not go for such help. They are too proud to do so. They will be afraid of being refused, or of being treated as my constituent was treated. I hope that what I say will not be taken as an attack on all those operating the service. Most of them are humane and do an excellent job. But there are exceptions and it is they who make people like my needy constituent afraid to seek supplementary benefit. No one wants charity.

The right way was that adopted by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). He said, "We will give more family allowances and then that money will be taken from the wealthy by taxation. No one has to crawl and ask for help." That is the right way. It is based on the concept of the nation as a family in which we do not allow the ill or the old to go in need. We do not ask them to say what they need. When we assist members of the family we do it as quietly as possible. I believe that to be the concept of Socialist policy and philosophy. We are now to have the days of charity back again; days when there is to be a means test, a poverty test: "Prove your poverty, brothers and sisters, and we will give you help, tailor made to your needs". It is not good enough.

I know that it is very late in the day, when policy is made and the debate is halfway through, but I hope that it may not be too late to ask the Chancellor of the Exchequer to reconsider whether he cannot provide some crumb of comfort for the elderly and the ailing, and give some hope that we are not to go back to the days of the Poor Law and of charity. If not, I respectfully suggest that, tonight being Guy Fawkes' Night, the right hon. Gentleman takes his entire budget to one of the bonfires which will soon be burning merrily near Westminster, so that the needy and the ailing in my constituency and elsewhere will not regret that Guy Fawkes did not do a better job.

5.45 p.m.

Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)

This is the first occasion on which I have had the pleasure of following an hon. Member who has just made his maiden speech. I have, therefore, particular pleasure in welcoming the contribution just made by the hon. Member for Leicester, North-West (Mr. Greville Janner), and congratulating him most genuinely on his sincerity and natural eloquence. There has been a convention in the past that one attempted to be not over-controversial in one's maiden speech. I am not sure that it was a good convention. It imposed restraint on hon. Members which sometimes raised their blood pressure considerably, and as I well understand that in such a debate as this it is a difficult convention to observe, the hon. Member will perhaps not take it amiss if I, too, touch on one or two controversial topics. Perhaps the best compliment I can pay him is to take up some of his points.

I have listened to the whole of the debate, and what has struck me most forcibly is that from the other side of the House there has been no challenge of the Chancellor of the Exchequer's basic statement that the Government's action has brought about a fundamental change in taxation prospects. The main plan and theme of these changes is that there has been this fundamental change. With Government expenditure rising at a rate of 3.5 per cent. a year the prospects were of ever-increasing taxation unless a great improvement in the rate of growth had resulted in future years. At 2.8 per cent. we have opened up good prospects of not just this reduction in taxation but of continuing reductions in taxation in the years ahead.

Listening to speeches from the opposite benches I was reminded of a man who was the proud owner of a one-string fiddle. He sat day after day with his finger always on the same place on the string, moving the bow backwards and forwards with a never-varying motion. One of his friends asked, "Why do you do this?" He replied, "Other people are looking for the perfect melody—I have found it."

To listen to hon. Members opposite, one would think that they had found the perfect balance between public expenditure and private disposal of personal income; that they had found the perfect and ideal balance between direct taxation on the one hand and indirect taxation and the financing of public expenditure on social provisions by other means on the other. The record proves otherwise, and that is why changes are being made.

I suggest that references to tax systems and levels in other countries, such as have been done by hon. Members opposite in attempts to prove that at certain levels of taxation we are not over-taxed, are not relevant to our needs. I do not feel that the response of individuals to different systems and levels of taxation is necessarily the same in different countries. Further, I believe that at different times in a country's experience the attitude of individuals to what is the right balance between direct and indirect taxation in that country will change.

What has happened in recent years is that feeling in the country has crystallised on two central themes; that taxation is too heavy and that, in particular, direct taxation takes too much out of the wage packet when it is handed to the man who has earned his pay. This crystallisation of opinion is something which the Labour Party refused to recognise, because the mood that had grown up was contrary to that party's own pet theories, long adhered to. So the electorate dismissed the right hon. Gentlemen opposite from office.

During the debate we have heard a good deal about compassion from hon. Members opposite. Indeed, the Amendment to the Motion refers to this quality, and I confess that I listened with some interest to the speech of the Leader of the Opposition in order to hear his views upon it, but I was not able to.

My constituency contains many old-age pensioners. I know that most constituencies do, but mine contains many—much above the average number. In some parts, 40 per cent. of the population are old-age pensioners. What has happened in my constituency since 18th June? The over-80s, who did not qualify under the 1947 Act, have received pensions. This was not something that the Labour Party omitted to do. It was something that it refused to do time and time again, despite repeated opportunities presented by Conservative Members who were then in opposition.

Many low wage earners in my constituency will benefit from the family income supplement. Hon. Members opposite have concentrated in this debate on the technicalities of the point. I well understand that, if hon. Members opposite think that a pledge has not been fulfilled in full, they are entitled to make the points that they have made, but I would have expected them to have at least recognised that the family incomes supplement is a milestone in social policy. It is direct action to help those whose need is greatest.

Mr. Norman Buchan (Renfrew, West)

I am interested in the hon. Gentleman's description of this as a milestone, because the concept is at least two and a half centuries old. It was developed at Speenhamland and impoverished workers in the countryside for generations thereafter.

Mr. Hall-Davis

This illustrates my point about the refusal of hon. Members opposite to take any action, however beneficial it might have been and however much it might have been sought by the people, that conflicted with their theories. I have no doubt that when some of the low wage earners in my constituency who are prevented by lack of manufacturing industry from enjoying the wage levels current in many other places, and who have been held back from prospects of immediate expansion in their area by the late Government's development area policies, receive no less than£3 a week as an addition to their income they will not be concerned with Speenhamland, nor with the theories of hon. Members opposite. They will say that at last one of the pockets of identifiable poverty has been dealt with, and dealt with rapidly, and that it was a pity that the Labour Party did not overcome its theoretical objections and do something about it.

Miss Bernadette Devlin (Mid-Ulster)

To bring the matter down to the level of ordinary people, I will ask one simple question. The hon. Gentleman is talking about a rapid solution to the poverty-stricken low wage earner. Has he ever done as I have done and as my mother did before me—sat in a council house whose rent she could not afford and tried to work out how to fill in the forms on which the giving of that money depended? I have done it. As long as I stand in this House I will not do anything to impose such humiliation on any other member of my class. It is nothing other than poverty-stricken begging of the State—

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. Interventions will be found to be more effective if they are kept brief.

Mr. Hall-Davis

The hon. Lady has touched a note which I think is regrettably common, if over-emphasised, from hon. Members opposite. It is the implication that no one can sympathise with another human being and fellow citizen unless they have shared his experiences in every respect. I am not sure as to how far one is justified in personalising experiences. I have not shared the hon. Lady's experience, and I greatly sympathise with her in it. I was born in industrial Lancashire and lived in a community where my father was a doctor and where over 20 per cent. of the adult male population was unemployed. I was entirely aware of the problems to which the hon. Lady referred. I did not say that I regarded this as a solution to the whole problem of poverty. I said that it would be welcomed as quick action to give amelioration in a clearly identifiable situation.

Mr. Elystan Morgan (Cardigan)

The hon. Gentleman has referred to the family incomes benefit scheme. What percentage of the people will be benefited by such a scheme? Will it be a significant percentage? If it is not a significant percentage, how can it be a milestone?

Mr. Hall-Davis

Five hundred thousand children live in families which will benefit from that provision. That is a sufficient cause for satisfaction on my part. I have no doubt that my right hon. Friend will address himself in winding up to the specific point that has been made.

I have referred to one subject which has been touched on by hon. Members opposite. I turn now to one which has not received the same mention—that is, the question of growth in the economy. This has a direct bearing upon the ability to remove the causes of unhappiness and distress we have been debating in the last two days. It is not surprising that we have not heard much about growth from hon. Members opposite, for in the last six years the growth in the domestic product was less than half of what it was in the previous six years. In the decade 1960–70 Britain will be the bottom of the O.E.C.D. growth league of 22 countries.

A slow growth has a twofold importance and consequence. First—this has a direct relevance to the debate—except when one is trying to deal with very narrow sectors of the community growth must be a better alleviator of poverty than any redistribution which is possible in a democratic society which has already moved as far down that road as Britain has.

Of course we want compassion in our society, but it is far better to secure growth and remove the need for compassion on the scale that arises when growth is inadequate. Therefore, when we are considering the question of how the nation may feel unified and how we can proceed on the basis of a harmonious community, growth is as great a factor as, if not one greater than, the question of distribution and redistribution. In the field of economic growth the record of the last Government was one of almost total failure.

There is another consequence of slow growth. A prolonged slow growth in a free society can only result in inflation. The present cost inflation stems largely from the denial of expectations of reasonable increases in living standards which took place over almost the entire life of the last Government. The present cost inflation stems also from the statutory incomes policy pursued by the last Government. It stems also to a considerable extent from the abdication of responsibility by the then Prime Minister and his colleagues when, either because they were not prepared to stand up for what they believed to be right or, worse, for reasons of electoral advantage, they let wages rip and almost encouraged this to be the case.

This summer inflation was almost out of control. [An HON. MEMBER: "What is it now?"] It is therefore important that we should talk about this, recognise this fact, and recognise the consequences.

The first consequence which is already evident is that a rampaging cost inflation does not benefit the wage earner. All the evidence now shows that if there is no real growth in the economy prices overtake wage increases at an extraordinarily rapid rate. For those outside employment inflation is a social evil, and one that the public will not tolerate. This is the second reason why hon. Members opposite are no longer the governing party but are in opposition.

I trust that I carry many hon. Members opposite with me in expressing the hope that we shall continue to resist any pressures to return to a statutory incomes policy. I congratulate my right hon. Friend the Chancellor of the Exchequer on having taken up this policy firmly, and I hope that hon. Members opposite who in the last Parliament fought vigorously and vocally for the abandonment of a statutory incomes policy will make their voices heard again. I hope, also, that they will raise their voices in support of moderation in wage claims, for if the present wage inflation continues the siren voices demanding a return to some form of statutory incomes policy will grow louder, and they will come from many quarters, and eventually—I say this without hesitation—if inflation does not moderate, those voices will be joined by the broad body of people who will not tolerate indefinitely a social evil such as inflation.

I do not believe that those who are responsible for lodging wage claims and conducting wage negotiations wish to feel that they are contributing to the creation and growth of a social evil. Anyone would strongly resent an accusation that he was contributing to the pollution of our environment. Anyone would have resented most strongly 30 years ago, in the days to which I referred in replying to the hon. Lady the Member for Mid-Ulster (Miss Devlin), an accusation that he was taking action which would lead to an increase in unemployment, which was recognised then as a great social evil.

Inflation at the level at which we see it now and have seen it for the past 12 months is a social evil. Once people understand this, and once they see that they have a reasonable expectation again of an improvement in their living standards, they will not want to contribute to any course of action which is an influence towards the perpetuation and intensification of what for many people is a most damaging social evil.

In speaking of the Government's attitude towards wage negotiations, the Leader of the Opposition used a phrase to the effect that the Government believe in, "One down, everybody down". With respect, the Government have at no time said that. In fact, it is the opposite process which must be watched. What has been so damaging in recent years under the statutory incomes and prices policy has been that the productivity loopholes in that policy allowed wage claims and wage increases to be made of a dimension not seen in this country before, and to be made in circumstances in which attention was focused directly on them because of the controversial nature of such questions at that time. What we must avoid, if at all possible, is wage claims of a level which of themselves establish an inflationary norm which comes to be accepted as a target, as an end which can be achieved.

Once people realise that this Government's policy is to reduce the burden of taxation on them, we shall over the coming months, I am certain, see a moderation of claims and of settlements. This will be achieved not by a statutory prices and incomes policy but by a consensus, a consensus among those sitting on either side of the negotiating table, a consensus between employee and employer. We have a voluntary incomes policy now. There is no need for the employee to accept a wage offer; he can withdraw his labour and press his claim. There is no need for an employer to settle unless he wishes to do so.

No one likes to give up cherished beliefs or to be told that his theories will not work. But experience has shown that the policies of right hon. and hon. Members opposite would not and did not work. They did not work to secure economic growth. They did not give us scope for ameliorating poverty and improving the critical elements of social provision which all knew to be necessary.

New policies are being followed now. As a result, I have no confidence—[Laughter.]—we all make the occasional slip, but it does not change the sincerity or correctness of what we say. I have every confidence that, as a result of these policies, all will benefit in the community. They will benefit partly by well directed social provision, and partly because the general strength of society and the economy will advance at an acceptable rate, which it has not done over the past six years.

6.5 p.m.

Mr. Edmund Dell (Birkenhead)

The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) spoke of the very real dangers of inflation at this time. I [...] sure him that people will not stand by [...] see their standard of living cut. In that sense, the Chancellor's mini-budget last Tuesday was inflationary. The hon. Gentleman said also that no one could challenge the Chancellor's statement regarding the prospects for taxation. In fact, the Chancellor has not explained to the House or the country the real economic meaning of the package which he has presented. What we say is that we object to the package on social grounds. We object on the ground that it discriminates against large numbers of people.

The Chief Secretary to the Treasury spoke today about the Labour Government's control of public expenditure. Of course, public expenditure has to be controlled. What we object to is the way public expenditure has been cut and charges increased in order to give an undiscriminating bonus to the rich. This is the gravamen of our charge against the Government, and the Chief Secretary made no attempt to deal with it.

The debate has been notable mainly for the frank brutality with which the Government's policy was stated by the Secretary of State for Trade and Industry. He divided the population—we can understand that; it is the Government's objective to divide the population—into lame ducks and those who can thrive in a bracing climate. The climate of this Chamber was somewhat bracing last night when the right hon. Gentleman was speaking, but I did not notice that he was thriving all that much.

The Secretary of State for Social Services (Sir Keith Joseph)

What my right hon. Friend said was that it was no good to treat the whole population of this country as though they needed help.

Mr. Dell

If the right hon. Gentleman studies his right hon. Friend's speech, he will find that he said rather more than that. He appears to believe—he applies it, apparently, not just to the last Government but to Governments over many years—that the country's policy in these matters has been conducted for a long time by reference merely to the lame ducks, lame duck individuals and lame duck companies. Such a view is nothing but outrageous nonsense. There is one thing to be said, however, about the lame ducks of industry, a matter on which, unfortunately, I have some knowledge.

Lame ducks in industry are the result of bad management, incompetent management, management which is sometimes even unable to assess its cash flow prospects with any accuracy. It is true that the Labour Government did try on several occasions, when there was hope for a firm by replacing the management, to avoid the creation of mass unemployment, particularly in the development areas where many of these cases occurred. The victim of incompetent management is not the management itself but the thousands of employees on behalf of whom that management is unable to discharge its responsibilities.

If it is the policy of the Secretary of State for Trade and Industry that in future, whatever the social consequences, whatever the unemployment which will be caused, and whatever, indeed, the prospects of a firm under better management, that perhaps temporarily lame duck firms will be allowed to sink, causing mass unemployment, he will give rise to a great deal of industrial trouble.

The stated objects of last Tuesday's announcement was to break out of the cycle of high taxation and low growth. The hon. Gentleman the Member for Morecambe and Lonsdale took the same theme for his speech.

As for high taxation on high income earners, there has certainly been a reduction in the taxation which they will pay, but for most of the population it will simply be a redistribution of taxation against them. I see nothing in the policy which will do anything about the low growth rate. The idea that this policy has some relevance to the low growth rate is evidently based on the idea that there are incentives; but what incentives are there in the policy?

The incentives are given indiscriminately to anyone, whether he is in a position of responsibility of any sort or not, and whether his income is earned or unearned. It is given, as the Secretary of State for Trade and Industry would no doubt say, like casting cream around. We remember that last night he told us that our development area policy was like throwing cream around with the idea that some might go into the cup. This policy is real cream worth hundreds of pounds, and in certain instances thousands of pounds, to rich people who do not necessarily carry any responsibility for the country's future growth rate.

Incentives for investment have been cut. We have to remember that this is the less, but better government. We are to have less, but better government; less but better investment incentives; less but better dentistry, no doubt; less but better prescriptions; no doubt ending up with less but better food.

The fact is that allowances against taxes are a worse way of stimulating valuable investment than the investment grant system. A study into the operation of the investment grant system was initiated by the Board of Trade in 1969. The Government could not wait to see the completion of that study before coming to this entirely doctrinaire decision to abolish investment grants.

For some industries, shipbuilding, for example, the result is clearly harmful, especially for shipbuilding which in many cases is confronted by subsidised competition by foreign countries. It will undoubtedly be weaker in confronting that competition; and the abolition of investment grants will be followed in 1974 by another decision relevant to shipbuilding—the abolition of the regional employment premiums.

The point has been made from this side of the House several times in the debate that the investment allowance system is worse for new companies, for companies undertaking major expansion, for companies with vast projects which see a profit return only at a distant date. In view of what we have been told of the Government's attitude towards competition, it is interesting to note that the effect of the decision on competition is to make it more difficult for new competitors. If there is a monopoly position and a new firm comes into the market and wishes to build itself up into the market, it will find that this decision has made doing so more difficult. A new firm will not yet have a profit record against which to set an allowance. The effect of the decision will, therefore, be directly opposed to the Government's alleged competition policy.

I have always been somewhat sceptical of the reality of the Government's love of competition. The right hon. Gentleman the Secretary of State for Trade and Industry in a former incarnation often spoke of his interest in the maximisation of profits. There is a conflict between the maximisation of profits and the maximisation of competition. I think that the Government will go for the former and not the latter. Their talk about competition is something which will have to be judged in the light of the statement which we are about to hear, but also in the light of a decision which has had the direct effect of making it easier for everyone who is established to compete against everyone who may come new into the market. It is no wonder that in Europe the whole tendency with investment incentives, as shown by a recent report of O.E.C.D., has been towards the grant system which the Government, in their wisdom, have now changed.

Grants have undoubtedly been beneficial in the development areas. They were operated under considerable difficulties at a period when we were transferring resources on a large scale to help the balance of payments. Despite a rapid rundown of traditional industries in the development areas, their relative unemployment rate during the period of the investment grant improved. The proportion of investment in the development areas increased substantially in the period during which investment grants operated. Originally, the proportion of investment in development areas estimated was 20 per cent., but by the end we were having to calculate on 33½per cent. The investment grant had a clear effect at the time of the 5 per cent. premium during 1967 and 1968.

The Government have broken every promise which they made to the development areas. I will go through a number. First, they suggested that, although there might be a cut in assistance to industry in development areas—and there has certainly been a cut in the direct assistance to industry in the development areas—this would be compensated for by money spent on improving the infrastructure. What has happened? Some miserable proportion of the£25 million, which is to be built up to, will go towards infrastructure improvements to compensate for the large reduction in other assistance to development areas.

Mr. John Nott (St. Ives)

If the hon. [...]eman's assertions are correct, can he tell me why it is that in the South-West development area, which, as he is aware, is the area which I know best, unemployment was in the latter years of the Socialist Administration double what it was when the Labour Party came to power? Secondly, is he aware that£14 million was spent on regional development of the South-West development area during that time and that the road programme in the South-West will be£100 million more in the next five years?

Mr. Dell

I am very glad that the hon. Gentleman is benefiting from the policies laid down by the Labour Government—I am not so glad that he is benefiting, but I am glad that his area is.

I am speaking of the general position of the development areas which benefited when there were investment grants. There were promises that compensation for reduced aid to industry would be greater work on the infrastructure, but there will be no significantly greater work on the infrastructure under the policy announced by the Chancellor of the Exchequer. It will be only an insignificant proportion of the£25 million.

The Government have not even abolished the discrimination between manufacturing and servicing in development areas. For years, we used to hear speeches about the iniquity of distinctions between manufacturing and service industries in the development areas, but there is still to be such discrimination. We have not been told why, but it is to continue. Why is not free depreciation given to the service industries? Apparently, at long last, the Government, with greater wisdom in this regard at any rate, accept the importance and desirability of some discrimination. At any rate, there will be some discrimination in the development areas.

They said—and this was often the theme in debates when I was speaking for the Labour Government and the right hon. Gentleman, now the Secretary of State for Social Services, was speaking for the Conservatives—that there should be a closer link between incentives and the creation of jobs. What has happened? There has been a change to free depreciation. What relation has free depreciation to the creation of jobs, any more than investment grants have? As a matter of fact, the specific task of creating jobs was better done by investment grants, plus regional employment premiums, than will ever be done by free depreciation.

Free depreciation is an aid to capital-intensive industry just as investment grants were, and I myself have never objected to the assistance which the Labour Government gave to capital-intensive industries. But all that has been done now is to provide this£25 million of additional expenditure under the Local Employment Acts, and that is a figure to which we are to build up, which will be dependent on the number of projects coming forward, and the Prime Minister told us that the number of projects was something which could not be forecast. Of course they cannot be forecast. They can be forecast even less at a time when incentives in the development areas are being reduced.

