Commons Sitting of 22 April 1971

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

  ISLE OF WIGHT COUNTY COUNCIL BILL
  Order for consideration, as amended, read.
  Hon. Members: Object.
  Bill to be considered upon Tuesday next.

PETITION

  Rhymney Valley (Hospital Services)
  Mr. Fred Evans: To the Honourable the Commons of the United Kingdom of Great Britian and Northern Ireland in Parliament assembled.
  The Humble Petition of the residents of the Rhymney Valley sheweth that there is grave foreboding over the effect of proposals now before the Secretary of State for Wales for the reorganisation of hospital services in the Greater Cardiff area in so far as they will affect the Valley, for these proposals were prepared without adequate prior consultation.
  A representative committee appointed by a public meeting and consistently supported by the public has for two-and-a-half years tried, without success, to obtain an opportunity for adequate consultation upon the planning of hospital health services.
  The people are apprehensive that proposals without prior consultation will not provide adequate services for effective community care in the Rhymney Valley now and in the future, in spite of the many millions of pounds of public money which has been spent in the Cardiff area.
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  Wherefore your Petitioners pray that the present proposals should be set aside and that the Secretary of State for Wales should immediately institute a review of present facilities and plan, in consultation with all interested organisations, including particularly local health authorities, general medical practitioners and other local informed medical opinion, for the development and expansion of Caerphilly District Miners' Hospital to meet the needs of this rapidly growing area.
  And your Petitioners, as in duty bound, will every pray.
  To lie upon the Table.

ORAL ANSWERS TO QUESTIONS
  HOME DEPARTMENT

    Drug Addiction (Portsmouth)
    Mr. Juddasked the Secretary of State for the Home Department what reports he has received of increasing drug addiction in Portsmouth; how these reports compare with reports from other major urban areas; and what consultations he has had with the appropriate authorities concerning improved preventive measures.
    The Minister of State, Home Office (Mr. Richard Sharples): The Chief Constable of Hampshire's information is that in 1970 dependence on narcotic drugs such as heroin remained reasonably static, but that there was a marked increase in the use of LSD. This is much in line with reports from elsewhere. Home Office inspectors keep in touch with the police Drug Squad, and the local drug dependency centre.
    Mr. Judd: I thank the hon. Gentleman for that reply. Does not he agree that, while excellent work is being done in rehabilitation in the Portsmouth area and similar urban centres, this is still a serious problem, particularly as it affects the young; that there is need for far greater emphasis on preventive measures, including public education; and that resources on the necessary scale are likely to be provided only on a national level?
    Mr. Sharples: Yes, Sir. The Misuse of Drugs Bill will make a contribution.

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    Emphasis particularly on the educative rôle of the Advisory Council is most important.

    Probation Service
    Mrs. Renée Shortasked the Secretary of State for the Home Department what proposals he has for the recruitment and training of the additional probation officers announced recently.
    Mr. Wilkinsonasked the Secretary of State for the Home Department whether he will announce special measures to improve the recruitment and retention of personnel for the probation and after-care services.
    The Under-Secretary of State for the Home Department (Mr. Mark Carlisle): New one-year probation training courses for mature students at the polytechnics of Birmingham, Manchester and Newcastle-upon-Tyne have been advertised to start this autumn. These courses, together with additional places on existing courses, should provide over half of the proposed 200 new training places. Plans will be made for further places to be available in 1972.
    Mrs. Short: I am obliged to the hon. and learned Gentleman. I am delighted to hear that there is to be an expansion of training facilities for probation officers, who are in very short supply. Is the hon. and learned Gentleman aware that to continue with a situation in which child care officers can get very much more—perhaps £300 or £400 a year—than probation officers is leading to a crisis in the probation service, and that many probation officers are leaving? Does not he think that he should look at this aspect urgently?
    Mr. Carlisle: I assure the hon. Lady that I am fully aware of all the relevant considerations. There are several other Questions on the Order Paper, including one from her, relating specifically to this issue.
    Mr. Wilkinson: Can my hon. and learned Friend assure us that the pay negotiations now in train will be expedited, since not only is the starting salary of fully qualified after-care and probation officers about £400 less than for their counterparts in the social security departments of local authorities, but also, fur-
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    ther up the scale, there is every inducement for trained personnel to make a transfer?
    Mr. Carlisle: As I said, there are Questions later about this. My right hon. Friend the Home Secreary is well aware of the urgency.
    Mr. Chapman: Does my hon. and learned Friend—whom we all congratulate on his recent legal promotion—agree that, as well as being the lowest-paid people doing social work, they are also doing some of the most important and most diverse work, not only in the criminal courts but in the divorce and county courts? In view of this, and in view of the terrible shortage in the West Midlands about which I know from personal knowledge, it is a matter of urgency that they should be granted a pay scale beginning at £1,380 per annum.
    Mr. Carlisle: I assure my hon. Friend that I am fully aware of the important part which probation officers play in the penal system, and it is being taken into account.
    Mr. Peter Archerasked the Secretary of State for the Home Department how many recruits have joined the Probation Service in the last period of 12 months for which figures are available; and how many of them are graduates.
    Mr. Carlisle: 430 persons were appointed as established officers in 1970. 133 held a university qualification, which includes, as well as a degree, a certificate or diploma in social studies awarded by a university.
    Mr. Archer: Will the hon. and learned Gentleman forgive me if I add a further voice to the lobby pressing him? Without in the least underating the contribution made by non-graduate probation officers, including those holding diplomas, would it not be a tragedy if graduates were attracted away from the probation service by better salary and career structures elsewhere?
    Mr. Carlisle: I entirely agree with the hon. and learned Gentleman that there is a need for professionally trained graduates to join the probation service, and they will always be welcome.
    Mr. Fowler: Does my hon. and learned Friend agree that the point about this

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    Question and Question No. 2 is that over a long period the probation service has not been given sufficient resources and that there is now substantial justification for treating it as a special case in view of the pressure on prison accommodation and the need to develop alternatives to prison sentences?
    Mr. Carlisle: I take account of what my hon. Friend said. There are several more specific Questions on this subject later on the Order Paper.
    Mr. David Stoddartasked the Secretary of State for the Home Department if he will ensure that, following the interim review of the pay of probation officers, salaries are offered that will attract suitable people to the Probation Service and offer an incentive to existing officers to remain in the service.
    Mrs. Renée Shortasked the Secretary of State for the Home Department what progress has been made in negotiations on the probation officers' pay claim.
    Mr. Carlisle: The Joint Negotiating Committee for the Probation Service is at present awaiting an indication of the Government's attitude. My right hon. Friend fully recognises the importance of bringing these negotiations to an early and satisfactory conclusion.
    Mr. Stoddart: Will the Minister give that indication of his attitude as soon as possible? As has been shown by the many questions on the subject this afternoon, there is a great deal of concern about the loss of officers from the service because of low pay and the bad career structure.
    Mr. Carlisle: I fully appreciate the expressions of concern from both sides of the House. All I can say is that the Home Secretary hopes to be in a position to give that indication in the near future.
    Mrs. Renée Short: Was not the interim pay award promised by the Labour Government to be operative from last January?
    Mr. Carlisle indicated dissent.
    Mrs. Short: I stand corrected. Does not the hon. and learned Gentleman think that take-home pay of £16 a week for a qualified young probation officer offers no incentive to him to stay in the service
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    and no incentive for new officers to enter the service?
    Mr. Carlisle: In regard to the factual situation, I would point out that the agreement was entered into in April, 1970. It was an agreement which was due to last for 21 months until December, 1971, but it contained a "break" clause which provided for negotiation from January, 1971, to consider whether there was a justification for an interim pay award to take effect from April this year. If any pay award is made as a result of these negotiations, the Home Secretary would have power to backdate it to 1st April. In regard to the second part of the hon. Lady's comments, I fully appreciate the great value of the part played by the probation service and the importance of having adequately trained members of the probation service.
    Mr. Hiley: If the main problem is shortage of money, as I expect it is, would the Under-Secretary consider averaging the remuneration of probation officers with that of other local government officers because people in the probation service are better equipped to do the job than are those in other sections of local government service?
    Mr. Carlisle: My hon. Friend's suggestion may be attractive but has its difficulties. Pay in the probation service is a matter for the Home Secretary, whereas the Government have no say about the pay in respect of other social workers who are paid by the local authorities.
    Mr. Hooson: Since concern is felt on this matter in many sections of the community, does it matter whether the matter of pay is dealt with by the government or by the local authority? In view of the increased demands upon the probation service and the tremendous pressures to which it is subjected, it is surely unrealistic to expect a good probation service at the present level of remuneration.
    Mr. Carlisle: As the hon. and learned Gentleman knows, we have already announced increased figures in respect of the probation service, but my point in answer to my hon. Friend the Member for Pudsey (Mr. Hiley) was a valid one: it is difficult to merge two amounts of money when they come from two separate

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    sources. The amounts paid by local authorities to the social services is one matter which is being presented to the Home Office in relation to the present negotiations.
    Mr. Deedes: Would the Under-Secretary of State also consider, apart from the merits of the claim, the important considerations which bear upon this matter, not least the rival attraction of other social services and the increased load which we may wish to place on the probation service, not least in the realm of parole?
    Mr. Carlisle: I can assure my right hon. Friend that through the representations which have been made and as a result of the meetings of the Home Secretary with the National Association of Probation Officers, the Home Secretary is fully aware of the strength of feeling on the first point and of the need for the second.
    Mr. Elysian Morgan: Would not the Under-Secretary accept as a matter of principle that a pay range of between £970 and £2,000 per annum is wholly unrealistic for the tasks which are now to be carried out by the probation service, certainly bearing in mind the extended tasks in the realm of non-custodial sentences which may very soon be placed on that service?
    Mr. Carlisle: The hon. Gentleman realises that it would be improper of me to make any comment about existing pay scales at a time when negotiations are proceeding, other than to remind the House that they were the scales which were negotiated in January, 1970, and at that time represented a 15·6 per cent. increase on the previous existing scale.
    Mr. Barnesasked the Secretary of State for the Home Department if he will take steps to grant basic grade officers in the Probation Service comparability with local authority social service Departments.
    Mr. Edward Lyonsasked the Secretary of State for the Home Department what steps he is taking to halt the drain of personnel from the Probation Service to local social service departments.
    Mr. Carlisle: The salaries of local authority social workers are a factor
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    which is being borne in mind in the current review of probation pay.
    Mr. Barnes: Would the Under-Secretary not agree that during the last six months competition from local authority social work departments and also a sharp increase in the cost of living, particularly in the London area, has brought about a situation in London in which the service, far from being able to extend its operations, cannot even fill existing vacancies? Does he not think that he should put the salary scales on a par with local authority social work departments so as to get the necessary recruits?
    Mr. Carlisle: I am not sure that the question of the rise in the cost of living is directly relevant to this Question, but in regard to the hon. Member's other point I agree that it is within the last six months that this substantial alteration in differential between local authority social workers and probation officers has occurred. As I said in answer to an earlier Question, the Home Office is aware that 78 probation officers left to join local authority social services during 1970 and we are being continually pressed on this matter by the National Association of Probation Officers. However, I can go no further than to say that the Home Secretary is aware of these matters and is considering them.
    Mr. Spearingasked the Secretary of State for the Home Department what representations on matters for which he is responsible he has received from the Middlesex Area Probation and After-Care Service; what reply he has sent; and whether he will make a statement about comparability of pay scales of probation officers with officers in local authority social work departments.
    Mr. Carlisle: The Home Office has received a number of such representations about probation salaries. Replies have said that these will be noted. The salaries of local authority social workers are being borne in mind in the current review of probation pay.
    Mr. Spearing: Is the hon. and learned Gentleman aware that until the announcement of the pay award comes through, many probation officers in the meantime will be working under a great

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    deal of personal sacrifice because they are waiting before applying for other work in social work departments? Since he said that last year there were 78 transfers, could he say how many transfers there have been this year?
    Mr. Carlisle: Although I am aware of the whole position, I do not feel that anybody would wish to exaggerate it. I am afraid that I cannot without notice give the figures for this year, but I have reason to believe that they are running roughly at the same level as they were during 1970. However, I would have to check whether I am correct.
    Mr. Marksasked the Secretary of State for the Home Department if he will introduce legislation to transfer the Probation Service to the social services departments of local authorities.
    Mr. Carlisle: No, Sir.
    Mr. Marks: Is the hon. and learned Gentleman aware that the probation officers are becoming increasingly isolated from other social workers both in their professional organisation and in their pay and conditions? Will he have discussions about this with all concerned? The Seebohm Committee was precluded from reviewing the probation service. Will the Minister reconsider this question?
    Mr. Carlisle: I am perfectly prepared at any stage to have discussions with anyone on this matter. The position of the probation service is somewhat different from that of other social services because of its close relationship with the courts and its link with the prison system. For that reason it has always remained a separate service and not a local authority service.
    Mr. Adam Butler: Will my hon. and learned Friend take note that, whatever his intentions, if the present trend continues in the county of Leicestershire there will be a transfer? Is the Minister aware that in Leicester, in 1970, of the 17 field officers operating outside prisons four left the service, three of whom went to local authorities? Is this not a compelling argument for considering as generously as possible in the present economic circumstances the salaries and promotion prospects of these men?
    Mr. Carlisle: I am fully aware and take note of everything my hon. Friend says. In 1970, in the country as a whole 78 probation officers left to enter local authority social service. As I said in reply to an earlier Question, this is obviously a matter of importance to the Home Office in the present negotiations.

    Drugs (Official Conference)
    Mr. Dalyellasked the Secretary of State for the Home Department if he will make a statement on his official conference on drugs at Moreton-in-Marsh.
    Mr. Sharples: The event last month to which the hon. Member refers was a seminar organised by the Home Office for heads of police drugs squads to study general aspects of the drug problem.
    Mr. Dalyell: What did the Department learn from the seminar about the early identification of drug taking among young people?
    Mr. Sharples: It was not the purpose of the seminar, part of which I attended myself, to do that. The seminar was concerned with prevention, the importation of drugs and drug trafficking. It was mainly a seminar for drugs officers in police forces.

    Civil Defence
    Mrs. Knightasked the Secretary of State for the Home Department what are his intentions with regard to the future rôle and organisation of civil defence; and if he will make a statement.
    Mr. Sharples: The Government's examination of Home Defence arrangements is still in progress and it is hoped that a statement will be ready before the Summer Recess.
    Mrs. Knight: Will my hon. Friend bear in mind that the civil defence people carry out a wide-ranging group of functions and that they are valuable voluntary workers who feel concerned about what the future of the service is to be? Will my hon. Friend expedite the report as quickly as he can?
    Mr. Sharples: I appreciate the concern of the voluntary workers who have taken part in civil defence activities, but it is right that there should be a full and comprehensive review of the whole of the

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    civil defence arrangements, which is what we are embarked upon, to ensure that we achieve not only effectiveness but cost-effectiveness.
    Mr. Hugh Jenkins: Is it being taken into account in the review that it is generally accepted that there is no such thing as civil defence against nuclear war and that the services of these very good people might be better used in creating a national emergency service for general civil disturbances and emergencies of various sorts?
    Mr. Sharples: We are carrying out a very broad review in order to cover the whole question, including the kind of question which the hon. Gentleman raised.
    Mr. Longden: If, while the review is going on, a citizen wants to know, as one of my constituents does, what he or she should do in the event of a surprise nuclear attack, to whom does he or she turn for information?
    Mr. Sharples: I think that in the short term she had better ask my hon. Friend.

    Northern Ireland
    Mr. St. John-Stevasasked the Secretary of State for the Home Department whether he will make a statement of policy concerning Northern Ireland.
    Mr. Roseasked the Secretary of State for the Home Department whether he will make a further statement on the current situation in Northern Ireland, so far as Her Majesty's Government is responsible.
    Mr. Sharples: I have nothing to add to the statement made by my right hon. Friend the Prime Minister on 22nd March and to what my right hon. Friend the Home Secretary said in the debate on 6th April.
    Mr. St. John-Stevas: In view of the alarming rumours circulating about plots to kidnap members of the Armed Services and hold them to ransom, can my hon. Friend assure the House that precautions are being take to protect them and public officials in Northern Ireland?
    Mr. Sharples: I can assure my hon. Friend that the necessary precautions are
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    being taken to deal with any threat about which we know.
    Mr. Rose: Will the hon. Gentleman make a statement on the efficacy of attempts to find unlicensed arms? Will he also take into consideration the more than 70,000 licensed arms in Northern Ireland and the more than 80 rifle clubs, many of which have been joined by former members of the B Specials and are connected with U.V.F.? Will he look into this matter, which is an equal cause of concern as extremists on the other side?
    Mr. Sharples: The Northern Ireland Government have initiated a check with all holders of firearms under certificate in Northern Ireland to see whether it is necessary for them to possess the weapons. The R.U.C. is undertaking these checks.
    Mr. Lane: Does my hon. Friend agree that there is very wide public support and admiration for the policy of firmness coupled with restraint under which the Army is carrying out its disagreeable task?
    Mr. Sharples: I am grateful to my hon. Friend and entirely agree with what he said.
    Mr. Dell: Can the hon. Member say whether the policy embodied in the Industrial Development Bill introduced at Stormont yesterday, which enables the Stormont Government to take equity holding in private industry, has the approval of Her Majesty's Government and whether Stormont will be recommending Her Majesty's Government to do the same thing in development areas in this country?
    Mr. Sharples: All that the Stormont Government do in these matters is for the Stormont Government. They have responsibility for the action they take.
    Mr. Kilfedder: Will my hon. Friend persuade the Prime Minister to visit Northern Ireland next month, because the Ulster Festival '71 will open next month and its success will help to restore the economy of Northern Ireland to normal and perhaps will help to reduce tension.
    Mr. Sharples: I understand that a later Question on this matter is addressed to my right hon. Friend the Prime

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    Minister. If my hon. Friend catches your eye, Mr. Speaker, it will be possible for him to raise that point then.
    Mr. Kaufman: Can the hon. Gentleman say what progress has been made in tracking down the murderers of the three young soldiers, as the Catholic community, in particular, in Northern Ireland is anxious that the perpetrators of this filthy crime should be discovered?
    Mr. Sharples: I cannot report on the progress being made. The hon. Gentleman will understand that this is a matter for the police. However, the whole House shares his sentiments.

    Mr. Abbie Hoffman
    Mr. Fellasked the Secretary of State for the Home Department what were the circumstances under which Mr. Abbie Hoffman was allowed into Great Britain.
    Mr. Sharples: Mr. Hoffman was inadvertently admitted as a visitor on 21st March. He left for the United States three days later.
    Mr. Fell: I am delighted that it was inadvertance. But is not the situation rather serious? Surely the Yippies are well known to the Home Office. They have stated, "We are going to make them"—that is, Britain—"regret letting us in". That was over a year ago. They further stated that—[HON. MEMBERS: "Reading".] It is best to get things right, is it not? They further stated that they supported the National Liberation Front in Vietnam, the Black Panther movement and the Irish Republican Army. Perhaps they were lucky to get in, but what does the Minister propose to do to prevent the inadvertent letting in of undesirable people of this type?
    Mr. Sharples: Considering the very large number of people passing through London Airport, the immigration officers do an extremely good job. A mistake was made in this case, and steps are being taken to ensure that it does not recur.
    Mr. Merlyn Rees: Who is Mr. Hoffman?
    Mr. Sharples: I have a long description of Mr. Hoffman. Perhaps I had
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    better write to the hon. Gentleman setting out the full description.

    Animal Welfare (Littlewood Committee)
    Miss Fookesasked the Secretary of State for the Home Department if he will take steps to implement the recommendations made in the Report of the Littlewood Committee on the welfare of animals, in particular by strengthening his Department's advisory committee on animal welfare.
    Mr. Carlisle: I am not yet in a position to add anything to the reply which I gave on 18th November to a Question by the hon. Member for Glasgow, Govan (Mr. Rankin).—[Vol. 806, c. 442.]
    Miss Fookes: May I ask what that reply was, as I do not have it to hand?
    Mr. Carlisle: My hon. Friend may ask, but, in the words of F. E. Smith, although it may make her wiser, I am not sure that it will make her any the better informed. The words were:
    "I am not at present in a position to make a statement."

    Parole
    Mr. Hardyasked the Secretary of State for the Home Department if he will state the number and proportion of those granted parole who were released from prison within six weeks of completing the minimum period of their imprisonment.
    Mr. Carlisle: Out of 2,171 cases which have been analysed, the answer is 1,133, or 52·2 per cent.
    Mr. Hardy: I thank the Minister for that reply and for the release on parole today of a constituent about whom I wrote to him. Will the Minister consider reducing the time which must elapse before parole is allowed, and so make a contribution to the problem of overcrowding in our prisons?
    Mr. Carlisle: As the hon. Gentleman knows, anyone who has served either one-third of his sentence or 12 months is eligible for parole. The matter of extending parole is being considered in the Home Office, and we have recently set up two new parole panels in Manchester and Birmingham. I cannot say anything further at this stage.

    Telephone Calls (Tapping)
    Mr. Leslie Huckfieldasked the Secretary of State for the Home Department who is responsible for the authorisation of the tapping of telephone calls; and to whom this authorisation is given.
    Mr. Carlisle: The practice follows the recommendations made in 1957 in the Report of the Committee of Privy Councillors appointed to inquire into the interception of communications.
    Mr. Huckfield: That is an interesting though not very informative reply. Will the hon. and learned Gentleman tell me how many telephone tappings were authorised last year, and whether the practice of tapping the telephone lines of hon. Members of this House has been resumed?
    Mr. Carlisle: The answer to the first part of the supplementary question is, "No, Sir, I cannot." Birkett recommended that it would be wrong for figures to be disclosed by the Secretary of State. The answer to the second part of the question is that there has been no change in practice from that announced by the previous Prime Minister on 17th November, 1966.
    Mr. St. John-Stevas: May I ask how the liberties of the subject are to be protected in this matter? When I addressed a letter to the Home Office about the fears of a distinguished Weymouth Street doctor that his telephone was being tapped, I was told that I could be given no information of any kind whatsoever.
    Mr. Carlisle: I am aware of the letter which my hon. Friend wrote to me and of my reply. I must stand by what I said, that it has been the agreed policy of previous Governments for many years, and of the present Government, that no answers of a factual nature can be given in these matters.
    Sir Elwyn Jones: Was not the Birkett Committee satisfied that this power was being exercised responsibly and carefully? Is there any reason to think that there has been any diminution in the care taken since the Birkett Committee reported?
    Mr. Carlisle: I am grateful to the right hon. and learned Gentleman for what he said. I entirely agree with what the Birkett Committee recommended,
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    and I can assure the House, as I said in my answer, that the practice recommended by that Committee has been effectively carried out since.

    Fire Services
    Mr. Tilneyasked the Secretary of State for the Home Department what are his plans for the expansion of fire services staff for the ensuring year, when the Fire Precautions Bill is enacted.
    Mr. Sharples: Provision has been made for an eventual addition of about 400 to the staff of fire authorities for the purposes of the Fire Precautions Bill, but precise requirements from time to time will be decided by the individual authorities.
    Mr. Tilney: What consultation has my hon. Friend had with the fire brigades and the Chief Fire Officers Association on methods of recruitment and training?
    Mr. Sharples: Discussions have taken place about this, but the implementation of the increases will be a matter for the individual fire authorities and will depend upon the rate at which the various stages of the Fire Precautions Bill are brought into operation.
    Mr. Merlyn Rees: When will the recruitment of the extra staff in the Home Office begin?
    Mr. Sharples: Very few extra staff will be required in the Home Office, and I do not think that any particular problem arises there.

    Magistrates' Courts (Applications for Bail)
    Mr. Clinton Davisasked the Secretary of State for the Home Department if he will introduce legislation to ensure that an accused person appearing at a magistrates' court is asked whether or not he wishes to apply for bail.
    Mr.Carlisle: No, Sir. This is not a matter on which a mandatory provision would be appropriate.
    Mr. Clinton Davis: Is the hon. and learned Member aware of the disquieting information disclosed by Mr. Michael Zander in the last edition of the "Criminal Law Review" that in about 50 per cent. of the 513 cases which he investigated, the question of bail was

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    not first raised by the court? Is he further aware that there is a danger that an accused person who is not aware of his entitlement to make an application could well find that what might be a successful application could not be entertained?
    Mr. Carlisle: I am aware of the article which Mr. Michael Zander has written in the "Criminal Law Review", and the Home Office is considering the matter generally. I do not think that a mandatory provision requiring magistrates to ask every person whether he required bail, even if they have already decided that in no circumstances would it be granted, is the appropriate method for dealing with this problem.
    Mr. Elystan Morgan: Does not the overriding presumption of an accused person's innocence up to the time he is found guilty demand such a mandatory provision as the Minister rejects?
    Mr. Carlisle: With respect, I do not think it does. Mr. Michael Zander in his article pointed out that there were cases in which bail is "not a realistic possibility". It would seem absurd in those cases to make a mandatory requirement on courts to invite the person to apply for bail when they clearly were not able to give it.

    West Yorkshire Constabulary
    Mr. Edwin Wainwrightasked the Secretary of State for the Home Department if he will call for a report from the Chief Constable of the West Yorkshire Constabulary, giving the number

    Year

    Recruitment excluding transfers

    Wastage (including normal loss e.g. through retirement, but excluding transfers)

    Wastage*of officers with less than 10 years' service

    Wastage* of officers with 10 to 20 years' service

    Authorised establishment at 31st December

    Strength at 31st December

    Deficiency

    1966

    280

    196

    —

    —

    4,602

    3,439

    1,163

    1967

    342

    169

    —

    —

    4,663

    3,578

    1,085

    1968

    205

    244

    47

    12

    4,663

    3,527

    1,136

    (from 1st October)

    (from 1st October)

    1969

    265

    236

    149

    24

    4,663

    3,532

    1,131

    1970

    296

    167

    111

    12

    4,663

    3,648

    1,015

    1971

    76

    41

    22

    7

    4,663

    3,680

    983

    (1st January to 31st March)

    (31st March)

    (31st March)

    * Information is not available for the period prior to amalgamation on 1st October, 1968.

    of policemen who have left the police force during each of the past five years, the respective numbers who had served less than 10 years, and from 10 to 20 years, the numbers recruited each year and the present shortfall.
    Mr. Sharples: As the answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Wainwright: Would the hon. Gentleman agree that the figures he has given prove that for too long we have been short of manpower in our police force, especially in the area covered by the West Yorkshire Constabulary? If the recent increase does not stop this wastage in the police force, will he guarantee that there will be a review within six months to try to make certain that new measures are taken in respect of salaries to improve recruitment? What is he doing about staff appraisal and other service conditions in the police force to try to make the service more attractive?
    Mr. Sharples: The matters referred to in the latter part of the hon. Gentleman's supplementary are matters for the Police Council and for negotiation in that council through the normal channels. I recognise that there is a problem in the West Yorkshire police force but I am glad to say that the rate of wastage has been going down and that, as compared with a net wastage of 39 in 1968, there was in 1970 an overall increase in the strength of the force of 129.
    Following is the information:

    London Airport (Taxi Service)
    Dr. Glynasked the Secretary of State for the Home Department whether, in view of the unsatisfactory arrangements for travellers arriving at London Airport seeking taxi services, he will take steps to ensure that the existing six-mile limit is altered to anywhere in the greater London area.
    Mr. Sharples: The Committee on the London Taxicab Trade has recommended that taxi drivers should be compelled to accept all hirings from London Airport to certain specified postal districts in central London. This and other approaches to the problem are being considered in the consultations following upon the Committee's report.
    Dr. Glyn: I thank my hon. Friend for that helpful answer. Is he aware that the first impression received by visitors when they arrive at London Airport is a most unfortunate one and that many taxi drivers would welcome some action since the situation has given taxi drivers a very bad name? Is he also aware that a change in the law may require special byelaws by the airport authority to enable any steps to be effective because these taxi ranks are on private property?
    Mr. Sharples: Yes, Sir, I am aware of the problem to which my hon. Friend refers, and I hope that we shall be able to proceed with the recommendation in the Stamp Report.

    Communications Media (Political Bias)
    Mr. Hugh Jenkinsasked the Secretary of State for the Home Department whether he will recommend the appointment of a Royal Commission to inquire into the question of political bias in the comunications media.
    Mr. Carlisle: No, Sir.
    Mr. Jenkins: Is the Under-Secretary not aware that a number of his hon. Friends take the view that as television and radio media have not as firm a pro-Tory bias as the majority of the Press, this means that they are not independent? Will he look into this matter again and try to ensure that the Labour Party has
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    one-quarter of the amount of bias which is apparent in all the media?
    Mr. Carlisle: No, Sir, I will not look at that answer again. I do not see any need for a Royal Commission, and the question of impartiality is one for the B.B.C. and I.T.A. As for the hon. Gentleman's comment about newspapers and pro-Tory bias, I would remind him that it is free for anyone with political views to publish a newspaper at any stage, provided that he feels that he can sell enough copies to make it viable.
    Mr. Fowler: Does the Under-Secretary not agree that the case would be completely met if a broadcasting council were set up to which complaints could be referred?
    Mr. Carlisle: By statutory force so far as Independent Television is concerned and by administrative arrangement so far as the B.B.C. is concerned this has always been a matter for the governors of those two bodies, to whom any member of the public is entitled to refer a complaint.

    Mr. Menachem Beigin
    Mr. Mayhewasked the Secretary of State for the Home Department if he is aware that Mr. Menachem Beigin, leader of the opposition in the Israeli Knesset was responsible for the massacre of Deir Yasin; and whether it is his policy to grant visas to those who have perpetrated war crimes and gone unpunished, such as the aforementioned person.
    Mr. Sharples: As a citizen of Israel, Mr. Beigin would not need a United Kingdom visa. His admission would fall to be considered in accordance with the published immigration rules (Cmnd. 4296), and on present information I have no reason to suppose that refusal of leave to land would be justified.
    Mr. Mayhew: Will the hon. Gentleman bear in mind that the facts of this extraordinary case are not disputed and that very strong and understandable feelings are held about it by the Arabs who have been the victims of this appalling massacre of Deir Yasin? Will the hon. Gentleman take into account those feelings in reaching his decision?
    Mr. Sharples: I have seen the report by Mr. Louis Heren and the reply by Mr. Beigin in The Times of 14th April. It

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    is relevant that Mr. Beigin is a member of the Legislature of a country with which the present Government, as did previous Governments, maintain friendly relations. This case has been carefully considered, and all the information that I have shows that there is no reason to withhold permission to land.
    Mr. Hafer: Is the hon. Gentleman aware that this episode took place in 1948, that it was condemned overwhelmingly by the majority of Israeli people, and that the Israelis have never been happy or satisfied with the episode? Is he further aware that, if we were to stop all people who at one time or another were responsible for atrocities, obviously we should bar about every leading politician in the world?
    Mr. Sharples: Without agreeing with the hon. Gentleman, there are probably two sides to this matter.
    Mr. Kaufman: While no one of decent sensibilities would have other than contempt and loathing for Mr. Beigin and his record, would not it be as well to allow him here so that he might learn a little democracy, just as members of the El Fatah terrorist organisation who are shortly to come here may also learn a little democracy in this country?
    Mr. Sharples: As I said, we see no justification for refusing Mr. Beigin permission to land in this country.