Mr. Hall-Davis

Is it not correct that the White Paper says that the rate of grant under the Local Employment Acts in the development areas will be increased from 35 per cent. to 45 per cent., which is not something to which we shall build up? Does the hon. Gentleman contest the statement: It is also estimated that the differential benefit provided to the development areas by free depreciation … will be broadly equivalent to the present cost of the regional differential in the investment grant scheme"?

Mr. Dell

I do not know whether or not to dispute it because the facts have not been presented to the House. I put a Question to the Chancellor for answer yesterday, asking him for the calculations which led him to the conclusion that the differential was the same. I have not yet had an answer. When I receive one I will be able to comment on the hon. Gentleman's intervention.

Until then, all I know is that, according to the reports in the Press today, the C.B.I. was saying to the National Economic Development Council yesterday that it did not agree that the differential had been maintained. I notice that Answers given to Questions by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) yesterday suggested that the differential has not been maintained by a wide margin. I would like to see the additional projects under the Local Employment Acts which will compensate for the reduction in differential shown in the answers to my hon. Friend.

This bears on another promise to the development areas which the Government have broken. I refer to their promise to maintain financial incentives. One may say that the differential has been maintained, and about that we wait and see. Meanwhile, what has not been maintained is the total expenditure on development in development areas—whether for industry, under the Local Employment Act, through R.E.P. or in any other way. I therefore do not see how this policy will enable us to break out of the cycle of high taxation and low growth, and there is no evidence that it will achieve a higher rate of growth.

I concede that for a country with a low rate of growth there are difficulties in knowing how best to finance the social services and education. Had the Government said, "We are cutting incentives to industry in the interests of developing the social services and education", that might have been an argument worth considering. But to give out this bonus indiscriminately to the rich is deplorable, and I am glad we will be opposing it in the Lobby tonight.

The Prime Minister was quoted in The Times, from an interview on 27th October last, as saying: You cannot make a nation richer by first making it poor. Somehow the right hon. Gentleman seems to believe that he can make the nation richer by first making its people poorer.

6.23 p.m.

Dr. Gerard Vaughan (Reading)

I am mindful of the fact that this House will not wish to be diverted for long from the main theme of this debate, even for a maiden speech.

While I will certainly not be following some of the lines of thought followed by my predecessor in this House, I hope that, if it is his wish, he will soon return to this place and to his many friends here—though not, I trust, to the constituency which I have the honour to represent.

Reading is a place known, regrettably, to far too many people as the first major traffic block west of London. This is soon to be changed as the M4 progresses. It is a thriving, lively, industrial town with one of the lowest unemployment rates in the country. It has always been a regional centre, and in the early days it had no fewer than 19 bridges across the Thames. Historically it is associated with its abbey and its prison. Industrially it is associated with two Bs, biscuits and brewing, a most healthy combination, I assure hon. Members. It has a medical centre and it is a university town. It is appropriate that for the festival which Reading is holding next year it has chosen the title, "A Total Town". That is what Reading is.

Apart from myself, there are three hon. Members in this House who have represented my constituency: my hon. Friend the Member for Honiton (Mr. Emery), the hon. Member for Poplar (Mr. Mikardo) and my hon. Friend the Member for Torquay (Sir F. Bennett). I do not know whether this is a record, but certainly it is a comfort to me in going through this somewhat traumatic experience of making a maiden speech. I turn now to the main topic of the debate, and I realise that in speaking today I am committed to be as uncontroversial as possible. I will do my best to be so.

I feel sure that hon. Members on both sides will have noted with satisfaction that, contrary to what has been happening in recent years, the figures for emigration from this country and the figures for the brain drain are, for the first time, showing a considerable drop. I put this point first because I believe that this is due to proposals such as those that are before the House today and the style of Government from which they emanate.

The statement of my right hon. Friend the Chancellor of the Exchequer is, of course, only one part of the long-term strategy of this Government. However, I believe this change in the brain drain has come about because a larger number of people in Britain now feel that this is a country in which they wish to remain—to work and bring up their children. The proposals and measures before us today are an essential first step in a process of bringing a sense of purpose and financial reality back into our affairs.

As a medical person—although my main interests these days are, I confess, more in the spheres of environment and planning—I wish particularly to support the proposals for the National Health Service, not just those relating to geriatric and mentally ill patients, though I welcome them very much, but the general policy. Incidentally, I had hoped that we might have had some extra provision for pensioners in general.

I support the changes in prescription charges and those relating to milk. A great deal of nonsense has been talked by hon. Members about the damage that this might cause for individual patients and children. I cannot see that these statements are medically sound or that these things are likely to happen. I admit that I am not quite as happy about the dental charges, for I fear that they could lead to a deterioration in our dental services. I was relieved to learn that ceilings for health and dental charges are likely—

Sir K. Joseph indicated assent.

Dr. Vaughan

—and I am glad to see my right hon. Friend assenting to that.

Proud though we are of the National Health Service, if we are honest we will admit that it is today a sick service. It is desperately in need of the skill and intellect which I know my right hon. Friend the Secretary of State will bring to bear on it. It needs reorganising and bringing up to date. Much of the building programme needs to be re-examined. We are getting far too many medical buildings for the sake of architectural prestige rather than for the uses to which they will be put. We recently had a new drugs centre built, only to have it closed without ever having a patient admitted to it. "An administrative error", it was called.

Do we really need the extensive increases in regional staffs which are being contemplated? I appreciate that this is not the sort of debate in which to go into the details of the N.H.S. I hope my right hon. Friend will shortly introduce a number of proposals which will reintroduce—this is why I spoke earlier about the need for a sense of reality—a sense of purpose into this great service of which we are proud.

I hope that other charges will be introduced in the next few months so that we may transfer from the national shoulder to the shoulders of individuals who are prepared to accept it their share of the cost of the N.H.S. It is on these terms that I welcome the measures and proposals which are before us, and I thank the House for extending its courtesy to a maiden speaker.

6.30 p.m.

Mr. Jeffrey Thomas (Abertillery)

I ask for the indulgence of the House as I make my maiden speech. I hope that the House will forgive me if, by chance, I make any remarks which could be construed as controversial and that it will remember that we are dealing with very controversial matters.

I congratulate the hon. Member for Reading (Dr. Vaughan) on the fluency and sincerity of his maiden speech, although he will understand when I say that I wholly disagreed with much of what he said.

It would be quite wrong of me not to take this opportunity of paying a sincere tribute to my predecessor, Alderman Clifford Williams, who brought to the House a wealth of knowledge and experience in mining and local government matters and who served the people whence he came with great diligence and energy.

My constituency is made up of the three urban districts of Nant-y-glo and Blaenau, Abertillery and Abercarn, all lying in the western valley of Monmouthshire, the most beautiful mining valley in South Wales—the valley of the Ebbw. It is not without interest that the official seal of Abercarn displays Big Ben, commemorating the long association with the district of Sir Benjamin Hall, who lived at Abercarn House.

It is only right to say that not the least of Abertillery's distinctions is that at the last election it had the highest percentage Labour vote in the United Kingdom. The constituency is confronted with the problems and difficulties which stem from the rundown of the mining industry and the compelling need to provide new factories and new jobs for men who are among the most industrious and adaptable in the nation. As a result of these problems, almost the whole constituency was designated a special development area by the last Government. I am therefore more than grateful for the opportunity of taking part in this debate on proposals which my constituents regard with mounting dismay and anxiety.

The Chancellor of the Exchequer's statement has been described as a mini- Budget. I prefer to call it a midi-Budget. It is no accident or coincidence that the last 5½years of Labour administration coincided with the age of the mini. We said, "Let the people see; keep as little as possible from the people." With the advent of the present Administration, we have had the launching of the midi. The Conservative Government believe in keeping the people guessing and in covering up as much as they can. But there comes a time when the guessing has to stop. I believe that we reached that moment, if not before, during the speech last night of the Secretary of State for Trade and Industry. One of the most disturbing features of that speech was that, in spite of the fact that regional policies and the development areas are his special responsibility, he did not deign to deal with them or to mention them once in that extraordinary speech.

I should like to deal with the Chancellor's proposals from the point of view of my constituency. They must be judged against the background that at least 15,000 jobs must be created in my part of Monmouthshire within the next 10 years. Of course, there were gaps in the Labour Government's provisions in the development areas, indeed even in the Principality. But in 1969–70 investment incentives in Wales alone amounted to£80 million, in sharp contrast with 1963–64 when the overall amount spent throughout the United Kingdom by the Conservative Government was£17 million. We were not surprised therefore when the Secretary of State for Trade and Industry told us last night, in that telling phrase, that he had no wish to look back at the "tangled skein" of the past. There were good and valid reasons why he shied away from it. Perhaps he would be interested to know the position in my constituency during the last 20 years.

Between 1951 and 1964 only one Board of Trade factory was authorised as opposed to four between 1964 and 1970. We had only two privately-owned factories between 1951 and 1964, in spite of the fact—and this is the important point—that so-called investment allowances, first introduced in 1954, provided companies with tax relief on plant, machinery and building, the same kind of allowances as right hon. and hon. Members opposite are trying to force on the nation.

Those allowances were abolished not merely because grants were more equitable and more certain but for the very good and compelling reason that they did not provide the necessary jobs. Last year investment grants alone brought£41 million to Wales. It has been estimated that we in Wales may expect to obtain a mere£5 million from assistance under the Local Employment Acts, and there can be no doubt that Wales will be much the poorer if the Chancellor's proposals are accepted tonight.

Even the present Director of the Confederation of British Industry, writing in the London Evening Standard on 29th October, expressed misgivings about the Government's odious package. He said: It is very doubtful whether on present information development areas will be as attractive to new investors as before No one on this side of the House will dispute that. We believe that it is a gross under-statement. The reality is that industry will lose£100 million or thereabouts as a result of the switch to allowances, even taking into account the cut in corporation tax. It is the Exchequer which will gain substantially by these proposals as opposed to the regions, which, together with others in the community less able to bear the brunt, are being asked to pay the price for a cut in corporation tax and the so-called cut in income tax. But the regions have been doubly penalised by the proposed cuts in the road programme and the increased cost of transport which will undoubtedly follow.

We fear, too, that firms just starting up—the kind of firm which, with the previous incentives, would have benefited considerably—will no longer be able to afford to take the risk of going to development areas like South Wales against a background of mounting unemployment. There is no point in right hon. and hon. Members opposite paying lip service to improvements in education when we are in jeopardy in South Wales of having the kind of situation which Aneurin Bevan referred to—the best educated dole queue in the United Kingdom.

What we on this side of the House cannot understand, try as we may, is this: why put South Wales and the other development areas in jeopardy? We cannot see the common sense. Not only is it a negation of common sense, it is morally and economically unsound for certain areas in Great Britain to be prosperous, wealthy and thriving whilst other areas are struggling for their very survival. These proposals underpin that position and buttress the imbalance in the economy, in particular in the south-east and the Midlands, at the expense of areas like South Wales and the North-East.

We cannot understand this, but some clue may be found in the bizarre philosophy propounded last night by the Secretary of State in a speech which could have been made one hundred years ago in this House, and probably was. This is what he is saying—and he put a gloss on it when he addressed the Development Council of Wales reception at the Hilton Hotel this week—"profitability is everything, and nothing matters as long as profits are all right."The Government believe, they say, in sturdy independence. We heard again tonight from the Chief Secretary this phrase, "shoring up success". The Government say that the rest of the community are to be written off, in that classic phrase, as lame ducks. We now know that the terms "disengagement", "non-intervention", and "less government" are euphemisms for indifference; indifference to the ever-growing army of the poor, indifference to the thousands of unemployed, indifference to the thousands of old-age pensioners who will be so grievously affected by these proposals, to say nothing of the thousands of children of the so-called lame ducks. Those who have the misfortune not to live in the Secretary of State's "bracing atmosphere" have to struggle and fumble as best they may.

We are witnessing a return to the days of patronage in the social services. What the so-called lame ducks want is the opportunity to get out of the vicious circle, whether they be pensioners, the unemployed, the new poor or the new categories which are being created almost daily by the Government. This is all we on this side of the House ask on their behalf. They cannot by themselves do this. What they say and what we say is that it is the duty and moral obligation of government to create a framework which can release their private enterprise and their energies. It has never been put better than by Jim Griffiths when he introduced the National Insurance Bill in 1946: …to those who profess to fear that security will weaken the moral fibre and destroy self-respect, let me say this. It is not security that destroys, it is insecurity. It is the fear of tomorrow that paralyses the will; it is the frustration of human hopes that corrodes the soul. Security …will release our people from the haunting fears of yesterday …and their gifts and energies for the services of the nation."—[OFFICIAL REPORT, 6th February, 1946; Vol. 418, c. 1758.] I commend that passage to the attention of the Secretary of State for Trade and Industry. If these proposals and the speech of the Secretary of State are indicative of what we may expect in the Tories' "better tomorrow", most people in this country would prefer "all their yesterdays".

I beg the Minister to inaugurate a crash programme for the regions. We need regional development agencies with powers and funds to set up new industries. The agencies should be charged with providing roads and houses in the right places at the right times. The I.R.C. could have taken on this task but, unfortunately, if these proposals are accepted tonight by the House, the I.R.C. will be no more.

Secondly, I ask the Minister to restrict the issue of industrial development certificates in the richer parts of the country. On this side of the House we are determined to see that the regions, the valleys of Wales and our valley communities shall not only survive but prosper. We find the proposals in the statement of the right hon. Gentleman the Chancellor of the Exchequer repugnant, not simply because they are shabby, spiteful and irrelevant, but because the Government still persist in their congenital hypocrisy of attempting to cover these proposals with a veneer of compassion. If the proposals are accepted, we shall see the dawn of the "selfish society". I thank the House for its indulgence.

6.46 p.m.

Mr. John Nott (St. Ives)

Although I represent another Celtic part of the British Isles, I am not very good at pronouncing the name of the hon. Gentleman's constituency, but I congratulate the Member for Abertillery (Mr. Jeffrey Thomas) on a very good maiden speech. Representing as I do another development area in the United Kingdom, I look forward to debating the subject with him in future. I do not agree with what he has said, but that can wait for another time.

I also congratulate my hon. Friend the Member for Reading (Dr. Vaughan), who represents a very different type of constituency from those of the hon. Gentleman and myself. He made an excellent speech which was very short, and I am sure that will immediately endear my hon. Friend to every hon. Member in the House.

I want to devote a few words to one aspect of the White Paper, the subject of aerospace, and I wish also to refer to Concorde. If I indulge in a preamble, it is only to support in a logical manner some heresies in which I will indulge towards this symbol of our national virility and the Anglo-French détente.

I do not mean to be dramatic, but I conceive that the economic situation in this country is extremely grave, and I regard the action that the Government must take on aerospace as being a crucial test of their realism and determination. Concorde is for the Tories rather what prescription charges are for the Socialists. It is a difficult and touching subject but nevertheless I intend to dwell on it just the same.

If I reflect upon the period of Socialist Government, I believe that they made two main mistakes. The first was to exaggerate rather than to minimise their economic inheritance of 1964. The second was to lack the political will to take decisions which an objective observer would have earlier performed. We know the consequences. The Socialist Government lost their mastery over events until events ruled them, and each one of the sacred tenets of Socialism—prescription charges, unemployment, and so on—one by one were sacrificed not out of choice but from necessity.

Had somebody and one particular person—namely, the right hon. Gentleman the Leader of the Opposition—acted just a little sooner with just a little more courage in those early days—and it would have taken great political courage—there is not much doubt in my mind that I would have been speaking tonight for the other side of the House.

The new Tory Government cannot be accused of the first mistake made by the Socialist Government in 1964. The economic situation is in my view quite critically bad but the Government have kept their head and rightly talked with optimism of what the British people can achieve given an environment in which initiative and hard work really thrive.

But let me sound a note of warning which will not cause the flight of a single pound—or should I say one hundred pence? With inflation running at 7 per cent. a year, involving a doubling of the price level in less than 10 years, we have a situation potentially more evil in its consequences even than 1 million unemployed. Inflation undermines and saps the livelihood and confidence of all those whom it is the Government's prime duty to protect: the elderly, the pensioner, the redundant and, in particular, the poor, the large low-income families. It hits the weakest in society, not those of working age. I do not wish to see a single unemployed person, but I repeat that inflation hits the weakest members of society.

Moreover, unlike depression and the unemployment which accompanies it, it provides a climate in which the spiv and the monopolist can really thrive. It permits also and encourages a vast misapplication of our national resources because with inflation at 7 per cent. it is difficult to make commercial mistakes; the rise in money values will just float one to success.

There is plenty of room for disagreement about how inflation should be checked but essentially there are only three ways of doing so. These are by cutting private consumption, private investment or public spending. Essentially the Socialist Government acted not from choice but from necessity on consumption by constant and everlasting rises in taxation. There was inadequate private investment and in the early years escalating public expenditure which went far beyond the rise in gross national product.

I believe their actions on consumption cost them the election and cost the country even more. It meant for the nation five years of lost growth, national humiliation and a steady erosion of the self-confidence of the British people.

I regard the Chancellor's statement as most important mainly as an avowal of an entirely new philosophy. Why should not the Conservatives have an entirely new philosophy different from the Socialist Party? I do not detract from the measures in any way when I say that the Chancellor's statement is not subject to full analysis until we have seen the Budget of 1971. I congratulate my right hon. Friends particularly that the war against the woolly-Socialist philosophy of certain previous Tory cabinets has at last been won. I will not recall too starkly the opening words of my right hon. Friend the Chief Secretary to the Treasury but he made this point about somebody who is rather closely related to him, and I support entirely what he said.

I come now to the main subject with which I wish to deal; namely, aerospace. With inflation running at the current rate, and the need, in my view, not just to simplify our tax system but to reduce our taxes right across the board, even the huge and highly welcome savings in Government expenditure which the Government have just announced are not enough. If inflation can be checked, then they are enough. But I believe that among certain union leaders there is a desire to play for high political stakes. I do not easily see the current rate of inflation being brought within control. Since in my view higher allocations are required for pensions and for the social services particularly in the areas to which my hon. Friend the Member for Reading referred, then there are only two remaining areas for further savings of Government expenditure.

One area is that of the nationalised industries and the other is that of aerospace. I do not believe that the nationalised industries can be financed to any great extent in the private capital market. The gilt-edged market could provide another£100 million or so but there are no large sums of money to be found in private capital markets for the further financing of the nationalised industries—certainly not on a fixed interest basis with inflation running at 7 per cent.

Therefore, if we wish further to reduce the burden of tax for the British people, which is my own philosophy, there is only one way in which we can make savings through the public sector industries and that is by allowing them to raise their prices so that they can be more self-financing for the future. However, with cost inflation running at an equivalent of 9 per cent. in industry I have doubts whether any Government, in these conditions, can allow the nationalised industries to raise their prices to the extent that would be necessary to make them self-financing in a proper way.

Therefore, by a process of reductio ad absurdum—and I do not ask hon. Members opposite to agree with me but merely to admit that there is a miniscule of logic in what I say—I come to the only major saving left; namely, aerospace.

That brings me, of course, to the Concorde. Concorde is a great British technical achievement. I wish I had not got to raise the subject in this debate. Sir George Edwards is a great industrialist, and it must be almost impossible to try to run an industry with chaps like me sniping at him from the House of Commons. I very much sympathise with him; but the fact is that Concorde's development programme is to cost on current estimates somewhere in the region of£820 million shared between Britain and the French, and only half of that sum has been spent so far. This means that there is another£200 million as an absolute minimum to be spent by us before we even get to more than six production aircraft. It is involving this country in approximately£1 million per week. However favourably one regards the Concorde as a British achievement, I do not believe we can afford this sum. With great reluctance I have come to the view that Concorde must be cancelled, and it is vitally important that the Government should act quickly before more of our national resources are drained away.

It will be said in answer to these points that Concorde has become a living symbol of the Anglo-French détente, and I shall probably be asked how we can conceivably do such a terrible thing as to murder this great technological achievement at a time when we are seeking entry to the Common Market.

I believe that the French have threatened the British Government with repercussions upon our negotiations if we cancel the project. I can only say that it does not bode well for entry if it demonstrates that this country is unable to decide for itself how it should run its own economy in the period leading up to entry. If it means spending another£200 million on the Concorde over the next few years, I submit that that sum must be added to the costs of entry to the E.E.C. We are now in the process of negotiating whether those costs should be£300 or£400 million across the exchanges. If we continue with the Concorde against our better economic judgment, I suggest that the Concorde development programme must be added to the cost.

I have a little experience of negotiating with the French in business. It must be said with a stiff upper lip that they do not negotiate like Englishmen. They have what I would describe as a rather limited respect for compromise. They are very tough and ruthless, and one has to call their bluff. If we as a nation, even before entry into the Common Market, are incapable of calling the Frenchmen's bluff on Concorde it bodes ill for what will happen when we become a member of the E.E.C.

I come finally to the B.A.C. 3–11 and the airbus. Here again, we are deep in the politics of the Common Market. I am quite prepared to see the issue influenced on political and Common Market grounds but if our economy is to be crippled or we are asked to sell our industrial assets overseas as a result of our understandable desire to enter the Common Market, we shall not be strong enough to enter, if this House wishes to do so, when that time comes along.