    Metropolitan Police (Informers)
    Mr. Hoosonasked the Secretary of State for the Home Department whether medical certificates are called for by the Metropolitan Police when persons with a history of serious psychiatric illness are employed by them in any capacity, including that of an informer.
    Mr. Sharples: Medical reports are required on people who wish to join the police force or seek permanent employment on the civil staff. The police are well aware of the need to assess and as far as possible, to verify material supplied by an informant, whatever his history.
    Mr. Hooson: The hon. Gentleman must be aware of the very disturbing report in a national newspaper that ex-Sergeant Challenor, who has retired from the police force on psychiatric grounds, has been employed and paid as an
    1354
    informer by the West End Central police authorities. Is this story true? It has been repeated in other magazines. If it is, is not it a grave cause for disquiet, in view of that man's record?
    Mr. Sharples: I understand that the Commissioner of Police has informed the editor of the paper concerned in these terms:
    "There is no record of Challenor having been paid any reward from Metropolitan Police Funds for information supplied since he left the police service."
    I understand that there may be legal proceedings arising out of the article. In view of that, it would be improper for me to make any further comment.
    Mr. Clinton Davis: Can the hon. Gentleman assure us that in no circum stances will ex-Detective-Sergeant Challenor be employed in any capacity, whether as an informer or in any other capacity, by any police force in the country, especially having regard to the fact that he led other young officers into a situation as a result of which they were convicted and imprisoned?
    Mr. Sharples: As I said, I understand that there may be legal proceedings arising out of this matter. It would be improper for me to make any further comment.

    Vandalism (Financial Restitution)
    Mr. Longdenasked the Secretary of State for the Home Department if he will list the existing powers magistrates' courts have to exact financial restitution from persons convicted of vandalism.
    Mr. Carlisle: The main powers are given by provisions in the Malicious Damage Act, 1861; Section 14(1) of the Criminal Justice Administration Act, 1914 (as amended); and Section 34 of the Magistrates' Courts Act, 1952 (as amended).
    Mr. Longden: While thanking my hon. and learned Friend for that answer, is not the target for all these young hooligans their pockets, in view of the fact that it is no longer considered civilised to visit their sins on their backsides?
    Mr. Carlisle: I have a good deal of sympathy with what my hon. Friend says. The Criminal Damage Bill going through the House at the moment provides for the

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    payment of compensation in magistrates' courts to a maximum of £400 by those guilty of offences of criminal damage.

    Magistrates' Courts (Rights of Appeal)
    Sir Elwyn Jonesasked the Secretary of State for the Home Department what steps are taken in magistrates' courts to ensure that defendants are informed as to their rights of appeal.
    Mr. Carlisle: The clerk of the court will advise defendants of their rights of appeal on request; and where they are represented, their legal advisers will do this.
    Sir Elwyn Jones: Should not there be a duty laid on courts to inform those convicted of their right of appeal? Will not the Under-Secretary take steps to see that the practice is improved?
    Mr. Carlisle: I am quite prepared to look at the practice. But I think that the right hon. and learned Gentleman will not feel, on reflection, that this is an appropriate matter for statutory provisions, especially when one thinks of the number of cases dealt with every day in magistrates' courts where pleas of guilty are even made by letter.

    Community Development Project
    Mr. Juddasked the Secretary of State for the Home Department whether he will now make a statement on the Government's plans for an extended programme by its Community Development teams.
    Mr. Sharples: The number of local authorities taking part in the Government-sponsored Community Development Project has now increased to seven—including one in Scotland and one in Wales. Three more local authorities have been invited to participate. It is hoped later this year to invite two further authorities, making twelve in all.
    Mr. Judd: I thank the hon. Gentleman for that reply, but would he not agree that, as that scheme was in the nature of an experiment, it would help to have a full report assessing the success of the scheme to date, at the same time as the Government make more detailed proposals about those towns in which they intend to introduce new schemes?
    Mr. Sharples: The hon. Gentleman is right: this was an experimental scheme. I will consider his point.
    Mr. Freeson: Without intending to be flippant, may I ask the hon. Gentleman to consider, in consultation with the Secretary of State for the Environment, a possible transfer of the general oversight of this programme to that Department, so that it can be more closely linked with general planning procedures and housing procedures in general improvement areas? Would he also consider more closely linking it to the urban aid programme, which is also to be similarly transferred?
    Mr. Sharples: The hon. Gentleman's question raises much wider issues, which are, of course, for my right hon. Friend the Prime Minister.

  UNEMPLOYMENT
  Mr. Barnettasked the Prime Minister what replies he sends to letters he receives on the subject of unemployment.
  Mr. Carterasked the Prime Minister how many letters he has received and replied to on the subjects of employment and job opportunities since 1st January.
  The Prime Minister (Mr. Edward Heath): About 50, Sir. The great majority of these letters relate to individual cases of unemployment, which are then followed up by the Department of Employment.
  Mr. Barnett: One would have hoped that the Prime Minister could give some consolation to the letter writers. If the right hon. Gentleman is not prepared to accept the forecast made by very serious commentators that the number of unemployed could rise to at least a million, will he assure the House that he will act long before it reaches that alarming level? If he does not, we shall conclude that he is not even prepared to act to prevent it reaching that kind of level.
  The Prime Minister: Taking the first part of the hon. Gentleman's question, a number of these correspondents apparently do not know the right method of obtaining assistance in employment, and therefore it is right for me to pass their letters to the Department of Employment,

  1357
  which will do everything possible to help them.
  As for the second part of the hon. Gentleman's question, my right hon. Friend the Chancellor of the Exchequer made it plain in his Budget speech and the wind-up speech that he has made his initial Budget judgment and that, if he wishes to take further action, the means are open to him.
  Mr. Carter: Is the Prime Minister aware that the Chancellor of the Exchequer yesterday once again stated the Government's view that cost inflation is the cause of unemployment—the view that the Prime Minister himself was not able to provide evidence to support in this House last Tuesday? Will the right hon. Gentleman now admit that it is the declared policy of the Government to use unemployment as their principal instrument of economic policy, with all the hardship that that entails?
  The Prime Minister: The hon. Gentleman is talking absolute nonsense, as usual, and he knows it. If he were more closely in touch with industry, whether it be on the trade union or on the management side, he would know of the many examples of firms which, because of wage increases, are attempting to keep down unit costs, and that the only way to do that is to stand off labour.
  Mr. St. John-Stevas: With regard to unemployment, are not the guilty men the Leader of the Opposition and his heir apparent, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), who, as we now know, connived at cost inflation to win the election?
  The Prime Minister: Yes, Sir.
  Mr. Harold Wilson: The Prime Minister told my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) that he was "talking nonsense, as usual". If the right hon. Gentleman will wait for the statement after Questions, perhaps he will find that that was a very inapposite comment to my hon. Friend, who was talking sense before the Government did on the matter which is to be discussed.
  As for what the right hon. Gentleman said about cost inflation, will he give us details of redundancies in the steel industry, where, in order to avoid redundancies, the workers were prepared to accept a cut in wages of £2 10s. a week?
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  Will the right hon. Gentleman take that into account in the sweeping and inaccurate generalisations that he makes to explain the failure of his Government to maintain his pledge on unemployment?
  The Prime Minister: The right hon. Gentleman knows, because he was in power at the time, that the programme of redundancies in the steel industry announced yesterday by the British Steel Corporation was considered and worked out while he was in power—[HON. MEMBERS: "Oh!"] What is more, the right hon. Gentleman will also recall that, during the Second Reading of the steel nationalisation Bill, one of the major arguments put forward by the then Minister, the right hon. Member for Greenwich (Mr. Marsh), was that the purpose of nationalising the steel industry was to rationalise it, to remove the older plant, and thus to achieve lower costs to enable British steel to be sold abroad.
  Mr. Chichester-Clark: Concerning unemployment, has my right hon. Friend noted the comments of the largest single industry in this country, the construction industry, to the effect that the measures contained in the Chancellor's Budget will be helpful in producing a higher work load and more jobs?
  The Prime Minister: Yes, Sir. It is not just the view of the construction industry. This was the view expressed by the C.B.I., both publicly and in the National Economic Development Council, in the discussion after the Budget.
  Mr. Harold Walker: Does the Prime Minister recall that in his now notorious and cheap electoral stunt of 16th June he said that his alternative policy would not only reduce rising prices at a stroke but would reduce unemployment at a stroke? Will he, in his replies to letters, explain why this is not happening and why he has failed so disastrously on this as on so many other matters?
  The Prime Minister: There is no doubt that the cut in S.E.T. announced by my right hon. Friend the Chancellor of the Exchequer has held prices and, indeed, in some sectors, reduced prices.
  The Government's intervention on steel prices has prevented that nationalised industry from putting up prices to the extent that it wished. For that we have been thoroughly criticised by right hon.

  1359
  and hon. Gentlemen opposite. They had better make up their minds whether they want us to prevent rising prices or whether they themselves want to increase prices.
  Mr. Harold Wilson: In his optimistic reply to his hon. Friend the Member for Londonderry (Mr. Chichester-Clark) about the construction industry and the "Neddy" discussions, the right hon. Gentleman sought to give the House the impression that the cut in S.E.T. would lead to an increase in employment. Will he give a pledge to the House that unemployment by the end of this year will be less than the 800,000 recorded last week?
  The Prime Minister: I shall adopt the procedure followed by the right hon. Gentleman and his colleagues, and not make forecasts.
  Mr. Thorpe: As unemployment in part of my constituency is running at 10.1 per cent., when the Prime Minister writes these letters will he say whether the present astronomic figures for unemployment came as a surprise to the Government, whether they were all along expected by the Government, how much longer they will place the exclusive blame for them on the record of their predecessors, and when they are prepared to be judged on their own policies?
  The Prime Minister: I have constantly explained the impact of the rising wage costs under the previous Administration and the efforts which we have been making to halt them. We have constantly and consistently been criticised and condemned by the Opposition for our efforts.

  PRIME MINISTER (SPEECHES)
  Mr. Sheldonasked the Prime Minister if he will place in the Library a copy of his public speech made to the British Electrical and Allied Manufacturers Association in London on 16th March on economic policy.
  The Prime Minister: I did so on 17th March.
  Mr. Sheldon: The Prime Minister stated in that speech that the escalation of wage demands had been "brought to a halt". "Brought to a halt" were the words which he used. Since this does not apply to industry generally, will the
  1360
  Prime Minister at least undertake to reconsider some of his policies?
  The Prime Minister: I shall deal with the public and private sectors separately. Not only has escalation in the public sector ceased, but de-escalation has begun. That is why we are criticised by right hon. and hon. Gentlemen opposite, who do not support that.
  Over a large part of the private sector the escalation has been halted and we have seen lower wage awards. There have been instances which are quite plain to everybody, particularly in the motor industry, where that has not happened. I do not see that that is a matter for satisfaction for the former Chancellor of the Exchequer to grin at. I should have thought that it was a matter for regret.
  Mr. Skinnerasked the Prime Minister whether he will place in the Library a copy of the public speech made by him at the Cutlers' Feast, Sheffield, on 18th March on industrial relations.
  The Prime Minister: I did so on 19th March, Sir.
  Mr. Skinner: Is the Prime Minister aware that when he spoke in the steel city he referred, among many obscure generalisations, to one man's strike call being another man's redundancy notice? Will he be more specific and tell the House which strikers have been responsible for the many thousands of steel workers who are to be thrown on the scrap heap, especially when we consider that this industry has been relatively strike-free for many years?
  The Prime Minister: I have already dealt with redundancies in the steel industry, which were planned under the last Government and which Lord Diamond, when winding up a debate in this House, said would help to reduce the over-manning which was a constant source of criticism in the steel industry.
  Concerning strikes, I should have thought that this was not a matter of contention between those who study these matters. When people lose orders because of strikes, undoubtedly employment diminishes afterwards.
  Mr. Harold Wilson: Is the right hon. Gentleman aware that the total number of man-days lost through strikes from

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  all causes in the first three months of this year under the Conservative Government exceeds the total number of man-days lost through strikes from all causes in the first three years of the Labour Government, when he was very vocal on the matter? Will he publish figures showing the comparable number of days lost per week from strikes, on the one hand, and, on the other, lost through unemployment which is now so much higher under the Conservatives than it was a year ago?
  The Prime Minister: I will certainly consider publishing any figures which the right hon. Gentleman requires. If he will put down a Question he will get the answer.
  Concerning strike figures, no doubt the right hon. Gentleman has included all the days lost through political strikes against a Measure put forward by a democratically elected Government.

  WEST LOTHIAN
  Mr. Dalyellasked the Prime Minister if he will pay an official visit to West Lothian.
  The Prime Minister: I have at present no plans to do so.
  Mr. Dalyell: Would not a decision to extend R.E.P. beyond the mid-1970s, with its effect on investment expectations, be about the most helpful thing which the Government could do for the development areas?
  The Prime Minister: I am sorry to differ from the hon. Gentleman, whose intentions, I know, are good. After all, his own Government were intending to bring R.E.P. to an end in 1974. That was announced by the former Chancellor of the Exchequer when he introduced it. There is no point in the hon. Member for Willesden, East (Mr. Freeson) shaking his head. He had better read the report of the debate.
  The criticism always made of R.E.P. is that it is given indiscriminately to everybody already in an area and does not concentrate on inducing new investment from firms outside the area. The purpose of regional development must be to bring new investment into an area, particularly Scotland.

  RHODESIA
  Mr. Roseasked the Prime Minister whether he will now make a further statement on his negotiations with Mr. Ian Smith.
  The Prime Minister: As the House knows, exploratory exchanges are continuing. The House will be informed when there is something of substance to report.
  Mr. Rose: Will the Prime Minister give an unequivocal undertaking that there will be no departure from the five principles laid down by his right hon. Friend the Foreign Secretary during the period of office of the last Conservative Government and indicate whether there has been any change of heart whatsoever on the part of the Smith régime?
  The Prime Minister: These exploratory exchanges are being carried out, as the House already knows, on the basis of the five principles. It is right that such exchanges should continue until there is something of substance to report to the House, and we shall then report it.

  GOVERNMENT DEPARTMENTS (COMPUTER DATABANKS)
  Mr. Leslie Huckfieldasked the Prime Minister who is responsible for the maintenance of standards of privacy and confidentiality in the storage of personal information in Government departments' computer databanks.
  The Prime Minister: The Minister in charge of the Department concerned.
  Mr. Huckfield: I still have not received an answer, but I shall continue to seek it. Is it not about time that the Minister was identified, because, in a recent Civil Service Department report of 182 pages, there were only five lines tucked away in an appendix, on the security of files? Therefore, will the Prime Minister try to identify the Minister and tell him to re-examine that report and the whole question of file security?
  The Prime Minister: Privacy and confidentiality in Government Departments is concerned not only with computers but with the whole of the activity of the Government so far as it affects personal

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  records. It is essential that we should always keep this in the forefront of our minds. Therefore, the Minister responsible for a Department must be responsible for privacy and confidentiality throughout all the activities of his Department, which includes the use of computers.

BUSINESS OF THE HOUSE
Mr. Harold Wilson: May I ask the Leader of the House whether he will state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Yes, Sir. The business for next week will be as follows:
MONDAY, 26TH APRIL—Second Reading of the Social Security Bill.
Motion on the Ministry of Aviation Supply (Dissolution) Order.
TUESDAY, 27TH APRIL—Motion On the Family Income Supplements (Computation) Regulations.
Motions relating to the National Health Service (Charges) Regulations.
At Seven o'clock, the Chairman of Ways and Means has named Opposed Private Business for consideration.
WEDNESDAY, 28TH APRIL—Second Reading of the Finance Bill.
Motion on the Amendments to the Potato Marketing Scheme, 1955.
THURSDAY, 29TH APRIL—Supply [16th Allotted Day]: There will be a debate on unemployment, on an Opposition Motion.
Motion on the Motor Vehicles (International Circulation) (Amendment) Order.
FRIDAY, 30TH APRIL—Private Members' Bills.
MONDAY, 3RD MAY—Second Reading of the National Insurance Bill.
Mr. Harold Wilson: The right hon. Gentleman will be aware that there have been undertakings to keep the House informed about the situation in Pakistan. Is he aware—if he is not, may I inform him—that the Opposition officially intend to table a Motion on the very grave situation in Pakistan, not in censorious terms but expressing the concern of, I
1364
am sure, the whole House? Would he consider how this might be properly debated, either as a separate Motion or as part of an early Foreign and Commonwealth Affairs debate?
Second, the right hon. Gentleman has announced the unemployment debate, for which we have allotted a Supply Day. Is he aware of the deep concern in all quarters of the House about the further prospective redundancies in the steel industry, speeded up as a result of Government policy, despite the Prime Minister's attempt to disclaim responsibility today? In view of this, would he recall that the Government—[An HON. MEMBER: "Question."]—this is a question to the right hon. Gentleman—have undertaken that their review of the steel industry, which is why they have not made other statements earlier, should be concluded in a week or two? Does the right hon. Gentleman understand that we shall then expect an emergency debate on the steel industry as soon as we have that report? Will he also give an assurance that that report will not be delayed beyond the time that we were promised by the Secretary of State for Trade and Industry?
Mr. Whitelaw: I note what the right hon. Gentleman says about Pakistan. Of course I agree that the whole House is very concerned about this situation, and my right hon. Friend the Foreign and Commonwealth Secretary has, as the Prime Minister made clear, been using every influence that this country has to ensure an end of the bloodshed as soon as possible. The Foreign Secretary will wish to keep the House informed and I am prepared to discuss through the usual channels how the Motion which the right hon. Gentleman tells me is to be tabled might be handled in future.
As for the steel industry, the matters to which the right hon. Gentleman referred can most properly be discussed very simply, provided that the Opposition Motion—as I understand it—allows that to happen, in the debate on unemployment. I understand that that is their intention—[HON. MEMBERS: "No."] I think that hon. Members have misunderstood me. The question of the redundancies in the steel industry can be discussed on that Motion.
As for the question of the review of the steel industry, I certainly note what

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the right hon. Gentleman has said. The result of that review will be announced as soon as it is ready, and I undertake to report to the Secretary of State for Trade and Industry what the right hon. Gentleman has said. Pending the debate on unemployment, I do not accept some of the implications of the right hon. Gentleman's supplementary question. Lord Melchett made it clear that these redundancies were part of the rationalisation programme which had previously been planned.
Mr. Harold Wilson: There should be no misunderstanding: I heard Lord Melchett too. Is the Leader of the House aware that, while the noble Lord said that this was not due to Government policy in relation to the intervention on prices, he said that it was due to the falling off of demand, and if that is not Government policy no one in the House knows what it can possibly be. [AN HON. MEMBER: "Get On with it."] If the right hon. Gentleman makes obiter dicta in a business answer he will get further questions in a business question.
With regard to the business for next Thursday, on which he also pronounced obiter dicta, is he aware that we who will be responsible for the Motion would feel that a debate on unemployment obviously would not rule out the question of redundancies in steel? But it is not principally about steel. When 7,000 redundancies for the coming month are compared with a 48,000 increase in unemployment—[Interruption.] If the right hon. Gentleman seeks to give guidance to the Chair on what is in order. I am allowed, as the author of the Motion, to tell the right hon. Gentleman where he is wrong.
Is he aware, therefore, that although in our view the question of steel will be included in that debate, we shall be very much concerned to discuss the wider increase in unemployment affecting other industries, including white-collar industries, and that we still require a debate on steel—not only on redundancies but on the Government's interference with the industry?
Mr. Whitelaw: I thought I had made that perfectly clear. If I did not make it clear before, I shall make it clear now. All I said was that I understood that, if we were to have a debate on unemployment, naturally the question of redun-
1366
dancies in the steel industry would be part of that debate. Of course I accept that there are many other issues in that debate, but clearly I understood yesterday after the Motion under Standing Order No. 9 was moved that it was part of the Opposition's desire that there should be an opportunity, among other discussions of unemployment, to refer also to the redundancies in the steel industry. That was all I said. As for the rest of the steel industry, I have made the position perfectly clear for the future.
Mr. Crouch: I should like to raise an entirely different subject. I should like my right hon. Friend to remember that he assured the House some weeks ago that a statement on the question of the siting of the third London airport would be delivered to this House before it was released to the Press. Last night, in the Evening Standard, and also on the radio and in the morning's papers, there was an air of authority about statements concerning the siting of the third London airport which gives me cause for great concern and which causes a great deal of concern to the hundreds of thousands of people who are involved. I hope that my right hon. Friend can assure me and every hon. Member that that was not an organised leak to soften the blow—
Mr. Speaker: Order. Is the hon. Gentleman asking a question?
Mr. Crouch: I am asking my right hon. Friend to assure the House that there is no question of an organised leak to soften the blow of this very serious decision facing Parliament and the people of this country. I would ask him to remember that back benchers will not sit back for ever being fobbed off, with information being delivered to the public before it is delivered in this Chamber.
Mr. Whitelaw: I make it absolutely clear to my hon. Friend and the House that I cannot be responsible for speculation. I am responsible for promising the House when a statement will be made, and it will be made as soon as the Government are ready to make it. No one regrets speculation more than I. No one is more anxious than I to see it stopped, and if I were given some help in doing it I should be very grateful and would do everything in my power to stop it.
Mr. John Mendelson: With reference to the steel debate—and some of us do speak for steel constituencies, although they have not had much of an innings so far—does not the right hon. Gentleman recall that yesterday when a debate under Standing Order No. 9 was sought, and in the subsequent questions, there was a demand for a debate on the position in the steel industry? The Prime Minister made the misleading declaration today that Lord Melchett had said that these redundancies were the result of the last Government's policy, when he knows that Lord Melchett had said many times up to about three months ago that they would be phased over a period of five years or more as new jobs were coming through new steel works all over the country. Since the Government have prevented Lord Melchett and the Corporation from pursuing that policy, which they agreed with the last Government, the issue ought to be debated separately as soon as possible.
Mr. Whitelaw: I will not follow the hon. Gentleman in his various remarks about the steel industry. As I have said, the question of the immediate redundancies in the industry will, I understand, form part, although perhaps as the Leader of the Opposition said not necessarily a major part, of the debate next Thursday. I have also undertaken that as soon as my hon. Friend the Secretary of State for Trade and Industry is ready to announce the results of his review of the industry he will so announce them. The question then of a debate can be considered.
Dr. Glyn: Has my right hon. Friend seen Motion No. 478, standing in my name and the names of 100 other hon. and right hon. Members on both sides of the House, relating to special opportunities for back bench speakers? Is he aware that this is in line with what Mr. Speaker himself has been pressing back benchers to do—to keep their speeches down to ten minutes?
[That this House considers that, in order to increase the opportunities for back benchers to contribute to proceedings, the occupant of the Chair should have the power to limit the time taken by back bench speakers to ten minutes in any debate, except by leave of the House.]
Mr. Whitelaw: I have noted the terms of the Motion. These are matters which can properly be considered by the Select Committee on Procedure in its review of the legislative process. I suspect that it is doing just that.
Mr. Orme: Is the right hon. Gentleman aware that many hon. Members who have constituents directly affected by the recent announcement of the British Steel Corporation do not feel it satisfactory to include it in a general debate, since the Government will be able to slide off the problem? Who will answer on behalf of the Government? Will that Minister have authority to give an answer on the steel questions? Many of us on this side feel that the steel industry ought to be discussed very soon—in fact, that it might be advantageous to have a debate before the Secretary of State comes to his conclusions so that he can hear what the House has to say about the matter.
Mr. Whitelaw: I am grateful to the hon. Gentleman, since his question helps me to say that the Government are anxious to meet what they feel will be the wishes of the House. My right hon. Friend the Secretary of State for Trade and Industry will be the first Government speaker during the debate on unemployment next Thursday.
Mr. Hugh Fraser: Clearly, there cannot be an early debate on the Pakistan situation. Therefore, would my right hon. Friend arrange for a statement to be made next week, especially regarding the question of international relief organisations and whether any progress has been made in making facilities available to them in Pakistan?
Mr. Whitelaw: I appreciate that point. My right hon. Friend the Foreign and Commonwealth Secretary has made is clear that he is most anxious to keep the House fully informed. If a statement can usefully be made to the benefit of the House he will make one.
Mr. Atkinson: Will the right hon. Gentleman reconsider his decision or comment about including the steel industry in the debate on unemployment, mainly because of the contradictory statements made by the Government and people representing the steel industry? As I understand it, the leaders of the steel

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industry have said that many of the redundancies will arise from the refusal of the Government to allow a price increase above 7 per cent. If that is the case, surely the Prime Minister has no right to suggest that many of the redundancies now occurring are the result of Labour's original rationalisation plan. Surely we should have a separation of these topics so that we can debate that aspect of the problem much more thoroughly than if it is taken in with the debate on unemployment.
Mr. Whitelaw: I can only repeat what I have said. Inevitably, in a debate on unemployment the recent announcement of redundancies in the steel industry is bound to have a part. I do not wish this to be taken as prejudging what may happen in future. I only mentioned that inevitably the immediate position of these particular redundancies—the reason for which Lord Melchett made clear yesterday—could form part of the debate on unemployment. I did not go further than that.
Mr. Money: Will my right hon. Friend give an opportunity to debate the arts in the near future?
Mr. Whitelaw: I will bear that in mind, but I cannot promise when.
Mr. Mayhew: Can the right hon. Gentleman find time for a debate on the far-reaching report of the committee of inquiry into Farleigh Hospital? Has he noted the Early Day Motion, signed by 170 hon. Members on both sides, calling on the Government and the local authorities to take urgent action for the better care and treatment of the mentally handicapped?
[That this House, aware of the widespread and acute suffering caused by mental disorder, welcomes the launching of the Mind Campaign by the National Association for Mental Health, with the support of many other voluntary organisations; and calls on the Government and local and other public authorities to support the objectives of the campaign, in particular by further increasing the provision of community care for mental sufferers.]
Mr. Whitelaw: I recognise the importance of the subject and the hon. Gentleman's interest in it. I cannot promise an immediate debate. There are, of
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course, other means by which the subject can be raised. If I can find time for a debate, I will be pleased to do so.
Mr. James Johnson: Has the right hon. Gentleman seen Early Day Motion No. 510, in the names of hon. Members on both sides, including mine, and particularly including those from fishing constituencies? If we enter the Common Market there will be redundancies in the fishing industry also, particularly in the coastal fisheries. Will he give time to debate this important matter?
[That this House believes that matters essential to the future prosperity of the British fishing industry such as the access to coastal waters, grading, minimum prices and the importation of fish fillets should be negotiated with the European Economic Community prior to Parliament being asked to approve British entry.]
Mr. Whitelaw: The question of fisheries in the Common Market is a subject in the current negotiations. I cannot promise time for a debate in the immediate future, but when the full issue is discussed inevitably this is one of the subjects that will be raised then.
Mr. Rose: In view of the winding up of one of the industrial training boards announced by means of a Written Answer, will the right hon. Gentleman ask the Secretary of State for Employment to make a full statement to the House on the future of industrial training?
Mr. Whitelaw: I will report to my right hon. Friend what the hon. Gentleman has suggested. It is in accordance with precedent that my right hon. Friend's announcement was made by Written Answer on this occasion.
Mr. Fernyhough: Will the Secretary of State for the Environment be taking part in next Thursday's debate on unemployment? When we asked which Minister was responsible for the North-East, we were told that he would do that job. Since unemployment there, and particularly in my constituency, has risen to almost astronomical heights in the last three or four months, we would like to hear what the Secretary of State for the Environment, as the Minister responsible, is going to do about it.
Mr. Whitelaw: In response to what I believe would be the desire of the House, my right hon. Friend the Secretary of State for Trade and Industry will speak first and my right hon. Friend the Secretary of State for Employment will reply.
Mr. Lawson: Does not the right hon. Gentleman agree that it is about time he set up a Select Committee on Scottish Affairs if he is going to set one up at all?
Mr. Whitelaw: I understand that discussions to this end are currently proceeding through the usual channels.
Mr. Harper: In view of the deteriorating situation in the Middle East, with the consequent effect upon future oil supplies, will the right hon. Gentleman find time, if not next week, for a debate?
Mr. Whitelaw: I appreciate the importance of the subject and the relevance of what the hon. Gentleman has said. I could not offer time for a debate in the near future.
Mr. Leadbitter: Yesterday, I transferred my request under Standing Order No. 9 to my right hon. Friend the Member for Newton (Mr. Frederick Lee), who drew particular attention to the problem of Irlam Steel Works arising from the closure announcement. You ruled, Mr. Speaker, that the application for a debate could not be accepted for reasons which you were not obliged to give to the House. However, you added that there were other ways of dealing with this matter. I therefore ask the Leader of the House to reconsider the position he has taken, because my hon. Friend the Member for Cleveland (Mr. Tinn), said in his contribution:
"… may I appeal through you, Mr. Speaker, to the Leader of the House to give us an assurance that we will have opportunity for a debate in the near future?"
The Leader of the House said, in response to that:
"I would hope that by some changes which I may be able to make to meet this point of view I should be able to offer some satisfactory answer at business questions tomorrow."—[OFFICIAL REPORT, 21st April, 1971; Vol. 815, c. 1181.]
I appreciate how the usual channels have worked—
Mr. Mellish: Hear, hear.
Mr.Leadbitter:—but, while I respect the usual channels and, of course, I respect the Ruling of the Chair, the Leader of the House gave a firm undertaking about a debate on steel. I put it to the right hon. Gentleman that he has not been as fair to the House as he intended to be yesterday. We are not at this juncture concerned about the Secretary of State's review. We want a debate on the state of the steel industry now. Will the Leader of the House be fair to the House and give an undertaking, as he promised yesterday—which we understood would be carried out—that we shall have an early debate on steel?
Mr. Whitelaw: I entirely accept the words which the hon. Gentleman has quoted, though I should like to check the matter in detail in the OFFICIAL REPORT. I believe that what I said to you, Mr. Speaker, and to the House was that it would be possible to discuss through the usual channels how best these matters could be handled in the immediate future. That I did, and I am grateful for the expression of support, having myself occupied the right hon. Gentleman's position on the other side of the House for some time.
Mr. Mellish: Hear, hear.
Mr. Whitelaw: This was discussed, and I think that the arrangement which was made is reasonably satisfactory for the immediate future. I note entirely what the hon. Gentleman has said as regards the longer term, but I cannot make any promise as yet.

VEHICLE AND GENERAL INSURANCE COMPANY
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): I think that it would be for the convenience of the House, in view of the publicity given to it, if I were to make a short statement about the question of unauthorised possession of confidential information concerning the Vehicle and General Insurance Company.
At a meeting between the directors of the Vehicle and General Insurance Co. Ltd. and my Department on 18th November last year, the former revealed

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knowledge acquired through a source outside the Department of internal exchanges between officials of the Department about the affairs of the group. A Departmental investigation was put in train at once. This investigation was inconclusive, and the matter was referred to the Director of Public Prosecutions early in Janauary. With the approval of my right hon. and learned Friend the Attorney-General, the Director decided that a further investigation should be carried out by the Metropolitan Police with a view to a possible prosecution. The papers are now with the Treasury prosecuting counsel.
Mr. Carter: May I put four questions to the right hon. Gentleman? First, will he reconvene the Departmental inquiry into the leak, will its finding be made public, and will full Ministerial responsibility be accepted for it?
Second, will the terms of reference of the present inquiry into Vehicle and General be extended to cover the Department?
Third, when it was known last July that the Vehicle and General Insurance Company was in difficulties, why did the Department not take action sooner, particularly since it discovered in November that the leak had occurred?
Fourth, from Parliament's point of view, does not the right hon. Gentleman feel that a Select Committee should be appointed and report all its findings to the House?
Mr. Davies: First, I have no reason to reconvene the Departmental inquiry until such time as the Treasury prosecuting counsel has had access to, and consideration of, the papers which have been put before him. I must leave it to him first and foremost to reach his conclusions on what has been put to him.
Second, the Companies Act inquiry will not cover the specific matter which is the subject of my statement, because it is an inquiry into the affairs of the company. It will look into relations between the company and the Department but only in so far as they affect the company's own affairs.
The third question which the hon. Gentleman raised is not germane to the statement which I have made. He referred to doubts which we had in July,
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which he considers we did not follow up quickly enough. This is not a relevant question arising on my statement.
Fourth, as to a Select Committee, again it is necessary first to see what is the reaction of the Treasury prosecuting counsel to the information put before him. It would be wrong to try to anticipate it.
Mr. Rost: Will my right hon. Friend consider asking the Stock Exchange Council to hold an investigation into the share dealings prior to the collapse of the company so that, if there were beneficiaries with financial gain resulting out of this affair, they may at least be identified, which would not allow insinuations or allegations to be made against possibly innocent parties, such as civil servants or even Ministers?
Mr. Davies: I entirely appreciate the motive behind that request, but again I must say that until such time as we have the conclusions reached as a result of the investigations which have taken place, about which there are papers, we should not seek in any way to devise a new method of inquiry.
Mr. Benn: Does the right hon. Gentleman realise that, without the persistence of my hon. Friend the Member for Birmingham, Northfield (Mr. Carter), his statement would never have been made to the House at all? Second, does he appreciate that in his statement he has revealed a far graver situation even than was apparent tram the Sunday Mirror leak and the letter written to my hon. Friend yesterday, inasmuch as it now appears that the leak was known on 18th November, and there was thereafter a Departmental inquiry, the Director of Public Prosecutions was not brought in until January, but meanwhile the company was allowed to continue in business when it was known by the Department that a leak had occurred about the Departmental attitude to the company? Does the right hon. Gentleman recall that in his statement to the House on 2nd March, he made no reference whatever to the leak? Indeed, he said that one reason why he had not acted earlier was that he was afraid that if anything go: out the company might collapse, although at the time he knew that something had got out three months earlier.
Hon. Members: Scandalous.
Mr. Benn: Can the right hon. Gentleman say now whether any of the directors or principal shareholders of Vehicle and General sold their shares between 18th November and the date when the company collapsed?
Further, does the right hon. Gentleman appreciate that an episode of this kind, however it arose—perhaps it included the passage of documents, and he will tell us—undermines the whole basis of confidence between Government and industry and really does merit an inquiry going well beyond either a police investigation or a Companies Act inquiry —requiring, indeed, a Select Committee which will allow every aspect of the matter, including Ministerial responsibility, to be called into account?
Mr. Davies: I cannot accept the exaggerated views expressed by the right hon. Gentleman. This leak was detected on 18th November. A Departmental inquiry was instituted. It was inconclusive. The necessary proper steps were then taken, and have been taken throughout. I entirely disagree that this should be broadened in the way the right hon. Gentleman seeks into some massive consideraton of confidence, which it absolutely does not justify.
As regards the revelation of this situation, which the right hon. Gentleman ascribes to his hon. Friend's persistence, I understand his point of view, but I must say that from the Departmental point of view it would not have seemed a matter which would have benefited greatly from revelation. [HoN. MEMBERS: "Oh!"] I reaffirm what I have said, that what was important was to get to the bottom of the matter, and this is what we have sought to do. When the hon. Gentleman addressed a letter to a Minister in my Department posing a specific question, it would have been impossible to do other than answer him directly, as has been done.
Mr. Benn: Does not the right hon. Gentleman realise that it was his own statement just given to the House which revealed for the first time that a source outside the Department had access to information which he knew, were it to become general, would precipitate the collapse of the company? Were documents passed? In view of the situation which now confronts us, is it not right
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that there should be an inquiry looking into every aspect of this matter and not just into the handling of the company? Is the right hon. Gentleman aware that some subjects whose revelation may not be beneficial for some people may be highly beneficial to this House and the public?
Mr. Davies: I am very conscious of that. I am certainly not trying to conceal anything in this matter. [HoN. MEMBERS: "Oh."] But when matters have been referred to the Director of Public Prosecutions, when a police inquiry has been instituted, and when papers have been produced by that inquiry and submitted to the Treasury prosecuting counsel, it is proper that they should be gone through with, and that is what I have adhered to.
Mr. Ashton: Does not the right hon. Gentleman remember that when the hon. Member for Worcestershire, South (Sir G. Nabarro) made allegations two years ago of a Treasury leak, allegations which received extensive publicity, my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), the then Chancellor of the Exchequer, immediately set up a Select Committee of inquiry to get to the bottom of the matter? Will the right hon. Gentleman give an assurance that on this occasion, irrespective of what the Director of Public Prosecutions finds out, he, too, will set up such a Select Committee to ascertain whether information has been divulged?
Mr. Davies: No, I will not do so irrespective. I will first and foremost see what the conclusion of the Treasury prosecuting counsel is.
Mr. J. T. Price: In view of what the right hon. Gentleman has now told the House in mitigation of this deplorable incident, is he not aware that long before he held his present office there was another serious insurance company collapse, that of the Fire, Auto and Marine Insurance Co., as a result of which the House passed amending legislation strengthening the Companies Act? I served for three months on the Committee considering that Bill. All hon. Members on both sides who took part in that consideration were satisfied that his Department were suitably armed to

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deal with similar cases. It is simply because his Department has procrastinated and failed to use the amended legislation available to it over the past 12 months that hundreds of thousands of policy holders have been inflicted with misery as a result of the collapse of Vehicle and General.
Mr. Davies: It is thanks indeed to such legislation that I am able to carry out the inquiry which is in course, so it would be wrong for me to do other than to be grateful for the existence of its provisions. But I cannot deal with the first part of the hon. Gentleman's question, which does not arise from my statement.
Mr. Thorpe: The whole House will agree that matters which may be of a criminal nature are very properly being investigated by the Director of Public Prosecutions, and it would not be right to comment on them. But the right hon. Gentleman has told the House today as a fact that a source outside the Government knew of exchanges within a Department relating to confidential information. Is he aware that the public are very concerned about the possibility of Governments obtaining information and making it known to third parties, and that nothing more than a thorough Departmental inquiry, the results of which will be published, whatever the outcome of the Director of Public Prosecutions' inquiry, will satisfy the public, although the right hon. Gentleman may be prepared to be satisfied with something less?
Mr. Davies: I think the right hon. Gentleman has jumped a stop, because I have not said that the Government revealed anything. I have said that information was acquired through a source outside the Government. That does not imply necessarily that the Government have revealed it.
Mr. Thorpe: How does the right hon. Gentleman consider that a source outside a Government Department knew what went on between two officials in a Government Department without one of those officials being indiscreet?
Mr. Davies: I simply ask the right hon. Gentleman to use his imagination On that. [HON. MEMBERS: "Oh!"] I can
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think of several methods of so doing. I will not discuss any of them with the right hon. Gentleman pending the report of the Treasury prosecuting counsel.
Mr. Roy Jenkins: The Secretary of State has made the most extraordinary series of statements to the House this afternoon. An event such as we are discussing is, fortunately, extremely rare in our administrative experience. What is clear is that this was known to the right hon. Gentleman on 18th November. The matter went to the Director of Public Prosecutions in January. It has become known to the House at the present time, and his statement, it is clear from what he has said, has been made only because of the intervention of my hon. Friend the Member for Birmingham, Northfield (Mr. Carter). It is most extraordinary that the Prime Minister should have chosen today to say that my hon. Friend was wrong as usual. The right hon. Gentleman has made it quite clear that he would not otherwise have made this statement. Is not it a most extraordinary state of affairs that this should be revealed to the House solely because his hon. Friend the Under-Secretary had to reply to my hon. Friend, and therefore revealed it incidentally? Is not the right hon. Member for Devon, North (Mr. Thorpe) on a very strong point when he says that Treasury prosecuting counsel are concerned only with the criminal aspect of the affair, but that there is a much wider aspect, which is the general relations of confidence between public Departments and business and the public generally?
Mr. Davies: I am very well aware of what the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) says. I am simply saying that until such time as I see the results from the work carried out by the police and the Treasury prosecuting counsel I shall take no further action, and I am convinced that that is right.
Mr. Jenkins: Will the right hon. Gentleman assure us that as soon as he sees that he will make a statement to the House without having to be prodded by my hon. Friend the Member for Northfield?
Mr. Faulds: Honest Government.
Mr. Davies: I do not very much take to the dig at the end, but I will certainly

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consider what further statement can usefully be made to the House in due course.
Mr. Tugendhat: Is my right hon. Friend aware that there is considerable support on this side of the House and throughout the country for the Government's attitude of not jumping to conclusions before the facts have been fully investigated? Is he also aware that under previous Administrations of both parties great harm has been done to the reputations of individuals when Governments have assumed that certain allegations have been right and have acted before the full facts have been assessed? This is a matter of which the Opposition have considerable personal experience.
Mr. Davies: It is for that reason that I do not wish at this stage to take action in anticipation of the results of the work in hand.
Mr. C. Pannell: Is the Secretary of State seized of the point which I think puzzles the whole House, that this was known at the end of last November? Bearing in mind the precedent of frankness between Government Departments and the House, why have we had to wait until now before any statement was made? We could quote many precedents of Ministers faced with similar situations being frank with the House and the matter —after disclosure—being treated as sub judice until all the facts were known. I make no assertions about this, but because the Minister came late to Government service he does not seem to have appreciated the conventions of the relationship between the Government and the House.
Mr. Davies: I do not think that that has anything to do with it. The truth is that when matters arise which involve the possibility of criminal prosecution it is infinitely better to let the proper course of investigation be proceeded with, and that is what has happened.

VEHICLE AND GENERAL INSURANCE COMPANY
Mr. Carter: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter
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that should have urgent consideration, namely,
"the leak of confidential information from the Department of Trade and Industry to outside interests concerned with the Vehicle and General Insurance Company."
I shall be brief, because most of what I have to say is already generally known.
There is, particularly as a result of what the Secretary of State for Trade and Industry has said today, a great deal of disquiet in the country, not only about the affairs of his Department but about motor insurance generally. It will be widely held outside that the Government have mishandled the whole affair. As to motor insurance generally, we must bear in mind that over the past few years over 2 million motorists have lost their cover as a result of the failure of insurance companies. With Vehicle and General over one million policy-holders lost their cover. If we take into account the losses of the small investor we could easily get to a figure of £30 million in losses. This is no small matter. The collapse and the leak, the whole affair, demand the attention of the House and I would ask you, Mr. Speaker, to accede to my request.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing an important matter which he thinks should have urgent consideration, namely,
"the leak of confidential information from the Department of Trade and Industry to outside interests concerned with the Vehicle and General Insurance Co."
I have considered the matter and have heard the exchanges that have taken place today, and listened carefully to what the hon. Gentleman has said. This is a matter for my decision and I have decided that I cannot submit the application to the House.

BALLOT FOR NOTICES OF MOTIONS FOR MONDAY 10TH MAY
Members successful in the Ballot were:

Mr. George Wallace.

Mr. Eric S. Heller.

Mr. Peter Mills.

ORDERS OF THE DAY

  SHIPBUILDING INDUSTRY BILL
  Order for Second Reading read.
  4.13 p.m.
  The Minister for Industry (Sir John Eden): I beg to move, That the Bill be now read a Second time.
  This is a short and simple Bill, the effect of which is to raise from £400 million to £700 million the statutory ceiling on the power to give guarantees under Section 7 of the Shipbuilding Industry Act, 1967, to facilitate the financing of orders for ships placed by British owners with British shipbuilders. It does nothing more. For reasons which I shall explain later in my speech, it does not prolong the life of the Shipbuilding Industry Board which under the 1967 Act must finish at the end of this year.
  The Bill follows an established path. When the home credit scheme was first introduced under the 1967 Shipbuilding Industry Act, the provision for credit guarantees was set at a relatively modest ceiling of £200 million. At that time the average order book seemed to be on the decline and international competition in shipbuilding was extremely severe. Overseas purchasers of British ships has access to credit at concessionary rates through E.C.G.D. British shipowners, however, could obtain cheap credit only by buying their ships abroad. The home credit scheme, by extending credit guarantee facilities to cover purchases of ships in Britain by home owners, was intended to prevent such orders from going abroad solely to obtain easier credit terms.
  Following the 1967 Act, it was found that far from declining as had been initially anticipated by the then Minister of Technology, the number of orders for ships to be built at British yards increased substantially. It became necessary by means of the 1969 Shipbuilding Industry Act to raise the statutory ceiling on shipbuilding credit to £400 million. Last year yet a further step was taken when the previous Government introduced legislation to increase the limit to £600 million. This Bill was lost on the dissolution of Parliament. So we have seen
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  what was at the outset a comparatively modest scheme grow into one which involves very substantial sums of money. This money is made available by the banks—not by the Exchequer—but there is of course a contingent liability on the Exchequer.
  The House will, I know, wish to consider the need for this further Bill against the background of events and policies since the Geddes Committee reported in 1966 and in the context of the Government's shipbuilding policy as a whole. The debate provides the first occasion to tell the House about some of the conclusions we have reached following on from the review in which we have been engaged.
  The basis for the policy followed by the last Administration is to be found in the recommendations of the Geddes Committee. Geddes proposed that the industry should be given a once-and-for-all opportunity to strengthen its competitive position in world markets through the provision of Government assistance. The industry was to make "a new start" and there was to he no open-ended commitment, no featherbedding—that was particularly emphasised by the right hon. Gentleman. The once-and-for-all character of the assistance was written into the legislation by setting a time limit to the life of the Shipbuilding Industry Board. There was no provision for Government assistance thereafter.
  The House will recall that the Geddes Report recommended that the Shipbuilding Industry Board should be empowered to make loans of up to £32·5 million and grants up to £5 million. In the event the assistance given was substantially in excess of these sums. The provision for grants to the industry through the S.I.B. was increased to £20 million and in addition substantial sums of money were provided outside the 1967 Shipbuilding Industry Act—£7 million for Upper Clyde and £1½million for the Cammel Laird shipyard.
  The total level of assistance already provided under the Act is £18 million in grants and £19 million in loans and the Shipbuilding Industry Board has further applications under consideration. Assistance has also been given to the industry through the rebate of indirect taxation at present worth 2 per cent. of the contract price of a ship. This is known as

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  the Shipbuilders' Relief and originated as an extension of the export rebate scheme to home sales of ships. It was retained for the shipbuilding industry alone following withdrawal of the export rebate scheme from manufacturing industry in 1968.
  These measures together with the home credit scheme gave substantial support to the industry over a period of some five years.
  Since 1967 international developments have been very favourable to the industry. We have seen a massive and continuing boom in shipbuilding. World order books in 1967 were 40·4 million gross tons. Today they are nearly 80 million gross tons. Prices of ships have responded to the world boom though costs have also risen substantially. A 250,000 deadweight-ton tanker in 1967 was priced at about £6-£7 million. The same tanker ordered today would cost about twice that figure. Lengthening order books have enabled shipbuilders gradually to secure more favourable terms and many have now negotiated contracts with escalation clauses.
  This then is the background to the review of the industry that we set in hand on taking office. We found that in recent years, in spite of favourable world market conditions and of Government grants and loans approaching £50 million, most merchant shipbuilders have made substantial losses. Performance, of course, has not been universally bad, and I do not mean to imply that it has been. There have been some notable successes. But taking the industry as a whole, although orders have been plentiful, the merchant ship order book is today worth about £737 million, production here has been virtually static. World output has been steadily increasing. In 1967 United Kingdom completions were 1·2 million gross tons; last year the figure was 1·3 million gross tons. The decline in our share of world output has not been arrested. United Kingdom shipyards now account for only 6·5 per cent. of world tonnage, compared with 15 per cent. in 1960, and 43 per cent. in 1950.
  I am sorry to have to say to the House that even though the urgent need for improvement was underlined over and over again in the Geddes Report, and despite the warnings given by the right
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  hon. Gentleman the then Minister of Technology, a good part of the industry's indifferent performance must be attributed to poor labour relations. The strike record of the shipbuilding, ship-repairing and marine engineering industries has been far worse than the average for other industries. Provisional estimates for last year indicate that 1,975 days per 1,000 employees were lost in shipbuilding, ship-repair and marine engineering through strikes compared with an average of 468 days for other industries. It is sterile in these circumstances to attempt to apportion blame. Both management and unions are responsible for what has been happening. They are taking too long to shake off old attitudes and they are wasting the opportunities they have been given to put their own house in order. It is their joint failure in this vital area, combined of course with the inflationary policies of recent years, that has proved so damaging to our shipbuilding industry and left it still saddled with problems which could—and should—have been solved years ago.
  Since it is usual for at least two years if not more to elapse between an order and the delivery of a ship, this is an industry which is particularly vulnerable to the effects of rising costs. And it has been hard hit: the scale and direction of past Government assistance has encouraged unreasonable wage demands and exacerbated inflationary trends. From October, 1967, to October, 1970, in a period when output has been stagnant and the financial position of most shipbuilding companies has failed to improve, weekly earnings in the shipbuilding and ship-repairing industries taken together have increased faster than the average for all manufacturing industries and faster than in engineering alone. In October, 1967, average earnings in shipbuilding and ship-repair were 61 pence more than those in engineering industries and 11 pence more than the manufacturing industry average. By October, 1970, these differentials had increased to 149 pence and 70 pence respectively.
  The inescapable fact is that a good part of the capital assistance to the industry has done little to strengthen longer term prospects. Some of the assistance was undoubtedly directed at maintaining employment in the short term, but insufficient account was taken of the prospect

  1385
  of ultimate profitability and security of employment. In fact, the only major facilities represented by almost £50 million of capital assistance are the building dock and associated steel facilities at Harland and Wolff, the new facilities under construction at Scott Lithgow, and a small dock project at Appledore.
  The previous policies have not transformed the industry to the extent that had been hoped. We do not intend to follow them. All hon. Members would agree that there is no doubt that what this industry needs is a period of stability in labour relations and relief from inflationary pressures. Here the Government can certainly help. In the longer term I am sure that the most effective way is to encourage self-reliance in management, to reward efficiency, and by supporting international efforts to help bring about the progressive elimination of practices that distort competition.
  Immediately, however, we recognise that a further breathing space is needed to complete the processes of readjustment in which the industry has been engaged. We have therefore extended the life of the S.I.B. to the end of this year, the latest possible date under the Act. This gives the industry a final opportunity to apply for what remains of loan assistance under the Act either for investment or for working capital, and enables the Board to complete outstanding business. It was never the intention that the Board should become a permanent feature of the landscape, and I repeat: we do not intend to extend its life and its powers to give grants and loans beyond the end of this year.
  An essential feature of the legislation which set up the S.I.B. was always that it was transitory—it was created to provide temporary assistance for the once-and-for-all re-organisation of the industry. And in relation to the size of the industry —in 1968 it accounted for about 1 per cent. of manufacturing industry—it must be said that it has received quite a disproportionate share of temporary assistance from public funds. Against this background, we do not see a case for singling out the shipbuilding industry as the continued recipient of a special payout from the taxpayer which can only weaken morale and lessen the incentives on management and employees alike to learn to operate competitively in the world market.
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  However, it would be unjust, as well as likely to lead to economic distortion, for shipbuilding to operate under significantly disadvantageous conditions compared with other manufacturing industry. Since it lacks the tariff protection enjoyed by other manufacturing industry, we have concluded that it is right to continue shipbuilder's relief which is equivalent to 2 per cent. of the contract price of a ship; the industry will continue to receive import duty drawback, and, as I announced to the House just before Easter, we are relaxing the rules about the import content of ships qualifying for credit guarantees in order not to hinder the use of imported steel where supplies on competitive terms cannot be obtained from the domestic market.
  Apart from the indirect help of the home credit scheme, to which I shall return in a minute, we do not consider that there is any justification on economic grounds for further special assistance to the shipbuilding industry as such—that is apart from assistance available to all industries operating or investing in development areas.
  In line with the policy of giving the industry an opportunity to readjust, we have accepted the proposals of the Northern Ireland Government for the future of Harland and Wolff. There is no doubt that this shipyard, which has some of the finest physical facilities in the world for building large tankers, has the genuine potential for coming out of its present, difficulties on a secure long term basis. The Northern Ireland Government will ensure that the company will be provided with funds to make it financially viable. Once these have been provided, the Northern Ireland Government have made it clear that there can be no question of further support if the company again gets into financial difficulties. I too wish to make it clear that the company will not he able to look for further support to the United Kingdom Government.
  Mr. Edmund Dell: Before the hon. Gentleman leaves Harland and Wolff, he will be aware that the Northern Ireland Government at Stormont yesterday introduced an industrial development Bill which makes it possible for the Northern Ireland Government to take an equity holding in private industry. Is the hon. Gentleman aware of whether it is the intention of the Northern Ireland Government to take an equity holding in

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  Harland and Wolff representing the level of the assistance they propose to give?
  Sir J. Eden: I am not aware of their intentions and what may be the exact motives lying behind that Measure.
  The House is aware of the Government's decisions as regards Yarrow (Shipbuilders) where we have taken action to safeguard the present orders and future programme of the Royal Navy. The separation from U.C.S. of Yarrow(S) will enable U.C.S. to concentrate on merchant shipbuilding and the intended capital reconstruction will enable the company to reflect the realities of their financial position. U.C.S. are confident of their future and I would emphasise that they have not asked for any new assistance from public funds.
  I mentioned the home credit scheme and said I would be returning to it. At the beginning of this year guarantees given or offered subject to the passage of legislation had brought the potential limit of liability to £600 million. This was sufficient to provide credit on full order books for the industry until mid-1972. The proposed increase to £700 million, together with forecast repayments of £25 million expected this year, should enable the industry to receive credit guarantees on all home orders on which fabrication will start by mid-1973.
  Some shipowners who have been offered guarantees subject to legislation now need to draw on guaranteed credit to meet their obligations under their contracts with the shipbuilders. If the House gives a Second Reading to this Bill I propose to enable these shipowners to draw on guaranteed credit by anticipating enactment of the Bill and giving guarantees in excess of the present statutory limit of £400 million. Guarantees given in advance of enactment will, of course, be counted against the proposed limit of £700 million.
  Mr. Anthony Wedgwood Benn: The hon. Gentleman is adopting the old practice of jumping ahead of parliamentary support. Is this not a nonsense? Of course he will get parliamentary approval to make these guarantees available, but they would have been available under the Act which he is repealing.
  Sir J. Eden: Because I am aware of this point I have given extra special emphasis to it in my remarks. Indeed, I paused at that point in my speech to give the right hon. Gentleman time to intervene.
  The answer to his substantive point is that I realise this is an unusual procedure. I thought it absolutely right to say this openly to the House. If the House does not agree with this course it will not be proceeded with. If the right hon. Gentleman is intervening to say that it is wrong for us to do it this way and that it should not happen, I assure him that I have taken note of his view.
  Mr. Benn: The hon. Gentleman is talking as if this were a debating point. It is not unusual, but illegal, to anticipate parliamentary approval. What I say in a supplementary intervention does not make it legal. I appreciate that he was underlining this point and I am grateful to him for that, but he has just repealed an Act which would have rendered legal the provision of these guarantees. He then comes before us with a smiling face, knowing that he has the good will of the House, to say that he proposes to do something which he has just made illegal by the repeal of another Act. This is an absurdity. Naturally the House wants to see the industry receiving these guarantees. The Industrial Expansion Act not being applicable until the expiry of the Shipbuilding Industry Act, there is a short overlap, but beyond that my point is wholly substantial.
  Sir J. Eden: It is not wholly relevant to the Industrial Expansion Act, and the right hon. Gentleman will be aware of what I said at the outset. These are bank advances and, as the right hon. Gentleman knows from what has already taken place, there are good grounds for a certain degree of optimism here. I have taken note of his remarks, and if he wishes me to understand that he does not think this is the way to proceed in this case in view of the circumstances—
  Mr. Dick Douglas: Before the Minister continues, as he is representing the Government at the Dispatch Box, may I ask him to be frank and indicate how much of the gap between the £400 million and £700 million has already been pre-empted

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  in terms of credit guarantees by the financial institutions?
  Sir J. Eden: I cannot give those figures. The decisions rest primarily with the Shipbuilding Industry Board first of all.
  Mr. Frederick Willey: This is an important matter and we must not overlook the responsibilities of the Comptroller and Auditor-General. What is the exact position? Either the Minister has the authority to do this or this legislation is a waste of time. Either way, he cannot say that because of apathy or this matter not having been dealt with he is taking this step, or that shipbuilding orders will be held up without this authority. It seems impossible for the House of Commons on a Second Reading debate to give the Minister authority to act in the way he is seeking authority to act.
  Sir J. Eden: I would accept the right hon. Gentleman's strictures if I had attempted to conceal something from the House, but I have certainly not attempted to do that. I recognise some of the points that have been made about this being a somewhat novel way of proceeding. It is with a desire to help the industry that this step is being taken, but I will return to the issue later in the debate if that will be of help.
  The proposed new limit of £700 million will help the industry to maintain its present order book, but it will not be sufficient to meet all applications this year for guaranteed credit. The Shipbuilding Industry Board in determining which applications to recommend will, therefore, have regard to the date of commencement of fabrication work in the yard.
  The Government are considering what should happen when the S.I.B. ceases to exist at the end of the year. We are taking into account the prospects for the shipbuilding industry and also the fact that, if the scheme is to continue, some change in the institutional and statutory arrangements would, in any case, be needed after 1971.
  Mr. Simon Wingfield Digby: My hon. Friend said that up to the end of 1973 there will be sufficient credit. He must know as well as I do that many of the big yards are trying to get orders for 1974. Is he really saying
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  to home owners that they might as well look abroad—is he trying to divert them abroad—because there will not be credit guarantees at home?
  Sir J. Eden: I was about to say that we are considering what should he the position when the S.I.B. ceases to exist.
  Mr. Dell Mr. Dell rose—
  Sir J. Eden: The British shipbuilding industry does not exist in a vacuum. It is part of the world shipbuilding industry and the form of any Government support in the future must have regard to what is happening abroad, as well as to the effect of prospective changes in this country in investment incentives and company taxation.
  I am not, therefore, in a position to give any categoric assurance today about the terms on which finance for shipbuilding may be available in future.
  Mr. Dell: We want to be absolutely clear about this extremely important and worrying statement which the Minister has made. As the hon. Member for Dorset, West (Mr. Wingfield Digby) pointed out, British shipowners are wishing to place orders now, and that would take the figure beyond £700 million. The Minister has himself said that the present decision involves rationing by the S.I.B. Are the Government really leaving the British shipowner and shipbuilder without any guarantee as to the future in respect of credit?
  Sir J. Eden: I was saying that we are now having to look to the future beyond the time when the existing vehicle comes to an end.
  Dame Irene Ward: If my hon. Friend is just beginning—we are not quite sure about this—to look to the future, may we know when he started looking to it and how long he thinks it will be before he catches up with the future?
  Sir J. Eden: Perhaps hon. Members will give me the opportunity of repeating the remarks I made before this last set of interventions, because it was particularly important and may go a long way to answering the questions which are now being put to me.
  I said that we had to look to the future and have regard to what was happening

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  abroad as well as to the effect of prospective changes in this country in investment incentives and company taxation. I went on to say that I was not in a position to give any categoric assurance about the terms on which finance for shipbuilding might be available in future.
  The Government recognise the importance for the industry of assured credit facilities. I hope to be able to make a fuller statement about the arrangements for shipbuilding credit before the Summer Recess.
  Mr. Arthur Blenkinsop: Surely the country and the shipbuilding industry were told that a major statement would be made on this occasion. They have made clear their interest in the future and the financial position of the industry. Is the hon. Gentleman now saying that after all the months of waiting for this Bill he cannot say anything more definite than what he has just said?
  Sir J. Eden: The hon. Gentleman is underestimating the significance of what I have said. Perhaps when he has studied my statement he will moderate his references to it and take comfort from it.
  Capital grants and loans will continue until the end of the year and will cease with the dissolution of the Shipbuilding Industry Board. Shipbuilders relief and import duty relief will be carried on. The credit rules on steel imports have been relaxed. The credit ceiling is being raised by the Bill, and a further statement on future credit facilities will be made before long.
  Taken together, these measures add up to realistic support for the industry which should give it every opportunity to improve its efficiency and to prosper. Despite inflation, it is possible for an efficient shipbuilder with good labour relations to flourish—as witness the case of Austin & Pickersgill, which has not received one penny in capital assistance from the Shipbuilding Industry Board. The industry as a whole has healthy order books. The extension of the home credit scheme to £700 million shows the potential demand for ships for United Kingdom registration. There are also profitable export orders to be obtained
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  and, indeed, the industry could well do more in this direction.
  But the fortunes of any particular company must depend on its own efforts, skill and judgment. No level of Government support can guarantee success. The industry, however, now has the opportunity to regain its independence and add further honour to its long and distinguished past. I ask the House to approve the Bill.
  4.43 p.m.
  Mr. Edmund Dell: The hon. Gentleman has just announced the Government's virtually total disengagement from the shipbuilding industry. Unlike the Governments in virtually every other shipbuilding country, the British Government have decided to disengage from this industry, which is vitally important to our balance of payments, vitally important to our own shipping industry and vitally important to the British engineering industry. They are abandoning the industry entirely to market forces. That is what their policy amounts to. That is what it is in all essentials.
  The hon. Gentleman said that perhaps we would find more comfort in his statement when we had an opportunity to study it. I must protest against the delay in making even this statement to the House. The Bill was introduced on 12th February. On 18th February the Under-Secretary of State said in Committee on the Industry Bill that the Second Reading of this Bill would be taken as an opportunity for a major statement of policy on the shipbuilding industry. We have been waiting two months since then. It even appears now that on the subject of credit guarantees we shall have to wait until the summer Recess.
  Even so far we have waited two months. Yet I remember the preaching we used to have from hon. Members opposite about the dangers of leaving industry uncertain. For two months the shipbuilding and shipping industries have been left uncertain by the Government as to what their intentions are—and for no reason at all. Everything which the hon. Gentleman has said today could have been said two months ago. If the Second Reading of this Bill could not have been fitted in before, then the hon. Gentleman's statement could have been made separately to the House. But for