I congratulate the Government on their measures. I shall be more easily able to judge them when the Budget comes in 1971, when I hope to see a completely different grading of our taxes. In the intermediate term, in my view we are in an infinitely worse economic position than we were in 1964. It is crucial that the Government find further savings in public expenditure, and, by a process of reductio ad absurdum, aerospace it has to be.

7.4 p.m.

Mr. John Mendelson (Penistone)

The hon. Member for St. Ives (Mr. Nott), to whose speech I listened with great interest, will have to accept my apology for, unwillingly, not following him into the fascinating subjects of the Concorde and the Common Market. Being aware of my views, he will know that I am tempted on both counts. However, the Secretary of State for Social Services is to wind up the debate. In view of that, I intend to devote my remarks wholly to the social services.

Before parting finally from the hon. Gentleman, however, who apparently has found after a great deal of thinking that the French behave like the French, I warn him that he will have a tough time if we ever enter the Common Market. He will find that the Germans behave like Germans, and that the Italians behave like Italians. He had better think hard before making up his mind to support his right hon. Friends in their negotiations.

In the case of the speeches which we have heard so far from the Government side, the debate has been full of generalisation. By that, I do not mean to imply that the Secretary of State for Trade and Industry is the only offender. There is more excuse for him to speak in more general terms because it is always a difficult task for anyone, however experienced and eminent in another walk of life, to master the technique of this House. But for other Ministers, especially the Treasury team, to remain in the general and refuse to move to the particular can only be a deliberate conspiracy not to inform this House on an important occasion when we are asked to accept what are very important changes in the Government's social policy. In view of that, I shall invite the Secretary of State for Social Services to deal with a number of detailed points, the answer to which hon. Members must know before they vote tonight.

I want first to return to a promise made by the Chancellor of the Exchequer yesterday when he said in reply to an intervention that if hon. Members wanted to go into further detail about the effect of the social policy changes on different categories of people, they would have to ask his right hon. Friend the Secretary of State for Social Services. I did not regard that as a satisfactory answer. The Chancellor of the Exchequer and the Treasury team have no excuse for saying that they have not looked into those details. Anyone who knows anything about our system of Government knows that the Treasury is always directly involved in costing processes and decision making.

We now have the Secretary of State for Social Services with us, and my first point concerns prescription charges and the people who will be hit hardest by the proposed increase. The Chancellor of the Exchequer said a great deal about exemptions. I do not wish to refer to exemptions at the moment. Instead, I want to discuss the wide range of people who are at work but who are earning lowish or limited incomes and who do not have two small children.

Yesterday, the Chancellor of the Exchequer tried to be very clever. He kept on talking about exemptions and then said that a family earning£20 a week and having two small children will not feel the impact of any of these new impositions, the implication being that the country consists only of couples with two young children. That is obvious nonsense. In my constituenciy alone there are thousands of people in their fifties who have no small children. They are wage earners who, especially in mining areas like my own, tend to suffer more than usual from chest and other diseases. In the case of dust-producing industries, obviously there is a high incidence of these diseases. So far, we have been unable to get from the Chancellor of the Exchequer any estimate of the effect of these very great increases upon such people.

At present, hundreds of thousands of these people have to pay out considerable sums in prescription charges. Hon. Members represnting similar constituencies will be familiar with the housewife who complains, "My husband is still at work in the pit"—or it may be the steel works. "For some years he has had a chest disease"—or it may be arthritis. "He needs regular prescriptions, and we do not fall within any exempted category." At present, such a family has to pay 7s. 6d. a week or perhaps 8s. over a fortnight. According to my own calculations, that sort of sum will go up to 15s. or£1. Those categories of people have not so far been mentioned by any right hon. Gentleman. It is passing strange that the Government should introduce—

Mr. Timothy Raison (Aylesbury) rose—

Mr. Mendelson

I thought that the Secretary of State was about to intervene, and I was going to give way to him.

Sir K. Joseph

Is the hon. Gentleman aware of what is called the "season ticket"? That enables a person who will frequently require a prescription to get a great discount by buying a cheap ticket.

Mr. Mendelson

Of course I am aware of the season ticket. I will have something to say about the introduction of that idea later.

I can supply evidence which has been brought to me by my constituents. I know that the total amount is considerable and that it is bound to go up. This charge will go upon the shoulders of people who have no way of being completely cured. This will accompany them to the end of their working days until they are retirement pensioners, which may be periods of seven, eight, 10 or 12 years. It is passing strange that we have heard nothing from any right hon. Gentleman throughout the debate, nor when the Chancellor first made his statement, about the incidence upon these hundreds of thousands of people.

I move to another category which is larger than the one that I have just mentioned but includes some of them—namely, the chronic sick. We know that those who speak for organisations concerned with the chronic sick—many hon. Members on both sides are in touch with them; this is not a particular privilege or pre-occupation of hon. Members on this side of the House—must have received communications expressing the deep concern of the chronic sick following the Chancellor's announcement. It is again passing strange that we have not heard any hon. Gentleman opposite, or hon. Lady for that matter, voicing any opinions of the people so severely affected. Before 18th June we heard a lot from Tory Members about the chronic sick, but we have not heard a word during the two days of this debate.

A spokesman for the chronic sick 'phoned me this morning and urged me to raise this point with the right hon. Gentleman and with the Government. He talked about what is called, by people who know a great deal more about it than I, the twilight zone of people in employment. These are the chronic sick who manage, by exercising all their energy, to hold down a job. We know that the real contrast between chronically sick people and the rest is that normally a man who is healthy and does his job might occasionally have a cold. But the chronic sick are in a different category. They sometimes have to force themselves to continue in regular employment. The representative who contacted me this morning—the Ministry must know about it—pointed out that many of these people, with all the new impositions that are to come their way as employed people, might now have to give up their employment and move into another category.

My next point concerns the way that some of the social changes have been presented by the Government side. I found offensive, for instance, the attempt to tell us that the millionaire's lady and Judy O'Grady are both simple housewives on the same level and that they face similar problems when shopping for their groceries. This is no way to treat the impositions that the Government are inviting the House to approve. We want none of this hypocrisy. We want, at least, a serious approach to the problems created by the Government's measures. The Government know that for about 8 million people—the category that I call the lower paid—the impositions which have been outlined will have a serious effect, and that 6 million of those 8 million people will not be reached by any of the compensating measures that the Government have proposed. Therefore, it is no good making play with the increased compensation on the other side—the further exemption from certain payments—because 6 million people among the lower paid will not be touched by that.

I have said nothing yet about those who are not among the lower paid, who have achieved a higher level of wages because they have been in a particular trade all their working lives. But here we come to what we saw at all Tory conferences in recent years—the naked class bias which was illustrated before they got into office. We saw on television, year after year, delegate after delegate going to the rostrum and complaining that people who are now earning decent incomes are now being supported by the State, living in council houses, and going to Spain for holidays. There was deliberate hatred that so many working people have been somewhat better off in recent years—particularly under a Labour Government. But even before that there had been a growing improvement in the standard of living—[Interruption.] The hon. Gentleman, who has been in the House some time, knows that I have never restricted the improvement in the level of wages to the year 1964. There has been a slow—but accelerated under the Labour Government—gradual growth since the war in the standard of living of working-class people. The Government are receiving the plaudits of many of their class-minded supporters because they are to do something about it. The reason behind it—it would be wrong and unworthy to call it a philosophy—is to see that working class people are forced to spend practically all their money on higher rents, higher food prices, prescription charges and similar items. What they want is a better standard of living for those earning more than£3,000 or£3,500 a year. This is the real indictment of this Government in what they have done.

I move to another aspect of the problem. These measures have been praised. We have had them praised today in maiden speeches, including one from the hon. Member for Reading (Dr. Vaughan), on which I cannot comment because they were maiden speeches. But those plaudits and praises will disappear as time goes by when people begin to find out how many sincere people who are supporters of the Tory Party care about our social services. I know a number of such people. This is not a monopoly of the Labour Party or the Liberal Party. Not all are like those delegates who went to the rostrum at the Tory conferences and displayed their naked class hatred. There are many hon. Members opposite who have been associated with organisations for helping the chronic sick. When the incidence of these measures on the groups that I have indicated becomes clear, they will receive complaints and hear stories of heartbreak, and many hon. Members opposite will think again about these measures. But today, in their foolish euphoria about these measures, they bring their plaudits to the Government. Therefore, when this Government, after a number of years, goes on the scrap heap of history, we on this side must make sure that we have the right kind of policy when the next Labour Government is in power.

It will be noted that there is an Amendment to my right hon. Friend's censure Motion. Hon. Members on this side who signed it are not alone in wishing to see the total abolition of prescription charges. This, as everybody knows, is a parliamentary device to bring the matter before the House. I wish to record, for the benefit of my right hon. Friend the hon. Member for Cardiff, South-East (Mr. Callaghan), who is to wind up for this side, that the annual conference of the Labour Party in 1967 and 1969 unanimously passed a resolution demanding the abolition of prescription charges. We know, too, that my right hon. Friend, who is a member of the Executive Committee of the Labour Party, and, therefore, one of the custodians of the policy of the Labour Party, was on the platform but did not rise to oppose the Motion. We are therefore entitled to believe that he, like my right hon. Friend the Leader of the Opposition and all the other members of the leadership of the Labour Party, accepted the resolution, are in favour of it, and are determined to carry it out. It is the task of our Front Bench to make it quite clear to the people of this country that they have an alternative Government, that they do not have to carry on with that lot on the benches opposite. People ought to know that the Labour Pary is prepared to adopt the opposite policy to that adopted by the Conservative Party.

I propose, in passing, to say something about the imposition of prescription charges by my Government. Whatever reasons may have been advanced for that step—and there is not time now to go into them—I do not accept many of them. There will be another occasion to debate the reasons. Whatever they were, it was estimated by my Government that there would be a saving of£25 million by the imposition of prescription charges. Many of my hon. Friends—and I see that one of our leading specialists on the subject is in his place—told the Government that there would be no such saving. They told the Government that once the costs of administration were met and all the exemptions were taken into account there would be nothing like that saving. The actual saving was reduced to£14 million, which many of us predicted would be the case.

Mr. Laurie Pavitt (Willesden, West)

Does my hon. Friend remember that it was£14.8 million, but that about£7 million was taken out for administrative expenses and other costs? I estimate that the saving was between nothing and£5 million.

Mr. Mendelson

I accept the improvement of my statement and that additional information from my hon. Friend who knows as much about this subject as does anybody in the House. It was that kind of saving for which the measure was originally introduced, and many of us predicted what the result would be.

When the right hon. Gentleman replies to the debate and gives us his answers he must not ride off on generalities and assurances about groups that we have not particularly dealt with in the debate. He must address himself to the problems of those who will be hard hit by these new provisions, and he must try to explain to the House how, as someone who for years has been saying that he has a sense of social responsibility and that he regards this as part of his ethical approach to public life, he can be a party to the kind of proposals being introduced by the Government.

My right hon. Friends must see to it that we make it clear, and the sooner the better, that the return of the next Labour Government will mean the abolition of prescription charges and the creation of a free national health service as originally introduced by my right hon. Friends in the immediate post-war period when we had a great reforming Labour Government which created institutions that are the envy of the world. We should make it clear to everyone that no matter how much damage the Conservative Government do to them we shall restore these institutions to what they were intended to be.

7.23 p.m.

Dr. Anthony Trafford (The Wrekin)

I have the honour to represent The Wrekin, a constituency which has many remarkable features. One of these is that the hill from which it derives its name is not actually within its constituency. The constituency has within it a good cross-section of the national community, because it has agriculture to the north, industry, both heavy and light, scattered throughout it, and what would be described as dormitory areas to the conurbations to the south.

Until June the constituency was represented by Mr. Gerald Fowler, who was particularly interested in education and who, as many hon. Members know, made his mark here as Minister of State. He was a very good constituency Member and I more than anybody else know this for obvious reasons.

I welcome the Chancellor's statement, but I should like to make one or two comments on it. The hon. Member for Penistone (Mr. John Mendelson) was not quite right in claiming that humanity, or compassion, or interest or social responsibility is the responsibility of any one party. They are spread throughout both parties.

Mr. John Mendelson

I did not make that claim.

Dr. Trafford

I should like, first, to make a few comments on prescription charges. I hope that we shall hear more of the philosophy behind this imposition by the Chancellor. It is not that I do not believe that it is right that charges should be imposed for those who can afford to pay them, but that I am today and always have been puzzled by the imposition of prescription charges.

If they are intended as a source of revenue, there are other alternatives. If they are intended in some way to reduce demand on the Health Service, it seems to me that there are many other effective methods of doing this, particularly perhaps to impose a charge at the point of primary contact for it must be the experience of every hon. Member that if he attends his doctor's surgery it is rare for him to leave without having some form of prescription.

But that is a secondary effect, and in practice today there is already some degree of deterrent to demand. I am talking about the development of the group practice, the scheme whereby a patient who may wish to see a particular doctor finds it slightly more difficult to do so, and also the appointment system which again makes it slightly more difficult for him to see a particular doctor. It is not therefore necessary to impose a charge at that level to make a change in the level of demand on the service itself.

If the intention is to reduce the level of the drug bill, again, in my view, there are better ways of doing it. For example, it is feasible to divide all drugs into those that are essential, and those that are not, and we should then make the former free, and charge for the latter. I agree that there are difficulties in doing that, but they are not insuperable, and indeed that division has already been made to some extent. The administrative complexity of the present system is expensive, and I think that any attempt to correlate the cost and the charge would be difficult and open to the same objection.

Second, I welcome the Chancellor's intention to devote much of the money that he saves to the social services in a different direction, but I ask my right hon. Friend the Secretary of State for Social Services to remember that illness usually starts in a community, often from non-medical causes, and that it is the inadequacy of community services that necessitates admission to hospital, which is by far the most expensive way of looking after anybody. First-class hospital charges are considerably less than hospital costs.

I assure my right hon. Friend that were he to build a hospital of 10,000 beds in an area where there was no great demand on hospital services, it would soon be full. The reasons for this are many. Perhaps one reason is that the weight of demand on the social services has often, and indeed greatly, been shifted to the hospital services as a result of the inadequacy of those within the community, which is the proper environment in which a man should live. I remind my right hon. Friend that about 30 per cent. of all patients in acute hospital wards are there, not for medical, but largely for social reasons. One may say, and I hope this will not be misinterpreted on the other side of the House, that they are there for the wrong reasons. The fact is that 25 per cent. of the time spent in an acute hospital ward is largely wasted time, largely waiting time. Incidentally, talking of waste, 20 per cent. or more of the food is wasted.

I should have thought that it was in those directions that we could have looked for an area in which to cut costs and make the necessary changes. Because they arise largely as a result of the inadequacy of community services, I hope that my right hon. Friend will see fit to shift resources accordingly.

The Chancellor talked about the question of the expenditure of money on the building programme. Although we are bound to welcome this, I must point out that in some areas there has been a misallocation of resources. So far as I know, nobody has ever been asked to justify the expenditure of millions on a hospital structure in an area where there were already seven acute beds per 1,000 population—and a shrinking population at that—where areas with less than two acute beds per 1,000 have been kept waiting and areas with no beds at all per 1,000 have still no hospitals. That is the sort of area which might be a fruitful source for inquiry.

I want to suggest a further idea to my right hon. Friend. When he introduced the chronic attendance allowance he made no reference to the acute. It would be a helpful measure to introduce a form of attendance allowance for the acutely sick, rather on the present Scandinavian pattern. Frequently an acutely-ill person cannot be looked after at home by relatives—where, incidentally, he may be medically as well as socially better off. He has to be kept in hospital, or transferred to hospital, purely for economic reasons, although they are economic only as far as he is concerned; they are uneconomic for the State. This happens to be an area in which humanity and economics completely coincide.

I welcome the family supplement scheme. It is a great advance. I recognise the difficulties involved, especially in terms of marginal money incentives, and the difference between a man with four children at£18 or£25 a week and a man who is unemployed and receiving supplementary benefit. I recognise that difficulties exist, but I also appreciate that there is great potential in this field and I am sure that my right hon. Friend will have the flexibility and imagination to amend or expand the scheme as he gains information about its operation.

We must remember that the biggest enemy of those in receipt of lower incomes is inflation. That is due partly to Government expenditure but also partly to the consequences of cost-push inflation. It is ironic—perhaps a better word would be tragic—that those who speak so frequently, so passionately and, I am sure, so sincerely about wishing to help the lower-paid workers leave the site of their speeches and by their actions carry out measures which are most harmful to the lower-paid workers. A huge wage demand may well benefit one sector of the community but will increase the rate of inflation as a whole and therefore hit most hard the poorest.

I could not help reflecting, during the debate on the coal industry—and I do not wish to single it out—that given the fact of a 12 per cent. wage rise, a 16 per cent. price rise, import restrictions and the inability to buy private sector coal, the Central Electricity Generating Board purchase of National Coal Board coal, with all the restrictions on conversions, and so forth, that it applied—and if the estimates of the Central Electricity Generating Board are correct, and assuming that there are about 300,000 people in the industry—the general public is sub-sidising the people in that industry. They are not regarded as the most lowly paid, which means that this is a good example of the point I am making.

Frequently, also, there is seen that other peculiar and curious phenomenon that has affected the social services, namely, that the least affluent often sub-sidise the most affluent. To me that is real social injustice. There is considerable difficulty in devising an entirely just and acceptable social service system, as was found by the previous Administration. As a purely historical speculation, I wonder, if Lord Keynes had written his work 20 years earlier and it had been accepted that much earlier, what sort of report Lord Beveridge would have written, and what sort of system we would have finally developed.

Knowing that most people tend to handle their money with greater care than other people's money, these measures are obviously something to welcome. Any move towards paying people to pay their own bills rather than paying the bills for them is welcome. I welcome not only the Chancellor's statement but, in particular, the incomes supplement scheme. I hope that it works well, because it could mark a new and important beginning to the organisation of social care in the coming decade.

7.35 p.m.

Mr. James Hamilton (Bothwell)

It is my pleasure to congratulate the hon. Member for The Wrekin (Dr. Trafford) on his first speech in the House. It was well delivered, very fluent, and easily understood. As he said, if he lives up to the reputation of the previous incumbent of his seat I am sure that he will make a remarkable contribution to our affairs. I am not allowed to follow him, but I believe that I am the first Member from Scotland to make a contribution to this debate.

It has been stated that this is a minibudget. My hon. Friend said that it was a midi-budget. In my opinion it is a maxi-budget and will mean, in essence, that the maximum amount of economic pressure will be brought to bear upon the people least capable of standing up to it.

Scotland is virtually a development area. One of the problems facing it is the situation in respect of development grants. We read in the Press today that the C.B.I., which the N.E.D.C. met yesterday, had made it indelibly clear that it regarded this as a retrograde step in terms of bringing industry to the development areas. In my constituency last weekend I was talking to a leading Scottish industrialist who conveyed to me his great fear that this would operate against North Lanarkshire, which is a development area. It is also worthy of note that in Lloyds List of 31st October there was an attack on the cessation of the payment of development grants for the shipbuilding industry—an industry where last year there was a record production. That is proof, if proof were needed, that the system of giving investment grants to development areas is to be applauded.

It is also noticeable that the people of Scotland, to their credit, have recognised the tremendous contribution made by the previous Labour Government by returning to the House 44 Labour Members of Parliament. All that we have on the Government benches are 23 Members, besides which there are three Liberals and one Scottish Nationalist. Under the present Standing Orders the Scottish Grand Committee is allowed 15 Members. In essence they cannot out-vote the Opposition. Secondly, the people of Scotland readily recognised during the General Election campaign that a gigantic fiddle was being attempted upon them. The General Election was fought on the issue of the economy. In the last four days there was a stampede over rising prices. The Prime Minister will readily concede, I think, that because of the voice of the opinion polls, which convinced everyone that the existing Government would be returned, he made irresponsible statements, one of which was that "at a stroke" he would reduce the cost of living and rising prices. Of course, nothing could be further from the truth.

The Government also said that the best policy was private enterprise, which gave competition. We now see what has happened in the oil industry. One petrol company put up the price of petrol by 1d. a gallon, and all the others followed suit. If that is private enterprise working, it will not be to the advantage of the development areas or indeed of the rest of the country.

To their credit, when prescription charges were reimposed by my own Government many of my hon. Friends voted against them because they felt so strongly. I abstained on that issue. Did the Government make the necessary representations to the B.M.A., as the previous Government did when, by a very small majority, the B.M.A. agreed that the over-12s, or children attending secondary school, could do without free milk? This has not been done over the cessation of free milk to children over seven. In a letter I received only yesterday, a teacher in my constituency pointed out the anomalous situation that in one class she has children of seven and others who are older. How can she tell the children over seven that they are not entitled to free milk?

Another point which very much concerns people in my constituency is the cuts in local authority subsidies. No matter how it is analysed, it must mean an increase in council house rents. It is not just a question of these rents being increased. So far we in Scotland have heard nothing from the Secretary of State of what the situation will be. Nevertheless, there will be form filling on a large scale. Many people are reluctant to fill in what can be very complicated forms, and many are not capable of doing so. Consequently, they will be required to pay the full rent.

There will be an addition on the rates as well as the rents. This will be borne by everyone. It is argued, with some justification, that owner-occupiers, because of the taxation relief on the interest on their mortgage repayments, receive a far greater subsidy than the council house tenant.

Mr. Arthur Lewis (West Ham, North)

Perhaps my hon. Friend will also deal with another class who get a 100 per cent. subsidy in addition to the 6d. off the income tax, a subsidy which is worth£2,650 a year. I refer to the Ministers of the Crown. They are not going to have to pay economic rents. If it is justifiable, should not Ministers pay this£2,650?

Mr. Hamilton

That is a most acceptable point for me, because it strengthens my argument.

Part of the Government's platform during the General Election was an immediate cut of 6d. in the pound off income tax. Those from constituencies like mine could have told them what it would mean to the average wage earner in the industrial belt of Scotland. We now recognise that the so-called cut of 6d. will mean that a man with two children at primary school will be approximately 8s. 2d. a week worse off.

I should also like to know whether the Government have given any thought to old-age pensioners. One of my constituents wrote to the Prime Minister and received a letter from his secretary to the effect that pensions had kept in front of the rise in the cost of living. That was a complete somersault from what they were saying before the General Election. If the Government cannot give me an answer tonight, I have put a Question on the Parser for the Prime Minister himself on this important matter.

Whether we like it or not, the workers now recognise that with the advent of this Government an Industrial Relations Bill will be introduced. The performance last night of the Secretary of State for Trade and Industry made it indelibly clear why we have so many strikes. We are always prone to ridicule the workers and the trade unions without recognising that it takes two to have a tight and that the employers are the perpetrators in many instances. By his attitude last night, the right hon. Gentleman annoyed many of my colleagues because he would not show himself conciliatory in any way. I hope that the Government will recognise this, especially the Prime Minister, who is responsible for selections. After all, the right hon. Gentleman held high office in the C.B.I. He is obviously used to expounding C.B.I. philosophy. I hope that he will recognise what that organisation has said about investment grants and that the Government will make a hasty retreat and return us to the situation which existed under the Labour Party.

I urge the Government to give serious thought to the road they are travelling at this critical time in our history and to recognise the strong expression of public opinion about this so-called mini-budget. If they do not have second thoughts, we shall be heading for economic ruin, with all that that means for the living standards of our people.

7.52 p.m.

Dr. Tom Stuttaford (Norwich, South)

Although the hon. Member for Penistone (Mr. John Mendelson) pointed scornfully at hon. Members on this side of the House when he was condemning prescription charges, it so happened that on the two occasions when he pointed he was pointing at two hon. Members who are opposed to prescription charges. The emphasis he put on his finger-pointing, therefore, lost its meaning.

Everybody in the N.H.S. was concerned lest we had slashing cuts in the service. The Press reports on the subject did not augur well, but, fortunately, in the event such cuts did not occur. Indeed, the hospital building programme has been enhanced. Understaffed and under-financed hospitals will not suffer. More money is going to help the geriatric sufferers and the mentally sick.

In an admirable maiden speech, my hon. Friend the Member for The Wrekin (Dr. Trafford) clearly expressed the medical objections to prescription charges. The hon. Member for Penistone did the same, but in highly over-emotional terms. We have always felt that these charges represented a bad tax. Unwittingly, I, as a doctor, have been a tax collector for Labour and Conservative Governments alike. These charges have continued, whichever party has been in power. Doctors return home to their practices after doing their rounds with their pockets full of coins. This money must be sent to the tax man.

Fortunately, the number of exceptions from prescription charges is to be increased, and I understand that people—I believe it applies to income rather than earnings—on£1,000 a year with two children will be exempt. We have been told that the executive council prepayment charge—the "season ticket", as it is known—which enables patients to obtain and pay for prescriptions in bulk is to be a better bargain, and this partly answers the anxieties expressed by the hon. Member for Penistone.

Those of us concerned with the N.H.S. have found that the chronically sick suffer the most, and the various categories of the chronically ill who have been exempt from prescription charges have been too narrow. The chronic bronchitic undoubtedly finds that, as his earnings begin to fall as his illness progresses, the money he spends on prescriptions increases. This is common to every doctor's surgery and is not restricted to the industrial North and Midlands or the mining areas of Wales. This type of chronic bronchitic is found all over the country, as are chronic heart cases, which have not been exempted from these charges.

Two things will happen if the charges become too excessive. The first is that doctors will prescribe more drugs, so that there is greater wastage. With larger amounts of dangerous drugs about, there is more chance of their falling into the wrong hands or the black market, through either carelessness or casualness.

Secondly, the doctor who has his patients' welfare at heart will prescribe more composite pills. Most manufacturers make this type of pill, which is just a pill but with different ingredients. These pills are dearer—that is, dearer to the service—because instead of their being manufactured from the national formulary they are made up separately, wrapped nicely and so make larger profit for the pharmaceutical industry.

I have always been worried about the idea of any charge of this type being on a sliding scale. It is bad enough to have a tax on illness. It is far worse when that tax operates on a sliding scale so that the more sick one is, the more rare one's disease, the greater the cost. A tax of this kind is indefensible in medicine.

My hon. Friend the Member for The Wrekin dealt more ably than I can with the problem of deterrents. We frequently hear that it is a deterrent for the patient to have to pay for his prescriptions. In my experience at my practice, that has not been the case. Generally speaking, a patient goes to his doctor, receives advice and then evaluates whether his illness is sufficiently grave for him to cash the script that night or wait until pay day. Prescription charges do not, therefore, provide a deterrent in the sense of stopping people visiting their doctors. If anything, they stop them—though only for a day or two—going to the chemist.

Mr. Pavitt

Is the hon. Gentleman aware that on each occasion prescription charges have gone up since 1956 the drug bill has gone up, and that last year it rose by£11 million, or 8 per cent.?

Dr. Stuttaford

I am grateful for that comment, but there are other reasons why the drug bill is bound to go up.

Mr. Raison

Will my hon. Friend agree that the reason for the bill going up has nothing to do with the fact mentioned by the hon. Member for Willesden, West (Mr. Pavitt), but is entirely due to drugs becoming increasingly expensive?

Dr. Stuttaford

It may be a deterrent to a very small section of the community to come forward, but the male wage earners in the poor families will, I hope, be saved by the fact that the wage level is to be increased£1,000 a year. In that case, these people will come forward, too.

8.0 p.m.

Mr. Robert Sheldon (Ashton-under-Lyne)

I was very interested in what was said by the hon. Member for Norwich, South (Dr. Stuttaford). I could never understand the reason for putting on the prescription charges. I could appreciate the argument against waste which says that one should not give free bread because giving necessities like that can lead to a certain amount of waste, but I never saw that argument applying to prescription charges. People do not enjoy a prescription; they get it only if the doctor thinks they should have it. Raising money by making people pay when they are ill is really a transfer of the raising of money from those who are well to those who are ill. When one considers the cost of collection of these relatively small sums, from the efficiency point of view it is far better that the money should be raised through general taxation and revenue and not by collecting it from those least able to support such payments.

I objected most strongly to the tone of the comments of the right hon. Gentleman the Secretary of State for Trade and Industry about the most unfortunate members of our community. I found his term "lame ducks" slighting, and even offensive. I am associated with the Inskip League. These are disabled people. I go to a number of their functions and meetings, and I also visit a number of the people, who do a great deal in very difficult circumstances. If in my constituency I were to refer to them as "lame ducks" it would be regarded as insulting. Perhaps the right hon. Gentleman does not understand how remarks of that kind can react in the minds of many people who are disabled in some way but have nothing else wrong with them. They are entitled to the same sort of treatment as more fortunate members of the community receive.

We are told that the whole purpose of the package is to expose our people and industry to the bracing climate which every now and again Tory philosophers think we are ready for, and deserve. My right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) referred to the article in the Sunday Times which showed that as a result of the concessions and the taxation offsets in this budget the average family earning£3,000 a year would be no better off, or even a little worse off. He showed that there was a regressive effect.

I am surprised that in these two days no one has so far mentioned the fact that those with unearned incomes will do even better. We know that the ordinary person will suffer. We know that the rich people will do rather better. What is not generally realised in that those with unearned income will do best of all.

Let me give one or two examples. As a result of these proposals, a single person earning£1,500 a year will save£21 a year, but a single person with that amount of unearned income will save£29. A married couple with all earned income will save£17; if their income is all unearned, they will benefit to the extent of over£25. A married couple with£3,000 of earned income will benefit by£46, but if that income is unearned their benefit will be£63. All along the line those with invested income do much better. I should have thought that those were the people to whom the argument about the bracing climate was the least applicable. If the argument is that we need to provide incentives to the "wealth creators", as the Secretary of State called them, I cannot see how this kind of incentive can apply to those enjoying large unearned incomes.

I believe that here we see the real reasoning behind these proposals. Dressed up in the guise of efficiency, of modern management, of the new capability unit, we have the pre-war Tories coming into their own, with the money going to those with the largest incomes and even more to those with unearned incomes. We see little of the incentive effects.

Let me take an example of how we might have tried to produce certain incentive effects or, perhaps, reduce certain disincentive effects. I go now to the other end of the scale from those high in industry who may be guiding the affairs of their companies. I speak of those who suffer from the earnings rule. At one stage in the arrangement their pension is reduced by 1s. for every 1s. they earn. This has been a very unhappy state of affairs for some time. In effect, they pay 100 per cent. of their extra income, because they fail to receive the corresponding benefit. There is therefore a zero incentive to earn.

Now we are going further. As a result of the various means tests to be applied to prescription charges, rent rebates and supplementary benefits we will inevitably have a situation in which those people will give up more than the extra 1s. they have earned. We shall have the absurd situation in which we shall rely on the ignorance of these people, as otherwise they would not work. It is here that we might have thought of the wealth creators, because I do not believe that the wealth creators are only at the top of industry. The wealth creators are in all parts of industry. They are not exclusively those earning over£3,000 a year. Something might have been done in the interests of those who take the view that, rather than merely remain in retirement, they will find a job that is useful and create wealth for the community as well as a better standard for themselves.

We shall need to launch the counterattack in favour of direct taxation as being the fairest way of raisins money. As a result of a lack of growth in the economy, people have become over-obsessed with the levels of direct taxation and are not quite so conscious of the benefits they receive. In all countries, as incomes have risen so has the demand for social services and social benefits. The one has been able to keep pace with the other.

Unfortunately, because of our lack of growth, this has not been so; so people have tended to notice the cuts that have been made in their pay packets more than the benefits they receive. One thing that the Tory Government will be showing these people is that, when they reduce the standard rate by the magnificent sum of 6d. in the pound, the effect on them will be so small that they will be much more conscious than they have been for many years of the benefits that they are receiving. This lesson, dearly bought, will be fully learned.

Our taxation system needs fundamental correction. We have a shape of a curve that is nowhere near an ideal shape. Over the years we have not improved it. We have worsened it. I am not talking about the Finance Act with its hundreds of Sections added over the years. That is bad, but it is a different kind of badness. I am talking about the shape of the curve. It should start off very small—almost imperceptibly small. Now a person either pays no tax or he pays it at the rate of 32 per cent. This is appalling. One should drift into income tax and it should rise steadily.

That is not the only anomaly. There is the middle range where there is a particular kink in it so that certain people get benefits halfway along. There is the crowning disgrace of all that, when the rate of tax is reduced, because surtax is the slab on top of it a disproportionate benefit is given to those paying surtax. A Chancellor, in deciding which people shall benefit, can either introduce impossible complications or decide on the straight cut which gives this large concession to surtax payers, for which nobody can find justification.

We need to tailor the whole income tax structure and join surtax with income tax and develop it along the curve that we want so that we can decide who will get benefits, who will make payments, and how much and how variable those payments of income tax will be.

Fundamentally, at the bottom of all this there lies the accent upon the growth of the economy. I am not one of those who wants growth for growth's sake. I believe that the importance of growth, the importance of the expansion of the economy, the importance of what we get out of the country's productive resources fundamentally and at the end, depends upon what is done with the money that the country raises.

I therefore believe that growth in itself is politically neutral. At the end of the nineteenth century our gross domestic product per head was the highest in the world—greater than that of the United States, double Germany's, double France's, treble Italy's. We were a great, powerful and most wealthy nation. It would have been a very great England if we had only known how to distribute the wealth at that time.

The most saddening thought is that by the time we got through to the idea of the proper redistribution of the country's wealth we were no longer wealthy. We need to understand that in terms that the comparative wealth of the economy has been in a long and almost uninterrupted decline. If continued, this would lead to our relative unimportance as a nation. In the first decade of the twentieth century America overtook Britain's power and wealth and assured for itself the economic domination of the world. Because of our relative decline, not only is the position we once held now taken by the United States but it is being increasingly taken by many other countries, too. We must ensure that we put growth as our first priority, because it is the foundation of all the social advantages and benefits we hope to achieve.

I particularly deplore the Chancellor's early commitment to the defence of the pound, the same mistake that we have made repeatedly over the years. I remember hesitantly advising Iain Macleod not to make any commitments of this kind and I was delighted to see him nodding his head on that occasion. It is a great pity that the succeeding Chancellor did not adhere to that view.

Nobody can be sure that any road can lead to growth. All that can be seen are the first steps. I am not like those clever men who say that this step leads to that step, leads to the other step. We cannot proceed in that way. We can make the first approaches towards growth and not be inhibited by any preconceived notions of defence of the pound, east of Suez nonsense, or any other part of what is today increasingly irrelevant. The first step is expansion and the ending of a permanent deflationary climate.

I am particularly sad about what is being done for the regions. Regional policy was one of the great successes of the Labour Government that will be long remembered as finally taking unto Government the full responsibility for an equalisation of wealth throughout the country. I did not agree with all the measures that were undertaken, but I certainly agreed with the money that was being spent and the idea behind it. I wanted to see it spent much more selectively in a number of ways, but I believe that over a period its selectivity would have been sharpened and that it would have been directed more forcefully towards the precise improvements that I felt were needed.

Under this Government there has been a decline in the commitment to regional development. A Question of mine elicited yesterday the information that the value of the investment grant for£100 of investment expenditure was worth in the development areas£52 as a result of the investment grant and it is now under the present scheme worth only£36. It is all very well to talk about the infrastructure, but that is not the precise kind of open commitment that a manufacturer had when he went into such an area. It is not something on which manufacturers can base their plans and place their reliance and so go to Scotland or the North-East. We now have a very pale imitation of the splendid achievements that were the Labour Government's.

As to the demise of the I.R.C., there are many cases in which Governments come to power and have to carry out a certain number of dogmatic measures to which they are committed. The I.R.C. did not fall into that category. There was no commitment to end it. No one could even call the I.R.C. a Socialist creation. Similar institutitons are being introduced in France, in Italy, and in the European Communities.

The job which the I.R.C. was set up to do needed to be done. The purpose was to look at industry from the national viewpoint. Those who feel that there is a national viewpoint to be represented must believe that the I.R.C. could always have a rôle, looking at industry not from the viewpoint of one firm taking over another, not from the standpoint of the particular manufactured articles involved, but looking at it from the viewpoint of the people engaged in the industry and of the country as a whole.

The I.R.C. did that job superbly. It was one of the most effective, efficient and workable solutions to a problem which has bedevilled every Western country. We pioneered the achievement of success in it, and the Tory Government, to their shame, have set about its destruction. Unquestionably, they will find the need for an instrument of this kind in the future, and it will be to their great shame that whatever temporary measures they may devise to meet that need will never be as good as the instrument which they have destroyed.

In a short time, people will become convinced of the disadvantages of the Chancellor's minor adjustments in direct taxation coupled with the loss of benefits. They will do their sums. They will find, under the veil of the Government's policy, that what it is all about is the funnelling of yet more wealth to the wealthy. I am not one who believes that all the Tories who have been in the House have been vicious men in one way or another. There was a generation, not so much represented now, who, I believe, were as individuals somewhat ashamed of what the Tory Government did between the wars. Unfortunately, as I say, they are not so well represented here now as once they were, and we have in their place men who are trying to be efficient and pretending to be compassionate. Their compassion has been exposed. Their lack of efficiency will be discovered. Their measures will, as a result, be rejected by the people as they come to be understood.

8.23 p.m.

Mr. Stanley R. McMaster (Belfast, East)

As the first speaker from Northern Ireland in this two-day debate, I shall, while complimenting the hon. Member for Ashton-under-Lyne (Mr. Sheldon), ask to be excused if I do not follow his argument in detail. We are always glad to hear him, his speeches liven up our debates, but, as time is short, I shall restrict myself to making a special plea for two groups of industries.

I congratulate my right hon. Friend the Chancellor on the general purport of the reforms which he has introduced. The philosophy behind them, the idea of reducing taxation, will, I believe, give much greater incentive to this country and will produce the necessary rapid increase in our gross national product to which the hon. Gentleman has just referred. There are, however, two groups of industries which the Chancellor would do well to consider carefully. I refer, first, to shipping and shipbuilding, and, second, to the aviation industry, which was mentioned earlier by my hon. Friend the Member for St. Ives (Mr. Nott).

I ask the Chancellor to remember that the shipbuilding and shipping industries are in a special position within the nation's economy. It is not, perhaps, fair to an industry such as shipbuilding or shipping, which has to meet international competition, to subject it to the close type of argument followed by the Chancellor in his speech opening the debate and in the White Paper on which the debate is based.

I ask for special treatment for this industry, first, because the industry has to compete against foreign shipping and shipbuilding concerns. For the sake of brevity, I shall devote myself to the shipbuilding industry, of which I have some special knowledge. Britain's competitors abroad in shipbuilding are heavily subsidised. I refer, in particular, to the European competition which we face. To take just two examples, France subsidises her shipbuilding industry quite openly to the extent of about 15 per cent., with on top of that an extra 1 or 2 per cent. regional assistance given to shipyards in certain parts of France, and Italy does the same. The result of this was seen only recently when, towards the end of the Labour Government's period of office, a contract for the building of a ferry steamer for British Rail, in which a lot of Government money is invested, was placed not in one of our own shipyards but in Italy. This is a deplorable state of affairs, considering that the Italian yard was able to cut its price because it receives 15 or 16 per cent. subsidy from the Italian Government.

When an industry in this country faces that sort of competition from abroad, one has either to match that competition or face the prospect of our industry going out of business. It is not sufficient, therefore, to say that we shall replace with investment allowances the investment grants given to our shipyards to help them modernise and keep abreast of the latest developments in shipbuilding. It is common knowledge that many of our larger shipyards have been making substantial losses each year rather than profits. What use is an investment allowance if one has no profit against which to set off the allowance? One can set off a capital allowance only if one has a profit. That is my first and main reason for asking that some special provision should be devised by the Treasury to assist our shipbuilding industry.

I do not, however, rest my argument on that point alone. There are two other factors affecting the viability and profitability of our shipyards to be taken into account. First—again, this is a matter of common knowledge—in the fierce world competition in shipbuilding, particularly from Japan, long-term contracts have to be made. Shipbuilding contracts are essentially long-term, entered into in one year, with the building not commencing, perhaps, for 12 months or so thereafter, and the ship itself not being finally delivered and paid for until three, four or even five years later. These long-term contracts are taken at fixed prices by British shipbuilding yards in order to obtain orders; if they did not quote fixed prices, the orders would go to Japan or somewhere else. What is important, however, is that such long-term contracts are frequently frustrated by rapid rises in the costs of materials and labour which were not fully foreseen by the yard when making the contracts. The price of coal has risen rapidly and with it the price of steel, while the wages bill, particularly in the last 12 months, has been escalating at a frightening rate. This has meant that orders which seemed profitable two or three years ago are now being completed at a loss, and yards such as those in the Upper Clyde, Harland and Wolff, Vickers and Swann Hunter are returning losses in their annual accounts.

This is a matter of which the Government should take cognisance, because to some extent they are responsible for the rapid rise of prices. It is part of the duty of the Government to keep down prices. If as a result of these rises our shipyards lose money, the Government should not with a sweep of the pen take away money on which the yards are relying for modernisation and keeping up to date.

Finally, but by no means least, the Government should consider the shipbuilding industry in the knowledge that we are a maritime nation and that it is in the national interest for the shipbuilding industry to be preserved. I do not argue this only from the defence point of view, even though defence is vital, but because we are a trading nation. If a large proportion of our yards are forced to close down as a result of changes in Government policy, we shall have to buy boats abroad, and that will result in a large loss of currency to Britain as a whole.

Mr. Dell

Does the hon. Gentleman regard Harland and Wolff as one of the lame ducks mentioned by his right hon. Friend the Secretary of State for Trade and Industry?

Mr. McMaster

It is an interesting speculation. If time allowed, I should like to deal with it. I do not regard the firm as a lame duck, for the reasons I have given. I believe that our shipyards are as capable as any in the world. All I am saying is that if foreigners get special subsidies, we have to match them. If there is unfair competiton, we must be prepared to match it.

Mr. Callaghan

I agree with much of what the hon. Gentleman is saying. If he does not think that Harland and Wolff, which has been receiving large grants, is a lame duck, to whom does he think his right hon. Friend was referring when he mentioned lame ducks? What kind of company was meant?