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  two months the Government have been prepared to leave these two vital industries in uncertainty as to what they intended, and today we find that even now they have not fully worked out their policy.
  Mr. Blenkinsop: In addition, we have had no kind of statement on the repair side of the industry, although we understood that we were going to get that as well.
  Mr. Dell: I agree. I was coming to that point. Only yesterday the Under-Secretary of State said, in answer to a Question, that if only we would wait until today we would have a statement on ship repairing. I do not know whether it is his intention to make that statement in his reply tonight, but if so it means that we shall not be able to debate it. That would be an extraordinary situation. We were assured that ship repairing was also under consideration by the Department, that we were to hear the Government's intentions about it and that, apparently, we would be able to debate them. But we shall not be able to debate them if the statement on ship repairing is to be made at the end of the debate instead of, as would be proper, at the beginning. The attitude of the Government is extraordinary and deserves the condemnation of the House.
  In relation to credit guarantees, for two months, apparently, the Government have been saying to themselves, but not to the House, "Give us the Second Reading of this Bill and then we will go through the processes of raising the limit of credit guarantees to £700 million." During these two months, the Government could have had their Bill. They could have enabled themselves to do what they propose to do, legally instead of illegally, taking advantage of the consideration of the House towards the industry. But their programme has been taken up with far less important and far more damaging Measures in the interval. For two months legislation which could have been got through, and which is vital to enable these guarantees to be given, has been held up. Now the shipbuilding and shipping industries are left uncertain as to the future intentions of the Government towards them.
  Dame Irene Ward: Before the right hon. Member for Birkenhead (Mr. Dell)
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  proceeds with his speech, I would like to know from my hon. Friend whether the shipbuilders, ship repairers and ship owners have been told all this information and what their views are.
  Mr. Dell: The hon. Lady cannot ask me for that answer.
  Dame Irene Ward: No. I am asking my hon. Friend.
  Mr. Dell: There are so many leaks from the Government, however, that it is quite possible that they have been told before the House has been told. But the hon. Gentleman has made his speech and has provided them with all the information that they are going to get from the Government for the next few months. The hon. Lady must rest on her disappointment and take the matter up with the Government in the vigorous way for which she is well known.
  The Government have decided, in effect, to revert to the pre-Geddes policy of allowing market forces to dominate the future of the industry. The industry will therefore be placed in a position entirely different from that of virtually every other shipbuilding industry in the world. What has happened to the industry since the war has lessons for industrial policy in this country generally. It shows the effects of the policy to which the Government are now reverting. After the war ours was the leading shipbuilding industry in the world. It was a growth industry, with a mounting demand for ships all over the world. Yet it was abandoned to the operation of market forces. It was abandoned to competition mounted from Japan with other than market forces operating there. The Government in this country were prepared to allow this growth industry, in which we had a world lead, to lose its competitive position year by year, even though, quite obviously, it could not, faced by the international competition it had to deal with, maintain its competitive position alone.
  That was the situation up to the Geddes Report. The industry was left to market forces, to which we are now to revert. The result was a catastrophe for the industry from which only the Geddes Report and the Geddes policy, implemented by the last Government, rescued it.
  The Under-Secretary of State for Trade and Industry (Mr Nicholas Ridley): What the right hon. Gentleman says does not square with the facts. The industry's share of the market, indeed its production, continued to decline even under the Geddes policy.
  Mr. Dell: I shall deal with the Geddes policy and remind the hon. Gentleman of the successes achieved under it. But, having allowed the industry to deteriorate for 20 years in face of international competition, it was not reasonable, especially if internationally subsidies were to continue, to expect that the industry could be rescued from its predicament in four years.
  The Geddes Report was based on the presumption, explicitly stated in the Report, that it would be possible to withdraw support at the end of 1971, although I think it was optimistic in that, but on the assumption that something was done internationally about subsidies. Nothing, or virtually nothing, has been done internationally about them. The competitive position, in its reality, remains as it was when the Geddes Committee reported.
  The Government have contented themselves with blaming management and workers, as the Minister for Industry did today. Because the industry cannot compete in these circumstances, or cannot regain its share of the market, we say that it must be management and workers who are to blame, whereas, although a great deal more could be done by management and workers, in this competitive situation what is needed is Government help.
  We shall not get anywhere by attempting to flagellate management and workers for the fate which the shipbuilding industry has suffered through the operation of market forces. Criticism of management and workers is self-fulfilling. We leave an industry to face this type of international competition, and it fails to meet it. There is not adequate investment and there are inadequate increases in productivity. Management is not recruited as it should be, and the fear of redundancy makes workers less cooperative with proposals for increased productivity. Though one result of the Geddes Report was that there was a great improvement in the willingness of trade unions in the industry to co-operate in schemes for increasing productivity.
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  Associated throughout with the shipbuilding industry, which was abandoned to market forces and which elsewhere in the world is assisted, was the shipping industry—again an industry with a world lead, again left to market forces and again left relatively to decline until investment grants were introduced when, oddly enough, the industry began to regain something of its relative position in the world. The Government have withdrawn investment grants. The Rochdale Report recommended their withdrawal but said that equivalent assistance should be given. It has not been given. Assistance to the shipping industry has been considerably reduced. The consequence is serious for the shipping industry, as leaders of it have pointed out. It is also serious for the shipbuilding industry because necessarily it will have an effect on orders placed by British shipowners in British yards.
  The shipping industry has throughout its history operated a policy of placing orders where economically it could best place them. A very large proportion of its orders has been placed abroad, which is understandable from its point of view. No other national shipping industry with a major shipbuilding industry in its own country has followed that policy. Whether the reason is that they were not permitted to follow such a policy is an interesting subject of speculation. If the British shipping industry had been prepared to give the shipbuilding industry the guarantees of future orders which were given in, for example, Japan, where 100 per cent. of Japanese shipping orders go to the Japanese shipbuilding industry, or in Germany, where 80 per cent. of orders go to the German shipbuilding industry, it would have been interesting to speculate whether we would have today a shipbuilding industry better capable of satisfying the requirements of British shipping. This has been one of the factors which have led to the relative decline of the British shipbuilding industry.
  Hon. Members opposite try to emulate the principles of Adam Smith. But even Adam Smith would not have allowed this to happen. He, being a good Scotsman, believed that the power of the State should be used to support British shipping. He was not nearly so much in favour of disengagement as hon. Members opposite.

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  In this way, these two growth industries were allowed to decline in face of international competition. Then, in 1965, the Geddes Committee was appointed. The Geddes Committee and the policy which followed its Report enabled the industry to survive, provided the industry with valuable additional resources which are today enabling it to get important orders which it would not otherwise have been able to get, has enabled it to increase its orders to the highest figure for many years and enabled it last year to achieve the highest volume of completions it has achieved for many years.
  The Secretary of State—and he has explained his absence today to me—is fond of saying, and the Minister for Industry repeated today, that money provided under the Geddes policy has gone down the drain. One result of the Geddes policy was the recent Shell tanker order which would not have been placed in this country without that policy. The value of orders like that to our balance of payments far exceeds the amount of money spent as a result of the Geddes Report, and the policy will bring further orders to the yards which will be of value to Northern Ireland and to our balance of payments.
  But, following the Geddes Report, the industry has not succeeded in dealing with its problems in two respects; and, in the face of international competition, it could not have done. First, it has not made itself profitable, and, secondly, the level of investment, other than the investment supported by Geddes, has continued low. We know about the low level of investment because we have the investment grant figures, which show that during the years since the Geddes Report privately financed investment has been very low. It will now probably be lower because of the withdrawal of investment grants. Incidentally, one of the advantages of the investment grant system is that we know facts like that, whereas under the Government's tax allowance system we shall not have these figures.
  We need today not another Geddes Committee but a decision by the Government on what share of a growing world market the United Kingdom industry should aim at, which the Government must achieve by means of large-scale investment assistance. On the other hand, if we should get out of this industry, as
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  the Government apparently believe, then the Government should say so. The statement of the Minister for Industry today merely confirms the indications that that is what the Government intend. He indicated that there will be no continuing support for the industry other than possibly further credit guarantees. We already knew of the demise of the Shipbuilding Industry Board. We know about the abandonment of investment grants, which, in an industry like this which is unprofitable, means that there will be no investment incentives at all. There is the end of the regional employment premium. In these circumstances I do not understand how the Government can expect the industry to be able to compete in world markets.
  I attribute no value to the exordium which the Minister has given us today that if only the industry would pull up its socks it could compete against the subsidised competition it faces abroad. This is not an industry which we can leave to market forces, we have lost far too many years, competition is loaded against us, the industry is still too weak, and if inflation continues at the present rate, even the escalation clauses will not save its profitability.
  The hon. Gentleman said that we must have regard to what is happening abroad. Let us look at world competition in the industry. Japan has 50 per cent. of the world market. Their shipbuilding industry is more efficient, which, given the investment that has taken place in that industry over the last twenty years, is hardly surprising. In addition, Japan has an undervalued currency, The Times, in a review of the Japanese shipbuilding industry a few weeks ago, said that the threat of yen revaluation haunts the industry, and I can understand that. An undervalued currency is a subsidy from the great mass of the population to its exporting sector.
  Japan is putting in eight new yards, which will raise its capacity from about 10 million gross tons now to 15 million gross tons by 1975. This is being done with the assistance of central and provincial governments. What estimates have the Government made of forward demand for shipbuilding in the world? According to estimates made by the British shipbuilding industry, these eight additional yards will be capable of raising Japan's 50 per cent. share of world

  1399
  shipbuilding to more like 60 per cent. Is that confirmed by the Government, or do they have different figures? It looks from these figures as though Japan is not even content with the record so far achieved but is going for an even larger share of the market.
  Let us look at the European position. There are overt subsidies in France and Italy. All over Europe there are yards maintained with Government help, despite financial crisis. Götaverken has had a financial crisis but has not gone out of existence. Burmeister and Wain has had a financial crisis but has not gone out of existence. Both are getting assistance from their Governments. Only the British shipbuilding industry is to be abandoned. There is also the other factor which I have mentioned of the greater loyalty of national shipping companies to their own shipbuilding yards.
  Given the history of the industry, given the nature of the international competition, given the freedom of British ship owners to order abroad, and given the abolition of investment grants and the regional employment premium, how can one reasonably hope that adequate investment from private sources will sustain a viable shipbuilding industry in this country? The only possible source of adequate investment is the State. I know that the Government's position is, as the Minister for Industry said, that they will not feed inflation by subsidies and grants. They apparently believe that the only effect of the implementation of the Geddes Report was to feed wage inflation in British shipbuilding yards. This is an extraordinary point of view for a Government which have decided to fight wage inflation through the public sector. The sector that can in the last resort rely on support from the Government is the sector which the Government have chosen to fight wage inflation.
  One of the new arguments for taking over the commanding heights of the economy—and the Government might consider this—is to help them fight wage inflation. But apparently in the shipbuilding industry assistance merely creates wage inflation. To give companies some guarantee of a future existence creates wage inflation. It depends on the method of providing Government aid. In the history of the shipbuilding industry there
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  have been too many Government rescue actions. When people are rescued from time to time they come to expect the next rescue. There has been too little consistent determination by the Government through aid to maintain a viable shipbuilding industry. Had that been the policy before Geddes as well as during Geddes we would have seen investment, higher productivity and a competitive shipbuilding industry, and rescues would not have been needed.
  So there is this vital question for the Government, and the Government have decided to abandon the British shipbuilding industry to market forces, and have taken this decision at a time of mounting unemployment generally and in the development areas. They have told us today that if there is a danger of collapse in particular shipbuilding companies because of the unprofitability of orders which they have taken on in the last few years, they will take no action, despite the current levels of unemployment in development areas. The Minister for Industry has made an amazing statement today against the background of the most recent unemployment figures and their trend.
  I believe that this policy is wrong. The Government should support the shipbuilding industry and undertake a continuing commitment to such support. The question is whether, where companies are so dependent on Government support and there is a prospect of that support being required long term, there is any point in continuing the forms of private ownership. If Government support is given, the reality must be strong Government control to ensure that we achieve the objects of the support—higher productivity, adequate management, greater competitiveness. There is, therefore, a strong argument for bringing the form into line with what must be the reality by means of public ownership. The Government have decided, as the Minister for Industry has told us today—
  Sir J. Eden: Is the right hon. Gentleman saying that it is the policy of the Opposition that the shipbuilding industry of this country should be nationalised?
  Mr. Dell: I am giving an expression of my view that if finance for particular shipbuilding companies to make them competitive has to come from the Government, there is a strong argument that

  1401
  such companies should be taken into public ownership, and for the form to be brought into line with the reality which is strong Government control of shipbuilding companies that require Government support.
  Sir J. Eden: Is the right hon. Gentleman giving it as his personal view that the industry should be nationalised, or is he speaking officially on behalf of the Opposition from the Dispatch Box and saying that the British shipbuilding industry should be nationalised?
  Mr. Dell: The hon. Gentleman is not in a position to argue, following the Government action on Rolls-Royce, that there are not situations in which on merit public ownership is required. I referred in a previous intervention to the Northern Ireland Government introducing the Industrial Development Bill which permits the Northern Ireland Government to take equity shares in private companies. There too, apparently, it is increasingly realised that public ownership is necessary to establish certain industries on a competitive basis. I believe that where an industry or a company is so dependent on Government support as is much of the shipbuilding industry, it should be publicly owned. The Government, on the contrary, have decided to abandon the industry, a decision which takes no regard of the employment consequences. They are prepared to allow the industry to die.
  We shall give a Second Reading to the Bill because it will enable certain further orders to be placed with the industry, and it is important that those orders should be placed, but we regard the statement of policy which has been made today as utterly calamitous for the industry and we utterly reject it.
  5.10 p.m.
  Mr. Simon Wingfield Digby: The right hon. Member for Birkenhead (Mr. Dell) had some responsibility for this industry when he was a member of the Labour Government, and, therefore, we listened with interest to what he said. Indeed, he said a number of things with which I would agree, but I would not go the whole way with him in many of his remarks. The fact that he attributed the revival of the shipbuilding industry to investment grants was far too broad. There have been wide-
  1402
  spread abuses of investment grants, and, though they have probably helped the shipping industry more than others, I am sure that it was right to do away with them.
  Mr. Dell: The hon. Gentleman says that there have been widespread abuses of investment grants, and I do not deny that in the case of the shipbuilding industry. Will he ask himself whether similar abuses are not possible in regard to tax allowances?
  Mr. Wingfield Digby: Abuse is always possible but I believe that investment grants particularly lend themselves to abuse.
  I did not agree with what the right hon. Gentleman said about the Geddes Report. When one looks at the implementation of its recommendations over the years, it can be seen that results have been most disappointing. One of the most disappointing things is the way in which money which was to have been available under Geddes in the way of grants and loans has been spent. It would be a brave man who would not say that the Upper Clyde had had too much of the money and that if that money had been spent in other areas it would not have been done very much more for the industry.
  I was amazed to hear the right hon. Gentleman say that public ownership would solve the problems of the industry. If a large amount of money is spent on an industry there must be a degree of public control, but the record of public ownership has not been one which I would wish to see followed in the shipbuilding industry.
  Although the Bill deals with a somewhat narrow point of Government guarantee for credit facilities, it also raises wide issues about the future of shipbuilding and its profitability. An article in the Economist Weekly on 27th March entitled "Should Europe Build Ships" pointed to the difficulties of ourselves and our competitors. The difficulties of the British shipbuilding industry can be regarded as typical of the problems of other industries, though perhaps in a more acute form. Lack of profitability, price inflation, fixed price contracts, labour relations and high wage claims are problems which are to be found in many industries other than shipbuilding, but since shipbuilding is an assembly industry which takes orders

  1403
  covering a long period ahead it has been particularly hard hit by these factors.
  I should like to stress that demand for shipping is very buoyant indeed. World demand for shipping has increased, and is increasing. Secondly, our shipbuilding competitors, despite the subsidies which they receive, also have their difficulties. Therefore, we should not get too depressed about the difficulties of our own shipbuilding industry, although they may seem a little more acute than those faced by some of our competitors.
  The Bill concerns home owners' orders; it has nothing to do with orders from overseas, which can be financed in other ways. It is, therefore, relevant to notice the degree to which the shipbuilding industry of Britain has become dependent on home owners. According to the latest figures for 1970, only 20 per cent. of compensated tonnage orders were foreign, and in regard to gross registered tonnage the figure was 18 per cent.
  Dame Irene Ward: Perhaps my hon. Friend would add that Swan Hunter on the Tyne has received a terrific fillip because it has just obtained an order to build a Norwegian liner, and this has helped us in our plans for the future.
  Mr. Wingfield Digby: That is very good news indeed, but the fact remains that home owners were responsible for 80 per cent. of the orders in 1970. If we look at the total order book the picture is very much the same: 22 per cent. of compensated tons only ordered from abroad, and in regard to gross registered tonnage the figure is 25 per cent. Therefore, we must see how far future orders will continue to come from our home owners.
  The trend which has led to foreign owners ordering away from Great Britain began some time ago. I remember that many years ago when I had some responsibility for the shipbuilding industry the tradition among Norwegian owners and others was to order in this country. Unhappily, that tradition has declined. As recently as 1966 65·7 per cent. of orders came from abroad; in 1967 it had fallen to 33 per cent. and by 1968 to 18·3 per cent. Therefore, our shipbuilding industry is largely dependent on home owners.
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  We have already heard from the Minister, in a somewhat disappointing statement so far as I was concerned, that the sum of £700 million will not be sufficient to meet all the orders which home owners might be willing to place in 1974 and after. This is bound to make those owners take their orders overseas where there are greater incentives open to them, such as better credit terms, than we are able to offer in this country. The ceiling in the original Bill, which was dropped a year ago because of the General Election, was £600 million. The figure is now £700 million but, according to my calculations, that is only six months' worth of orders and, therefore, is less generous than the original Bill.
  A good deal of uncertainty has been created because shipbuilders have been unwilling to order components and steel until they were sure about the credit position. They have been uncertain about the final cost and delivery dates, and this has made it more difficult for them to plan future voyages and the profitability of ships.
  Another factor which has altered since the original Bill is that Bank Rate has now been cut to 6 per cent. while at the same time the rate of interest allowed to banks has gone up from 5½ per cent. to 7 per cent. Therefore, the terms have increased enormously in favour of the banks. I do not understand why the banks are reluctant to advance this money when they can get 1 per cent. above Bank Rate for it. It could be argued that there is no great advantage in the Government guarantee since the owners can go to the market and get the favourable terms of reduced Bank Rate. That may be so, but I cannot understand the reluctance of bankers to lend their money on terms of this kind, all the more so at a time when we read that export credit guarantees have increased so much. According to my figures, they were up 17 per cent. in the last quarter of last year. I should have thought that this cause was just as worthy in terms of foreign exchange as guarantees for export credits.
  I now come to my comments on the Geddes Report. Ever since I was first associated with the industry, I have believed it to be one of the greatest complexity. It was probably impossible for any outside committee to come into the

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  industry and make the correct recommendations. Looking back, we can all see that our doubts about the main recommendations were more than justified. My hon. Friend the Under-Secretary of State has more than once drawn attention to the emphasis on shotgun weddings. The right hon. Member for Bristol, South-East (Mr. Benn) is the patron saint of shotgun weddings. He always seemed to want them. But they have not worked out at all easily, especially on the Upper Clyde, and if some of the other proposals between Northern Ireland and the North-West had been implemented, the position would have been even worse. This is one of the reasons why too much of the Geddes money was spent in the wrong place.
  Mr. Douglas: Will not the hon. Gentleman concede that paragraph 276 of the Geddes Report says:
  "During the past ten years the industry has spent over £60 million on land, buildings and new plant and machinery. It appears to us, however, that little if any attempt has been made before investing new capital to estimate the return in terms of increased profit or reduced costs…"?
  That was the industry under private enterprise.
  Mr. Wingfield Digby: I do not see what that has to do with shotgun weddings. Some of the amalgamations could have been encouraged and would have been good. But there is no doubt that the action of the last Government in forcing them on people has done, and will continue to do, a great deal of harm. The mere fact that they did it with the best intentions does not exculpate them or put them in the position of saying that Geddes was wonderful in every respect.
  Mr. Albert Booth: The hon. Gentleman is a fair man. He referred to my right hon. Friend the Member for Bristol, South-East (Mr. Benn) as the patron saint of shotgun weddings. Surely he will agree that in the case of the shipbuilding industry my right hon. Friend implemented a measure which had been agreed within the industry. He was not responsible for foisting the Geddes policy on the industry. The industry had agreed to it.
  Mr. Wingfield Digby: The hon. Gentleman will remember that Geddes
  1406
  made definite recommendations, one of which would have meant that shipbuilding in his own constituency would be joined to that in Northern Ireland. I do not know whether he thinks that that would have been a good plan. I think his constituency would have suffered.
  Then the Geddes Report dealt with machinery and components. Here again, its recommendations have not worked out very well. I find it difficult to attribute blame, though I feel that the Shipbuilding Industry Board has proved to be a disappointment. Certainly I expected more from it than has been achieved.
  Although the difficulty about industrial relations was recognised by Geddes, undoubtedly that has also done a lot of harm. In support of that assertion, I use not my own words but those of the article in The Economist:
  "…repeated rescue operations have given shipyard workers the impression that the taxpayer will probably pay for whatever unreasonable wage demands they make."
  I think that that comment is justified, and the right hon. Member for Birkenhead came very near to agreeing with it.
  Another point that right hon. and hon. Members opposite must remember when they claim credit for Geddes is that they ignored the most important of all the Committee's recommendations, which was that shipbuilding should once again have a cheaper rate of steel, as it did in the old days. I have said this many times before in this House, and I say it again. I am happy to congratulate the Government on holding down the price of steel, and my hon. Friend is to be congratulated for altering the position about getting cheaper steel from abroad. Steel is a very important part of every ship, and it is sad that this important provision of the Geddes Report was ignored for so long.
  What are the prospects today, after Geddes? World demand is great. In our yards we have great skill, and we have certain skills of management. I have always believed in our doing the tasks at which we excel. Great Britain is good at shipbuilding, whatever the temporary difficulties. For that reason, certain help is justified. The provision of this guaranteee does not cost the Government a penny. Even the Bill says that it will not cost any money. I do

  1407
  not see why the bankers should not put up the extra money to turn the Government's proposal into a full revolving credit.
  In a highly competitive world it is difficult to find an industry which does not have difficulties. The shipbuilding industry is a concentrated one, and unemployment has severe social consequences. I believe that there is a place for the British shipbuilding industry in the world today, although our share of world markets has been reduced so seriously. In the few cases where we have the kind of equipment which can be compared with that of the Japanese—for example, at Harland and Wolff—I hope we shall be able again to show the world, but it can be done only with the co-operation of all sections of the industry, including the workers.
  I hope that my hon. Friend will lose no time in considering the home owners, making up 80 per cent. of our market, who contemplate ordering ships for 1974. As a result of what has been said today, I fear that they will be inclined to look abroad more than ever. Our shipping industry has pulled up. It has shown itself more enterprising than it was after the war. It is going in for bulk carriers and container ships in advance of the world. It is a very competitive industry. At 2 or 3 per cent., its return on capital is very small. It must be able to order in the cheapest place. I am sure that most owners would prefer to order at home. and I still believe that it can be made possible for them to do so. For those reasons, I hope that my hon. Friend will complete his further look at the industry as rapidly as possible.
  5.28 p.m.
  Mr. Frederick Willey: I begin by declaring an interest. My constituency probably contains the greatest concentration of shipyards in the country.
  It is pointless for the Minister to talk about shipbuilding representing only 1 per cent. of British industry. Shipbuilding is concentrated in three or four districts, and in those districts, obviously, it is of great local importance. Incidentally, my constituency contains the best and most successful yards in Britain in terms of management and men, though
  1408
  they have not the resources of other yards. The Minister mentioned Austins, and he will be delighted to know that the company is celebrating the centenary of the SD14.
  I mention these local factors because there are two that I want to emphasise. The Minister said that Austins has received no aid. In fact, the Sunderland shipbuilders are very independent. They are reluctant to take aid. Compared with other shipbuilding districts in Britain, they have had practically no aid.
  I also think that it is unfortunate that the operations of the S.I.B. have been too subject to political pressures. If we looked at the industry coolly and rationally, probably more aid would have been concentrated on areas like Sunderland where the yards have been so successful. Indeed, we have helped other yards. The best thing that was done about U.C.S. was to get Stan Douglas from Austin Pickersgills. I mention this to draw the Government's attention to the warning given by the S.I.B. in its last report, when it said that
  "large sectors of the industry will continue to require access to capital which they will not be able, in the near future at any rate, to generate in sufficient amounts for themselves."
  The S.I.B. said that this was a real risk and warned us that this year, the period we are just in, the S.I.B. will find itself unable to deal with some of the applications made to it.
  I have mentioned Sunderland's background because I think it may require aid. I want an assurance from the Government that any such request will be looked at rationally and realistically and that Sunderland's claim, if it should be made, will be considered against the background of the aid which has been given to competing shipbuilding districts, because Sunderland is facing competition not only subsidised from abroad but in this country, too. The Sunderland yards are not prepared to be out-subsidised by the other British yards which have been so heavily financed.
  The second local factor which I emphasise is that, like most shipbuilding districts, Sunderland is in a development area. I have acknowledged in previous debates that Sunderland is now a special development area. At the moment it has male unemployed at 9· per cent., but it has had male unemployment bumping

  1409
  10 per cent. for three years. Shipbuilding has to be considered in this context.
  It is no use the Government telling me that Rolls-Royce will be considered in the interests only of Rolls-Royce. As Rolls-Royce has been nationalised we must pay attention to the fact that the Rolls-Royce factory in Sunderland is vital to maintain even the present rate of employment.
  The Minister referred to labour relations. I should like to emphasise one particular consideration. For many years shipbuilding has been a contracting industry. Our Sunderland yards have been making 300 to 350 workers redundant every year. A lot of nonsense is talked about the shipyards. There has been heavy rationalisation in the yards, and this has taken place in areas of heavy unemployment. In these circumstances, labour relations are frightfully difficult. We had a disastrous strike at Doxfords for 13½ weeks last year. That is why I have mentioned the difficulties which we may be facing.
  The Minister must appreciate that asking men to accept the rationalisation of their industry within the context of heavy unemployment is a real difficulty. Other factors affect the matter. Sunderland has redundancy among miners, too, but one should think of the terms which they get on redundancy. I mention this because these matters have to be considered as part of regional policy.
  The tragedy about shipbuilding is the need—which we have had for years—for an expansionist attitude in the industry. Consider the present position. We have an order book to discharge facing serious cost escalation. Think of the incentive that there ought to be to speed production, if only to mitigate prospective losses. It is not altogether a good thing to have accumulated this order book. It carries liabilities.
  I have previously made clear my position on steel prices. The steel price is 20 per cent, of the cost of a ship. We should be doing all that we can to hold down price increases as we have done previously, but it should be done in the context of a prices and incomes policy. We should mitigate prices in the nationalised industries. We should do what our competitors would do in the present situation; we should see that the British shipyards, to encourage them to speed
  1410
  production, by one device or another receive steel more cheaply than at present.
  I should like to pay tribute—I am surprised that no one has done so—to Sir William Swallow. Sunderland has been fortunate. It has not troubled the S.I.B. greatly. However, the industry recognises that Sir William Swallow has done a very good job. But the job was only a holding operation. The melancholy fact is that in broad terms Geddes has been only a partial success. It has been a partial failure. We are reaching the dates set down by Geddes but we have no prospect of reaching the target of 2¼ million gross tons or 12½ per cent. of world output. As has been pointed out, the output is just over half that and there are no signs of it rising. I am not suggesting that the solution is easy or that it is stereotyped, but we must consider the British shipbuilding industry in the context of world shipbuilding.
  My right hon. Friend the Member for Birkenhead (Mr. Dell) mentioned Japan. When I last spoke in a debate on the shipbuilding industry a couple of years ago I pointed out that Japan was then producing six times the shipping that we were producing. The amount is now nine times higher. Two years ago I gave the world output figures. I said that we should probably be pipped for third place by Sweden. We are now a poor fourth, and Sweden is well above us. But France and Spain are on our tail. Spain has made a spectacular increase. These countries are not going in for shipbuilding to carry losses. There must be some attraction in building ships.
  Our export figures have been mentioned. They are the worst for five years. But what is appalling and disastrous—this is the crux of the debate—is that, despite the aid which the Bill will give, British orders from abroad worsen from year to year. It is fantastic, compared with 20 years ago, that last year new British shipping built abroad was far greater than the total output of British yards. This is not a matter of nationalisation. That is irrelevant but we must recognise that other countries have, and pursue, a national policy for their national industries of shipping and shipbuilding.
  Japan's yards have, in our terms, a fantastic order book which has put them

  1411
  in an entirely different league. Yet, despite that, 100 per cent. of Japan's home orders go into Japanese yards. This does not happen by accident.
  The Japanese merchant fleet has multiplied five times in the last 10 years. In 1969 it overtook the British fleet, and now it is 1 million tons larger. All that has been built in Japanese yards. The Japanese have an entirely different national attitude to their national industries. It has nothing to do with nationalisation. It is a matter of national will and determination.
  That attitude is to be found not only in Japan but in other shipbuilding countries. I have mentioned France. France did not have a Geddes Report. People there recently looked at their industry, and there has been a thorough reorganisation of the basic principles of shipbuilding in France. The result is that since the beginning of 1970 France has topped the list of countries building specialised shipping. She builds more oil tankers than we do. She has an order book as big as we have, but the important thing is that in France they have looked rationally at the market, decided what they could take, and have got on with it. All this has not been done by accident. It has been the result of a concerted national effort, and it is this attitude that we have to recognise. We must adopt a similar approach, and what I am saying about shipping and shipbuilding applies to other industries, too.
  Geddes—and it should not have been put any higher—was a salvage operation. It is no good saying to the shipbuilding industry, "We have given you a launching pad, off you go". We must see what other shipbuilding countries have done, learn from them, and then show equal skill, sense and determination here.
  I intend to be brief. Nothing has been said about marine engineering. Every year I read with melancholy the S.I.B. report that no progress has been made and that the position is thoroughly unsatisfactory. Our marine engineering industry should look at other countries to see what is happening. No mention has been made of ship repairing, which is facing major difficulties.
  What we want is a national will and spirit to settle the problem. I am dif-
  1412
  fering from my right hon. Friend about nationalisation, because this is not a simple matter. This must be a joint operation. At the moment we are considering the banks providing cheap credit, with Government guarantees, discriminating in favour of an industry. This is an industry upon which my constituents depend to a great extent, and I support this, but the problem is complex. I am not saying that if shipbuilding and shipping are considered, we must not consider other industries, too. What I am saying is that however great the difficulties, we must face them.
  It will not be easy to evolve a pattern for dealing with difficulties in this industry. If one considers the history of Japanese shipbuilding, one realises how complex it can be—at one time it was supported by a levy on sugar. Let us show the kind of determination that has been shown by the Japanese, not only in shipbuilding but in shipping. They have now shown such a determination to go ahead in shipping that Liberia had better watch out.
  I am disappointed at the Government's attitude. I do not think that they can abnegate their responsibilities. Shipbuilding and shipping are international industries. We must learn from what has been done in other countries, and do the same kind of thing here. If we do not, then not only these industries but the whole country will slide into trouble. Probably it has slid too far already. What we need above all else is a national will. The Government cannot leave somebody else to deal with the industry; they must give a lead and see that people pull together. For years I have argued that this ought to be an expansionist industry. What we want to see in the industry again is spirit and determination to deal with the problems which face it.
  5.45 p.m.
  Mr. Stanley R. McMaster: I denounce, straight away, the air of depression which was so apparent in the speech of the right hon. Member for Birkenhead (Mr. Dell). I welcome the Bill. As the right hon. Member for Sunderland, North (Mr. Willey) said, the shipbuilding industry has a great future. I, too, have a large shipbuilding yard in my constituency. During the last 10