Mr. McMaster

I am tempted to follow that, but several hon. Members still wish to speak and I had better not do so.

If we were to give up assisting our yards and they went out of business, the country would have to finance its purchases of ships from abroad by increased exports, and there is no proof that the men employed in the yards and their expertise could be diverted to other export industries to make up the difference. Another factor is that almost 50 per cent. of the money spent on building ships in this country comes back to the country in taxation, and that would not happen if boats were bought abroad. The full effect of the replacement of investment grants by allowances should be tempered to this industry.

Another factor of particular concern in Northern Ireland—and many hon. Members who are interested in the position there will have this in mind—is that we already have some 7 per cent. unemployment in Northern Ireland. As the country knows, we have been faced with civil unrest. If our yard went out of business, some 10,000 or 11,000 men in Belfast would lose their jobs and this could do nothing but add to the unrest in Northern Ireland, besides adding greatly to the burden of unemployment which has to be borne by the country as a whole.

I should like to hear a little more from my right hon. Friend about what the Government mean when they say in the White Paper in reference to the development areas that they intend to improve the infrastructure and to adopt other measures to assist them.

I welcome the comment in the White Paper and in the other White Paper on investment incentives that these proposals will be discussed with the Government of Northern Ireland, who act as the agents of the United Kingdom Government in putting these reforms into effect. But I should like to know more. We in Northern Ireland are likely to be detrimentally affected by the reforms I have mentioned; that is, the abolition of the capital grant and the regional employment premium. I accept the argument that this will help service industries, which are particularly important in Northern Ireland, where they take up a lot of slack. This is particularly true of tourism, which is growing rapidly.

Nevertheless, we have large manufacturing industries, like shipyards, textiles, linen, Gallaher's tobacco factory and aviation, all of which the regional employment premium benefited. I hope that my right hon. Friends will pay attention in these social reforms to ensuring that their measures, which are not mentioned in detail in the White Paper, make up the leeway which is likely to be lost in this sphere.

My hon. Friend the Member for St. Ives said that he would like the Government to make further economies in the aviation industry and suggested that we should abandon Concorde. This, again, is a special case, which I feel the Government should consider. It is a matter of common knowledge, no matter what decision is made over Concorde or the air bus—whether to support the BAC 1–11 or the European airbus and let Hawker Siddley take a larger share—that this is a field in which the Government are right to take a hand, because the sums involved are so large that they cannot be raised on the market.

This is for two reasons. The first is the amounts involved. For Concorde, it is nearly£1,000 million for development, before we produce any. It is actually about£820 million at the moment, but I gather that this figure will rise a little before we see the final account. The second is that not only can no private concern raise money like this but the risk is far too great. Therefore, the Government must take the risk in this enterprise, or we abandon the aircraft industry entirely. As it is a leader in technology and in breaking new boundaries, and since it is an important prestige industry, it requires special help from the Government.

Therefore—I am now attacking the theory behind the White Paper—I suggest that, while in general one supports the ideas behind the White Paper, there are certain industries, particularly shipbuilding and aviation, which deserve special consideration. I hope that my hon. Friend will say that he is prepared to look at them separately and in some way to treat them differently.

8.39 p.m.

Miss Joan Lestor (Eton and Slough)

I hope that the hon. Member for Belfast, East (Mr. McMaster) will forgive me if I do not take up his arguments because I want to deal with one or two items of particular interest to me.

I start with a quotation which seems to me very apt to this subject. It was said by Robert Lowe a hundred years ago as the House approached the Education Act, 1870: I do not think it is any part of the duty of Government to prescribe what people should learn except in the case of the poor where time is so limited that we must fix upon a few elementary subjects to get anything done at all The lower classes ought to be educated to discharge the duties cast upon them. They should also be educated that they may appreciate and defer to higher cultivation when they meet it and the higher classes ought to be educated in a very different manner in order that they may exhibit to the lower classes that education to wit, which, if it were shown to them, they would bow down in deference. There are two strands of deference in that quotation. One is that the poor must defer to the rich, and the other is that those who do not have higher cultivation and education should defer to those who have it.

I make that quotation not only to show how we have progressed in our attitudes in the hundred years that we have had our public system of education, but also because the Secretary of State for Social Services must try to explain what the Secretary of State for Trade and Industry meant last night when he said: …the essential need of the country is to gear its policies to the great majority of people, who are not lame ducks, who do not need a hand …"—[OFFICIAL REPORT, 4th November, 1970; Vol. 805, c. 1211.] As my hon. Friend the Member for Ashton-under-Lyme (Mr. Sheldon) said, this attitude underlies what the Government have done and propose to do.

It is about time that someone made it perfectly clear that when people use the social services, the Health Service and other services to which they are entitled they have paid for them. People receiving retirement pensions, people in hospitals because they are sick and women having children under the Health Service have paid for these benefits. They are not lame ducks. Medicine and welfare services were introduced not to remove poverty, but to ensure that they were available freely at the point of need. That does not mean that people have not paid for them. The Secretary of State for Trade and Industry undermined his case last night.

It has been said time and again in this debate, "You did it first. You took away the milk from the older children, you put up prescription charges and, therefore, you cannot point the finger at us, because we are building on what you started to do". Like my hon. Friend the Member for Penistone (Mr. John Mendelson), I did not agree with some of the things which the Labour Government did. But the circumstances were different. We did not deliberately set out in our social policies to take from those who do not have it to put it in the pockets of those who do.

The electorate is sick to death of listening to the argument, "You did it first". Let me turn the argument around the other way. We did not sell arms to South Africa. Perhaps the Government will follow our lead in that respect. We can all do a bit of analysing, but I do not think that it impresses anybody and I do not believe that it helps us one iota to talk about poverty. It seems that this debate is primarily about poverty—creating poverty, trying to do something about it and, perhaps, on the basis of what we have heard, trying to legislate the poor into existence.

I wish to talk generally about the family income supplement and the exemptions which many members of the Government genuinely feel will help to alleviate poverty. My hon. Friend the Member for Hitchin (Mrs. Shirley Williams) said yesterday, quite rightly, that one of the difficulties in any system which has exemptions is applying for exemption. That applies to the family income supplement. This is why the Government will do a great deal better out of their proposals than they believe they will. In 1966, 850,000 people were eligible for supplementary benefits but did not apply for them. The latest evidence shows that only 808,000 households benefit from rate rebates, yet an increasing number of people are eligible but have not taken advantage of the scheme. Many children qualifying for free school meals do not take advantage of them. Plowden pointed out that although one would expect to find a greater number of free school meals being taken in areas of the most social difficulty this was not so. Various methods have been tried for explaining the rebate schemes and the benefits available. We know the difficulty of getting this information across.

Hon. Gentlemen opposite sometimes forget about people and how they can be humiliated and embarrassed. To refer to people who receive social benefits as "lame ducks" is a sure way of stopping needy people from applying for them. This is what the Secretary of State has done. More explanation and information should be given to people about social benefits.

I have here a letter from a constituent. She is a woman whose husband has left her and she has, I believe, three children. I had explained to her that she was entitled to apply for free meals because of her difficult circumstances. She says in her letter that she knows this, but she does not want to do it: I know that the school that you refer to does go out of its way to avoid other children knowing. I am aware of that. It happened to me. I had free meals, I had free shoes through the school clinic. It was not whether other people knew, it was whether I knew, and I knew I had them. I felt my family had let me down. Whether we like it or not, people believe that they are treated as if they were receiving charity to which they are not entitled. This is why I object so much to the attitude which is adopted about school meals. We are all guilty of it. School meals, which, after all, benefit children, should be part of social housekeeping. We should devise a system to enable children to have school meals without making them feel conspicuous when they have to pay at the point of consumption so that everyone knows about those who cannot pay. Children can be humiliated, and when they are that humiliation stays with them for a long time.

The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) took issue with the hon. Member for Mid-Ulster (Miss Devlin) when she said, "Have you ever known poverty as I have?" He said, "But you do not have to experience poverty to understand it." There is something in that, but to have known poverty helps one to listen to people who are experiencing it. Similarly in Indus- trial relations, there are people who spell out all the cures for disputes in, for example, the engineering industry when they have never worked on the shop floor and probably do not know the difference between a monkey wrench and a monkey nut. Yet they believe that they can talk abut the causes of disputes and can legislate about them. I do not say that one cannot talk about poverty if one has not experienced it. But people who have experienced poverty, social humiliation, and embarrassment and who have been discriminated against are usually the people who do not think they should have to prove their poverty in order to apply for social benefits.

One of the cardinal principles of social welfare in the 1970s—and this is a principle that we on this side of the House have accepted, and if any of us have not done so we should have—is that it is far better if a few people get something to which they are not entitled than that any one family should go without. We should so try to organise matters that society treats all people the same and then afterwards we can try to do something about the lame ducks. With their proposals the Government will only ensure that families in need will go without and that the only people who will apply will be those with tough hides. [Interruption.] It is not funny. Some of us know about these things and have experienced them.

With the best will in the world, the difficulty about this whole principle is that people have to contract in and people do not like having to prove their poverty.

Mr. Charles Curran (Uxbridge)

I have a good deal of sympathy with the hon. Lady's case, but I should like to ask her one question. I see the force of what she is saying about children being discriminated against if they are given free meals on application. Would she take the same line if it were proposed that, instead of exempting children who cannot afford to pay, we were to give the money to the parents so that the children could pay?

Miss Lester

I was trying to say that, however we finance school meals, we must move away from the situation as it is now when the child is made to feel humiliated because it knows it is getting free meals. There are discussions taking place about how this could be done and I will not go into that argument now. It is the principle with which I am concerned this evening.

Another aspect of the situation that concerns me is that an open-ended sum is involved in these calculations. In 1974–75 not only will money by way of school meals and welfare milk, be taken out of the pockets of people rearing children, but there will be an open-ended sum geared to the rise in the cost of school meals. This is why this argument is so important.

The situation now, which I do not understand, is that pre-school children in play groups and nursery schools will get free milk if they are in nursery schools and play groups, but children at home will cease to receive subsidised welfare milk. Why are they to get free milk and the others not? Is it considered that children in special schools by definition are more in need of milk than children who are not in special schools? I do not know to what extent this matter has been thought through. We must approach the question of school milk more sympathetically. The situation may even arise that doctors will start prescribing milk. At the moment there is some disagreement among them as to the value of milk, but in the end this may mean that if a doctor considers that a young child should have milk he will prescribe it.

There are other hon. Members waiting to speak and I will come to my last point. It relates to the situation of old people as a result of these proposals. I have tried to make out a case on the effects of poverty. We are not dealing with this problem at all but are making it worse.

When we on this side of the House were in office, we did a great deal for the elderly. As was demonstrated yesterday, our record is a very reasonable one. The fact remains that everyone who is old and in difficulty thought when young that everything would be all right when he or she grew old. Young people think the same way today. But it never is all right. I hate doing it, but in my constituency I constantly nag my local council about concessionary fares for old people, and I write to the Minister for Posts and Telecommunications asking why old people cannot be exempted from the cost of T.V. licences. In fact, I see that consideration is being given to the possibility of allowing old people free admission to museums and galleries. But this is wrong. Every time that I do it, I know that it is wrong. We should not have to make old people suffer, be humiliated and be discriminated against because they are poor. That is the wrong way of looking at poverty, and if we are to tackle the problem we have to think much more about it.

Another effect of what the Government propose is that in many instances it will affect others who in some way are underprivileged. The cuts in further education, for example, will mean increasing the fees charged by local authorities in England and Wales for courses at further education establishments from September of next year. This proposal will hit a large number of people who left school at an early age and want to improve their education standards. Young people in industry who are on day release will also be affected, especially those employed by smaller firms which will not be able to afford the increase in fees. On the face of them, these are sound ways of saving money but, in social and privilege terms, they are designed to discriminate, and they will.

Having said all this, if we had no prescription charges, if all children had free school meals, if these decadent measures had not been proposed by the Government, we would still be left with poverty. It is clear that the Government have not thought through the way in which poverty should be tackled. They have talked a great deal about a family income supplement to alleviate the worst side effects of their proposals. However, they have not faced the fact that, if we are to deal with aspects of poverty affecting families with young children, family allowances must be increased, while, at the same time, tax allowances at the other end are abolished. Obviously by doing that we will bring in people who do not really need help. But, by reducing income tax by 6d., we shall also benefit a large number of people who do not need it.

8.58 p.m.

Mr. Timothy Raison (Aylesbury)

Representing the constituency that I do, I am acquiring a certain sensitivity about the repeated references to ducks to which we have been subjected in the last hour or so. I remind hon. Members that Aylesbury ducks are notorious for their ability to stand on their own feet—that is, until a butcher gets at them.

Throughout this long debate, there has been one conspicuous gap in the Opposition's analysis. There has been a complete failure on their part to look at the real problems which beset our social services. They are problems which have been becoming more and more apparent in the last few years and ones which any Government, sooner or later, will have to tackle.

The merit of the present Government's approach is that they have shown that they are prepared to start tackling the problems now. The first has been the enormous increase in the sheer amount of money demanded by the social services. The individual services have been increasing in cost each year at the rate of 6–8 per cent. Beyond that, there is the major switch in the balance of the population. With the passing of each year, the number of dependants increases numerically very much faster than the number of providers.

We know that in the long run there is a risk of substantial technological unemployment again adding to our burden. We know that many of these social services demand ever higher costs. This is particularly true of drugs. These things are becoming more expensive the whole time. We know that we have higher expectations on the part of the public—rightly so—of the services being provided. We know that the people who staff the services also have higher expectations. The fact that the social services are inevitably generally labour-intensive means that this will add to our economic problems in manning them. We know, above all, as has been pointed out, that there are still substantial pockets of real need remaining, and in some cases they are far more than pockets.

We know all these things. We know that the pressure on the social services is minting the whole time. Yet hon. Gentlemen opposite will not face the real question that is posed: what are we going to do about it; how shall we provide the resources to enable us to get the social services that we need today? They are rooted—we have seen this time and again—in the concepts of the 1920s. They simply will not apply themselves to the problems of today.

To my mind, the merit of the Government's approach is that they accept the facts. They accept that there are needs to be met. They realise that needs change, that the needs of the 1920s are not identical with those of today, and they try to concentrate on meeting those real needs.

The introduction of the measures of selectivity that we have seen in the Chancellor's statement of last week set the kind of pattern for which we have to look in future. In that sense it was an extremely important statement. I believe that it will enable us to provide better services in future.

This is a matter close to my heart. The question is: what are we going to do; how shall we meet the needs which exist?

One school of thought, to which many hon. Members opposite clearly belong, is what might be called the relative poverty school. Essentially, they say the whole time that the answer is to go on redistributing wealth; that if incomes at the lower end go up, they must go on and on, and no real attention must be paid to how we can provide for what we have to do at the moment. The trouble about the relative poverty approach is that it seems incapable of picking out priorities in the way that we must at the moment.

The point put forward against this on our side—the hon. Member for Ashton-under-Lyne (Mr. Sheldon) also shared this point—is that the ability to provide the things which must be provided depends on economic growth. This is the absolute key to the problem. How are we to get this economic growth going? I am sure that the Chancellor is right and that our policy is right to stress that we shall not get economic growth going unless we can create a climate of encouragement for those who have been called the wealth creators. This is fundamental.

We had a certain amount of argument, yesterday particularly, about the extent to which a reduction in direct taxation is an incentive. Hon. Members opposite said that there is no evidence that this is so; others contradicted it. I concede that in the present state of psychological and economic research there is probably not much evidence either way. I do not think that we have the ability to study these things. But I think that everybody who has worked in industry knows that there is something in this point about incentives. It is vitally important to give the people who are in a position to give a stimulus to industry the chance to feel that their work is worth while and that the rewards available to them really do exist.

I should like to look more closely at some of the specific policies which have been put to us today, but there is not time. I hope that I can claim genuine interest in the development of the social services. I firmly believe that the policies that have been put forward are designed to help people as a whole.

9.5 p.m.

Mr. James Callaghan (Cardiff, South-East)

The hon. Member for Aylesbury (Mr. Raison), who has had to compress his remarks, referred to what he seems to think is a new policy of helping the wealth creators. The hon. Gentleman is only 10 years out of date, because it was in 1961 that the former Chancellor of the Exchequer, the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), did precisely that. I remember that in his Budget Statement that year the right hon. and learned Gentleman told us—and for greater accuracy I have here a copy of what he said—that he wished to give an incentive to those in positions of responsibility in our national life. Those are almost the words used by the hon. Gentleman this evening. The right hon. and learned Gentleman went on to say that the present scope and level of surtax is a substantial disincentive to effort and initiative."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 819.] and therefore he must take steps to correct that substantial disincentive in order that those in a position of responsibility in our national life should be able to release those springs of energy which were going to transform the country.

When the right hon. and learned Gentleman raised the surtax limit from£2,000 a year to£5,000—[Interruption.]—nurses at that stage did not count. First, there was not an election on the horizon. Second, they were not people who were holding responsible positions in our national life. It was the wealth creators that the right hon. and learned Gentleman was after when he raised the surtax limit from£2,000 to£5,000. It did not compare with the beggarly 6d. off that we have had now. It was something dramatic and important.

What happened in the following two years? The hon. Member for Aylesbury has followed these things for many years, and, if I may say so, he has made a substantial contribution in the matter of social services. Does he recall, because I am sure the former Chancellor does, what happened in the following two years? The gross national product fell, exports fell, imports rose, and the balance of payments deteriorated. Where was the great spring forward which that reduction in the surtax level by such a tremendous sum was supposed to bring?

Mr. Selwyn Lloyd (Wirral) rose—

Mr. Callaghan

The right hon. and learned Gentleman clearly wants to tell me what it was. I wish he had not waited 10 years to do so.

Mr. Selwyn Lloyd

The right hon. Gentleman is always fair. Would he not agree that the increase in the g.n.p. in 1963 and 1964 was equivalent to 4 per cent. a year? The surtax reduction was bitterly criticised. Did the right hon. Gentleman do anything to change it when he got in?

Mr. Callaghan

No. What I am attacking—

Hon. Members

Oh!

Mr. Callaghan

I am not going to spend my time this evening debating that aspect of it, except to say that I was bitterly attacked by the Opposition when I increased the surtax contribution in one of the years when I happened to hold the office which the right hon. and learned Gentleman had held. The real point, and the right hon. and learned Gentleman and the Opposition Front Bench cannot dodge it, is that we have had these incentives. We have had this claptrap earlier. We have had the action following the claptrap, and the result was a calamitous decline in almost every index by which we measure our national prosperity.

The plain truth—and I am surprised that the hon. Member for Aylesbury did not admit it—is that the motivation of people as to how they work, where they work, and why they work lies much deeper than a miserable 6d. off income tax. The hon. Member for Aylesbury knows that as well as I do.

Having made those comments, I should say that I congratulate the hon. Members who have made their maiden speeches during this debate—my hon. Friend the Member for Leicester, North-West (Mr. Greville Janner), the hon. Member for Reading (Dr. Vaughan), the hon. Member for The Wrekin (Dr. Trafford), and my hon. Friend the Member for Abertillery (Mr. Jeffrey Thomas). I do not wish to be invidious and pick out anyone but, speaking as a fellow South Wales Member, my heart warmed to my hon. Friend the Member for Abertillery, who made a most powerful speech about the regions.

I should like to make some comments on four major aspects of the debate in trying to sum up for the Opposition. I think the House will agree that I have listened to most of the speeches during the last two days—I have missed very few of them—and I think that they have concentrated on about four things.

First, there has been the impact of the Government's measures—as far as can be foretold—upon the regions. Secondly, there has been the question whether or not the Chancellor has any counter-inflationary strategy. Most of his hon. Friends seemed to think that he had not. Thirdly, there has been the fact—and a lot of attention was concentrated on this—that the Government have deserted their policy of bringing prices down and are now deliberately encouraging and allowing prices to rise. Fourthly, there has been the philosophical argument whether it is or is not the right thing, at the present juncture of our affairs, to put charges on the lower-paid and make them worse off in order that other people should be better off.

These are the issues on which the debate has focused. I begin by discussing the question of the regions. It is a pity that the Chancellor was not here when his hon. Friend the Member for Belfast, East (Mr. McMaster) spoke. He would have discovered how that hon. Member reacted to the new, bracing climate now being imported into the shipbuilding industry. The hon. Member's speech was one long moan about the consequences of what the Chancellor is doing to the shipbuilding industry, and a plea for special help. We asked him—somewhat cruelly, perhaps—whether he thought that the shipbuilding industry was one of the lame ducks referred to last night. "No", he said indignantly—and with his constituents we can excuse him saying such a thing.

Mr. McMaster rose—

Mr. Callaghan

I am sorry, but I cannot give way. I allowed the hon. Member for Aylesbury to go on until five minutes past nine, when I could have risen earlier. I allowed him to make his speech. I must be allowed to make the comments that I want to make. I am ready to take it out of the Secretary of State's time, but I do not wish to do that. I shall sit down at half-past nine.

The whole point about these regional incentives, about which we who come from the regions feel so deeply, is that the Government have decided to make these far-reaching changes in advance of making a thorough-going study of the problem. That is gambling with the future well-being of the regions and with their prospects of securing new industry. This is a change that they should not have made without first making their long-term thorough-going review of it. It is not as though the regions, at the moment, are looking very hopeful. My hon. Friend the Member for Carmarthen (Mr. Gwynoro Jones) had a reply from the Secretary of State for Trade and Industry. I shall have something to say about that later. It is a pity that the Secretary of State for Trade and Industry does not listen to these debates.

Sir K. Joseph

I have a message from my right hon. Friend that I was going to give. He is fulfilling an obligation, to which he has been committed for some weeks, to address the centenary dinner of the I.C.F.C. He is coming here as soon as he can.

Mr. Callaghan

That will not do. I shall say now what I have to say about him. He has been absent from the House through the whole of these two days, except for the opening and closing speeches. He made no serious reply to the debate last night; instead, he made a brutal and insensitive speech. He is a new Member, and no one wants to hound a new Member. [Laughter.] I remember what hon. Members did to Frank Cousins! It does not lie in the mouths of hon. Members opposite to talk about hounding a new Minister. It is well known to the House that a new Minister has a special obligation to come to the House and learn what it is all about. If the right hon. Member had done so we might not have had the kind of insensitive speech that we had last night from him. He has listened to none of our comments. [Interruption.] His dinner has not been going on since lunchtime. He has listened to none of the things that have been said of him today. I shall say something more about him later.

I come to my hon. Friend the Member for Carmarthen. Dealing with new industrial sites in Wales, inquiries have been made, and I am sorry to say that in the third quarter of this year—it is far too early to ascribe blame to the Government for this—the number of inquiries for new sites was the lowest for the year. I am not blaming the Government for that but what I do blame them for is making a leap into the dark with this change in regional policy without first of all investigating it and saying what the consequences will be.

It is over a year ago that an inquiry was set in hand on this question of the effectiveness of the investment grant. On 22nd October, 1969, a Committee of this House was told that a full inquiry was being set in hand by the previous Government. That was repeated at a later stage, and a Committee of this House reported that it hoped the inquiry would be carried out and completed at an early date in order that it could consider what changes had been made. What has happened to that inquiry? I notice that paragraph 14 of the White Paper says: A thorough-going study of regional-development policy has been put in hand. There is nothing new in that. It was put in hand as long ago as October, 1969. If a thoroughgoing study has been put in hand now, why do they want to make changes before seeing the results? If it is a leap in the dark, as I believe it is, if it will worsen the position of the regions as many of us fear, why could they not wait? Why could the Chancellor and the Secretary of State for Trade and Industry not wait until then?

The Secretary of State for Trade and Industry said last night that it is a wasteful way of doing it. He put it more graphically. He said: It reminds me of trying to put the cream in your coffee by spraying a jugful of cream around the room in the dark."—[OFFICIAL REPORT, 4th November, 1970; Vol. 805, c. 1218.] Reminds him!That is what they get up to in the C.B.I. Just imagine the scene—all these tycoons of big industry sitting in the dark while someone goes round spraying the room. No wonder they all finish up as—what was the phrase?—"a soft, sodden morass of subsidised incompetence" Well, if they have cream all over them I am not surprised.

In paying a compliment to the Secretary of State for Trade and Industry, I thought that his speech was well worthy of his predecessor, the former hon. and gallant Member for Knutsford, Colonel Sir Walter Bromley-Davenport. He went on to make a comment—and far be it from me to attack HANSARD—which amid the laughter that followed his original remark was not caught by HANSARD. He said, "It is better to switch the light on." These revelations of the way they conduct the affairs of the C.B.I.! All sitting down, groping at their papers in the dark, finally switching on the light after they have sprayed all the cream around. It confirms all our beliefs about the quality of big business and the manner in which they reach decisions. I can promise him that if he goes to have a cup of tea in a workers' canteen he will not be subjected to this sort of indignity.

I agree that it is better to switch the light on first, and this is why I ask the Chancellor: why has he not waited for the report of the Committee of Inquiry that he has set up and that was in being long before he came into office, dealing with the effect of investment grants, before rushing into precipitate action?

The Secretary of State said that it had failed in its purpose, but that is not so. On the very day on which the right hon. Gentleman said that, the shipbuilding industry—as the hon. Member for Belfast, East pointed out in a statement—was telling us in headlines in the newspapers that its order books were the fullest for 10 years.

The truth is that the right hon. Gentleman has rushed into this out of a sheer ideological sense that he must take some action irrespective of the consequences. We believe that he is putting the development areas very much at risk and that he should have waited for some time before taking this step.

I say this because unemployment in these areas is too high. Action should be taken to bring it down. There are more men out of work in this country, as the hon. Member for Leek (Mr. Knox) said yesterday in what I thought was an excellent speech, than we should tolerate. The Chancellor has a big balance of payments surplus, and this brings me to the next point I wish to make, which is that there is a four-sided quadrilateral which every Chancellor must tackle. [Interruption.] Quadrilaterals are usually four-sided.

Mr. Harold Wilson

Not under this Government.

Mr. Callaghan

I am sure that the Foreign Secretary would agree with me.

The balance between having a healthy balance of payments, getting a reasonable rate of growth, keeping unemployment low and keeping stable prices should be maintained. We know, of course, that the Government have deserted the last objective. Indeed, they have thrown it overboard. They do not want stable prices but price increases. [HON. MEMBERS: "No."] Nobody can deny that the Minister of Agriculture, Fisheries and Food said recently that he had no intention of subsidising food any further. He wants prices to rise. Nobody can deny that the Minister of Transport said at a conference recently that port charges were too low. And nobody can deny, in view of what is taking place in the oil and coal industries and the forecasts we have of what will take place in the electricity and gas industries, that fuel prices will not rise.

The Government have deserted the stable prices factor, but what about the other three? I believe that the level of unemployment in Britain is such—I agree that the cushion can be rapidly snatched away—that, in view of the balance of payments surplus, the Chancellor could afford to take a somewhat greater risk in order to put more men back at work. [Interruption.] I do not think he needs to be so cautions. After all, the balance is designed to put men back at work.

There is nothing extraordinary in what I am saying. There are times when the Chancellor must put the balance of payments first and say, "The balance must come above all right now." There are, however, other times when he can say, "I have a substantial balance of payments surplus, I expect to have a substantial balance during the whole of 1971 and I am determined, therefore, to arrange my priorities in a different way." Unemployment is at such a level—I accept that it has remained at this level for a considerable period—that the time has come when the right hon. Gentleman should have his priorities a little differently arranged. I therefore press him to put more men back at work, as he knows it would be possible to do.

I come to the deliberate decision of the Government to help the better-off at the expense of the lower-paid. [HON. MEMBERS: "Rubbish."] Hon. Gentlemen opposite need not be ashamed of this. If this is something in which they believe—and they are entitled, if they believe in it, to put it into force—they should not run away from it but stand by their philosophy. They should be prepared to say clearly, "We believe it is better to put£140 million in charges on to the lower-paid"—not the worst-off because they want to cater for them through the F.I.S.—"so that the better-paid may have relief from their taxes."

I hope that this will be defended in the country. It was what they were elected to do, they say, and they have done it. But they must not run away from the consequences. It is of no use the Prime Minister standing on the steps of No. 10 on the day after the election and saying, "It is our intention to create one nation and to heal the divisions" when they make divisions of this sort. It is our very strong feeling that nothing will be able to bridge this gulf between us; that they cannot build or bind up one nation together if at one and the same time they deliberately take steps to make the best off better off whilst making the lower-paid worse off.

The Government really have taken upon themselves the injection of a philosophy which, with the best will in the world, is setting the clock back. I believe that it is the end for the time being of any real attempt to say that there is one nation. We shall do our best to ensure that these policies are destroyed and rejected as soon as possible but, in the meantime, we shall do our best to make certain that we fight their policies as hard as we can.

The Chancellor of the Exchequer has not developed any realistic strategy for overcoming inflation—none at all. On the contrary, his measures are pulling against each other. His fiscal policy of reducing taxation is pulling against his monetary policy of tightening bank credit. His policy of allowing—indeed, of encouraging—prices to rise pulls against his policy of keeping wages down.

Someone said to me as I was coming into the Chamber, "There is no need to have any mercy on the Chancellor: he never had mercy on us." But I do have mercy on the right hon. Gentleman. There are very few of us who have held that office, and it is a brute of an office. I should know, and so should the other two right hon. Members who have held it. In my view, the right hon. Gentleman has got, as has any Chancellor of the Exchequer, the most onerous job in Government.

But there are one or two things that follow from that. The first is—and I hope that it will be believed that I am not being patronising—that his policies must pull together and not against each other. What was said by the hon. Members for Horsham (Mr. Hordern), South Angus (Mr. Bruce-Gardyne) and St. Ives (Mr. Nott) quite clearly shows that he has not convinced his own supporters that his policies at present are pulling together instead of pulling against each other. So I say to him that it is important that he should endeavour to reconcile what he is doing.

Further, and I say this meaningfully, I hope that he will try to get at least the understanding of the House, even if he cannot, as he probably will not, get its full agreement and support. What he has done in regard to some of his figures is subject to some criticism. The City Editor of the Daily Telegrah had a cross-heading in his page "Adroit Mathe- matics". I do not think I can say anything more condemnatory. What the right hon. Gentleman had to say about defence costing, what has been said about the education programme and about the shortfall in the nationalised industries are all examples of very adroit mathematics indeed. The Chancellor of the Exchequer had better take it up with the City Editor of the Daily Telegraph, because on this occasion I agree with him. I hope that the right hon. Gentleman will take us fully into his confidence on these matters, and not try to put something across that cannot be sustained.

I ask the Secretary of State why the date for the coming into operation of the family income supplement is proposed to be 1st August. If the income tax payers are to get their relief on 1st April why should not those who are already beginning to suffer the consequences of the Government's policy have theirs brought forward at least to that date, if not much earlier? I should be grateful to have an answer, because we shall press him on it.

Second, we shall certainly want to see the limits of the family income supplement rate. I do not know whether the House is fully seized of the fact that a man with two children receiving the family income supplement whilst still at work will still get less than a family receiving the standard supplementary benefit scale benefits. I cannot believe that this is right. I therefore believe that the Chancellor should raise the limits as well as bring the date forward.

Finally, I want to say a word about the rate support grant in relation to the settlement which has ben arrived at to-day as a result of Sir Jack Scamp's inquiry. What a condemnation this is of the Government! They have allowed a strike to continue for several weeks by standing back and taking no action. The result is that not only have the unions concerned got nearly everything that they were asking for, but Sir Jack Scamp has said to the Government that, given the pace of inflation in the country as a whole, there is no chance that it can be arrested by a somewhat smaller pay increase for local authority employees; all that would be achieved would be a deterioration in their position without a significant benefit to the country as a whole.

Do the Secretary of State and the Chancellor believe that they can stand back in this situation? It is a situation of very great concern. How do they think that it will be resolved if they play no part in it and if, indeed, when they step in their purpose is to increase prices and to make it more difficult, therefore, for anybody to negotiate reasonable wage claims? How do they think that they can stand aside in the face of such a report? What do they intend to do about this situation?

Over the last two days the Chancellor has presented not a single word that will give anybody in the House encouragement to believe that he has any strategy, let alone ideas, on how to conquer inflation. Until he can do that, his economic strategy will not be credible. We condemn the Government because they have behaved unfairly. They have divided the nation instead of uniting it. They have endangered and imperilled the prosperity of the regions. They have brought forward no remedy at all for conquering the inflation that is rampant in this country.

9.32 p.m.

The Secretary of State for Social Services (Sir Keith Joseph)

My first pleasant duty is to congratulate four maiden speakers. Unfortunately, I missed the speech of the hon. Member for Leicester, North-West (Mr. Greville Janner). I gather that it was a unique occasion for a son to pay tribute to a father who was his predecessor in the same seat. It was reported to me that the hon. Gentleman spoke eloquently and forcefully but that his speech had a strong political flavour.

I heard the other three maiden speakers. I cannot imagine how they all get so much self-possession. None of them seemed the least abashed, as the right hon. Member for Cardiff, South-East (Mr. Callaghan) said. The hon. Member for Abertillery (Mr. Jeffrey Thomas) also made a political speech; he made it with great self-possession, and I am sure that the House will want to hear him again.

Two of my hon. Friends, the hon. Members for The Wrekin (Dr. Trafford) and for Reading (Dr. Vaughan), spoke easily and fluently and said things very relevant to this debate. The House will not be surprised that these two, both doctors, managed, even in short speeches, to find points of disagreement between themselves on the medical component of my right hon. Friend the Chancellor's statement.

We have just had a very good humoured, slightly avuncular, speech from the right hon. Member for Cardiff, South-East.

I hope that the House will allow me to address myself to answering the very large number of questions in the social service field which have been put by hon. Members on both sides, particularly by the hon. Member for Hitchen (Mrs. Shirley Williams), who spoke last night. After I have dealt with the questions I will try to turn to the underlying issues between the parties which have laid behind the speeches.

First, charges. Except for our proposal to reduce the age exemption limit for dental charges from 21 to 18 and our proposal to move towards a proportionate charge for prescriptions, both of which changes will need legislation, we are making no changes in the substance of the charges. The items charged under Labour remain charged under the Conservative Administration. Moreover, we are not cutting the exemptions. The exemptions applied by Labour apply under our proposals.

Hon. Members

Hear, hear.

Sir K. Joseph

I am glad that hon. Members opposite appreciate my right hon. Friend the Secretary of State for Trade and Industry and are pleased to see him present in the Chamber. [HON. MEMBERS: "No."] Some of the things he said last night would have raised strong applause and agreement from many Labour audiences in this country.

I was saying that we have kept all the exemptions which Labour had. In fact, my right hon. Friend the Chancellor of the Exchequer has devoted£7 million to increasing the exemptions. I shall repeat my right hon. Friend's claim, which met with a certain incredulity last evening. I confess that I take a little blame on myself for the lack of knowledge which the House had about the effect of the exemptions. A Question has been answered today, and will appear in HANSARD tomorrow morning, spelling out all the details. I think that it was my fault that I did not put it down a couple of days ago so that the House would have the details.

Hon. Members

The Minister cannot put it down.

Mr. G. Elfed Davies (Rhondda, East)

On a point of order—[Interruption.]

Mr. Speaker

Order. The hon. Gentleman can put a point of order without dramatic gestures.

Mr. Elfed Davies

On a point of order, Mr. Speaker. Is it in order for the Minister to put down a Question to himself?

Mr. Speaker

Order. I did not understand that to be what the Minister said.

Sir K. Joseph

A Question was put down. My right hon. Friend announced in his statement that all the exemption limits had been raised by about 30s. The effect will, I think, interest hon. Members. I take, for instance, the charges for teeth and eye treatment. A family with three children will be totally exempt—the children are exempt anyway—on an income up to almost£1,200 a year, and with two children up to nearly£1,100 a year. Now, prescription charges. The children are automatically exempt. A man and wife and three children will be exempt up to an income of about£1,150 or£1,175 a year. [An HON. MEMBER: "Gross or net?"] Gross pay. Before that figure is taken, there is a£2 disregard for any wife's earnings. Thus, the scale and number of exemptions is, I think, far more extensive than the House realises.

I should explain, also, that there is to be a ceiling on any potential dental charges, and also when we move to a proportionate charge for prescriptions. The maximum dental charge will not be more than£10 for a course of treatment. [HON. MEMBERS: "Oh."] It replaces a maximum for dentures of£6 5s., and a large percentage of dental treatments will be charged at a lower figure than now.

The hon. Member for Penistone (Mr. John Mendelson) asked me about exemptions for single people and couples without children. These people get exemptions up to a limit above the supplementary benefit level, but it varies with individual rent and I cannot, therefore, give him the net figure.

Mr. John Mendelson rose—

Sir K. Joseph

I have a great deal to say and I do not think that I have time to give way to the hon. Gentleman. Perhaps he would allow me to write to him.

The House is probably aware that there is a "season ticket" for prescriptions, and any individual who is subject to a charge can, for 30s., buy as many prescriptions as he wants, or as he needs, for six months. So for something over 1s. 1d. a week a man who needs prescriptions and whose need for them is not covered by the exemption which is available for some chronic illnesses can get as many prescriptions as he needs.

But, as was effectively pointed out by the hon. Lady the Member for Eton and Slough (Miss Lestor), there is still the problem of take-up. The Government will embark on an elaborate campaign to get as large a take-up as possible of all these means-tested benefits. Because of the extra exemptions arranged by my right hon. Friend the Chancellor of the Exchequer, some people will pay less for school meals after 1st April than at the moment. I ask the House to bear in mind, as my hon. Friend the Member for Norwich, South (Dr. Stuttaford) welcomed, that£110 million extra, over and above the other increases in the Health Service which will evolve over the next four years, has been allotted by my right hon. Friend to improving the treatment of the mentally handicapped and the geriatric, the elderly, and other National Health Service priorities.

I turn to the family incomes supplement. I must emphasise that all people who will be eligible for family income supplement are, by hypothesis, exempt from all the charges we have been discussing. The F.I.S. is not intended to make up to them for charges. They are not subject to charges. It is meant to produce an improvement in their standard of living.

The family income supplement will involve an additional test: that I cannot deny. We shall seek to simplify the test. The F.I.S. test will entitle anyone eligible automatically to free prescriptions, and we shall try to arrange that it shall be a passport to exemptions from other charges.

It is true that when we were the Opposition we expressed our preference for an increase in family allowances with clawback as our first step in tackling family poverty. [HON. MEMBERS: "You promised it."] No, we expressed our preference. My right hon. Friend the Prime Minister said—I have seen the letter—that it seemed to him at the time that this—[Interruption.]

Mr. Speaker

Order. The House must listen to both sides.

Sir K. Joseph

But now that we look at it with the greater facts available to the Government, we prefer "FIS".

Hon. Members

Fizz! [Laughter.]

Sir K. Joseph

I do not know why hon. Members find this laughable.

Hon. Members

Look behind!

Mr. Speaker

Now back to the debate.

Sir K. Joseph

The fact is that, compared with the family allowance increase proposed, this Bill will put into the poorest working household sums of up to£150 a year. One hundred and eighty thousand of the poorest working households will qualify and 20,000 households on the wage stop will benefit, many of them being taken off the wage stop. Moreover, the Bill will bring help to households with one child, which a family allowance increase would not have done.

The Bill is a first step in our programme for tackling family poverty. We only wish—and I agree with the right hon. Member for Cardiff, South-East—that we could get it into payment before August. But the administrative job—and we tried our best to reduce it—makes this the first time—[Interruption.]

Mr. Speaker

Order. The hon. Member for Rhondda, West (Mr. Alec Jones) must control himself.

Mr. Alec Jones (Rhondda, West)

On a point of order. I am the Member for Rhondda, West. The hon. Member at my side is the hon. Member for Rhondda, East (Mr. G. Elfed Davies).

Mr. Speaker

The stricture was levelled at both hon. Members.

Sir K. Joseph

We can now see coming into sight the second step to relieve family poverty.

Many households have gross incomes above the family income supplement level and therefore will not be eligible for it. But, because of high rents, these families are among the very poorest in the land. The announcement by my right hon. Friend the Secretary of State for the Environment earlier this week of a national rent allowance in future for tenants of local authorities and of private dwellings means, that, except for households living in furnished accommodation—and that represents about one-sixth of the total private rented accommodation sector—there will be rent allowances perhaps 18 months to two years from now for the very poorest households.

Therefore, this is a second step in the relief of family poverty which all those—[Interruption.] The hon. Member is right that wherever one tries to help there is a problem about the cut-off point.

Meanwhile, perhaps the most serious hardship occurring in the country is the result of the inflation started by the last Government. It is a scourge for the elderly on fixed incomes. My hon. Friend the Member for Harwich (Mr. Ridsdale) yesterday and my hon. Friends the Members for Morecambe and Lonsdale (Mr. Hall-Davis) and St. Ives (Mr. Nott) today emphasised the damage which inflation is doing to the elderly. Supplementary benefits, under the arrangements of the last Government agreed by us, were increased this week and we are due to review pensions next year.

There is no doubt of the evil which was left by the last Government. We warned the country that the fires of inflation lit by the last Government could not be rapidly quenched and that the people who are suffering are the poor and the elderly.

Behind this debate the discussions about the charges and the family incomes supplement there is a clash of judgment.

Mr. Eric S. Heffer (Liverpool, Walton) rose—

Mr. Speaker

Order. If the right hon. Gentleman does not give way the hon. Member must resume his seat.

Mr. Heffer

What about the three waiting days?

Sir K. Joseph

The three waiting days is simply adopting a proposal put forward—[Interruption.]

Mr. Heffer

Answer the question.

Sir K. Joseph

The Opposition and the country should welcome the clash of vision and strategy between the—

Miss Devlin rose—

Sir K. Joseph

The Government—

Miss Devlin rose—

Mr. Speaker

Order. Mere repetitive standing does not make a Minister give way.