  1413
  to 12 years this yard has been modernised, and it now has a large building dock, one of the largest in the world, and certainly the largest in Europe. New fabrication sheds are nearing completion, and when they are in operation they will place this country in the forefront of world shipbuilding.
  The right hon. Member for Birkenhead does no service to the industry when he calls for the nationalisation of the shipyards. One has only to consider what has happened in other industries that have been nationalised. For example, the steel industry, to which the right hon. Gentleman referred, has had seven different political bosses during the last five years. What good does it do an industry to bring it under public control and change its management with every change of Government?
  Mr. Dell: The hon. Gentleman is a Northern Ireland Member who frequently talks about the situation at Harland and Wolff. In fact, he has been described as the hon. Member for Harland and Wolff. Perhaps he will comment on the Industrial Development Bill introduced yesterday. Does he know whether the Northern Ireland Government intend to take a shareholding in Harland and Wolff, a company to which they are giving financial assistance, and to which they are likely to continue to give such help?
  Mr. McMaster: The right hon. Gentleman has anticipated my speech. If he will forgive me, I shall deal with that issue in due course.
  I welcome the Bill, and I am glad that the limits are being increased. This is the second increase in the limits provided for in the 1967 Act. These are reforms which I and the stalwart few who always attend these debates have advocated for many years. The whole purpose of the Bill is to place the British shipbuilding industry on a par with shipbuilding industries throughout the world. Considerable sums of money are tied up when a ship is being built in German, Swedish or Japanese yards. Five years may elapse from the placing of an order to the delivery of the finished vessel. The building of the ship often has to be financed at gruelling interest rates. For many years interest rates abroad have
  1414
  been lower than in this country. Bridging the gap and providing a guarantee has not cost the Government one penny. They have been at risk, but they have not lost anything through having to provide these guarantees since the provisions for them were introduced in 1967.
  Therefore, with the expenditure of the taxpayers' money, the Government can give a guarantee which has enabled the shipowner, British or foreign, to order vessels in this country at very competitive interest rates. I would remind the House that one or two per cent. on the interest rate can account for many hundreds of thousands of pounds in the final cost of the vessel.
  I agree that perhaps the limit of £700 million may not be adequate. I am glad that the Minister did not close the door on this point. I would urge him to reconsider it, as it costs the Government nothing—although our money is at risk —and I do not see why they should not provide a guarantee subject to ordinary commercial considerations. After all, the banks can be relied on to vet the purchasing shipping line carefully. They would bear the loss in the first instance.
  I suggest that a limit of about £1,000 million is more realistic. I said this when we discussed the original Bill, and I said it when the limit was raised to £400 million in 1969. By the same token, I believe that the £700 million is inadequate. The Minister almost said as much.
  I hope that the Minister will pay particular attention to what is happening abroad. Our main competitors, of course, are other European yards. We know that some of them, particularly France and Italy, are subsidised. British Rail placed an order just over a year ago with the Italians, who receive a 15 per cent. subsidy. In France the industry receives between 15 and 17 per cent. subsidy, which can be further increased by another one or two per cent. if the yard is in a development area. I do not go along with the Minister. I feel that it would be better if there were no subsidy provided for any yard, but as this is an international business, we have at least to match the foreign subsidies.
  I might then be asked: what of the Japanese? But they do protect their industry, since any Japanese ship owner who orders his ships abroad has to pay

  1415
  import duty. As Japan has been able, on the strength of her own home market, to build up a strong shipbuilding industry, surely, if we cannot persuade our other main competitors to drop this policy, we should consider matching it and protecting our own shipyards. I accept completely what the right hon. Member for Sunderland, North said: shipyards are vital to this country.
  I welcome the Shell tanker order, which is valuable not only directly to the shipyard in my constituency but also to our balance of payments. It saves vital earnings abroad. Also, since these tankers will carry crude oil all over the world, this country will be assisted in that way too in the long run. So for trading reasons, it is essential, not just important, that our shipyards should be made as competitive and viable as possible.
  Also, we are a maritime nation. Our defences are completely dependent on the seas. Certain economists have advocated that since our foreign competitors are prepared to subsidise their yards, since capital and labour are scarce, we should buy the ships which they are offering at low prices, allow the shipyards to decay and redeploy the men into other industries. [Interruption.] I am referring to articles in the Economist and other journals.
  Mr. Douglas: Would the hon. Gentleman not concede that his Front Bench have a peculiar addiction to the views of the Economist? The policy announcements for the steel industry and their practice in that industry were announced in the Economist months ago.
  Mr. McMaster: I welcome the Government's action over the steel industry, and I am tempted to follow the hon. Gentleman into that argument. But if he considers the Minister's speech carefully, he will see that what I have said is correct. In other words, this is not the policy of Her Majesty's Government. I would strongly refute any such policy, for both trading and defence reasons.
  When an industry like shipbuilding is making large bulk purchases of steel, there is a good case for the quotation of a special price. I very much welcome the Government's action in halving the increase suggested by the industry from 14 per cent. to 7 per cent. Steel is a large
  1416
  factor in the price of a ship—more than 20 per cent.—so this is a matter of great concern to British shipbuilders.
  However, I wonder whether this is the complete answer to the problems of British shipbuilding. It would do the shipbuilding industry no good if it paid such a low price for its steel that the steel industry suffered. The reason for the difficulties which our shipyards have got into, particularly over the last decade or two, is the rapid rise in its prices, which is directly related to increased labour costs and increased prices in the country as a whole. Where escalation clauses were added to contracts—many contracts had none—they proved totally inadequate because costs have risen so sharply.
  I would like the Minister to consider carefully whether we should not now have a prices and incomes policy. If the escalation in current trends continues in the shipbuilding industry, under which wages costs have risen more rapidly than in other parts of the engineering industry, our shipbuilding industry will be badly damaged.
  In the present circumstances, we cannot control our shipbuilding prices, and it is unreasonable to expect that we can. Therefore, although I have not advocated this in the past, I feel that now, considering the particular problems of our shipbuilding industry, the time has come for the Government to lay down some norm or, perhaps, even go further and impose a statutory policy on the country restricting the increase of prices and incomes, perhaps even for a long period. I feel that it is the Government's duty to take a lead in this way, and I ask them, in the light of this debate, to reconsider the whole question.
  Now, a word about Harland and Wolff, During the Easter Recess I took the opportunity to go round the yard and see for myself the progress being made in building facilities there. There are five modern slips, added 10 or 12 years ago, in the Musgrave Yard, which are still in operation, but much more impressive is the new large building dock capable of taking tankers of up to 1 million tons, which looks as far ahead as one can see.
  At the moment, the dock is being used to build a tanker of 250,000 tons, and, as we know, it recently received orders

  1417
  for more such vessels from Shell. There are orders on the books from both Shell and Esso, and also from Onassis.
  The productivity of this modernised yard will help Britain to recover her position in the world as a major shipbuilder. Once the steel fabrication sheds are finished and brought fully into operation—by June of this year, I hope—the metal will flow through from one side of the yard, through the shot blasting, cutting and other parts of the fabrication sheds, where large sections will be prefabricated under cover in a way never possible before. Very large sections can be prefabricated, and, as I saw for myself, there is giant cranage available so that the plates may be welded together in the building dock.
  All this means that the facilities can be used on two, or even on three shifts, I hope, if there is pressure, as there is a great deal of capital tied up. This is something revolutionary in British shipbuilding, but it is vital if we are to bring down our costs so as to compete with Europe and Japan. One would not expect fabrication in the building dock to go on round the clock, because of the weather conditions which we so often experience in this country, but this would not be necessary. So long as large portions can be assembled under cover in the fabrication shed, it should be possible for the company to reduce its costs considerably.
  For these reasons, I am far more optimistic now about the future of shipbuilding in this country. We have great skills available. We have a skilled work force. The trade unions have made clear that they are prepared to meet the management on flexibility of labour in a way which we have not known for many years. The co-operation of the trade unions and the better management which, I hope, will be available will put this country back among the leading shipbuilders of the world.
  I hope that we can be told a little in the winding-up speech about the Governmenes plans for the management of Harland and Wolff. This is a matter of some concern in Belfast, particularly after the recent uncertainty about the future of the yard and the possible plan to sell a large part of the interest in the yard to an overseas interest. I was very pleased
  1418
  that, in the end, control of the yard remained in this country.
  I come now to the point made about nationalisation by the right hon. Member for Birkenhead. I do not regard nationalisation as the answer for our shipyards. If Government money has to go into our shipbuilding industry so that it may meet subsidised competition from abroad, it is right and proper that the Government should protect their interest by taking an equity holding in the yard and having representatives on the board; but that is totally different from Government management and control.
  The trouble with nationalisation is that we have frequent changes of Minister and changes of Government policy, and nationalised yards become subject to terrific political pressure. This cannot help any industry, whether shipbuilding, steel, coal or transport. It is far better that that industry should be given some stability, security and continuity for the future. Nationalisation would not secure this for our shipyards. That is why I reject the suggestion that either Harland and Wolff or British shipbuilding generally should be nationalised.
  Mr. Dell: I did not suggest that the nationalisation of particular shipbuilding companies was the answer to the problem. I suggested that it might be part of the answer. But will the hon. Gentleman answer this? He believes that equity holdings should be taken by the Government in firms to which Government money is given. Will he tell us what proportion of the equity of Harland and Wolff would now be in public ownership if the capital provided by the Government to that yard were represented as a share of the total capital of the yard?
  Mr. McMaster: I think that my hon. Friend the Minister would be in a better position to answer that than I am at this moment. I am aware that the entire shipyard of Harland and Wolff is grossly under-capitalised, but I should not like to go into that in great detail now. For one thing, part of the money advanced by the Shipbuilding Industry Board to Harland and Wolff may be advanced by way of loan. Before giving a realistic and sensible answer, one would have to determine what proportion of Government money would best be made available on loan, which could reasonably be expected to be

  1419
  repaid in the future, and what proportion should be put in permanently by way of equity. There are many arguments as to the pros and cons of each method. What is advanced by way of loan has to be serviced, and interest rates are high, which puts a large charge on the company. On the other hand, the company retains a much greater degree of independence. If a company is under-capitalised, it is possible for people to go into the stock market and, by spending comparatively little money, particularly if the company is not doing well, gain control. All these are matters which would have to be considered. I should not like to give a firm answer to the right hon. Gentleman.
  I return to my original point. While welcoming the Bill, I should like the Government to look again at the total limit available and see whether it would be more sensible to increase it. As a nation, we ought to adopt a far more confident frame of mind. Whether the money made available to Harland and Wolff or to other yards is public or private money will depend very much on confidence: in the one case, the confidence of the individual investor, debentureholder and shareholder, and, in the other case, the confidence of the British public in allowing public money to be spent in this way.
  The British shipbuilding industry merits our confidence. As a result of the Geddes Report and the efforts of the last two Governments, Labour and Conservative, our shipbuilding industry has been modernised. I imagine that the reason why there are so few hon. Members attending the debate today is that people are, perhaps, more optimistic about the future of our yards. There certainly does not seem to be great concern evident in the House that the industry needs further help, for if there were there would be more hon. Members present.
  Therefore, I totally reject the depressed air which hung over the House during the opening speeches, and particularly that of the right hon. Member for Birkenhead. With a revision of the total amount of guarantee, which is not costing the Government a penny, we can look forward to a brighter future for our shipyards.
  6.10 p.m.
  Mr. E. Fernyhough: I apologise to the Under-Secretary of State because I may not be able to hear his reply as I hope to take part in another forum at 8 o'clock. It was a commitment made long before I knew that there would be this debate, a debate in which I am glad to take part.
  I am intrigued by the contradictions of the speech of the hon. Member for Harland and Wolff. He has no belief in nationalisation, but praises the Minister who, if the steel industry had not been nationalised, would not have had the power to intervene in the commercial judgment of the Steel Corporation and make it keep the price of steel down. Our steel prices are still competitive. The shipbuilding industry has already made it clear that it does not believe that there will be any advantage to be gained by being able to import foreign steel, because it does not believe that it will be able to get better prices and quality than it can get here.
  If I felt as hon. Members opposite do and lived in a town where there was a naval dockyard, I should be very unhappy and uncertain, because there is something publicly-owned that is part and parcel of the shipbuilding and ship-repairing industry. I presume that Conservative hon. Members will go to Gosport and Portsmouth and various other places like that and tell the people there that the yards are inefficient and must be put in the hands of private enterprise, that the State which runs them is incapable and is running them in an inefficient and costly and wasteful way. We know that that will not happen.
  The main theme of the Minister's speech was that most of our problems in the shipbuilding industry are apparently due to wage cost inflation. I do not understand what is happening. The Government are publishing broadsheets telling the people that we must get into the Common Market. Articles are published in the papers saying that the wage rates of British workers are £5 to £7 a week lower than in the Common Market. If our wage rates are inflationary now, what will they be like when we get Common Market wages? What will the effect be if our lads say, "If Common Market wages are £5 to £7 above ours,

  1421
  it is time we made up some leeway and caught up. It is time we levelled out this unfairness."? That would place us in an even more uncompetitive position. It is all right to say that the Common Market workers are more productive and so on. One of the major factors that very few hon. Members will realise, in regard to the shipbuilding industry or any other of our major industries, is that this country has carried a defence burden far greater than all its competitors. It is that, more than anything else, which has placed us at a competitive disadvantage in industry in general.
  What disappointed me most about the Minister's speech was that he made no reference to ship repairing. The Under-Secretary of State said yesterday in reply to a Question by the hon. Member for Tynemouth (Dame Irene Ward):
  "A report prepared by the Ship Building and Ship Repairing Council on the ship-repair industry as a whole was considered by my right hon. Friend before deciding, last August, that further Government assistance for the Palmers ship-repair yard would not be justifiable. The Council released its Report to the Press last September."
  Before the decision was made to close Palmers the Government had studied the report, which makes it perfectly clear that the North-East had the lowest cost in ship-repairing of any of the ship-repair yards in this country. If the costs in the North-East were the lowest of any of the yards, how did it come about that the most up-to-date ship-repair yard in the North-East was closed down? Why were not the Government prepared to give a much longer look at that problem and at the social problem which is created?
  The Under-Secretary also said yesterday:
  "The Minister for Industry or myself, if we catch your eye tomorrow, Mr. Speaker, will hope to say something about policy for the ship-repairing industry."—[OFFICIAL REPORT, 21st April, 1971; Vol. 815, c. 1178–9.]
  The Minister did not say a word about it, and therefore we are in the dark. It may be that the Under-Secretary will give us a little more hopeful news about the ship repairing industry than we have had about the shipbuilding industry. The Bill, with its limitations, and the other announcements made today, will bring no great joy to the hearts of directors, managements and workers in the shipbuilding industry.
  Mr. Blenkinsop: Does my right hon. Friend agree that it is very unsatisfactory for us not to have had that statement at the beginning of the debate?
  Mr. Fernyhough: It will be decidedly unfair to everyone taking part in the debate if a statement is made in the winding up speech on which no one will be able to make any comment, no matter how acceptable or unacceptable the statement might be.
  The one part of the speech of the hon. Member for Belfast, East (Mr. McMaster) with which I agreed was that in which he referred to the British shipbuilding industry being as important a part of our defence as any ballistic missile or any other weapon. No nation such as we are, the biggest importers in the world, dependent upon ships more than any other single nation, could ever afford to allow its shipbuilding industry to disappear, whatever the causes. The Government would have to do a Rolls-Royce if things went too badly wrong. Of course they would then recognise that the ships which bring in our food and raw materials are as important as the aircraft engines which we have been discussing in the House recently. I do not believe that the future of the industry is quite so hopeless. It is possible to encourage better relations which can lead to improved productivity and greater competitiveness. A Government which wants that kind of thing ought not to have done what this Government have done.
  There is a dispute on the Tyne at present. I wonder what the Secretary of State for Employment's conciliation officers are doing to bring about a settlement. We know that this is a Government of no interference; they do not believe in getting mixed up with such things. They cannot run away from their responsibilities for 56 million people in this country and they cannot run away from their responsibility for what is happening in industry. It is the duty of the Minister to attempt to use his good offices to bring about a settlement in the dispute.
  If we accept the philosophy which was behind the Minister for Industry's speech we can see that this is a Government which believe in standing aside. What they have to realise is that there are countless thousands of people who believe that they are not interfering enough. We

  1423
  cannot have an unemployment problem such as exists in my constituency and surrounding constituencies, of enormous magnitude, with all the worries apprehensions and fears which accompany such a problem, and expect the people affected not to think that it is the duty of the Government to intervene.
  Naturally they want the Government to intervene because they believe the Government's policies are largely responsible for their fears and apprehensions. The Under-Secretary could bring a little brightness to what has been a dull and sombre picture by saying something which will encourage those in the ship-repairing industry and give them a little more hope for the future than they received when I brought a delegation from Vickers, Hebburn to meet him last year.
  6.23 p.m.
  Dame Irene Ward: I am a little apprehensive about taking part in the debate because I have so little expert knowledge to contribute. However, for many years I have taken a great pride in the shipbuilding and repairing industry in my part of the world and I would not like a shipbuilding Bill which contains certain helpful features to be passed on to the Statute Book without expressing my appreciation of it and some of the anxieties about the future of the industry. After listening to the Minister for Industry, I felt that my limited knowledge of the industry was not sufficient to enable me to cope with the statement made my him.
  We have had to wait a long time to hear that speech. In my own small way I have been instrumental in pressing my Government to get on with this Bill and I feel in an unfortunate position. In parliamentary life one learns to pick up information and to exercise judgment as to who to believe and who not to believe. I had understood that it was very embarrassing to the Department responsible for the Bill that we have had to wait so long for its introduction. I had emphasised to the Leader of the House on many occasions that we ought to have the Bill.
  To my consternation, when the Minister for Industry got up he did not seem to be ready to make the statements which I thought he was ready to make because
  1424
  he was so anxious to get the Bill on the Statute Book. I am in an unfortunate position because I do not know who is speaking the truth. Perhaps the Under-Secretary can say whether the Government are in a position to state their case fully, and I hope it will be better than that which has been stated this afternoon. When are we to know? How far have representations from the shipbuilding, ship repairing and other shipping interests been taken into consideration here?
  I do not want to get into a political conflict today, but I must say that the views of the right hon. Member for Birkenhead (Mr. Dell) did not accord with mine. It was refreshing to hear the right hon. Member for Sunderland, North (Mr. Willey) rightly paying tribute to the shipbuilders on his river. We have always known of the first-class shipbuilding industry in Sunderland. There have been a lot of small, competent family firms there. According to what the right hon. Gentleman said, they were not demanding money from the Government and certainly not demanding nationalisation.
  I agree with the right hon. Member for Jarrow (Mr. Fernyhough) that we have not had the promised statement on ship repairing. I shall not argue with the right hon. Gentleman about who has the best ship-repairing yard in the North of England, but in my constituency there is a first-class repairing yard. I am naturally anxious to hear about it.
  It is not always the Whips or, indeed, Ministers who encourage one to press the Leader of the House to find time for a Bill. It is quite pleasant when it comes up. I was naturally expecting that we should have the pledge redeemed and that we should hear something about ship repairing. Nothing seems to have happened and nothing seems to have been said. It was very difficult to fathom exactly what the Department of Trade and Industry was intending to do, what its ideas were, or whether it was having difficulties with the Treasury. By the time I had listened to my right hon. Friend, I had no idea exactly where we were on this very important issue. I hope that later we shall have a great deal more reliable, consistent and helpful statements made so that the shipowners and those who build ships on our rivers,

  1425
  on the Tyne and in other parts of the North-East, will be assured of their future.
  It is well worth while to remember that our shipping industry has contributed a great deal to our invisible exports. As the industry is part and parcel of the active side of our economic survival, we should give it all the help that we can. The letter sent from the Department of Trade and Industry to the Chamber of Shipping on the business of perhaps helping a little in the transfer from investment grants to investment allowances was rather mean. We could have been a little more helpful and generous to an industry which has contributed so much to our invisible exports. I am not pleased by that letter.
  Another difficulty with which I am faced at present with regard to shipbuilding is what we can do to help. It was interesting to hear my hon. Friend the Member for Belfast, East (Mr. McMaster) —the hon. Member for Harland and Wolff, as he is described. He ought to be very pleased, proud, hopeful and appreciative, as I am sure will be his constituents. I have always thought that the Upper Clyde received a great deal more attention from the previous Government than did Tyneside or, perhaps, Belfast. Political pressures from sections of the community play their part in Parliament, as we well know. I was not all that pleased because sufficient help had not been given to marine engineering. I have often raised that question in the House, but unsuccessfully. Also, ship repairing on the Tyne, which is very important to owners who sail from that river, has not had a fair share of help.
  Hon. Members on both sides of the House have been pretty restrained in the debate. But we are faced with a very difficult situation on the Tyne with regard to the fitters' strike. I have not seen the latest figures, but it is a terrifying situation for everyone on Tyneside, whether they are engaged on shipbuilding or not. One cannot continue to run private or nationalised industries without profitability. That is quite clear. When I speak to friends who are not particularly interested in shipbuilding on the Tyne, they always say, "You are all right up there now, because you have full order books." Up to a point, that is true. But a major shipbuilder in our country, Swan Hunter, is not building at a profit. In the end, without profit there will be no money
  1426
  to tax to maintain the general instruments of government. This is a serious situation. Although full order books provide employment, that will be no good if those who work in the shipbuilding industry know that, in the long run, a time of reckoning is coming.
  I sympathise with the right hon. Member for Jarrow when he talks about loss of jobs and so on. Unemployment is a frightful situation for any person to face. But the people who are carrying out this strike in a certain section on the Tyne are running the risk that Swan Hunter will close some of its yards. This would have an escalating effect on unemployment on the Tyne and would deprive first-class shipbuilders, first-class workers, their wives, the shopkeepers, ratepayers and everyone else. Many additional unemployed would be added to the already regrettable number.
  Obviously there has been controversy about the Government's decision on the steel industry, a decision which I warmly applaud. The reason for giving shipbuilders the release to import foreign steel was the continuing losses in the nationalised steel industry and its continuing demands for increased prices.
  The other day I listened to the head civil servant in research. What he said about the possible future of all our industries in relation to competition from. Japan ought to be noted by every man and woman who has any responsibility for government. To my knowledge, what was related to the many men and women who were present was a very frightening statement of fact. I hope that we are now to be told when the anxieties of the shipbuilding, ship repairing and shipping industries will be alleviated.
  Many of the Minister's remarks made me anxious. For example, he did not comment on a point which the right hon. Member for Bristol, South-East (Mr. Benn) raised. This may not seem terribly important to some, but it is important to me. Apparently the Secretary of State for Trade and Industry told the Opposition why he could not be present for this debate. That was polite of him, but I would have liked to have been told too. I have a shrewd suspicion that because of pressure from hon. Gentlemen opposite, this debate is taking place today, with the result that my right hon. Friend, because of an appointment from which

  1427
  he could not escape, is not able to attend. That is my guess. He graciously informed the Opposition of that. He might have told his hon. Friends as well.
  Sir J. Eden: I apologise to my hon. Friend for not having mentioned this before. Her guess is absolutely correct.
  Dame Irene Ward: Psychology is important, particularly in Parliament. Having been here for many long years, I want the Government to know that I want to be put in the picture as well.
  I am still not sure whether this Measure will achieve anything. Although I listened carefully to the remarks of the Minister for Industry, I do not know what section of the industry will benefit or how, when, why and if it will benefit. We must do everything possible to keep our first-class shipbuilding industry in operation, and competitively and profitably in operation.
  I must sound a political note which I am sure will not be acceptable to hon. Gentlemen opposite. I would like to see built here the frigates which South Africa wants. One of our great mistakes of the past was the loss of naval shipbuilding. We once had a first-class naval shipbuilding industry, but we now seem to build very few naval ships. I do not know if any have been going to Belfast or the Clyde, but certainly they have not been coming to the Tyne. We would like to see some built on our river, for a number of reasons, and especially because it would help to reduce unemployment.
  I am today neither congratulating nor hammering the Government. I dislike finding myself in the position of having heard a Minister's speech, not understanding what he said. Whatever he said, he said it charmingly, but charm does not tell one anything. I want to know some absolutely reliable facts. All the charm in the world—it is fun to be charmed and we have some extremely charming Ministers—will not provide the wherewithal for life. In other words, one cannot live on charm.
  I want to know how, if at all, the Bill will help our shipbuilding and ship-repairing industry. I hope that the Under-Secretary will answer this question and all the others I have asked in a way that will give us the facts and also, perhaps, get a good reaction. It is the
  1428
  job of the Opposition to criticise and when we were in opposition we criticised hon. Gentlemen opposite. Indeed, I often enjoyed doing it. I find it difficult to criticise the Government because I am such a loyal supporter of theirs, but what we had today from the Minister was not good enough.
  Our great shipbuilding industry has done much for Britain. Our shipowners have earned great invisible exports. Long may they go on doing so. I want to know what a Conservative Government intend to do to ensure their survival economically, competitively and profitably.
  I trust that the Under-Secretary will comment on the strike on the Tyne and will point out to the men precisely what they are doing. I believe that if industry can earn substantial profits—I refer to any industry, but in this context I am concerned with shipbuilding—they should be distributed in an equitable fashion so that everybody benefits.
  However, it is not a good idea—indeed, I oppose it root and branch—for one section of the shipbuilding industry to run the risk of doing lots of valuable men out of jobs and thereby increasing unemployment on our river, for that would be the result of such action. Nor do I think it right that our shipping interests, which are so valuable to the nation, should be threatened. I trust that the Under-Secretary will, when replying to the debate, bear in mind the many questions that need answering, and answering satisfactorily.
  6.46 p.m.
  Mr. Arthur Blenkinsop: I assure the hon. Lady the Member for Tynemouth (Dame Irene Ward) that she is not alone in expressing dissatisfaction with the speech of the Minister for Industry. Indeed, it would be hard to find an hon. Member on either side who had any greater understanding than she had of that speech. She can console herself with the thought that her anxieties are shared in all parts of the House.
  We have every reason to be dissatisfied because, as she said, we have been pressing for this debate. The Bill was published some time ago and we were given to understand that this would be made the occasion for an important statement of Government policy on the future

  1429
  of the shipbuilding and ship repairing industry. This has not happened. Far from a full statement of the views of the Government about these two important sections of industry, we have even had an uncertain account of the provisions of the Bill and all that goes with it.
  One would have thought that the Minister would at least have been able to give an account of a two-Clause Bill, with all the background information to it. One might equally have expected to have been told whether the existing credits were adequate for the orders which the industry has already taken. When questioned about the existing credit facilities, and whether the maximum figure had been reached, leaving aside the future, the Minister did not give a clear reply.
  Neither did we receive an assurance about whether the provision made by the Bill will be adequate to meet the orders for which tenders are now being offered. The industry wants to know whether it should seek business ahead. We are in a fantastic situation because while the industry is saying that the figure should not be £700 million but between £800 million and £1,000 million, the Minister did not try to explain the position.
  All he did was to say that there were doubts about the future, that the matter was being examined. His phrase was that the Government were "looking to the future". I do not know whether we can take much comfort from that. Presumably, they have been looking to the future for the last six months or more. The fact that they have not been able to come up with an answer, even though the debate has been repeatedly postponed, does not greatly encourage us to expect much more from the Minister who replies. That is one matter on which we think it right to express our dissatisfaction, and this unsatisfactory way in which the Government have brought forward the Bill ought to be pursued vigorously.
  As my hon. Friend the Member for Jarrow (Mr. Fernyhough) said, we are dissatisfied not only with the way in which this modest Bill has been introduced, but because we have not had a statement setting the Bill in the wider perspective as we were promised. This wonderful Administration of expert businessmen and the rest is not showing up particularly brilliantly, and certainly
  1430
  the businessmen concerned with this industry will be even more uncertain about their future after the debate. We know that they are already expressing their uncertainty clearly and vigorously.
  We are dealing with industries which affect thousands of people. It may not employ a large proportion of the total employed population, but in my constituency it employs a very large proportion of the total employed. The industry has been contracting in any case as part of the reorganisation which we all foresaw as being inevitable with the changes in the industry, but that makes it all the more difficult for the unions to implement and accept changes of a kind which all agree to be desirable.
  The unions have accepted great changes in procedures in order to make for more flexibility. They have accepted great changes in pay structures. I agree that they have fought for and secured important improvements in pay and earnings, but they have also accepted a great many changes in all the enormous range of rates of pay customary in the industry. Although there have been great improvements, there is no doubt that they have been implemented only with great difficulty. That has imposed an immense strain on the trade unions and it must be understood that that process has been going on while changes have occurred in this industry that only a few years ago might have seemed not very likely, if not impossible. That is one element of the situation which ought not to be forgotten.
  My right hon. Friend the Member for Sunderland, North (Mr. Willey) called attention to the success story of Sunderland. I have an equal claim for my constituency where all the launchings of a major shipyard last year were well ahead of the order date. Those are facts. There are many disappointing facts which we have to face, but for heaven's sake let us not decry the positive work which is also being achieved. When people have successes, it is not particularly encouraging to them to get the kind of blanket condemnation which is all too often made. I claim that the successes we have had over that period have been due to the Labour Government's efforts to ensure that the recommendations of the Geddes Report were implemented, for because of that it has been possible to