Sir K. Joseph

Both sides of the House agree that the country's progress under both Conservative and Labour Government's has been sluggish.

Mr. Jeremy Thorpe (Devon, North)

Hear, hear.

Sir K. Joseph

Both sides agree that other countries are passing us in their standards of living. We do not agree between the two sides on the causes. This side of the House believes that one of the ingredients of our sluggishness is the high marginal rate of taxation. My right hon. Friend does not claim that 6d. off the standard rate is enough in itself to transform the country's prospects. But it is a first step, it is a sign of hope.

The right hon. Member for Cardiff, South-East mocks any idea of incentives. We do not agree. If we can galvanise the performance of management, men and investors we shall benefit everyone. We desperately need the best talents in our industry—

Hon. Members

Send him back.

Mr. Speaker

Order. May I remind the House that noise does not help.

Sir K. Joseph

The best candidates are not always ready to take the job that they could handle well because there is no worth-while reward for the great efforts involved. The Labour Party look at the position as a static one. They look at those who might benefit now; we look at those who can transform the country's prospects if they are given the chance of a reward commensurate to the effort they would have to put it. The people of this country want to be able to save, to build up capital. If they are to torment themselves with the difficult jobs they must be offered the same sort of prospect that is available to the successful man in Western Europe and Scandinvaia.

The party opposite do not recognise that it is not only managers, directors and investors who are interested in getting direct taxation down. During the election all their supporters said that direct taxes were far too high. There are abilities and talents to be released at all levels of income in the country, and the country as a whole, everybody in it, will benefit. If we get the exemptions right, then charges rapidly become accepted, but tax levels remain a running sore, and that is why my right hon. Friend was so right to concentrate on getting down direct taxation.

The Labour Party does not share our view, but some of its hon. Members do, and I suspect that in that demonstration of synthetic indignation by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) we saw a man who hankered to be allowed by his party to do just that. Our belief is that much that both sides want—regional prosperity, higher real incomes, better social services—will sooner come from galvanising managers and workers than from increasing taxes in order to maintain subsidies.

Let us for a moment put the charges about which there has been so much complaint into proportion. The right hon. Member for Stechford calculated that a family above the exemption limit earning about£27 or£28 a week would have to pay possibly 10s. a week in extra charges. Let us take his figure. What proportion does that represent of the net increase in earnings that that household will have had in the current year? It will be a quarter or a third.

The Leader of the Opposition and the right hon. Member for Stechford have labelled my right hon. Friend's statement "divisive". [HON. MEMBERS: "Which one?"] Do they mean the increase in charges? We have not added a single charge. We have increased charges and we have increased exemptions. Why are we divisive and why were they not when they did the same thing? Why? Why?

Mr. Callaghan

I can give the right hon. Gentleman the answer straight away. It is because he is making the better-off even better off at the same time, and this is dividing the country.

Sir K. Joseph

Will the right hon. Gentleman now announce that the Labour Party policy is to abolish charges?

Mr. Callaghan

What I will say quite clearly is that we shall operate, when we become the Government, in a way which will ensure that the better-off people in this country—

Sir K. Joseph rose—

Mr. Callaghan

If the right hon. Gentleman wants me to answer it, I will answer it.

Sir K. Joseph rose—

Mr. Speaker

Order. Sir Keith Joseph.

Mr. Callaghan rose—

Sir K. Joseph rose—

Mr. Callaghan

The right hon. Gentleman is giving way, and I wish to make the position quite clear—

The Parliamentary Secretary to the Treasury (Mr. Francis Pym) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the Amendment be made:—

The House Division: Ayes 280, Noes 308.

Division No. 18]	AYES	[10.0 p.m.
Abse, Leo	Davidson, Arthur	Harrison, Walter (Wakefield)
Albu, Austen	Davies, Denzil (Llanelly)	Hart, Rt. Hn. Judith
Alldritt, Walter	Davies, G. Elfed (Rhondda, E.)	Hattersley, Roy
Allen, Scholefield	Davies, Ifor (Gower)	Healey, Rt. Hn. Denis
Archer, Peter (Rowley Regis)	Davies, S. O. (Merthyr Tydvil)	Heffer, Eric S.
Armstrong, Ernest	Davis, Clinton (Hackney, Central)	Hilton, W. S.
Ashley, Jack	Deakins, Eric	Horam, John
Ashton, Joe	Delargy, H. J.	Houghton, Rt. Hn. Douglas
Atkinson, Norman	Dell, Rt. Hn. Edmund	Howell, Denis (Small Heath)
Bagier, Gordon A. T.	Dempsey, James	Huckfield, Leslie
Barnes, Michael	Devlin, Miss Bernadette	Hughes, Rt. Hn. Cledwyn (Anglesey)
Barnett, Joel	Doig, Peter	Hughes, Dr. Mark (Durham)
Baxter, William	Dormand, J. D.	Hughes, Robert (Aberdeen, North)
Beaney, Alan	Douglas, Dick (Stirlingshire, E.)	Hughes, Roy (Newport)
Benn, Rt. Hn. Anthony Wedgwood	Douglas-Mann, Bruce	Hunter, Adam
Bennett, James (Glasgow, Bridgeton)	Driberg, Tom	Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Bidwell, Sydney	Duffy, A. E. P.	Janner, Greville
Blenkinsop, Arthur	Dunnett, Jack	Jay, Rt. Hn. Douglas
Boardman, H. (Leigh)	Eadie, Alex	Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)
Booth, Albert	Edelman, Maurice	Jenkins, Hugh (Putney)
Bottomley, Rt. Hn. Arthur	Edwards, Robert (Bilston)	Jenkins, Rt. Hn. Roy (Stechford)
Boyden, James (Bishop Auckland)	Edwards, William (Merioneth)	John, Brynmor
Bradley, Tom	Ellis, Tom	Johnson, Carol (Lewisham, S.)
Broughton, Sir Alfred	English, Michael	Johnson, James (K'ston-on-Hull, W.)
Brown, Hugh D. (G'gow, Provan)	Evans, Fred	Johnson, Walter (Derby, South)
Brown, Bob (N'c'tle-upon-Tyne, W.)	Faulds, Andrew	Jones, Dan (Burnley)
Brown, Ronald (Shoreditch & F'bury)	Fernyhough, E.	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Buchan, Norman	Fisher, Mrs. Doris (B'ham, Ladywood)	Jones, Gwynoro (Carmarthen)
Buchanan, Richard (G'gow, Sp'burn)	Fitch, Alan (Wigan)	Jones, Barry (Flint, East)
Butler, Mrs. Joyce (Wood Green)	Fitt, Gerard (Belfast, W.)	Jones, T. Alec (Rhondda, West)
Callaghan, Rt. Hn. James	Fletcher, Raymond (Ilkeston)	Judd, Frank
Campbell, I. (Dumbartonshire, West)	Fletcher, Ted (Darlington)	Kaufman, Gerald
Cant, R. B.	Foot, Michael	Kelley, Richard
Carmichael, Neil	Ford, Ben	Kerr, Russell
Carter, Ray (Birmingh'm, Northfield)	Forrester, John	Kinnock, Neil
Carter-Jones, Lewis (Eccles)	Fraser, John (Norwood)	Lambie, David
Castle, Rt. Hn. Barbara	Freeson, Reginald	Lamond, James
Clark, David (Colne Valley)	Galpern, Sir Myer	Latham, Arthur
Cocks, Michael (Bristol, S.)	Garrett, W. E.	Lawson, George
Cohen, Stanley	Gilbert, Dr. John	Leadbitter, Ted
Coleman, Donald	Ginsburg, David	Lee, Rt. Hn. Frederick
Concannon, J. D.	Gordon Walker, Rt. Hn. P. C.	Leonard, Dick
Conlan, Bernard	Grant, George (Morpeth)	Lestor, Miss Joan
Corbet, Mrs. Freda	Grant, John D. (Islington, East)	Lever, Rt. Hn. Harold
Cox, Thomas (Wandsworth, Central)	Griffiths, Eddie (Brightside)	Lewis, Arthur (W. Ham, N.)
Crawshaw, Richard	Griffiths, Will (Exchange)	Lewis, Ron, (Carlisle)
Cronin, John	Grimond, Rt. Hn. J.	Lipton, Marcus
Crosland, Rt. Hn. Anthony	Gunter, Rt. Hn. R. J.	Loughlin, Charles
Crossman, Rt. Hn. Richard	Hamilton, James (Bothwell)	Lyon, Alexander W. (York)
Cunningham, G. (Islington, S. W.)	Hamilton, William (Fife, W.)	Lyons, Edward (Bradford, East)
Cunningham, Dr. J. A. (Whitehaven)	Hannan, William (G'gow, Maryhill)	McBride, Neil
Dalyell, Tam	Hardy, Peter	McCann, John
Darling, Rt. Hn. George	Harper, Joseph	McCartney, Hugh
MacColl, James	Pannell, Rt. Hn. Charles	Steel, David
McElhone, Frank	Pardoe, John	Stewart, Donald (Western Isles)
McGuire, Michael	Parker, John (Dagenham)	Stewart, Rt. Hn. Michael (Fulham)
Mackenzie, Gregor	Parry, Robert (Liverpool, Exchange)	Stoddart, David (Swindon)
Mackie, John	Pavitt, Laurie	Stonehouse, Rt. Hn. John
Mackintosh, John P.	Peart, Rt. Hn. Fred	Strang, Gavin
Maclennan, Robert	Pendry, Tom	Strauss, Rt. Hn. G. R.
McMillan, Tom (Glasgow, C.)	Pentland, Norman	Summerskill, Hn. Dr. Shirley
McNamara, J. Kevin	Perry, Ernest G.	Swain, Thomas
MacPherson, Malcolm	Prentice, Rt. Hn. Reg.	Taverne, Dick
Mallalieu, E. L. (Brigg)	Prescott, John	Thomas, Rt. Hn. George (Cardiff, W.)
Mallalieu, J. P. W. (Huddersfield, E.)	Price, J. T. (Westhoughton)	Thomas, Jeffrey (Abertillery)
Marks, Kenneth	Price, William (Rugby)	Thomson, Rt. Hn. G. (Dundee, E.)
Marquand, David	Probert, Arthur	Thorpe, Rt. Hn. Jeremy
Marsh, Rt. Hn. Richard	Rankin, John	Tinn, James
Mason, Rt. Hn. Roy	Reed, D. (Sedgefield)	Tomney, Frank
Mayhew, Christopher	Rees, Merlyn (Leeds, S.)	Torney, Tom
Meacher, Michael	Rhodes, Geoffrey	Tuck, Raphael
Mellish, Rt. Hn. Robert	Richard, Ivor	Urwin, T. W.
Mendelson, John	Roberts, Albert (Normanton)	Varley, Eric C.
Mikardo, Ian	Roberts, Rt. Hn. Goronwy (Caernarvon)	Wainwright, Edwin
Millan, Bruce	Robertson, John (Paisley)	Walden, Brian (B'm'ham, All Saints)
Miller, Dr. M. S.	Roderick, Caerwyn E. (Br'c'n & R'dnor)	Walker, Harold (Doncaster)
Milne, Edward (Blyth)	Rodgers, William (Stockton-on-Tees)	Wallace, George
Molloy, William	Roper, John	Watkins, David
Morgan, Elystan (Cardiganshire)	Rose, Paul B.	Weitzman, David
Morris, Alfred (Wythenshawe)	Ross, Rt. Hn. William (Kilmarnock)	Wellbeloved, James
Morris, Charles R. (Openshaw)	Sheldon, Robert (Ashton-under-Lyne)	Wells, William (Walsall, N.)
Moyle, Roland	Shore, Rt. Hn. Peter (Stepney)	White, James (Glasgow, Pollok)
Mulley, Rt. Hn. Frederick	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Whitlock, William
Murray, Ronald King	Short, Mrs. Renée (W'hampton, N. E.)	Willey, Rt. Hn. Frederick
Ogden, Eric	Silkin, Rt. Hn. John (Deptford)	Williams, Alan (Swansea, W.)
O'Halloran, Michael	Silkin, Hn. S. C. (Dulwich)	Williams, Mrs. Shirley (Hitchin)
O'Malley, Brian	Sillars, James	Williams, W. T. (Warrington)
Oram, Bert	Silverman, Julius	Wilson, Alexander Hamilton)
Orbach, Maurice	Skinner, Dennis	Wilson, Rt. Hn. Harold (Huyton)
Orme, Stanley	Small, William	Wilson, William (Coventry)
Oswald, Thomas	Smith, John (Lanarkshire, North)	Woof, Robert
Paget, R. T.	Spearing, Nigel	TELLERS FOR THE AYES:
Paisley, Mr. Ian	Spriggs, Leslie	Mr. William Hamling and
Palmer, Arthur	Stallard, A. W.	Mr. John Golding.
NOES
Adley, Robert	Butler, Adam (Bosworth)	Elliot, Capt. Walter (Carshalton)
Alison, Michael (Barkston Ash)	Campbell, Rt. Hn. G. (Moray & Nairn)	Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Allason, James (Hemel Hempstead)	Carlisle, Mark	Emery, Peter
Amery, Rt. Hn. Julian	Carr, Rt. Hn. Robert	Farr, John
Archer, Jeffrey (Louth)	Cary, Sir Robert	Fell, Anthony
Astor, John	Channon, Paul	Fenner, Mrs. Peggy
Atkins, Humphrey	Chapman, Sydney	Fidler, Michael
Awdry, Daniel	Chataway, Rt. Hn. Christopher	Finsberg, Geoffrey (Hampstead)
Baker, Kenneth (St. Marylebone)	Chichester-Clark, R.	Fisher, Nigel (Surbiton)
Baker, W. H. K. (Banff)	Churchill, W. S.	Fletcher-Cooke, Charles
Balniel, Lord	Clark, William (Surrey, East)	Fookes, Miss Janet
Barber, Rt. Hn. Anthony	Clegg, Walter	Fortescue, Tim
Batsford, Brian	Cockeram, Eric	Foster, Sir John
Beamish, Col. Sir Tufton	Cooke, Robert	Fowler, Norman
Bell, Ronald	Coombs, Derek	Fox, Marcus
Bennett, Sir Frederic (Torquay)	Cooper, A. E.	Fraser, Rt. Hn. Hugh (St'fford & Stone)
Bennett, Dr. Reginald (Gosport)	Cordle, John	Fry, Peter
Benyon, W.	Corfield, F. V.	Galbraith, Hn. T. G.
Berry, Hon. Anthony	Cormack, Patrick	Gardner, Edward
Biffen, John	Costain, A. P.	Gibson-Watt, David
Biggs-Davison, John	Critchley, Julian	Gilmour, Ian (Norfolk, C.)
Blaker, Peter	Crouch, David
Boardman, Tom (Leicester, S. W.)	Crowder, F. P.	Gilmour, Sir John (Fife, E.)
Body, Richard	Curran, Charles	Glyn, Dr. Alan
Boscawen, R. T.	Dalkeith, Earl of	Godber, Rt. Hn. J. B.
Bossom, Sir Clive	Dance, James	Goodhew, Victor
Bowden, Andrew	Davies, Rt. Hn. John (Knutsford)	Gorst, John
Boyd-Carpenter, Rt. Hn. John	d'Avigdor-Goldsmid, Sir Henry	Grant, Anthony (Harrow, C.)
Braine, Bernard	d'Avigdor-Goldsmid, Maj.-Gen. Jack	Gray, Hamish
Bray, Ronald	Dean, Paul	Green, Alan
Brewis, John	Deedes, Rt. Hn. W. F.	Grieve, Percy
Brocklebank-Fowler, Christopher	Digby, Simon Wingfield	Griffiths, Eldon (Bury St. Edmunds)
Brown, Sir Edward (Bath)	Dixon, Piers	Grylls, Michael
Bruce-Gardyne, J.	Douglas-Home, Rt. Hn. Sir Alec	Gummer, Selwyn
Bryan, Paul	Drayson, G. B.	Hall, Miss Joan (Keighley)
Buchanan-Smith, Alick (Angus, N & M)	du Cann, Rt. Hn. Edward	Hall, John (Wycombe)
Buck, Antony	Dykes, Hugh	Hall-Davis, A. G. F.
Bullus, Sir Eric	Eden, Sir John	Hamilton, Michael (Salisbury)
Burden, F. A.	Edwards, Nicholas (Pembroke)	Hannam, John (Exeter)

Harrison, Brian (Maldon)	Maddan, Martin	St. John-Stevas, Norman
Harrison, Col. Sir Harwood (Eye)	Madel, David	Sandys, Rt. Hn. D.
Haselhurst, Alan	Maginnis, John E.	Scott, Nicholas
Hastings, Stephen	Marples, Rt. Hn. Ernest	Scott-Hopkins, James
Havers, Michael	Marten, Neil	Sharples, Richard
Hawkins, Paul	Maude, Angus	Shaw, Michael (Sc'b'gh & Whitby)
Hay, John	Maudling, Rt. Hn. Reginald	Shelton, William (Clapham)
Hayhoe, Barney	Mawby, Ray	Simeons, Charles
Heath, Rt. Hn. Edward	Maxwell-Hyslop, R. J.	Sinclair, Sir George
Heseltine, Michael	Meyer, Sir Anthony	Skeet, T. H. H.
Hicks, Robert	Mills, Peter (Torrington)	Smith, Dudley (W'wick & L'mington)
Higgins, Terence L.	Mills, Stratton (Belfast, N.)	Soref, Harold
Hill, John E. B. (Norfolk)	Miscampbell, Norman	Speed, Keith
Hill, James (Southampton, Test)	Mitchell, Lt.-Col. C. (Aberdeenshire, W)	Spence, John
Holland, Philip	Mitchell, David (Basingstoke)	Sproat, Iain
Holt, Miss Mary	Moate, Roger	Stainton, Keith
Hordern, Peter	Molyneaux, James	Stanbrook, Ivor
Hornsby-Smith Rt. Hn. Dame Patricia	Money, Ernle D.	Stewart-Smith, D. G. (Belper)
Howe, Hn. Sir Geoffrey (Reigate)	Monks, Mrs. Connie	Stodart, Anthony (Edinburgh, W.)
Howell, David (Guildford)	Monro, Hector	Stoddart-Scott, Col. Sir M.
Howell, Ralph (Norfolk, North)	Montgomery, Fergus	Stokes, John
Hunt, John	Morgan, Geraint (Denbigh)	Stuttaford, Dr. Tom
Hutchison, Michael Clark	Morrison, Charles (Devizes)	Sutcliffe, John
Iremonger, T. L.	Mudd, David	Tapsell, Peter
Irvine, Bryant Godman (Rye)	Murton, Oscar	Taylor, Sir Charles (Eastbourne)
James, David	Neave, Airey	Taylor, Edward M. (G'gow, Cathcart)
Jenkin, Patrick (Woodford)	Nicholls, Sir Harmar	Taylor, Frank (Moss Side)
Jennings, J. C. (Burton)	Normanton, Tom	Taylor, Robert (Croydon, N. W.)
Johnson Smith, G. (E. Grinstead)	Nott, John	Tebbit, Norman
Jones, Arthur (Northants, South)	Onslow, Cranley	Temple, John M.
Jopling, Michael	Oppenheim, Mrs. Sally	Thatcher, Rt. Hn. Mrs. Margaret
Joseph, Rt. Hn. Sir Keith	Orr, Capt. L. P. S.	Thomas, John Stradling (Monmouth)
Kaberry, Sir Donald	Osborn, John	Thomas, Rt. Hn. Peter (Hendon, S.)
Kellett, Mrs. Elaine	Owen, Idris (Stockport, North)	Thompson, Sir Richard (Croydon, S.)
Kerby, Capt. Henry	Page, Graham (Crosby)	Tilney, John
Kershaw, Anthony	Page, John (Harrow, W.)	Trafford, Dr. Anthony
Kilfedder, James	Percival, Ian	Trew, Peter
Kimball, Marcus	Peyton, Rt. Hn. John	Tugendhat, Christopher
King, Evelyn (Dorset, South)	Pike, Miss Mervyn	Turton, Rt. Hn. R. H.
King, Tom (Bridgwater)	Pink, R. Bonner	van Straubenzee, W. R.
Kinsey, J. R.	Pounder, Rafton	Vaughan, Dr. Gerard
Kirk, Peter	Powell, Rt. Hn. J. Enoch	Vickers, Dame Joan
Kitson, Timothy	Price, David (Eastleigh)	Waddington, David
Knight, Mrs. Jill	Prior, Rt. Hn. J. M. L.	Walder, David (Clitheroe)
Knox, David	Proudfoot, Wilfred	Walker, Rt. Hn. Peter (Worcester)
Lambton, Antony	Pym, Rt. Hn. Francis	Walker-Smith, Rt. Hn. Sir Derek
Lane, David	Quennell, Miss J. M.	Walters, Dennis
Langford-Holt, Sir John	Raison, Timothy	Ward, Dame Irene
Legge-Bourke, Sir Harry	Ramsden, Rt. Hn. James	Warren, Kenneth
Le Marchant, Spencer	Rawlinson, Rt. Hn. Sir Peter	Weatherill, Bernard
Lewis, Kenneth (Rutland)	Redmond, Robert	Wells, John (Maidstone)
Lloyd, Rt. Hn. Geoffrey (Sut'n C'd field)	Reed, Laurance (Bolton, East)	White, Roger (Gravesend)
Lloyd, Ian (P'tsm'th, Langstone)	Rees, Hn. Peter (Dover)	Whitelaw, Rt. Hn. William
Lloyd, Rt. Hn. Selwyn (Wirral)	Rees-Davies, W. R.	Wiggin, Jerry
	Renton, Rt. Hn. Sir David	Wilkinson, John
Longden, Gilbert	Rhys Williams, Sir Brandon	Wolrige-Gordon, Patrick
Loveridge, John	Ridley, Hn. Nicholas	Wood, Rt. Hn. Richard
McAdden, Sir Stephen	Ridsdale, Julian	Woodhouse, Hn. Christopher
MacArthur, Ian	Roberts, Michael (Cardiff, North)	Woodnutt, Mark
McCrindle, R. A.	Roberts, Wyn (Conway)	Worsley, Marcus
McLaren, Martin	Rodgers, Sir John (Sevenoaks)	Wylle, Rt. Hn. N. R.
McMaster, Stanley	Rossi, Hugh (Hornsey)	Younger, Hn. George
Macmillan, Maurice (Farnham)	Rost, Peter	TELLERS FOR THE NOES:
McNair-Wilson, Michael	Royle, Anthony	Mr. Reginald Eyre and
McNair-Wilson, Patrick (New Forest)	Russell, Sir Ronald	Mr. Jasper More.

Main Question put:—

The House divided: Ayes, 308, Noes 279.

Division No. 19.]	AYES	[10.16 p.m.
Adley, Robert	Barber, Rt. Hn. Anthony	Boardman, Tom (Leicester, S. W.)
Alison, Michael (Barkston Ash)	Batsford, Brian	Body, Richard
Allason, James (Hemel Hempstead)	Beamish, Col. Sir Tufton	Boscawen, R. T.
Amery, Rt. Hn. Julian	Bell, Ronald	Bossom, Sir Clive
Archer, Jeffrey (Louth)	Bennett, Sir Frederic (Torquay)	Bowden, Andrew
Astor, John	Bennett, Dr. Reginald (Gosport)	Boyd-Carpenter, Rt. Hn. John
Atkins, Humphrey	Benyon, W.	Braine, Bernard
Awdry, Daniel	Berry, Hn. Anthony	Bray, Ronald
Baker, Kenneth (St. Marylebone)	Biffen, John	Brewis, John
Baker, W. H. K. (Banff)	Biggs-Davison, John	Brocklebank-Fowler, Christopher
Balniel, Lord	Blaker, Peter	Brown, Sir Edward (Bath)
Bruce-Gardyne, J.	Harrison, Brian (Maldon)	Montgomery, Fergus
Bryan, Paul	Harrison, Col. Sir Harwood (Eye)	Morgan, Geraint (Denbigh)
Buchanan-Smith, Alick (Angus, N & M)	Haselhurst, Alan	Morrison, Charles (Devizes)
Buck, Antony	Hastings, Stephen	Mudd, David
Bullus, Sir Eric	Havers, Michael	Murton, Oscar
Burden, F. A.	Hawkins, Paul	Neave, Airey
Butler, Adam (Bosworth)	Hay, John	Nicholls, Sir Harmar
Campbell, Rt. Hn. G. (Moray & Nairn)	Hayhoe, Barney	Normanton, Tom
Carlisle, Mark	Heath, Rt. Hn. Edward	Nott, John
Carr, Rt. Hn. Robert	Heseltine, Michael	Onslow, Cranley
Cary, Sir Robert	Hicks, Robert	Oppenheim, Mrs. Sally
Channon, Paul	Higgins, Terence L.	Orr, Capt. L. P. S.
Chapman, Sydney	Hill, John E. B. (Norfolk, S.)	Osborn, John
Chataway, Rt. Hn. Christopher	Hill, James, (Southampton, Test)	Owen, Idris (Stockport, North)
Chichester-Clark, R.	Holland, Philip	Page, Graham (Crosby)
Churchill, W. S.	Holt, Miss Mary	Page, John (Harrow, W.)
Clark, William (Surrey, East)	Hordern, Peter	Percival, Ian
Clegg, Walter	Hornsby-Smith, Rt. Hn. Dame Patricia	Peyton, Rt. Hn. John
Cockeram, Eric	Howe, Hn. Sir Geoffrey (Reigate)	Pike, Miss Mervyn
Cooke, Robert	Howell, David (Guildford)	Pink, R. Bonner
Coombs, Derek	Howell, Ralph (Norfolk, North)	Pounder, Rafton
Cooper, A. E.	Hunt, John	Powell, Rt. Hn. J. Enoch
Cordle, John	Hutchison, Michael Clark	Price, David (Eastleigh)
Corfield, F. V.	Iremonger, T. L,	Prior, Rt. Hn. J. M. L.
Cormack, Patrick	Irvine, Bryant Godman (Rye)	Proudfoot, Wilfred
Costain, A. P.	James, David	Pym, Rt. Hn. Francis
Critchley, Julian	Jenkin, Patrick (Woodford)	Quennell, Miss J. M.
Crouch, David	Jennings, J. C. (Burton)	Raison, Timothy
Crowder, F. P.	Johnson Smith, G. (E. Grinstead)	Ramsden, Rt. Hn. James
Curran, Charles	Jones, Arthur (Northants, South)	Rawlinson, Rt. Hn. Sir Peter
Dalkeith, Earl of	Jopling, Michael	Redmond, Robert
Dance, James	Joseph, Rt. Hn. Sir Keith	Reed, Laurance (Bolton, East)
Davies, Rt. Hn. John (Knutsford)	Kaberry, Sir Donald	Rees, Hn. Peter (Dover)
d'Avigdor-Goldsmid, Sir Henry	Kellett, Mrs. Elaine	Rees-Davies, W. R.
d'Avigdor-Goldsmid, Maj.-Gen. Jack	Kerby, Capt. Henry	Renton, Rt. Hn. Sir David
Dean, Paul	Kershaw, Anthony	Rhys Williams, Sir Brandon
Deedes, Rt. Hn. W. F.	Kilfedder, James	Ridley, Hn. Nicholas
Digby, Simon Wingfield	Kimball, Marcus	Ridsdale, Julian
Dixon, Piers	King, Evelyn (Dorset, South)	Roberts, Michael (Cardiff, North)
Dodds-Parker, Douglas	King, Tom (Bridgwater)	Roberts, Wyn (Conway)
Douglas-Home, Rt. Hn. Sir Alec	Kinsey, J. R.	Rodgers, Sir John (Sevenoaks)
Drayson, G. B.	Kirk, Peter	Rossi, Hugh (Hornsey)
du Cann, Rt. Hn. Edward	Kitson, Timothy	Rost, Peter
Dykes, Hugh	Knight, Mrs. Jill	Royle, Anthony
Eden, Sir John	Knox, David	Russell, Sir Ronald
Edwards, Nicholas (Pembroke)	Lambton, Antony	St. John-Stevas, Norman
Elliot, Capt. Walter (Carshalton)	Lane, David	Sandys, Rt. Hn. D.
Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Langford-Holt, Sir John	Scott, Nicholas
Emery, Peter	Legge-Bourke, Sir Harry	Scott-Hopkins, James
Farr, John	Le Marchant, Spencer	Sharples, Richard
Fell, Anthony	Lewis, Kenneth (Rutland)	Shaw, Michael (Sc'b'gh & Whitby)
Fenner, Mrs. Peggy	Lloyd, Rt. Hn. Geoffrey (Sut'n C'd field)	Shelton, William (Clapham)
Fidler, Michael	Lloyd, Ian (P'tsm'th, Langstone)	Simeons, Charles
Finsberg, Geoffrey (Hampstead)	Lloyd, Rt. Hn. Selwyn (Wirral)	Sinclair, Sir George
Fisher, Nigel (Surbiton)	Longden, Gilbert	Skeet, T. H. H.
Fletcher-Cooke, Charles	Loveridge, John	Smith, Dudley (W'wick & L'mington)
Fookes, Miss Janet	McAdden, Sir Stephen	Soref, Harold
Fortescue, Tim	MacArthur, Ian	Speed, Keith
Foster, Sir John	McCrindle, R. A.	Spence, John
Fowler, Norman	McLaren, Martin	Sproat, Iain
Fox, Marcus	McMaster, Stanley	Stainton, Keith
Fraser, Rt. Hn. Hugh (St'fford & Stone)	Macmillan, Maurice (Farnham)	Stanbrook, Ivor
Fry, Peter	McNair-Wilson, Michael	Stewart-Smith, D. G. (Belper)
Galbraith, Hn. T. G.	McNair-Wilson, Patrick (New Forest)	Stodart, Anthony (Edinburgh, W.)
Gardner, Edward	Maddan, Martin	Stoddart-Scott, Col. Sir M.
Gibson-Watt, David	Madel, David	Stokes, John
Gilmour, Ian (Norfolk, C.)	Maginnis, John E.	Stuttaford, Dr. Tom
Gilmour, Sir John (Fife, E.)	Marples, Rt. Hn. Ernest	Sutcliffe, John
Glyn, Dr. Alan	Marten, Neil	Tapsell, Peter
Godber, Rt. Hn. J. B.	Maude, Angus	Taylor, Sir Charles (Eastbourne)
Goodhew, Victor	Maudling, Rt. Hn. Reginald
Gorst, John	Mawby, Ray	Taylor, Edward M. (G'gow, Cathcart)
Grant, Anthony (Harrow, C.)	Maxwell-Hyslop, R. J.	Taylor, Frank (Moss Side)
Gray, Hamish	Meyer, Sir Anthony	Taylor, Robert (Croydon, N. W.)
Green, Alan	Mills, Peter (Torrington)	Tebbit, Norman
Grieve, Percy	Mills, Stratton (Belfast, N.)	Temple, John M.
Griffiths, Eldon (Bury St. Edmunds)	Miscampbell, Norman	Thatcher, Rt. Hn. Mrs. Margaret
Grylls, Michael	Mitchell, David (Basingstoke)	Thomas, John Stradling (Monmouth)
Gummer, Selwyn	Mitchell, Lt.-Col. C. (Aberdeenshire, W)	Thomas, Rt. Hn. Peter (Hendon, S.)
Hall, Miss Joan (Keighley)	Moate, Roger	Thompson, Sir Richard (Croydon, S.)
Hall, John (Wycombe)	Molyneaux, James	Tilney, John
Hall-Davis, A. G. F.	Money, Ernle D.	Trafford, Dr. Anthony
Hamilton, Michael (Salisbury)	Monks, Mrs. Connie	Trew, Peter
Hannam, John (Exeter)	Monro, Hector	Tugendhat, Christopher

Turton, Rt. Hn. R. H.	Warren, Kenneth	Woodhouse, Hn. Christopher
van Straubenzee, W. R.	Weatherill, Bernard	Woodnutt, Mark
Vaughan, Dr. Gerard	Wells, John (Maidstone)	Worsley, Marcus
Vickers, Dame Joan	White, Roger (Gravesend)	Wylie, Rt. Hn. N. R.
Waddington, David	Whitelaw, Rt. Hn. William	Younger, Hon. George
Walder, David (Clitheroe)	Wiggin, Jerry
Walker, Rt. Hn. Peter (Worcester)	Wilkinson, John	TELLERS FOR THE AYES:
Walker-Smith, Rt. Hn. Sir Derek	Wolrige-Gordon, Patrick	Mr. Reginald Eyre and
Walters, Dennis	Wood, Rt. Hn. Richard	Mr. Jasper More.
Ward, Dame Irene
NOES
Abse, Leo	Duffy, A. E. P.	Lambie, David
Albu, Austen	Dunnett, Jack	Lamond, James
Allaun, Frank (Salford, E.)	Eadie, Alex	Latham, Arthur
Alldritt, Walter	Edelman, Maurice	Lawson, George
Allen, Scholefield	Edwards, Robert (Bilston)	Leadbitter, Ted
Archer, Peter (Rowley Regis)	Edwards, William (Merioneth)	Lee, Rt. Hn. Frederick
Armstrong, Ernest	Ellis, Tom	Leonard, Dick
Ashley, Jack	English, Michael	Lestor, Miss Joan
Ashton, Joe	Evans, Fred	Lever, Rt. Hn. Harold
Atkinson, Norman	Faulds, Andrew	Lewis, Arthur (W. Ham N.)
Bagier, Gordon A. T.	Fernyhough, E.	Lewis, Ron (Carlisle)
Barnes, Michael	Fisher, Mrs. Doris (B'ham, Ladywood)	Lipton, Marcus
Barnett, Joel	Fitch, Alan (Wigan)	Loughlin, Charles
Baxter, William	Fitt, Gerard (Belfast, W.)	Lyon, Alexander W. (York)
Beaney, Alan	Fletcher, Raymond (Ilkeston)	Lyons, Edward (Bradford, East)
Benn, Rt. Hn. Anthony Wedgwood	Fletcher, Ted (Darlington)	McBride, Neil
Bennett, James (Glasgow, Bridgeton)	Foot, Michael	McCann, John
Bidwell, Sydney	Ford, Ben	McCartney, Hugh
Blenkinsop, Arthur	Forrester, John	MacColl, James
Boardman, H. (Leigh)	Fraser, John (Norwood)	McElhone, Frank
Booth, Albert	Freeson, Reginald	McGuire, Michael
Bottomley, Rt. Hn. Arthur	Galpern, Sir Myer	Mackenzie, Gregor
Boyden, James (Bishop Auckland)	Garrett, W. E.	Mackie, John
Bradley, Tom	Gilbert, Dr. John	Mackintosh, John P.
Broughton, Sir Alfred	Ginsburg, David	Maclennan, Robert
Brown, Bob (N'c'tle-upon-Tyne, W.)	Gordon Walker, Rt. Hn. P. C.	McMillan, Tom (Glasgow, C.)
Brown, Hugh D. (G'gow, Provan)	Grant, George (Morpeth)	McNamara, J. Kevin
Brown, Ronald (Shoreditch & F'bury)	Grant, John D. (Islington, East)	MacPherson, Malcolm
Buchan, Norman	Griffiths, Eddie (Brightside)	Mallalieu, E. L. (Brigg)
Buchanan, Richard (G'gow, Sp'burn)	Griffiths, Will (Exchange)	Mallalieu, J. P. W. (Huddersfield, E.)
Butler, Mrs. Joyce (Wood Green)	Grimond, Rt. Hn. J.	Marks, Kenneth
Callaghan, Rt. Hn. James	Gunter, Rt. Hn. R. J.	Marquand, David
Campbell, I. (Dunbartonshire, West)	Hamilton, James (Bothwell)	Marsh, Rt. Hn. Richard
Cant, R. B.	Hamilton, William (Fife, W.)	Mason, Rt. Hn. Roy
Carmichael, Neil	Hannan, William (Glasgow, Maryhill)	Mayhew, Christopher
Carter, Ray (Birmingh'm, Northfield)	Hardy, Peter	Meacher, Michael
Carter-Jones, Lewis (Eccles)	Harper, Joseph	Mellish, Rt. Hn. Robert
Castle, Rt. Hn. Barbara	Harrison, Walter (Wakefield)	Mendelson, John
Clark, David (Colne Valley)	Hart, Rt. Hn. Judith	Mikardo, Ian
Cocks, Michael (Bristol, S.)	Hattersley, Roy	Millan, Bruce
Cohen, Stanley	Healey, Rt. Hn. Denis	Miller, Dr. M. S.
Coleman, Donald	Heffer, Eric S.	Milne, Edward (Blyth)
Concannon, J. D.	Hilton, W. S.	Molloy, William
Conlan, Bernard	Horam, John	Morgan, Elystan (Cardiganshire)
Corbet, Mrs. Freda	Houghton, Rt. Hn. Douglas	Morris, Alfred (Wythenshawe)
	Howell, Denis (Small Heath)	Morris, Charles R. (Openshaw)
Cox, Thomas (Wandsworth, Central)	Huckfield, Leslie	Moyle, Roland
Crawshaw, Richard	Hughes, Rt. Hn. Cledwyn (Anglesey)	Mulley, Rt. Hn. Frederick
Cronin, John	Hughes, Dr. Mark (Durham)	Murray, Hn. Ronald King
Crosland, Rt. Hn. Anthony	Hughes, Robert (Aberdeen, North)	Ogden, Eric
Grossman, Rt. Hn. Richard	Hughes, Roy (Newport)
Cunningham, G. (Islington, S. W.)	Hunter, Adam	O'Halloran, Michael
Cunningham, Dr. J. A. (Whitehaven)	Irvine, Rt. Hn. Sir Arthur (Edge Hill)	O'Malley, Brian
Dalyell, Tam	Janner, Greville	Oram, Bert
Darling, Rt. Hn. George	Jay, Rt. Hn. Douglas	Orbach, Maurice
Davidson, Arthur	Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)	Orme, Stanley
Davies, Denzil (Llanelly)	Jenkins, Hugh (Putney)	Oswald, Thomas
Davies, G. Elfed (Rhondda, E.)	Jenkins, Rt. Hn. Roy (Stechford)	Paget, R. T.
	John, Brynmor	Palmer, Arthur
Davies, Ifor (Gower)	Johnson, Carol (Lewisham, S.)	Pannell, Rt. Hn. Charles
Davies, S. O. (Merthyr Tydvil)	Johnson, James (K'ston-on-Hull, W.)	Pardoe, John
Davis, Clinton (Hackney, Central)	Johnson, Walter (Derby, South)	Parker, John (Dagenham)
Deakins, Eric	Jones, Dan (Burnley)	Parry, Robert (Liverpool, Exchange)
Delargy, H. J.	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Pavitt, Laurie
Dell, Rt. Hn. Edmund	Jones, Gwynoro (Carmarthen)	Peart, Rt. Hn. Fred
Dempsey, James	Jones, Barry (Flint, East)	Pendry, Tom
Devlin, Miss Bernadette	Jones, T. Alec (Rhondda, West)	Pentland, Norman
Doig, Peter	Judd, Frank	Perry, Ernest G.
Dormand, J. D.	Kaufman, Gerald	Prentice, Rt. Hn. Reg.
Douglas, Dick (Stirlingshire, E.)	Kelley, Richard	Prescott, John
Douglas-Mann, Bruce	Kerr, Russell	Price, J. T. (Westhoughton)
Driberg, Tom	Kinnock, Neil	Price, William (Rugby)

Probert, Arthur	Smith, John (Lanarkshire, North)	Wainwright, Edwin
Rankin, John	Spearing, Nigel	Walden, Brian (B'm'ham, All Saints)
Reed, D. (Sedgefield)	Spriggs, Leslie	Walker, Harold (Doncaster)
Rees, Merlyn (Leeds, S.)	Stallard, A. W.
Rhodes, Geoffrey	Steel, David	Wallace, George
Richard, Ivor	Stewart, Donald (Western Isles)	Watkins, David
Roberts, Albert (Normanton)	Stewart, Rt. Hn. Michael (Fulham)	Weitzman, David
Roberts, Rt. Hn. Goronwy (Caernarvon)	Stoddart, David (Swindon)	Wellbeloved, James
Robertson, John (Paisley)	Storehouse, Rt. Hn. John	Wells, William (Walsall, N.)
Roderick, Caerwyn E. (Br'c'n & R'dnor)	Strang, Gavin	White, James (Glasgow, Pollok)
Rodgers, William (Stockton-on-Tees)	Strauss, Rt. Hn. G. R.	Whitlock, William
Roper, John	Summerskill, Hn. Dr. Shirley	Willey, Rt. Hn. Frederick
Rose, Paul B.	Swain, Thomas	Williams, Alan (Swansea, W.)
Ross, Rt. Hn. William (Kilmarnock)	Taverne, Dick	Williams, Mrs. Shirley (Hitchin)
Sheldon, Robert (Ashton-under-Lyne)	Thomas, Rt. Hn. George (Cardiff, W.)	Williams, W. T. (Warrington)
Shore, Rt. Hn. Peter (Stepney)	Thomas, Jeffrey (Abertillery)	Wilson, Alexander (Hamilton)
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Thomson, Rt. Hn. G. (Dundee, E.)	Wilson, Rt. Hn. Harold (Huyton)
Short, Mrs. Renée (W'hampton, N. E.)	Thorpe, Rt. Hn. Jeremy	Wilson, William (Coventry, S.)
Silkin, Rt. Hn. John (Deptford)	Tinn, James	Woof, Robert
Silkin, Hn. S. C. (Dulwich)	Tomney, Frank
Sillars, James	Torney, Tom	TELLERS FOR THE NOES:
Silverman, Julius	Tuck, Raphael	Mr. William Hamling and
Skinner, Dennis	Urwin, T. W.	Mr. John Golding.
Small, William	Varley, Eric G.
Resolved,
That this House approves Mr. Chancellor of the Exchequer's Statement of 27th October on Public Expenditure and Taxation and the White Papers, New Policies for Public Spending (Command Paper No. 4515) and Investment Incentives (Command Paper No. 4516).