  1431
  make some important changes. There are thus successes to be set against the disappointments.
  On the other hand, it is suggested by the ship owners that the ship repair industry, which has been fairly profitable recently, is placed in the North-East. We welcome that recommendation, but it is a fact which ought not to be dodged that the ship repair industry still continues many out-dated practices, and we all know it. We have to ensure that the modernisation which must come occurs in that industry too. But we will not get the advantages we want unless there is more understanding by management of what discussion with workers really means.
  Unfortunately, it is still true that the management of far too many ship repair yards do not have real discussions with the men of a kind which any of us would recognise by that term. It is a tragedy that there is still so much of the atmosphere of casual labour about the industry, in spite of many improvements. If we are to get the advantages available to us and to develop the ship repair industry fully, this is one of the most urgent matters to put right.
  That is why we want some clear initiative by the Government to bring the two sides of industry together openly to discuss the future of the shipbuilding indusstry and the ship repair industry, not a discussion only by a few people at the top, but an attempt to open the whole of the industrial background to discussion by a wide range of representatives of the men, as well as of the management, so that these problems may be brought into the open. Until we can do that, we have little hope of getting the atmosphere of expansion which is needed.
  I am not so doubtful as my hon. Friends about looking at the possibility of some form of greater public intervention in the industry. It is a vital industry for the country. My anxiety was aroused because the Minister seemed to be casting the industry out, to be standing aside, willing to see the industry disappear. If it disappeared, that would be the end of employment for 156,000 men and women all over Britain. It would mean in the northern area some 34,000 to 35,000 more men out of work. In my
  1432
  constituency alone it would mean another 5,000 men out of work in addition to the nearly 14 per cent. who are already out of work.
  Surely this is a situation which no Government can accept in the kind of casual way which seemed to be conveyed in the Minister's speech. I therefore call upon the Government to make a clear statement of their attitude to the whole industry, both shipbuilding and ship repairing, and to offer some hope of a new initiative to set against the great anxieties and fears which most of us have drawn from the hon. Gentleman's speech.
  7.0 p.m.
  Mr. W. E. Garrett: Several hon. Members have called this a fairly dull, listless and somewhat sombre debate. This is because the Minister spoke with not much delight and enthusiasm for his task. I hope that when the Under-Secretary of State replies we shall get more enthusiasm and some distinct replies to the many questions raised on both sides of the House.
  Like the hon. Lady the Member for Tynemouth (Dame Irene Ward), I could not understand the important part of the Minister's speech dealing with credits. I hope that the Under-Secretary of State will give a clearer explanation; otherwise, I am afraid, there will be misapprehensions which could result in extreme gloom and dismay in the North-East and other parts of the country. I hope that the hon. Gentlemen will consult and try to put it in simpler terms for ordinary hon. Members like myself.
  Basically, the attitude of the Government towards this industry is one of indifference. I cannot understand that really, because there is an impression that the industry is being heavily subsidised. It is not. We are talking about credits, and these are paid out at interest. The term "revolving credit" means that we have a kitty of Government credits out of which the Government make money. The situation is different in certain parts of the Upper Clyde area, where some subsidies have been granted. But these are infinitesimal compared with the vast sums of money handed out for Concorde—£400 million at least—or in agricultural subsidies. When considering the financial state of the shipbuilding

  1433
  industry, we should relate it to the amount of money spent on other industries.
  We in this House also seem to have a masochistic delight in putting certain industries before the public eye. We debate the shipbuilding industry and coal mining, bat we rarely debate the chemical, electronic or civil engineering industries and others which should possibly be given an airing on occasion. This is the fourth or fifth debate we have had on this subject over the last four to five years. What we are saying in many cases is a reiteration of a familiar theme.
  Again, the myth that self-destruction seems to pervade the industry should be destroyed. The industry is not desperately sick. It is not going as well as some people would like, but still in some regions it is prosperous, and it is going through a period of reorganisation. If I had to criticise the Geddes Report it would be on the time limit. I believe that the time limit it set for the period of reorganisation was too short. I would like to have seen it extended. That is why I am so disappointed that the Shipbuilding Industry Board's term will expire in December. I ask the Minister even at this stage to think about that again. The Board still has a useful job to do. If its term were extended for another three to four years, it could be a most useful tool for the reorganisation of the industry.
  Much has been said about labour relations in the industry, and one could get the impression that there is complete anarchy. There was. It had a bad labour relations record. But it is not as bad as it used to be. The hon. Gentleman referred to the bad state of labour relations, but, taking the record over the last decade, there has been a decided improvement, in spite of some unfortunate disputes, particularly on the Upper Clyde and the one which is taking place on Tyneside at the moment.
  Here I must declare my interest, because I am a member of the Amalgamated Engineering Union, whose members are in dispute with the Swan Hunter Group. This is basically an old-fashioned dispute. The management gave a rise to the boilermakers and the engineers think that they are entitled to a similar rise on a question of parity. I appeal to
  1434
  the management once again to make some approach to the trade union so that negotiations can begin and the five-week-old strike ended as quickly as possible.
  The marine engineering side was at one time a very important facet and adjunct of the industry, but it is not so important now. As the Geddes Report said, our influence on that side has declined. Nevertheless, it still has a part to play, and I would like to have heard something more positive from the Minister and some guidance as to what is to happen to some of the shipbuilding research councils, particularly the one at Wallsend. We are possibly the top nation in shipbuilding design. We have given a lead in shipbuilding techniques. But there again we have let them go to other countries, I regret to say. The Japanese, in particular, have taken advantage of much of the techniques we acquired through research over the years.
  Both the Minister for Industry and the Under-Secretary of State were born in and have connections with the North-East. They know full well that the men in the shipbuilding industry are basically hard working and have a great belief in their industry. I hope the Government will continue to rethink their attitude to the industry and, above all, give it much more hope than they have done up to now. If we get that, the debate will have served some useful purpose because it will give men and management and the unions the incentive and desire to make this industry once again one of the premier industries of Britain.
  7.9 p.m.
  Mr. Dick Douglas: The Minister for Industry endeavoured, albeit unsuccessfully, to put the shipbuilding industry into the context of the capital goods industries as a whole. If I have any direct quarrel with the Government in relation to their industrial strategy—if I can dignify it with such a term—it is that they are attacking directly the capital goods industry. The shipbuilding industry is a major capital goods industry, but it also, as my hon. Friends have pointed out, has a number of facets that relate, in terms of employment, production and import saving, to other industries as well. The supply of auxiliary materials to ships is of vital importance. Yet the Government

  1435
  have sought, in their policy of withdrawing from industry as a whole, to attack and undermine confidence in the capital goods industries. One of the unpleasant features of the rise in unemployment is that whereas before the assets in question could be classified as wasting assets, the Government are attacking an asset which is not a wasting asset and which therefore has distinct possibilities of regeneration.
  However, that does not, in the short term, excuse the high level of unemployment which is directly attributable to Government policy. If the Government can claim any credit, it is that they have removed the seasonal variation. In future, one winter will be integrated with the next. The Government have eliminated the seasonal variation, and in future we shall have a continually upward trend.
  The Minister indicated some of the Government's solutions to the problems facing the industry in general and the shipbuilding industry in particular. He said that many of the industry's problems could be cured if we could eliminate, in some magical way, cost-push inflation. I do not dispute that occasionally inflationary bargains are made which will not be justified in terms of long-run productivity; that is a question of judgment and balance for management and men. But I do dispute that the Government can, by exhortation, achieve an incomes policy.
  I refer to the speech of the Chancellor of the Exchequer last night. It is in this context that we consider industrial relations in the shipbuilding industry and other industries. The hope which the right hon. Gentleman holds out is this:
  "Our interim aim is to achieve a substantial de-escalation of pay settlements accompanied by a levelling off in the rate of unemployment Later, when pay settlements have returned to more sensible levels, it should be safe to allow output to grow at a rate sufficient to reduce the level of unemployment".
  The right hon. Gentleman is saying to the unemployed, "Before there is any prospect of reducing unemployment, the level of wage bargains must be de-escalated". No framework is suggested in which that can be done. This is the prospect for men in industry. With this psychological approach, is it any wonder that industrial relations are bad?
  1436
  The Government are saying to men in industry, "You must resolve your differences by magic. We shall stand back and let you battle it out. But we shall create a climate in terms of the level of demand which is conducive of insecurity".
  We may be wrong about the psychology of the working man. Having worked in a shipyard, I can speak personally about this matter. Rightly or wrongly, the working man does not fear inflation—perhaps he should. He fears unemployment. Unless the Government give a guarantee that the level of unemployment will be significantly reduced in the coming winter, they will be in for a bad time in terms of industrial relations. It does not please me to say that, but that will be the result of their policies.
  Mr. McMaster: Is the hon. Gentleman asking the Government to say to people employed in making stage coaches, "We guarantee that you will always be employed in making stage coaches"? Can a Government give such a guarantee? Is it not in the nature of things that men have to accept change in a changing world?
  Mr. Douglas: I agree that men must accept change. But it is the Government's responsibility to create an economic climate in which change is acceptable, and the present Government are manifestly not doing that. That intervention comes ill from an hon. Member who has advocated an incomes policy. The Government have denied responsibility for any type of incomes policy other than a policy of exhortation. If an incomes policy or de-escalation could be achieved by mere words, the Government should be successful, because they have devoted more words to that than to almost any other topic.
  On 25th March, the Under-Secretary of State for Trade and Industry said:
  "I am in some difficulty in that my right hon. Friend will be making a major statement on shipbuilding policy on the Second Reading of the Shipbuilding Industry Bill, and I do not wish to anticipate him on that occasion."—[OFFICIAL REPORT, 25th March, 1971; Vol. 814, c. 1060.]
  If the Minister's speech today was a major statement of policy, it will not give any cheer to the shipping companies or to the shipbuilding industry, because all that the hon. Gentleman said was known on 25th March and when the Bill was

  1437
  published. There has been no supplementary statement about the Government's policy. We have an interim Measure which says, in -effect, "The Shipbuilding Industry Board will be wound up at the end of 1971". I agree with my hon. Friend the Member for Wallsend (Mr. Garrett) that the time scale in connection with the Board leaves much to be desired, because the deep-rooted problems of the industry are so great—perhaps a lot greater than the Geddes Committee thought—that the work of the Board should continue.
  I turn to that part of the Shipbuilding Industry Act, 1967, which deals with the guarantees, Section 7(3), which reads:
  "No guarantee shall be given under this section except on the recommendation of the Board, and the Board shall not make such a recommendation unless it appears to the Board"—
  and then it gives several pointers. Subsection (3)(b) states that the Board shall not make a recommendation unless
  "the carrying out of the order in question in that shipyard is consistent with, or will contribute to, that increased efficiency and will secure that use is made of resources which are then or will shortly be available and are otherwise unlikely to be used".
  Therefore, the Board has a specific responsibility to ensure that increased efficiency will result.
  When the Board is wound up at the end of 1971 and its administrative powers devolve to the Minister, how will the Minister act, directly or indirectly, in connection with the yards to ensure increased efficiency? Will he, because of his non-interventionist view, leave the matter to the operations of the yards? I do not believe that £700 million is sufficient because claims up to that figure have, I think, already been made. It is the Government's responsibility to consider what is to happen to the industry.
  The change from investment grants to tax-based incentives has not necessarily benefited the industry.
  Taking a tanker costing £5 million, will the Government quantify the difference in terms of the life of that asset related to free depreciation and the investment grant procedure and the pre-1966 position? There is no point in the Minister taking refuge in the Rochdale view of investment grants. Rochdale was asking for a pre-1966 position with investment allowances where sometimes
  1438
  140 per cent. of the asset could be written off. We have the position where only 100 per cent. of the asset can be written off over the life of the asset. The Government have a responsibility to give their views on the future of this industry, particularly after 1974 when regional employment premiums will end.
  Is it the Government's intention to alter the differential betwen manufacturing industry and other industries in development areas? This is extremely important from the point of view of shipbuilding orders now being taken. The Minister said that we should receive, some time in the future, a further statement of policy, but will his further statement require legislation? His Department has dismantled the structure set up under the Industrial Expansion Act, and has abolished the Industrial Reorganisation Corporation. These instruments could have been held in reserve at no great cost to facilitate some of the residual powers of the Shipbuilding Industry Board.
  I turn to steel prices. It would be ill-received on this side of the House if a yard such as Harland and Wolff, or any other yard in receipt of governmental or public subvention, chose to use indirectly public money to import massive quantities of steel from abroad, when the British steel industry is under such severe attack by the Government. I share the view of the hon. Member for Belfast, East (Mr. McMaster) on steel prices. The Japanese industry which has grown so massively in the past 20 years to 10,000 million tons, has done so because of the competitive prices of Japanese steel. This has again been a purposeful element of the Japanese Governmental policy of creating massive integrated steel works. It would ill serve our future prospects if, by allowing higher steel imports, we indirectly subsidised Japanese and other producers to the long-term detriment of the British steel and shipbuilding industries.
  The Government must look at their industrial policy overall. If we are to save the British shipbuilding industry we must take measures to save the British steel industry. If we are to have cheaper ships along the lines Geddes suggested, it is vital that the British Steel Corporation should have Government backing for massive investment in the industry. It will

  1439
  not do to say that the shipbuilding industry can import in the short run cheaper steel from abroad.
  On analysing the figures, I am perturbed about the decline in the proportion of the British flag fleet to total world shipping. Over 20 years the British proportion of the world flag fleet has halved, whereas the Japanese proportion has doubled. I am concerned about this proportionate diminution in the number of ships under direct British control. From discussions with constituents who are concerned in supplying British and other shipbuilding industries with auxiliary equipment, I understand that it is much easier for them, for language and other reasons, to obtain orders for a ship under the British flag built in a British yard.
  I believe that there is a future for the British shipbuilding industry, but that future can only be made secure if the Government are behind the industry's efforts to solve the problems. I depart from the view of my right hon. Friend the Member for Birkenhead (Mr. Dell) and I ask the Minister who is to reply not to do so on the direct issue of whether the industry should be publicly owned. That is not the question now. Changing the name on the door will not solve the industry's problems. Unless the industry is given a clear guarantee of governmental support and assistance during the next five or ten years, the morale of the men and management will be impaired. This industry has suffered more than any other industry in the past from dynastic entrepreneurship. We have to create dynamic entrepreneurship, and that is the responsibility partly of the industry and partly of the Government. The Government should not sit back and adopt a non-interventionist attitude but should take direct responsibility.
  7.27 p.m.
  Mr. William Small: I listened with dismay to the speech of the Minister. I have worked in the shipbuilding industry man and boy and I shall deal only with the broad aspects of it. In the old days when we were asking the Minister of Transport—who was then the right hon. Member for Wallasey (Mr. Marples)—for support for the shipbuilding industry, I used to say that there would be demarcation
  1440
  disputes and empty berths. At that time there were empty berths because of the lack of a labour force, the lack of ships and of orders. If a census were to be taken, it would show that the Labour Government gave more support to the shipbuilding industry and made it more stable.
  In my generation parents used to say that every boy should have a trade, and I speak as an engineer. However, we all know that rivers cannot be moved to suit anybody, not even engineers. We are naturally a shipbuilding nation and I am an interventionist. Sixty years ago the United States and the Soviet Union were merely economic backyards. The economic blocs of today in building up maritime strength are taking the trading routes from Britain. We all know that in the airways the Government are hiving off profitable routes to private enterprise, but now our sea routes are being stolen from us and abroad we have the image of a backward nation in this respect.
  I speak as an engineer who worked in industry for many years. I know that there is dismay among workers in the shipbuilding industry when considering the matter of their security and whether they will be able to look forward to a lifetime of work in the industry and will ever be able to draw a pension.
  The recommendations of the Geddes Committee were welcomed by the trade unions. It was a demonstration of what could be done by Government intervention, and it paid off. The shipbuilding industry did not need an Industrial Relations Bill to control its relationships. There were teething troubles in the industry, but the style of change which flowed from Geddes was welcomed. What came out of the Geddes Report was transferability of job functions so that there were no demarcation disputes, which had always been a crime condemned by everybody. This was why we were not getting orders.
  In looking at the situation on the Clyde, we must ask ourselves whether that area benefited from the activities of the Labour Government. I personally acclaim the efforts of my hon. and right hon. Friends when in Government for bringing stability to the Clyde and a greater sense of security than had ever been the case

  1441
  before. The Government must now consider whether Government intervention should continue.
  To come on to the rôle of the Shipbuilding Industry Board, it must be said that the Board put public money into the Clyde in the form of grants and loans and that that money was necessary. Fairfields fell out of the picture before Geddes reported, and I hope that the present Government will take some action over that yard, since it is one of the most important yards on the Clyde.
  We must consider the style of what is taking place under the Industrial Expansion Act and consider the situation which will arise because of the abolition of regional employment premiums. The names of the shipbuilders on the Clyde are, to me, household words, as are the names of the various employers within the shipbuilding industry. The employers certainly felt that the 37s. 6d. per head per employee in employment premium helped as a balancing factor in terms of employment ratio and enabled a situation to obtain in which there was not rivalry in the pricing policy of various engineering companies. This helped the industry and stabilised the labour force. Therefore, the regional employment policy had a considerable effect in the shipbuilding areas.
  The Secretary of State for Trade and Industry is due to come up to the Yarrow Yard on 14th May to open one of the covered-in building berths. This will be one of the biggest of its kind in the world—three ships can be built under cover. For the benefit of all those dilletantes who may not know these facts because they have never dirtied their hands, I would inform them that a shipyard worker often has to work in fog and in frost, day and night, in the open. Therefore, a figure of absenteeism of 16 per cent. during the winter must be seen in the context of the sort of conditions in which such a tradesman must work. The development of these covered building berths means that the assembly and prefabricated units will be covered in and will be directly accessible to the workers and a man's productivity is likely to go up by 30 per cent. This development took place with Government support and I hope that this initiative will be continued. I understand that there are some employers who regard that sort of ex-
  1442
  penditure as unjustified. In fact, it is more than justified, and I am sure that this will be shown by the results.
  I think that it is wrong to put a credit ceiling of £700 million into legislation when one bears in mind the length of time it takes to build a ship, and indeed to build up an order book. The one-off job is no use in these modern days. We now have to go for four and five jobs at a time and we must aim at standardisation. This is what is happening in the Upper Clyde Shipbuilding Group which specialises in building four or five ships at a time.
  We all know that there has been an extension of the principle of container ships. I will not go into details because we all know that the Under-Secretary of State who is now on the Front Bench is an intelligent and knowledgeable young man who has lived in the modern world. He will know the large increase in container ships and many developments are taking place in this respect which will mean that the shipping lanes will be turned into a vast trunk road.
  The fact remains that I am somewhat disappointed with the Government's policy and with the provisions of the Bill. I would restyle the well-known work by Ivor Novello "Careless Rupture" and would apply it to the Secretary of State, who does not know where he is going.
  7.38 p.m.
  Mr. Bruce Milian: Unfortunately, this debate has not been very satisfactory because of the inadequacy of the information that we had from the Minister in opening it. I shall come back a little later to what he said—or perhaps to what he did not say.
  I wish to begin by taking the House back to the Geddes Report and its recommendations. The report made the important point, which many people at that time had not sufficiently appreciated, that there was an expanding demand on a worldwide basis for shipping and shipbuilding. The United Kingdom industry in face that expanding world demand had not itself been expanding sufficiently, or indeed at all. This was the important and basic message of Geddes—namely, that this country should share in that increased demand for shipbuilding.

  1443
  Geddes said that the industry in this country would not be able to share in that expansion unless it was radically reorganised. The Geddes recommendations were intended to achieve the reorganisation of the industry partly by the efforts of the industry itself, both management and men, which would involve a considerable amount of Government assistance and the establishment of the Shipbuilding Industry Board to oversee the reorganisation which that Committee felt was required.
  The Labour Government accepted the basic premises, arguments and recommendations of the Geddes Report, and they were implemented in the 1967 Act. The various schemes for giving grants to the industry, loans for reorganisation, additional working capital, and the home credit scheme whose extension we are considering today, all come from the 1967 Act.
  The point which I want to make more than any other about the Geddes Report and about the 1967 Act, leaving aside for the moment all the very important details of the Act, was that when the Labour Government passed the 1967 Act they took on a commitment to the prosperity of the industry. We accepted the Geddes statement that the industry had a future, and that it had a bright future if it could reorganise itself on the lines that Geddes recommended. We expressed our confidence in the industry, and it was part of the general confidence that we expressed at the time and attempted always to express in the six years of Labour Government in British industry as a whole being able to solve the problems with which it was confronted.
  What has happened to the Geddes recommendations in the light of the support that the Labour Government gave in the 1967 Act? It is a mixed picture. Obviously, all the hopes held out at the time of the Geddes Report and the passing of the Act about reorganising the industry and putting it on a sound economic basis for future expansion have not been achieved within the time limit that Geddes laid down, which, with slight alterations, was accepted by the Labour Government of the day. But there is an impressive record of achievement, and a good deal of the policy of reorganisation has been implemented over the last few years.
  1444
  At this point, it would be remiss of us not to pay tribute to the Shipbuilding Industry Board. Sir William Swallow and his colleagues have shown tremendous enthusiasm and courage in very difficult circumstances. They have achieved a considerable amount in the period of the Board's existence. But we have not solved all the problems of the shipbuilding industry. It is still true that our share of world orders is far too low. It is also true, unfortunately, as my right hon. Friend the Member for Sunderland, North (Mr. Willey) said, that the share accruing to the British shipbuilding industry has been reducing rather than increasing over the last few years.
  Some of the figures are alarming, when one sees what Britain has been able to achieve compared not just with Japan, where the figures are quite remarkable, but with Sweden, West Germany, even France, and Spain as well. Taking a 10-year period, in terms of ships launched using gross tonnage figures, which I appreciate are not necessarily the best figures to use, the figures show that the 1970 launchings from British shipyards at 1·2 million gross tons were very little different from the 1960 figures. In fact, they were slightly down. They were, admittedly, an increase over the 1968 and 1969 figures, but they were still very much at the 1960 level. In the case of Japan, the gross tonnage has moved from 1·7 million in 1960 to no less than 10.5 million in 1970. In the case of Sweden the tonnage has gone from 700,000 in 1960 to 1·7 million in 1970. West Germany also shows a very substantial increase. So does France. The Spanish figures are now beginning to represent another alarming picture on the scene from the point of view of competition to British industry.
  In the time that we have had since the Shipbuilding Industry Board was established and the 1967 Act was passed, obviously we have not brought up our share of the world total in the way that we might have expected and hoped. Similarly, our productivity is not as good as that of some of our major rivals, though one hesitates always to make generalisations about these matters because different yards have different records of productivity and some are very much better than others. Our labour relations have improved considerably.

  1445
  That is certainly true on the Clyde. But there is a long way to go there as well. Our cost figures have not been sufficiently under control compared with those of some of our international competitors. In the last year or two, partly because of contracts taken on at very small margins which have then been eroded by subsequent cost increases, our industry has been running at a very low level of profitability and, in some cases, with considerable losses.
  The situation is by no means a completely satisfactory one. As my right hon. Friend the Member for Birkenhead (Mr. Dell) said, it may be that one of the difficulties that we have been facing is that the Shipbuilding Industry Board has not had enough powers to implement and push through the reorganisation as quickly as it should have been done. The implication of that is that what is required here is not less Government intervention and Government control in the industry but more direct Government intervention and a great deal more Government control when very large sums of public money are being put into the industry.
  Above all these considerations, the important one to fix firmly in our minds about what has happened over the last two or three years and what the record of the Shipbuilding Industry Board has been is simply that if it had not been for the 1967 Act and the activities of the Board, the British shipbuilding industry would have been completely obliterated by 1971. There is no one in Clydeside who would argue that in Upper Clyde we would have any shipbuilding industry if it had not been for the 1967 Act and the action taken since then. That is the really important consideration that one should have in mind when looking at the admitted disappointments that we have had in some areas of actvity over the last few years. We have this achievement to our credit, and it is a very important one. We have maintained a British shipbuilding industry in circumstances where, without these efforts, it would not have been possible to maintain it at all.
  One of my criticism of the Minister's speech is that he made too few of his remarks in the context of what is happening in the world as a whole and in terms of the worldwide demand for shipping and shipbuilding. The state of the world's order books is better than ever
  1446
  before. Orders are very buoyant, and there is a tremendous amount of work available in different parts of the world. Many of our competitors continue to increase their share of the amount of orders available.
  Another important feature of the present situation is that we should not be too depressed by some of the difficulties on cost and profitability that we have in the British shipbuilding industry. Similar problems face our competitors. Even the Japanese are not completely excluded from them. The Swedes and Germans are facing similar difficulties of contracts taken on in a period of inflation on what were virtually fixed prices which subsequently turn out to be unprofitable. The problems that we face are not unique from the British point of view or intrinsic only to the British situation. The same problems are faced by our competitors, and, while directly that situation does not help us, indirectly it gives us some cause for optimism.
  We are finding that our competitors, as well as ourselves, are having to insist on contracts with appropriate cost-escalation clauses, because without them they are unable to run at a satisfactory level of profitability. The more contracts which are taken on with cost-escalation clauses, and provided that our industry—this is an important proviso—is able to reduce its delivery periods to match what some of our competitors are able to achieve, the more we can be satisfied that the long-term future, from the profitability point of view, is a good deal brighter than now.
  With an increasing world demand and better prospects of profitability, it seems that the question facing this Government, which would have faced any Government, is whether, having already invested large sums in the industry, they should continue that investment and get the advantages which can come from it, or abandon the industry altogether.
  It is important to look at the attitude of other countries in this respect. In many cases they face problems similar to our own. They have at times reluctantly been pushed into providing subsidy and support over the last few years. However, I know of no major competitors of ours in shipbuilding who have taken the attitude that they should abandon their industry. The opposite has happened. They

  1447
  have all, by Government action and policy, reasserted that they have every intention of seeing that their industry survives and will expand.
  What we expected, and were entitled to have, from the Government today was a similar expression of confidence and determination in the continuance and prosperity of our shipbuilding industry. It is a particularly bitter disappointment that we heard nothing from the Minister expressing that determination and confidence. There seems to be a particular lack of self-confidence in the Government generally about British industry. Some of the talk about lame ducks and allowing industry to stand on its own feet, and so on, is simply a mask for a complete lack of self-confidence and policy towards industry. The Government are frightened of some of the problems with which they have to deal, and they take refuge in these general philosophies and principles which do not bear serious examination either as principles or in practical application.
  I should like to have heard today the kind of approach outlined by my right hon. Friend the Member for Birkenhead in his opening speech: first, a statement on the Government's determination to support the industry, and, secondly, an assessment of what they think its place will be in a worldwide context and the kind of achievements which would be open to it, given the necessary support and determination within itself. Such forecasts were made at the time of the Geddes Report. We are entitled to know how the Government see the place of British industry in that worldwide context and what they intend to do to support the industry in order to achieve the objectives which they have in mind for it.
  What have the Government done which bears upon the prosperity of the industry? First, we have had the changeover from investment grants to allowances. This is not an appropriate time to deal with the change in investment grants policy dealing with industry as a whole. However, it is generally accepted in industry now that the changes announced by the Government in October were at the very least mistimed. There may be a certain body of opinion within
  1448
  industry that, on the merits, some of these changes ought to be made; but, at the very least, I find that industry takes the view that the changes were mistimed.
  Many parts of the country, including the regions, which have particular support from the investment grant system, go very much further, as I do, and suggest that the changes themselves, apart from their timing, are essentially wrong in principle. Certainly they are mistimed, because they have been made at a time of low profitability within industry as a whole. The change from investment grants to allowances for taxation purposes is likely to be unattractive to large sectors of industry, particularly those running at low levels of profitability and those attempting to expand their activities in the development areas.
  We know that the shipping industry has protested vigorously about the changes made by the Government in the grants and allowances available to it. There is no doubt—Rochdale admitted it, though it subsequently went on to advocate certain changes—that a good deal of the increase in orders over the last few years was directly attributable to the change which the Labour Government introduced in the investment grant arrangements. The Chamber of Shipping certainly takes the view that the changes which have now been announced by the Government are detrimental to the shipping industry and will lead to a falling off in orders which, as has been pointed out on a number of occasions today, will have a serious effect on our shipbuilding industry because so many of the orders which we have had over the last few years have been by British shipowners.
  There are also the transitional arrangements for the shipping industry and the particular problems which it has had because of the terms on which the Government announced the change from 27th October, 1970. I understand that there have been some discussions with the Government on the problems arising from that change. I hope the Minister will be able to give us some information about the present position.
  Another thing which the Government have done positively, or, rather, negatively, is to announce today what one assumed from the terms of the Bill, that

  1449
  the Shipbuilding Industry Board will go at the end of 1971. I agree that the 1967 Act visualised that the Shipbuilding Industry Board, in terms of the various financial incentives which it would give to the industry, would have a limited life. This was in line with the Geddes recommendation that what was required was a reorganisation operation to be done quickly and with vigour by the industry itself, not something which would take a long time. Geddes recommended that the sooner the reorganisation was done the better. But it did not necessarily follow that when the reorganisation had been done the Government would disengage from the industry altogether, contract out, and say: "The job has now been done. The Board has fulfilled its purpose. It will now be wound up, and nothing will take its place."
  We had an extraordinary statement from the Minister to the effect that the Board would be wound up at the end of 1971. However, he was not able to tell us what would take its place. He had no idea about the administration of the credit scheme which had been done by the Board or what was to be done, even administratively, when the Board was wound up at the end of the year. More important than the administrative arrangements, the Minister was unable to tell us anything about Government policy towards the kind of things which the Board had been doing so successfully over the last few years.
  The job will not be finished at the end of 1971—we might have hoped that it would be finished, but it will not—and the Minister gave no indication of what was to take the place of the Board at the end of this year. Again, we are promised some kind of statement about it before the Summer Recess.
  Mr. McMaster: I am following the hon. Gentleman's remarks very closely, and I am obliged to him for giving way. A few minutes ago he charged the Government with lack of confidence in the industry. What could be a greater token of lack of confidence than suggesting that the Board should be carried on in perpetuity or, as his right hon. Friend suggested, that our shipbuilding industry can survive only if it is nationalised?
  Mr. Milan: I think that not for the first time the hon. Gentleman has mis-
  1450
  understood the point that I am making. There is nothing more damaging to the confidence of the industry—I should be willing to wait and see the reaction of the industry to the Minister's speech today in order to see who is right—than the uncertainty which will be continued by the kind of speech made today by the Minister. The obvious inability of the Government, after 10 months in office, to make up their mind about the industry will be the most damaging thing of all to arise from today's debate.
  The increase to £700 million in grants and guarantees is a disappointment, not only because of the amount itself but because of the unwillingness and inability of the Minister to give any indication whether this is the end of the road for guarantees or whether there will be something more in the future when the sum of £700 million is exhausted.
  The Minister said that the limit laid down in the Bill would take us up to ships for which the fabrication would be starting by the mid-point in 1973, but, as the hon. Member for Dorset, West (Mr. Wingfield Digby), and others, said, this is completely unsatisfactory to deal with the present position, because many of the orders which ought to be placed now relate to periods beyond the mid-point in 1973. The Chamber of Shipping has been making this point repeatedly over the last two months, and we have had an admission from the Minister today that the Shipbuilding Industry Board has been turning down applications, apparently for no reason other than that funds, even at the £700 million level, are completely exhausted. The Bill, therefore, provides no real extension to the guarantee scheme.
  I think that it was the hon. Member for Dorset, West who said that the Bill as it stands, even without looking further into the future, was a good deal less generous than the Labour Government's Bill of a year ago because the amount of money which ought to have been made additionally available is more than the difference between the £600 million proposed by the Labour Government and the £700 million in the Bill.
  I agree with those who have said that unless we get further assurances, and very quickly, from the Government about what is going to happen, orders will be placed abroad. This is particularly so where

  1451
  there is a full order book and shipowners are, naturally, concerned to get their place in the queue established as quickly as they can and cannot wait any longer for government decisions about credit terms. The delay in establishing a policy is particularly disastrous because orders lost now are unlikely to be regained, even if the Government make a further and more optimistic statement in a few months' time.
  My right hon. Friend the Member for Sunderland, North said that there had been a delay of up to two months, but the delay has been considerably more than that. We have been waiting for a statement of policy on the shipbuilding industry ever since the Government were elected to office last June. They have now been in office for 10 months. We have been expecting, and have been entitled to, a statement from the Government long before now, and the excuse that we are given now about the lack of parliamentary time is ludicrous.
  The Government have found the time to introduce legislation to denationalise State pubs. They have found the time to bring in the ridiculous Education (Scotland) Bill. I detail only those pieces of legislation which I particularly abhor, but we have been presented with all sorts of legislation which could easily have been put back to enable this Measure to be brought forward if the Government were really anxious to end the uncertainty in the industry.
  There has been uncertainty in the industry for all that time, and promises were made that the uncertainty would be ended when the Bill was debated. To get the kind of negative and uninformative speech that we had from the Minister this afternoon is merely to add insult to injury. Nothing has been said about marine engineering. Nothing has been said about the ship repair industry, even though we were promised that a statement would be made about it today.
  We had the extraordinary spectacle of the Minister saying that because of the Government's dilatoriness he intended to act illegally and anticipate the passing of the Bill by giving guarantees which he had no legislative authority to give. I say this for the Minister, that he had the grace to look shamefaced when he
  1452
  made that statement, but that is all that one can say on his behalf.
  There is, too, the extraordinary situation of U.C.S. On 11th February the Secretary of State for Scotland made an announcement about capital reconstruction at U.C.S. One assumes that the arrangements for that were made before the statement was made in the House, but two months have elapsed since then and we have had no more information, and when the Secretary of State is questioned about it he says that details have not been worked out. It is an extraordinary situation, and seems to be typical of the complete lack of decision in the Department about the industry.
  We have not been told whether, when the new statement is made, further legislation will be required to implement what is said. This point was made by my hon. Friend the Member for East Stirlingshire (Mr. Douglas). Will further legislation be required? Is this all that we are to have in the way of legislation, or will something else be produced before the Summer Recess, or perhaps after it? Once again a cloud of uncertainty hangs over the whole issue.
  What is particularly damaging is that this uncertainty will continue in an industry which is situated almost exclusively in areas of high unemployment. I represent an area of Glasgow where there is a high rate of unemployment. The situation in that part of Glasgow, and in the West of Scotland and elsewhere, during the last few months has been marked by an uncertainty and a lack of confidence the like of which I have not known for 10 years. This state of affairs is attributable, first, to uncertainty about the Government's regional policies and, secondly, to the inadequacy of the Chancellor's statement in October, and the inadequacy of statements made by the Government since then.
  We may argue about the merits of various policies, but it is a fact that there is a greater lack of confidence now than at any time during the last 10 years. With unemployment figures as excessively and disgracefully high in the areas to which I have referred, it is particularly abhorrent that we are to have added to it uncertainty about the shipbuilding industry. The uncertainty could easily have been removed if the Government had made up their mind about what

  1453
  policy they would pursue, and had been able to announce it this evening.
  If we cannot be given details of Government policy—and, obviously, they have not worked it out, or they would not have been so discreet about it, or, alternatively, as the hon. Member for Tynemouth (Dame Irene Ward) said, they have not been able to get Treasury approval for it—I hope the Minister will at least express confidence in the industry and a determination to see that it prospers and achieves a higher rate of production than it is achieving now. If we get such a statement, something might be saved from the debate on the Bill.
  Obviously, we have to support this Measure, because it does something useful, but we do so with feelings of bitter disappointment at the Government's having been unable to tell us what they have in mind for the future of this industry.
  8.10 p.m.
  The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): I should like to answer straight away the point of the reference of my hon. Friend the Member for Belfast, East (Mr. McMaster) about Harland and Wolff. The question of the management or capital reconstruction are matters for the Government in Northern Ireland, and I cannot help my hon. Friend with the answers he seeks, although I understand their importance.
  The second matter to which I should like to turn straight away is ship repair. I said at Question Time yesterday that either I or my hon. Friend would say something about this industry today. I apologise if it is inconvenient to hon. Gentlemen that it was decided to put this in the wind-up, but if any hon. Gentlemen wish further elucidation as I speak we still have a little time and I will try to answer their questions.
  As the House knows, the Shipbuilders and Repairers Council produced a report in August, 1970, which showed, sadly, that the industry had been shrinking for 10 years and to some extent put the blame on the changing world trade routes, which did not bring ships to our shores for repair so readily, and on the failure of our industry to hold its share of the traffic. The report was made public and I should like to mention five recommen-
  1454
  dations which it made and report on what the Government consider should be done about them.
  The first recommendation was that the industry should take steps to strengthen itself, that there should be much closer discussions between unions and management, and that there was scope for beneficial mergers, arranged by management, not Government. They commissioned at the same time a report from the Economic Intelligence Unit on the marketing difficulties of the industry and came back clearly with the answer that it was performance, the speed and reliability of carrying out repair contracts, which was the difficulty with the industry, and not the price at which it could tender.
  In a second recommendation, the report asked that the Government should exceed the two per cent. shipbuilders' relief to the industry, but since it appears that it was not cost which was the industry's problem, and since no economic case was made for this concession, the Government have not see fit to accede to it.
  The right hon. Member for Bristol, South-East (Mr. Benn), on Second Reading of the Shipbuilding Industry Bill in 1967, said:
  "… there is no intention that any of the finance made available under the Bill shall be devoted to ship repairing."—[OFFICIAL REPORT, 9th March, 1967; Vol. 742, c. 1887.]
  We still do not believe that there is a case for that now.
  Third, the report asked that we should find ways to persuade ship owners to repair their ships in this country rather than abroad, a sort of arm-twisting suggestion which I believe would be unacceptable both to opinion in this House and indeed to the interests of ship owners themselves, who must be allowed the freedom to decide where it is right and proper to repair their ships.
  Mr. Blenkinsop: Is the hon. Gentleman not aware that nearly every other country ensures that an extremely high proportion—in some cases 100 per cent.—of their ship repairs are done in their own country? Is this suggestion so unreasonable? Should it be dismissed quite so casually as the hon. Gentleman has done?
  Mr. Ridley: But hon. Gentlemen have also spoken a lot about the importance of a big and successful shipping industry. A

  1455
  large number of British registered ships never call at British ports. We are perhaps foremost in cross trades. Therefore, it would be a tremendous step for Government to take to try in some way to bring those ships home for repair when they may be ploughing several thousand miles from our shores. The reactions of the shipping industry to this suggestion are strongly against it.
  Mr. Willey: What is the position about the Japanese mercantile fleet, which is larger than our own?
  Mr. Ridley: Without notice. I cannot be exact about the rules about repairing in that country. I can only say that the Government believe that a measure of this sort would not be in the interests of the Merchant Marine or of the British repairing industry in the long run.
  Mr. Douglas: On this point, have the Government made representations to the shipping companies to see why it is, even when the ships come fairly regularly to British ports, that they are not brought here for repairs and refits? As the report said, this is a problem of marketing. Do the Government intend to have some discussions with the shipping companies, or are they just going to wash their hands of it?
  Mr. Ridley: I will come to that in a moment.
  The next recommendation dealt with the rating and taxation of dry docks. There are cases before the courts on both these matters, and it is impossible to comment on them until they have been decided. But the Government are keeping a keen eye on this, because clearly this is an important matter.
  The last matter was the question of fall back pay. The up-and-down nature of employment in the ship-repair industry has costly results for the industry, and the redundancy pay and contracts of employment legislation has in the past made difficulties for this industry. The House would not like to exempt the ship-repairing industry from the standard behaviour in these matters towards the work force, and we are not considering anything of the sort. But if the industry can find ways which would help to solve this problem, either with the unions or by some acceptable relaxation of regulation,
  1456
  we should be only too pleased to try to help them. But we do not accept the industry's case that special Government funds should be made available to cover these payments because it is an exceptional industry and incurs them more often than others.
  The right hon. Member for Jarrow (Mr. Fernyhough), who courteously explained why he could not stay, and other hon. Gentlemen have felt some apprehension about this industry. I know that, in the industry, it is sometimes thought that it is unfortunate because it has not received the same degree of aid as shipbuilding. But the Economic Intelligence Unit did not believe that cost was the industry's problem and talks with shipowners, perhaps at second hand from myself, have led me to understand that there is a feeling among shipowners that it is this question which is paramount in their minds, as to where to place repair contracts.
  But what is encouraging is that the outlook does seem to be improving in a number of firms. Indeed, some ship repair firms are doing well. It appears that we now have a competitive edge in this industry, and if the speed and reliability of the work can be improved, the industry should have a considerable future without any subvention from Government.
  I turn now to the steel price question, which was the subject of considerable debate. It is general knowledge that the original request from the British Steel Corporation was for a 22·2 per cent. increase in shipbuilding plate, but that has now been brought down to about 10 per cent., which I believe will be of great benefit to the shipbuilding industry in future.
  On top of that, the Government have waived the credit admissibility rules so that it will be possible on occasion to import steel to manufacture ships which are subject to credit arrangements. The point of this is that it will introduce a thoroughly competitive atmosphere and shipbuilders will be able to buy their steel on the most competitive terms available. If we have to live in the highly competitive atmosphere of shipbuilding, it is clearly right that the cost of plate should be equally highly competitive. It is not only a question of cost; all sorts

  1457
  of other factors come into it, the terms of delivery, quality, and so on.
  Now, the question of extending credit to urgent cases if the Bill receives a Second Reading tonight. We have waited, for reasons of courtesy to the House, and have not extended credit up to the £700 million limit because it is wrong to anticipate legislation in that way. On the other hand, there is nothing illegal in so doing, and right hon. and hon. Members who have used the word "illegal" are quite wrong. It is a matter of courtesy to the House. If the House were to agree to the principle of the Bill by giving it a Second Reading, I see no reason why, as these guarantees are urgently needed, my right hon. Friend should not now issue them.
  That would not be to anticipate legislation in any sense to the same extent as the right hon. Member for Bristol, South-East did when he appointed the members of the Shipbuilding Industry Board six months in advance of the Second Reading of the Bill which brought the Board into existence. I do not think that we should greatly complain about that, especially as money was not involved on a large scale. But I must ask hon. Members whether they want us to use this credit now, because it is urgently needed by shipowners and is having an effect on the liquidity of some shipbuilders who need credit instalments for their cash flow purposes.
  Mr. Willey: I am concerned about this. It has been strongly argued in the debate that we may have to go beyond £700 million. Do I understand from what the Minister has said that he will be able to do that and that he need not come to the House with legislation?
  Mr. Ridley: There is no legal impediment to anticipating the passage of the Bill. The only reason that the Government have not done it so far, before Second Reading, stems from the obvious question of courtesy to the House.
  Mr. Willey: I am putting it to the Minister that he may find that he ought to exceed the £700 million after the Bill has become law. I gather from what he said that he is able to do that. This is very important, because if the industry is in troube all he need do is make a statement that the guarantees can be given.
  Mr. Ridley: May I put that right? It would be wrong and totally illegal for the Government to extend guarantees beyond the £700 million limit covered by the Bill. Nor would it help very much if the banks were not prepared to provide the money, for it is not just a question of the Government's willingness to provide guarantees; there is also the question of whether the money would be forthcoming.
  Mr. McMaster: Hon. Members on both sides strongly questioned whether £700 million would be adequate, particularly in view of what was said in the opening Government speech. Will my hon. Friend consider whether an Amendment could be introduced to increase the £700 million, since it appears to hon. Members on both sides that the proposed limit is totally inadequate, and it would not cost the Government any money anyway?
  Mr. Ridley: I am coming to that, if my hon. Friend will have patience. I have quite a bit to say about the future. The Bill takes us to a limit of £700 million, which, with the £25 million repayments which are expected, will be enough to produce credit for all home orders where work starts by the middle of 1973. There is no question whatever but that anyone who wants to draw credit from the hank, provided that he has the necessary guarantee and documentation, will be able to do so, as far as we can judge, right up to the middle of 1973. The total amount of credit so far drawn is, I think, £258 million.
  Mr. Small: With this knowledge before the shipbuilding community, there will be a bunching and administrative problems created thereby before the S.I.B. is wound up this year.
  Mr. Ridley: I shall be grateful if hon. Gentlemen will allow me to complete what I have to say. I think that they will find their questions answered and that they will be reassured.
  I shall stick for the moment to the question of drawing credit, and I shall then come to the question of provision for the future. We have, as I say, ample credit which can be drawn for any order up to the middle of 1973. Within the totals, there is a certain amount available for any ship which might be required to

  1459
  be delivered early, because a berth was found for early delivery, and this will apply in the case of small ships. I feel that the House will agree that it is right to use the available credit under the £700 million limit for those ships which may be built and in respect of which, therefore, money may need to be drawn.
  As my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby) said, it is the banks which finance these credits, and the demand for credit of this type creates problems for the banks. Fixed-rate lending is tending to pre-empt an increasing proportion of the banks' resources, as the right hon. Member for Sunderland, North said. That is the reason for the ceiling in the Bill. It is not purely a decision which can be attributed to the Government. It is clearly right and proper, therefore, that beyond the ceiling of £700 million the Government will have to do something else for the future, and, as the hon. Member for East Stirlingshire (Mr. Douglas) said, there will have to be new arrangements for underwriting the guarantees after this stage is complete.
  On the question of home credit after the £700 million, I hope that I can convince the House that the cries of alarm from hon. Members opposite are not justified. We cannot tell the House today the terms on which finance for shipbuilding will be available. The Government fully recognise the importance for the industry of assured credit facilities and we hope to make a statement on the future arrangements before the Summer Adjournment. I appreciate that the hon. Gentleman would like me to be even more forthcoming, and I should like to be. But I remind the House that the money comes from the banking system, although backed by a Government guarantee, and I ask right hon. and hon. Members to accept that it might be more helpful to the objective which they seek, and which we all share, not to press me to anticipate further what facilities will be available.
  Mr. Dell: The Minister is evidently indicating that in future a different technique may be used for home orders from that which was used in the past. He evidently cannot say what that technique will be. However, can he give an assurance that it is the Government's intention to provide British shipowners ordering
  1460
  ships in British shipyards with terms which are competitive with those that would be available if they placed those orders abroad?
  Mr. Ridley: I think that I answered that question entirely when I said that I cannot tell the House today the terms on which finance for shipbuilding will be available in future. But I should have thought that any shipowner who reads what I have said today will feel that it is not so difficult for him to consider which of the alternatives before him he would like to choose if he wishes to order a ship.
  Dame Irene Ward: Why cannot my hon. Friend say why he cannot tell us. If he just told us why we could perhaps take it in.
  Mr. Ridley: The reason why I cannot go further than that is that the matter has not been decided. I have said that I cannot yet tell the House the terms on which credit will be provided in future. But, as I have also said, it is perfectly clear that there is enough credit to last until 1973. So I do not see why the House is so terribly keen to know how the terms will be arranged, in the period long before that.
  Mr. Dell: The Under-Secretary seems to imagine that on the basis of his statement British shipowners will be able to make decisions, but his statement is that he cannot tell them the terms on which the future guarantees, by whatever method, will be available. Surely, the implication is that British shipowners will take the terms they know they can get abroad rather than wait for uncertain terms which the Government may or may not announce in the future.
  Mr. Ridley: The right hon. Gentleman is doing a great disservice to the shipbuilding industry by trying to confuse and twist what I have been saying, which is perfectly clear. Never have shipowners been able to know the terms on which fixed rate credit would be available in the future. The interest rate went up in the middle of last year, but they were not told that five years before. The exact rate of interest on which credit might be available, or the terms of any sort, have never been announced five years ahead. I implore the right hon. Gentleman not to try to make out something which was

  1461
  intended to be clear and helpful to be the reverse.
  Mr. McMaster: Listening to my hon. Friend carefully, I am in some doubt. He said that he would increase the £700 million guarantee because the banks may not be able to lend the money. There is no guarantee that they will lend the money, is there? All that my hon. Friend has to do is to increase the guarantee, and whether the banks have the money and are willing to lend it is nothing to do with the Government. Therefore, is there an undertaking that moneys will be made available by the banks up to the limit of the Government's guarantee?
  Mr. Ridley: My hon. Friend should know full well that it is the money the shipowners want, not the guarantee. The guarantee is by no means the hardest part of the operation. The problem which must be faced up to is providing these very large sums of money at a fixed rate against a background of liquidity.
  I should like to make one further point about credit before moving to the industry as a whole. The shipbuilding industry has an ample stretch of orders ahead. The order books are very long and very fat. So there is no question but that there will be a complete continuation of work, and there is no suggestion that this will affect the shipbuilding industry.
  Mr. Douglas: The hon. Gentleman has had a number of interruptions, and I apologise for interrupting him again. He has given certain figures which I understand represent a ceiling of credit guarantee of £700 million. That is what the Bill is about. He said that about £240 million has been drawn. Can the hon Gentleman tell us how much of this cash has already been pre-empted? How much have the banks given in terms of credit on the assumption that this Bill will be passed? Has he any figures on that?
  Mr. Ridley: It is difficult to give an accurate figure because there is a large block of orders under consideration. If they were all to be granted then it would bring us quite near to the limit. If, on the other hand, they are not all granted, and there are uncertainties of sufficient importance for it to be misleading to try
  1462
  to quantify an answer, then there would be much more leeway.
  I believe that I have made the position entirely clear and I hope that it is clear to my hon. Friend the Member for Tynemouth (Dame Irene Ward). I hope that it is clear, even though it may not be entirely acceptable to some hon. Gentlemen opposite.
  My hon. Friend was taken to task a little for not saying enough about the international aspects of shipbuilding. It has been said that the domestic industry will be at a disadvantage compared with shipbuilders elsewhere because of the extent of overseas government support. This is an area in which comparisons are fraught with difficulty. Moreover, the importance of subsidies can be exaggerated. Differences in the costs of material, labour, productivity and finance are factors of great importance, difficult to quantify. Our experience over the past five years demonstrates that substantial financial assistance does not necessarily ensure success.
  The right hon. Member for Birkenhead (Mr. Dell) suggested that nothing had been done about international subsidies. It should not be overlooked that some countries have already reduced the rate of assistance or protection to their industry. France and Italy have been reducing their building subsidies. Only five years ago the French building subsidies were about 20 per cent. of the cost of a vessel. Now they have been reduced to 5 per cent. Japan has removed her tariff on the import of vessels over 10,000 tons and intends to widen her home credit scheme, currently restricted to domestic orders in domestic yards, to cover orders placed by Japanese shipowners abroad. This is a great opportunity for our industry to attract Japanese orders.
  There is also the agreement on levelling up credit rates which was made last year. All this shows the progress being made in ironing out international subsidies. While the effect of subsidies can be exaggerated, I would not dismiss them as unimportant. Their existence is damaging to fair competition. They can also represent a waste of resources and while there are real difficulties in the way of rapid progress towards an elimination of Government aid the current programme of O.E.C.D. is encouraging.

  1463
  All the main shipbuilding countries are co-operating to find a basis for reducing assistance in a fair and equitable manner. This is necessarily a complex task but I believe that the work now in train will in due course result in a further agreement to complement the understanding on export credit for ships. For our part we intend to give full support to these discussions to ensure that they reach fruition.
  Some hon. Members appear to think that we should continue indefinitely a system of subsidies for the United Kingdom shipbuilding industry. To do so would clearly undermine the international discussions to which I have referred and this would damage the longer-term interests of the industry in turn.
  As has been pointed out, the whole Geddes concept was a once-for-all injection of funds for the industry to get itself on its feet. The life of the Shipbuilding Industry Board could not be extended beyond the end of this year even under the Act passed by the party opposite. It would have required new legislation. I will quote from what the right hon. Member for Bristol, South-East said when he introduced the Bill. He will agree that he shared this view strongly at that time.
  He said:
  "If I had to summarise the Geddes Report in three sentences, I should do it like this. First, the competitive success of the British shipbuilding industry depends on the industry itself, the managements and workers in it. Secondly, the Government should help, but all public expenditure should be directed to and conditional upon the reorganisation of the industry. Thirdly, the job is urgent: the industry must not look forward to aid on a continuing basis. This is a job that has now to begin."—[OFFICIAL REPORT, 9th March, 1967; Vol. 742, c. 1778.]
  Mr. Benn: Before the hon. Gentleman concludes the reference to what I said, he will recall that that speech was made, I think, in 1967 on the recommendation of Lord Geddes himself, which we accepted. But nothing in that speech precluded the possibility that at the end of the period we would see where we were and take necessary measures, and nothing in that speech indicated what we have heard today: the dismantling of the whole policy towards the shipbuilding industry, no help whatever for ship re-
  1464
  pairing, and the credit scheme to be brought to an end, with no indication of what is to happen thereafter.
  Mr. Ridley: The right hon. Gentleman knows that his last sentence was wrong and mischievous. As I remember, the credit scheme introduced by the previous Government had a limit of £600 million with no prolongation of the Shipbuilding Industry Board or any other different policy from what I have been talking about.
  But, whatever may be the case, this phase has come to an end. The industry has had this chance. I do not think it is wrong to go over the effects of giving the industry this chance, and I should like to do that. But at this stage I join with hon. Gentlemen in paying a very real and warm tribute to Sir William Swallow and his Board, and to Mr. Barker, the director. The only reason why my hon. Friend did not do this earlier was that he did not know whether it was right to pay a warm tribute nine months before the end of the life of the Board, but since other hon. Gentlemen have decided to do so, I am sure that it would be right that we should add our grateful thanks for the hard and intelligent work that its members have done for the industry.
  The right hon. Gentleman, and other hon. Gentleman, thought that the Board should continue longer. He seemed to say that there should be no rescue operations—there we agree with him—but that there should be a sustained period of aid for the industry. I wondered, en route, how long he thought that this sustained aid would need to continue. For the last four years, the industry has had nearly £50 million of State capital, and the home credit scheme has now taken £258 million of advances, and, in addition, £15·7 million has been spent on shipbuilders' relief. This adds up to £65 million of capital and £258 million of loans from the banks.
  This industry represents 1 per cent. of our manufacturing capacity. Production is still lower than the 1954 post-war peak of 1·5 million gross registered tons. In 1970 it was 1·3 million only. Our world market share between 1954 and the present time has fallen from 27 per cent. to 6·5 per cent.
  Mr. Benn: Would the hon. Gentleman give the figures for 1966, when the Geddes

  1465
  recommendations first began to be implemented?
  Mr. Ridley: I do not have them with me, nor are they in my head. If the right hon. Gentleman would like to look them up, I will give way to him so that he can give them.
  Productivity does not appear to have risen. Our productivity is lower than that of our rivals, although I agree with the hon. Member for Glasgow, Craigton (Mr. Millan), who said that it is very difficult to quantify. In the three years from 1967 to 1970, wages in the industry have risen by 34·6 per cent., which is more than the average for all wages and the average for the engineering industry. This has been the cause of the fixed price contract losses which have brought the industry into difficulties and affected its liquidity.
  The hon. Member for East Stirlingshire seemed to think that the Government was making an attack upon all capital-intensive industry. But what is doing that is wage inflation at this rate, because often it is two or three years, or even more, between the need to tender for a ship and having to pay the final wages Bill for work on it.
  During this period the number of days lost per 1,000 employees through industrial disputes went up from 750 in 1960 to 1,975 in 1970, a staggering record, the figures being almost trebled.
  A number of comments have been made about the strike on the Tyne. I do not wish in any sense to intervene or comment on it, except to say that this continued record of strikes not only damages the reputation of the industry but greatly adds to its costs, and costs must be got down if the industry is to be competitive.
  I can sum up the Government's policy so that my hon. Friend the Member for Tynemouth is in no doubt about it. My hon. Friend the Minister for Industry made this policy quite clear, but it may be helpful if I go over it. Since coming to office, the Government have given an extra 1½ years' breathing space, until the end of 1971, for the existing weapons to remain in existence—the S.I.B., grants and loans, credit and so on—and loans will still be applied by the S.I.B. if companies wish to claim them.
  We have decided to give three more years of R.E.P. until the date when it is
  1466
  due to come to an end. We have decided to continue with the credit scheme, and I have spoken of the difficulties of this, particularly for the future. We have decided to continue the 2 per cent. shipbuilders' relief. We have also decided to provide a competitive situation for the provision of plate for shipbuilding.
  On the other hand, we have decided to end the S.I.B. at the end of this year and to provide no further grants or loans apart from those already undertaken by the S.I.B., and, of course, apart from the assistance which is available to all industries operating in the development areas.
  The right hon. Member for Sunderland, North was right—I greatly admired his speech—when he said that national will and determination was required. He seemed at the end of his remarks to say that it should be will and determination on the part of the Government. I believe that it must be will and determination exercised by everybody concerned with the industry.
  The conditions are there, the market is buoyant and order books are long. The Government are providing far greater help for this than for many other industries. I see no reason whatever why this industry should not go ahead and succeed, provided it has the national will and determination for which the right hon. Member for Sunderland, North called.
  Nothing would be more disastrous than to follow the advice of the right hon. Member for Birkenhead and nationalise this industry, so plunging it into the uncertainties of nationalisation. Sufficient has been said about the harm caused by uncertainty. In view of the history of the steel industry, I would have thought that nobody would advocate that treatment for shipbuilding considering what happens once an industry becomes the shuttlecock of politics.
  Further to the remarks of the hon. Member for East Stirlingshire, I see no reason to believe that changing the name of the owner on the gate would solve the problems of this industry.
  Mr. Dell: Would the hon. Gentleman indicate to the House whether there were any political motives behind the assistance to Harland and Wolff? Would he indicate to the House whether there were

  1467
  any political motives behind the assistance to Yarrow? Would he indicate to the House whether there were any political motives behind the capital reconstruction of U.C.S.?
  Mr. Ridley: Would the right hon. Gentleman indicate to the House whether there were any political motives behind his suggestion that the Government should nationalise the shipbuilding industry?
  Mr. Dell: I hope that the hon. Gentleman will answer my questions.
  Mr. Ridley: The right hon. Gentleman knows full well that there are all sorts of considerations in a Government's mind. What I want to know from the Labour Party is whether hon. Members opposite intend this to be their policy in future. If they do, the nation will know and pudge. I believe that the Government's policy is quite clear and that it gives great opportunities to the industry, and I therefore hope that the House will give the Bill a Second Reading.
  Mr. McMaster: I must admit that I am very disappointed. In reply to questions from both sides of the House, my hon. Friend said earlier that he could not increase the £700 million because of the lack of availability of money from the bank. But he knows as well as I do that this money is advanced by the banks, on the Government's guarantee, for the purchase of ships built in this country. The money is to be spent in this way and one way or another it will find its way back to the banks where, subject to the liquidity ratio, it can be re-lent, so that the banks do not have to find a penny and can get their 7 per cent., less what they have to pay on deposits. Why do we have to stick to £700 million? Could it not be increased to £1,000 million? The money goes round, and my hon. Friend knows it.
  Mr. Ridley: My hon. Friend seems to have found a form of financial perpetual motion. I do not believe that such a thing exists, and I hope he will ask the banks and discuss the matter with the Committee of the Clearing Banks. I am not prepared to discuss the willingness of other people to lend
  1468
  their money. It is entirely a matter for them to explain to him.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee, pursuant to Standing Order No. 40 (Committal of Bills).

SHIPBUILDING INDUSTRY [MONEY]
Queen's Recommendation having been signified—
Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to amend section 7 of the Shipbuilding Industry Act 1967, it is expedient to authorise any increase in the sums payable out of moneys provided by Parliament or into the Consolidated Fund which is attributable to any amendment of the section increasing the limit of £400 million imposed by subsection (5), as amended by section 1 of the Shipbuilding Industry Act 1969, on the Secretary of State's liabilities on guarantees given under section 7, but so that the new limit shall not exceed £700 million less the amount of any sums which have been paid by the Secretary of State to meet a liability falling within the subsection and have not been repaid to him.—[Mr. Ridley.]
8.53 p.m.
Mr. Edmund Dell: I should like to ask the Government some questions about this Money Resolution. The Under-Secretary left us in some doubt on the subject of legality and I should like to follow the questions put to him by my right hon. Friend the Member for Sunderland, North (Mr. Willey).
The Under-Secretary seemed to be saying that it would be illegal to go beyond this £700 million because there was no legislation, but not illegal to go beyond the current legislative limit of £400 million, although there is no legislative authority to do so. I wonder whether he would explain what is illegal, what is done simply because it is courteous to the House, and from where exactly the limits of this operation derive in law so that we may be quite clear what he meant when he said that what the Government were proposing to do after Second Reading was not illegal. My right hon. Friend the Member for Sunderland, North was making an important point. If it is true on the face of it that it is not illegal to go beyond the current

1469
limit of £400 million, why will it be illegal to go beyond the next limit of £700 million if the interests of the industry so require?
Secondly, as he knows, there have been representations from the Chamber of Shipping about these guarantees expressing concern about the fact that orders placed by British shipping companies in British shipyards have not been covered in full and that, apparently, it is not proposed to cover them in full. For example, the owners of four container ships have been told that only the vessels themselves may be covered, but not the containers, which are essential for the operation of the ships. Exactly what is the limit of operation of these guarantees? Do they cover orders in full, and to what extent do they not cover the orders?
I am sorry to revert to the next point, but it must be clear to the hon. Gentleman that he has left the House in some doubt about what is to happen after May 1973 when the £700 million expires.
One of the original intentions behind these credit guarantees was that eventually, they would rotate—in other words, enough guarantees would be released in order to enable the Government to cover new orders. Do we understand from the hon. Gentleman that that ambition is now dead, that these guarantees will never get to the point of rotating and that some other method will substitute entirely? In other words, is this the case not just for any requirements above the £700 million which may be necessary in future but over the whole range? Is it the case that the £700 million of credit guarantees will gradually come to an end altogether and that this system will play no part in the further support of orders placed by British shipowners with British yards?
The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): I will do my best to answer the questions put by the right hon. Member for Birkenhead (Mr. Dell), although I shall not go over again the ground I have covered in relation to the future of the credit scheme.
First, the Government can do anything they wish legally unless they are expressly forbidden by legislation to do so. I apologise for giving the right hon. Gentleman a wrong answer earlier. I am advised that we could give credit guarantees to
1470
any amount so decided without legislative authority and be strictly within the law. It is clear, however, that it is right that we should obtain authority for so doing. We should particularly obtain legislative authority because if there is a default and credit is not paid we would have to present the bill to Parliament and would have to be able to justify to the House that it should cover that bill. Therefore, there is no reason why we should not go over the £700 million. But I believe that it is perfectly justifiable, once a Bill has obtained its Second Reading, to advance guarantees against the £700 million limit contained in the Bill, and that is what we intend to do.
Secondly, the credit is available to cover all the equipment of a ship. It can be used to cover containers. The limit of £400 million has been biting hard and the only question has been whether it is better used, in view of the short supply of credit, for new ship orders or for containers. We are at present consulting the Chamber of Shipping, with the introduction of the Bill, to see what it would like to do in this respect, although the Government will eventually decide how to use the money.
Thirdly, the right hon. Gentleman asked whether we would substitute a new scheme for the existing credit. He himself knows the answer. It is impossible to do anything about credit which has been advanced to an amount of over £200 million and therefore it would be impossible to consider substituting an existing credit mechanism for a new one.
Mr. Dell: I do not think the hon. Gentleman has taken my point. The intention was for these guarantees to rotate —in other words, as guarantees fell out because the ship was paid for, that value of guarantee would be used for new orders. Obviously, there would have to be a certain minimum value of credit guarantees available before that could happen and a certain time would elapse. That was the original intention. Has that intention been clearly abandoned? The hon. Gentleman suggested that beyond the £700 million there would be a new system, although he could not give the terms. I was asking whether the £700 million which would be available would be allowed to rotate—that is, fill in some of the gaps as part of it is released—or whether the whole thing would be

1471
abandoned and everything would depend on the new scheme.
These are fairly clear questions which derive from the nature of the credit guarantee scheme and I should have thought that the hon. Gentleman could answer them.
9.0 p.m.
Mr. Ridley: With leave, may I say that the fund is rotating and that when the money is repaid it becomes available for relending. We estimate that £25 million will become available for relending this year, which will increase the amount of the credit from £700 million to £725 million, although the ceiling level is not affected. The right hon. Gentleman is right in saying that the scheme can rotate.
I have said many times that I do not yet know, and therefore cannot tell the House, the terms of any credit scheme which may be announced later. For that reason, I cannot answer the right hon. Gentleman's second question.
Mr. Bruce Milian: I should like to pursue the question of the legality or illegality of what the Government intend to do. The Under-Secretary of State has said that it is not necessary to have legislation because there is a general Government power to cover guarantees. He is saying that he can act as he likes unless we tell him that he must not go beyond a certain limit.
However, I should have thought that in the Money Resolution there was a specific debarment against the Government going beyond a certain limit because, unless the Resolution is completely meaningless, it says in the third last line that
"the new limit shall not exceed £700 million".
I presume that during the passage of the legislation which laid down the present limit of £400 million the House solemnly passed a Money Resolution saying that the limit should not exceed £400 million. The House said to the Government, "You have authority to go to £400 million but not beyond." Now we are giving the Government authority to go to £700 million but not beyond it.
1472
Either the Money Resolution is completely meaningless or what the Secretary of State has said is not accurate. Can the hon. Gentleman reconcile what he has said with what he is asking us to pass in the Resolution?
Mr. Frederick Willey: I support what has been said from this side of the House. This is a matter of considerable constitutional importance. I am prejudicing myself in a way because I am anxious that the industry should have the money, but we cannot let the Government behave like this.
The Government must realise that they cannot spend a penny unless they obtain Parliament's authority. The Money Resolution refers to "moneys provided by Parliament". That was the position before, and it is the position now. The Comptroller and Auditor General should be alerted to this matter. If guarantees have been given, the position should be exposed. All that the Secretary of State is saying is that if a guarantee has not been given he will guarantee the money out of his own pocket. It is exactly the same position as the position which exists between a local authority and the district auditor, and the House should be alive to it.
We cannot tolerate this sort of slipshod administration, with the Government saying, "It does not matter. There will be a Bill some day—this week, next week—but we are sure to get it. Therefore, we can go ahead in a slipshod administrative way". This is vitally important, because the control that Parliament exercises over the Executive is that of finance. The Executive cannot spend anything unless it has parliamentary approval for it. Here we have expressed parliamentary approval subject to a limit. If the Government give guarantees, they must be covered by legislation backing those guarantees. We should not let this go idly by.
Criticism was made earlier of the arrogant way in which the Department disregarded the opinion of the House of Commons. Now the Minister says, "That is the view I take." I have been here longer than the hon. Gentleman and he might not be as aware as I am of the traditions that the House has established over a long time. I cannot

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remember a Minister ever coming to the House and saying, "We are considering legislation, but do hon. Gentlemen mind if we ignore it and give a few guarantees?".
Mr. Ridley: The right hon. Gentleman is wrong.
Mr. Willey: If I am wrong, let us have an explanation. The Secretary of State is here and the obligation is upon him to give the explanation, he is in charge of the Department—or let us have a Law Officer. Let us have someone who can satisfy the House about what after all is the cardinal control that the House exercises over the Executive.
Mr. Ridley: The right hon. Gentleman may be aware that the previous Government advanced £7 million to Upper Clyde Shipbuilders not very long ago and never sought legislative authority to do so. Can he explain that one away? Since he claims such great knowledge and wisdom in constitutional matters, can he tell us by what authority the Labour Government did that?
Mr. Willey: First, we are in the unusual position of discussing a Money Resolution without a Treasury Minister being present. That point was taken at the opening of the debate. Secondly, there is express legislative provision here. I am not concerned with what was done about U.C.S., I am concerned about what is done in regard to Section 7. If the hon. Gentleman is saying that he can give these guarantees without parliamentary authority this is a matter which we can raise if the £700 million is exceeded, but from the Money Resolution it appears that the Minister is completely wrong.
Mr. Dick Douglas: I am not wholly conversant with financial procedures in this House, but I have some regard for financial probity. If we have exceeded the guarantees of £400 million, do I understand that the Government are liable in law, if there should be any default, only to pick up the pieces for £400 million? When the Bill becomes law, will the Government be liable in law only to pick up the pieces for £700 million? Will there be no legal liability for the Government to pick up the pieces in excess of £700 million? The Minister is giving a misleading impression to the House and to
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the people who might be obliged to give loans to companies wishing to build ships if he is saying that he will be able to exceed the £700 million.
The hon. Gentleman appeared to be misinterpreting the rôle of this House in the control of Supply. I have already confessed my lack of knowledge of the procedures of the House, but I would ask the hon. Gentleman if either the accounting officer in his Department or indeed the Comptroller and Auditor-General was consulted before this Bill came before the House?
Mr. Stanley R. McMaster: To return to the point relating to the £700 million limit, I would suggest to the Under-Secretary of State that it is not sufficient when dealing with a Bill of this importance to say "Go and talk to the joint stock banks about it".
It is a well known principle of banking that every advance creates a deposit. The loans are guaranteed by the Government, and a loan is made to the shipowner who has placed the order for a ship. He takes the money as he requires it to pay advances on the building of the ship. The money is then paid to the shipbuilder, who pays it out either for steel or in wages. The money is paid in that way, and it goes back into the banking system. The banks have the same total of money to re-lend subject to their liquidity ratio, which usually amounts to a third. In other words, the money rotates. This is normal banking practice. It is the way in which business has been financed for many hundreds of years.
I cannot see in logic why the Government say that they cannot guarantee more than £700 million. I suggest that my hon. Friend goes and talks to the joint stock banks about it. Why should the figure of guarantee not be increased? In concluding the Second Reading debate my hon. Friend said that he could not tell what in future would be the interest charged on the money. He does not even know what money will be available for lending by the joint stock banks. If in six months or a year's time the joint stock banks found that they could lend up to £1,000 million to the shipyards, would another amending Bill need to be introduced into this House? Why should the total limit not be increased at this stage even above what the joint stock

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banks are willing to advance? Would my hon. Friend address his mind to this matter?
Mr. Milan: The way in which the Government have drawn this Money Resolution is expressly designed to prevent the hon. Member for Belfast, East (Mr. McMaster) or anybody else increasing the limit in Committee. This is another objection to the present drafting of the Money Resolution.
Mr. McMaster: Yes, I accept that point.
9.15 p.m.
Mr. Anthony Wedgwood Benn: I beg to move, That the debate be now adjourned.
I take this step because in the course of this debate the House has heard from two Front Bench speakers three or four totally contradictory explanations. First, the Minister for Industry began by saying that he thought he should tell the House that after the Second Reading he would be advancing the credit. He then indicated that if there was any opposition from this side of the House he would not do so, but that if we were prepared to approve the Bill without a Division he would be willing to authorise the credit. He well knew that we wanted this to be done. I said that this was illegal.
In summing up, the Under-Secretary of State said that this was not to be the case and that the Government could do what they liked as far as I understood it, resting on a prerogative view of Government which is unusual. He cited other cases about the Shipbuilding Industry Board which are not on all-fours with this. He then said that it would be possible, with the authorisation of this Bill, to give credits of more than £700 million. [HON. MEMBERS: "No."] Yes, he did. He said, "On exactly the same basis as Industry said that we can go ahead now in anticipation of Parliament, since the Government can do what they like there is nothing to prevent their going beyond the £700 million unless Parliament expressly prohibits it." But that is exactly what the Money Resolution does. It says:
"…shall not exceed £700 million."
These are complicated matters, but, inadvertently, the hon. Gentleman misled
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us in what he said. This is important. I will not got into any discussion of banking matters that the hon. Member for Belfast, East (Mr. McMaster) raised, be-caused I am not competent to do so. But there is genuine anxiety about the amount of credit and whether it is sufficient.
If this Money Resolution goes through tonight, we shall have legislated, since in a sense the Money Resolution limits the amount of money available, to make it impossible in Committee even to urge any further expenditure, because the Government have the power to limit the amount that Parliament can recommend should be spent. If we pass the Money Resolution tonight, we rule out the possibility of any extension beyond £700 million, plus the rotating fund.
Since the Money Resolution is in the name of the Financial Secretary to the Treasury, since very important legal matters arise on which we may need the advice of the Law Officers, since it is of no consequence whether the Resolution is passed tonight in that the Minister will give credit anyway when the Bill has received a Second Reading, which it has already, and since the Resolution is exempted business which could be put on at 10 o'clock any night, when five minutes from the Financial Secretary could resolve our differences, I seriously suggest that the debate on the Money Resolution be adjourned so as to give the Government an opportunity to put before us a clear statement of the position, and we can then proceed in the light of that.
The Minister for Industry (Sir John Eden): I do not think it would be helpful to proceed in the way that the right hon. Gentleman has suggested. I believe it would be more helpful to attempt again to go over the ground and try to answer his points.
As I understand the position, the Bill relates simply, strictly, and, in my view, righly to the powers of my right hon. Friend the Secretary of State for Trade and Industry to give guarantees and to the possible consequences for parliamentary approval of expenditure in the event of a guarantee being called. That is the important point. In this regard, there is no difference here from previous Acts which the right hon. Gentleman's Administration brought before the House. The

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Bill, after all, is a simple amendment of the 1967 Act.
In general terms, if one decided to give guarantees against bank advances, one could go up to any figure that one chose. But where one is limited is that, in the event of that guarantee being called, Parliament has not authorised the expenditure beyond the sum of money set in the Bill.
Mr. Benn: Obviously, I have not the record before me, but I take it that the Money Resolution on my last Bill to become an Act was identical to this, except that it said:
"…shall not exceed £400 million."
That being the case, the Minister has now said that the guarantees that he would be giving beyond the £400 million that he is ready to give now that the Bill has received a Second Reading would be illegal were they to fall due for the Government to pay. So, in anticipating the Money Resolution, the Government have given guarantees that it would be illegal for the hon. Gentleman to discharge by making payments, but not, he claims, simply to give. This raises the point made by my right hon. Friend the Member for Sunderland, North (Mr. Willey). This is why, with the best will in the world, we must have a lawyer or a Treasury Minister here if we are to dispose of the matter.
Sir J. Eden: I understand the pressure from the right hon. Gentleman. The difficulty or the difference of opinion arises—I am doing my best to try to make this clear—on the use of the word "illegal", which is taken to cover the proper procedures by Parliament for the control of expenditure which, in constitutional terms, is something different.
There are two points. The first is whether it is legal or illegal. When this was first used, it was in a much wider context. It would not have been illegal to have authorised expenditure because it could be drawn from the Civil Contingencies Fund or something like that. In the examples which have been given, this has been done by the previous Administration and by others. In that sense my hon. Friend was using the expression "not illegal". I hope that I have made that point clear.
Concerning the control of Parliamentary expenditure—this is the important
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aspect in considering the Money Resolution—in the event of guarantees being called, the expenditure may not exceed £700 million. If, before the Bill becomes an Act, guarantees were called, those guarantees could not exceed £400 million, because that is the amount in the Act. The right hon. Gentleman knows that Parliament has authorised the issuing of guarantees up to a total of £400 million in previous legislation.
Mr. Wiley: I am still not satisfied. I understand the hon. Gentleman to be saying that this is not illegal or improper because if this unlikely event occurred we could scratch up the money from the Consolidated Fund or elsewhere. I do not accept that. I know of no grounds for believing that if Parliament makes an express provision the Government can scratch around and find some fund to save themselves. This would be denying the whole purpose of the legislation.
I can appreciate the hon. Gentleman's point in saying that this is an awful bore and that it is a most unlikely call to be made on the Government. But we are concerned with guarantees and the legal basis for them. I cannot accept what the hon. Gentleman said on the first point.
On the second point, I can understand the Minister saying: "I have come to tell the House frankly my difficulties. I hope the House will be tolerant and, having heard the position, will allow me to go ahead and do something which is quite reasonable". However, I cannot accept that. If we allow this kind of slipshod administration we shall run into very real difficulties. This is why we have the Comptroller and Auditor-General and accounting officers. I was horrified to hear that this is being done on the advice of the accounting officer. He, at any rate, is identified and will have to account to the Comptroller and Auditor-General in due course. But it is asking the House to do too much to say that a Minister whom we trust and who is a nice chap is doing something which is regrettable but which the House is pressing him to do, and that therefore we should not bother about constitutional propriety. That is just the one thing which we must bother ourselves about.
Mr. Milan: I agree with my right hon. Friend the Member for Sunderland, North (Mr. Willey): The Minister for Industry has not dealt with my point about what

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the Under-Secretary said earlier, that the Government could pay out anything unless they were specifically debarred. I would accept that as a general constitutional principle, but, unless the legislation is meaningless—I do not think that it is—once one has passed legislation, one has laid down a certain limit beyond which the Government are not authorised to go.
But then the Minister goes on to say that the principle is something different. The principle is not that one cannot go beyond the guarantees laid down in the legislation. One can go beyond it, he says: the difficulty arises only when one is called upon to pay up on the basis that the guarantees now have to be discharged. But that is not what the 1967 Shipbuilding Industry Act says. It does not say that the limit of £200 million, which was subsequently raised to £400 million, is a limit on guarantees which have fallen to be discharged by the Government. Section 7(5) says:
"The aggregate amount of the liability at any time of the Minister in respect of guarantees under this section…shall not exceed £200 million."
It does not say that the aggregate amount of the expenditure, but to the liabilities. Therefore, the Minister cannot take on liabilities exceeding £400 million under the present legislation.
The Minister is trying to draw a distinction between a liability and payment, but the Act specifically directs a limit of those liabilities. So what the Minister has been saying tonight does not represent what the legislation say. It is certainly completely inconsistent with what the Under-Secretary said earlier.
I suggest sincerely that it will help everyone if this Resolution were withdrawn. The Bill has had its Second Reading and the Money Resolution can come forward at any time. It limits discussion in Committee, but it can be passed subsequent to the Second Reading. The Government would suffer no disability.
The Minister and his hon. Friend have tried to explain the exact position. I mean him no disrespect in saying that he has not convinced the House that he understands the questions which we are putting. In any case, the Resolution is in the name of the Financial Secretary. It used to be a courtesy, which seems to
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have been disregarded in recent years, that a representative of the Treasury was always present during discussion of money resolutions. It would be useful to hear from a Treasury Minister or a Law Officer, and this could easily be done. The Money Resolution could be exempted business on any evening next week. I suggest this course, because we are anxious not to vote against the Resolution.
9.30 p.m.
Mr. McMaster: I am confused on the question of illegality, and I hope that the Minister can help me by explaining at what point illegality would arise. The Money Resolution would provide:
"That, for the purposes of any Act of the present Session to amend section 7 of the Ship building Industry Act 1967, it is expedient to authorise any increase in the sums payable out"—
I underline those words "payable out"—
"of moneys provided by Parliament or into the Consolidated Fund which is attributable to any amendment of the section increasing the limit of £400 million imposed by subsection (5). as amended by section 1 of the Shipbuilding Industry Act 1969, on the Secretary of State's liabilities on guarantees given under section 7, but so that the new limit shall not exceed £700 million less the amount of any sums which have been paid by the Secretary of State to meet a liability falling within the subsection and have not been repaid to him."
Does that mean that the Minister will be acting illegally only if he pays out more than £700 million? In other words—
Mr. Speaker: Order. The hon. Gentleman must direct his attention to the question whether the debate be now adjourned, not to the merits of the Money Resolution.
Mr. McMaster: In order to decide whether the debate should be now adjourned, Mr. Speaker, I want to know whether there is something in the Money Resolution which would render action by the Government unlawful or ultra vires if they guaranteed more than £700 million but were not in fact called upon to pay out more than £700 million.
The 1967 Act has not led to the payment out of any money. On the experience of the past four or five years, the Government could advance a great deal more than £700 million without in any way acting ultra vires because they would not in fact be required to pay out more than £700 million. Would the Government be acting illegally only if they pay out, as

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opposed to guarantee, such sums? The Money Resolution as such imposes a liability on the Treasury, but the guarantee itself raises no liability on the Treasury.
Mr. Arthur Blenkinsop: Could we have the help of the Leader of the House? I am sure that he would accept our suggestion that the Money Resolution be withdrawn at this stage. To do so would put the Government in no difficulty, and it would enable the matter to be rectified in a much more sensible and relaxed way. I feel that the Leader of the House will appreciate that, and will be able to advise in that sense. I hope that we might have his support in doing so, as it seems to me the appropriate thing to do at this moment.
Mr. Benn: I hope that the Minister will accept that there is a little difficulty here and that it is important that people should understand the exact legal position. I know that he was trying to help us, but with the best will in the world it is not possible for a Minister, caught with questioning that it is easier to put than to answer, to give absolutely authoritative replies.
My hon. Friends and I support the Bill and are anxious that the Money Resolution should go through so that the Bill should proceed, but since there is no problem about time the matter could be brought back on Monday. It would show sensible flexibility and sensitivity if the Minister would simply accept that we should put the Resolution on one side and that he should come back with an absolutely clear, authoritative statement on Monday, Tuesday, or whenever it may be, and it would then go through.
After this long day's debate, with so much discussion about the question, I beg him not to try to push us on to the Money Resolution before we have an absolutely clear answer to this question.
Mr. George Lawson: If the Minister accepts what has been said by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), I shall not want to press the matter any further, but if he does not I would certainly wish to put the case put by my right hon. and hon. Friends. Will he say that the Government will look at the matter again?
I have not taken part in the debate, and I hesitated to intervene now, but
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the subject under discussion is of first importance. The Minister did not seem to be very clear in what he was saying. It seemed to me that he was trying to withdraw the word "illegal", trying to suggest that the earlier use of the word had been inept, that it did not quite mean what "illegal" usually meant but merely meant that perhaps the Government were doing a little bit of something that was not quite in order but nothing that was really wrong. If so, he is saying that a Money Resolution can be disregarded by any Government. When a maximum figure is stipulated, whether of the guarantee or the maximum paid out, it seems to me that that is the ceiling.
I have always understood that a Money Resolution is virtually absolute. With your experience, Mr. Speaker, you will be very clear on this matter. It is often the Government's concern to tie up legislation by means of a Money Resolution. It used to be a regular exercise by my right hon. Friend the Member for Kilmarnock (Mr. Ross) and the previous Member for Edinburgh, East, Mr. George Willis, to look very closely into Money Resolutions, because they knew of their importance for the legislation in question, and the facilities that a Committee would have in amending legislation. They knew that these were contingent upon the Money Resolution, which was absolute for the Committee dealing with the Bill. It is the regular practice of a Chairman when a Committee begins its deliberations on a Bill to advise the Committee that the Money Resolution is available, and we can do nothing outwith the terms of the Resolution. It is an absolute instruction for any Committee of the House.
The power and authority of this House reside in its ability to control the purse strings. It can say that a Government have been given power to spend up to a certain limit and not beyond. There must be a further sanction. We all can recall special Bills that have been passed to give a Government power to make certain expenditures. The Minister for Industry seems to be saying that we do not mean by "illegal" what is commonly meant by the word, but nevertheless if it suits the Government's purpose they can commit themselves to more than this and not just a pound or two. There is apparently no limit.

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If this is so, it is different from what I have always understood to be the position. If this is the proper interpretation of a Money Resolution, then I would say that in no Committee of this House dealing with a Bill would hon. Members be legitimately silenced by a Chairman who says that the Money Resolution lays down the terms under which expenditure can be committed. Any future Committee would be entitled to say that the Money Resolution was only a rough guide. It could say that if the Government can allow expenditure in excess of a Resolution, then the representatives of the people can insist that they do it in Committee, too.
No hon. Member worth his salt would accept rules for a Committee that do not apply to the Government. We should have from the Secretary of State a statement to the effect that what has been said earlier has been misleading in the sense that the word "illegal" was wrongly used and in the sense that the Government do not have latitude to commit themselves to more than is here stipulated. The Government have no more latitude than we have as a Committee to involve themselves in further expenditure. I have no doubt that hon. and right hon. Gentlemen opposite are wrong, and it would be an absurd position if, having talked in this way, they have to come back and admit that they were mistaken.
I do not say this disrespectfully but there is no Minister on the Front Bench who properly understands this. It is reasonable for right hon. Gentlemen opposite to say that there is a doubt and that the matter should be withdrawn and brought back next week. Unless this is done, my hon. Friends will have no alternative but to push this as far as we can, which may mean dividing.
9.45 p.m.
Mr. Tom Boardman: I apologise for having been absent during the earlier debate, but I understand that the hon. Member for Motherwell (Mr. Lawson) shared a similar disadvantage.
Mr. Lawson: I took no part in the debate on the Bill. I heard only parts of it here and there. But I have heard all the debate on the Money Resolution.
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and it is the Motion that we adjourn the debate on that Resolution that I have been talking about.
Mr. Boardman: Like the hon. Gentleman, I was not here for the debate, but I heard the criticisms raised about the Money Resolution and so on, and I accept the hon. Gentleman's argument—it is perfectly valid—that it is the duty of the House to control the public purse, and that is right. But is it not also right that we should ration our time carefully? I heard the suggestion that this matter should be taken on a future occasion. One asks what there is in the Resolution to which hon. Gentlemen opposite object. It is a matter in which the Resolution—
Mr. Millan: We are not talking about the Money Resolution in those terms. We are talking of a Motion to adjourn the House because of the confusion. As I understand it, Mr. Speaker, you have already announced that we are not entitled to object to the Resolution as such. With great respect, the hon. Gentleman is in no position to make a sensible contribution to the debate.
Mr. Boardman: The hon. Member for Glasgow, Craigton (Mr. Millan) will accept that every Member of the House has a right to contribute to any debate. The money to be supplied for this vital industry concerns hon. Members on both sides of the House. I accept that that is not the issue which is being debated at present. What is being debated now, and what concerns me, is the use of parliamentary time. This is a precious commodity. I am sure that the hon. Member for Motherwell would agree with that.
Mr. Lawson: Hear, hear.
Mr. Boardman: Indeed, the hon. Member does. We are wasting a great deal of parliamentary time. My intervention will be brief.
Mr. Dell: Tell us what it means.
Mr. Boardman: Does the right hon. Gentleman wish me to give way?
Mr. Dell: The simplest way of saving time is for the Government to explain what the Money Resolution means.
Mr. Boardman: If I understand the right hon. Gentleman correctly—again apologising for my absence—it seems

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that this is what hon. Gentlemen opposite are seeking to prevent the Government from doing by seeking the adjournment of the debate, thereby preventing my right hon. Friend from putting to them the Resolution, a Resolution which I believe —I hope that I am not out of order—commends itself to the House as a whole.
Mr. Benn: I am sorry that the hon. Gentleman appears to be making fun of this.
Hon. Members: No!
Mr. Benn: The hon. Gentleman was absent, no doubt for good reasons, when the Money Resolution was put to the House and debated. Certain problems arose in the Ministerial explanation, and I moved that the debate be adjourned. My hon. Friends have not prevented the Money Resolution from being put. We are merely waiting for the Minister or the Secretary of State, who, after a busy day, courteously came in for the end of the debate, to give an authoritative reply to some of the unresolved questions.
Mr. Boardman: I gathered that that was the meat of the argument. The right hon. Gentleman is wrong to accuse me of taking this matter lightly—[Interruption.]—particularly as some of his hon. Friends appear to be taking it lightly.
Sir J. Eden: The House is in a dilemma because of the rather hasty action of the right hon. Member for Bristol, South-East (Mr. Benn) in moving the adjournment of the debate. It is now impossible, without going out of order, to answer the questions which hon. Members put about the Money Resolution. It would be helpful if my hon. Friend would press the right hon. Gentleman to withdraw his Motion so that we may proceed with the discussion of the Money Resolution.
Mr. Boardman: I understand that the Money Resolution has been debated and that a number of points—
Mr. Lawson: On a point of order. It must be clear to you, Mr. Speaker, that the hon. Member for Leicester, South-West (Mr. Tom Boardman) has been asked to kill time until troops can be gathered to vote down this Motion. Would it not be wise to ensure that the hon. Gentleman knows what he is talking about before he is permitted to continue?
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In other words, is it in order for him to go on talking when he knows nothing about the subject under discussion?
Mr. Speaker: If the hon. Gentleman is asking the Chair to apply that test to every speech, it would be a very broad issue.
Mr. Boardman: I had the advantage, if that is the right word, of hearing the remarks of the hon. Member for Motherwell (Mr. Lawson). I have no doubt that many good questions have been posed by hon. Gentlemen opposite, and it is clear that the Minister is anxious to answer them. I hope that the right hon. Member for Bristol, South-East will enable him to do so, and, with the penitence of one who has not had the advantage of hearing all the debate, I ask him to withdraw his Motion.
Sir J. Eden: With the leave of the House, I ask the right hon. Member for Bristol, South-East (Mr. Benn) to consider withdrawing his Motion. I appreciate the spirit of his follow-up speech after he moved it, and I am sure he was trying to be helpful.
In the exchanges which have taken place since the right hon. Gentleman moved his Motion I have taken further advice, and I understand that the answer I gave about the differentiation between what is legal and what is within the bounds of the parliamentary expenditure control procedures was substantially correct.
Mr. Benn: Substantially?
Sir J. Eden: I say that only out of courtesy to the House.
I wish to have an opportunity of elaborating a little further on the Money Resolution on that point. It would be easy to take up the points mentioned by the hon. Member for Motherwell (Mr. Lawson)—the question, for example, of when action is legal. As has been said, it is perfectly legal to pay money out of the Civil Contingencies Fund to the U.C.S., as the previous Government did —they never came before the House specifically for authorisation to do so. However, this Money Resolution is concerned with parliamentary control of expenditure, and it is to that that I particularly wanted the opportunity to reply.

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For that reason, I urge the right hon. Gentleman, again in the same spirit in which he urged me to accept the Motion, to be good enough to withdraw it.
Mr. Benn: By leave of the House, I wish to explain why I am not prepared to withdraw my Motion to adjourn the debate. If I withdraw the Motion and the hon. Gentleman withdraws the Money Resolution, we shall be getting somewhere and we get back to it again. But, lest people outside reading HANSARD and the words "I have had the opportunity of taking advice" misunderstand what that means, let me say that traditionally it means that there has been a great deal of scurrying among colleagues so that a Front Bench spokesman may be assisted from scraps of paper to know whether what he said earlier was right. That is what is meant when a Minister in difficulty "takes advice". There is no harm in being a little more accurate in describing it.
It does not mean that the Secretary of State himself, whose responsibility it is, has felt able to intervene; nor that a Law Officer has been consulted; nor that a Treasury Minister has been consulted. It means that one has gone to advisers, who must remain anonymous and invisible, but who are present, and asked, "Was I right to say that?" and those advisers have said, "Yes, Minister, broadly you were right." But that is not enough when dealing with the financing of an industry which is faced with uncertainty.
The Minister knows full well that we support the Bill: it was our Bill and it has now been somewhat extended and brought in again. We support the provision of money under the authorisation of a Money Resolution. But we are not prepared to pass a Money Resolution after the Under-Secretary has said that it does not preclude him from going above the sum of £700 million and when the Minister knows full well that when the Bill goes to Committee we shall be unable to move Amendments to increase the sum to more than £700 million.
That is the basic problem which still remains unresolved. In the circumstances, I repeat my request that the Money Resolution be withdrawn so that the Secretary of State may bring it back on Monday
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when a short, clear, crisp statement explaining the position would have the Money Resolution through the House without further debate and within five minutes, more or less as long as it would take to read the statement and get a word of thanks from the Opposition.
In those circumstances, the Resolution should be withdrawn and I intend, if we do not get such a withdrawal, to advise my hon. Friends to press the Motion.
Mr. Charles Fletcher-Cooke: The right hon. Member for Bristol, South-East (Mr. Benn) is not rising to the situation. He is an intelligent and important person. He wants the present £400 million limit to be raised to £700 million, he perhaps more than anyone in the House, because he believes more than I do in this sort of State guarantee. He knows perfectly well that, in view of the crowded and clouded view of the future of Parliamentary business, if he pushes the Motion the Money Resolution may well be lost. What is wrong with passing this Money Resolution?
Mr. Millan Mr. Millan rose—
Mr. Fletcher-Cooke: I do not think I shall give way.
Mr. Milian: The hon. Member was not here.
Mr. Fletcher-Cooke: I have to confess the penitence of my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) for coming late into the Chamber.
I realise that in 1967 the Act created a limit of £200 million. That was subsequently raised to £400 million, and it is now wished to raise it to £700 million. Precisely the same parameters and considerations apply to the £700 million as applied to the £200 million and the £400 million, precisely the same considerations whether it be de minimis or, possibly by means of virement, possibly by means of the matters mentioned by my hon. Friend the Member for Bournemouth, West (Sir J. Eden) which would apply to the new figure. [Interruption.] Of course they do. They are exactly the same. They may be right—
It being Ten o'clock, the Motion for the Adjournment of the debate lapsed, without Question put.
Original Question put and agreed to.
Resolved,
That, for the purposes of any Act of the present Session to amend section 7 of the Shipbuilding Industry Act 1967, it is expedient to authorise any increase in the sums payable out of moneys provided by Parliament or into the Consolidated Fund which is attributable to any amendment of the section increasing the limit of £400 million imposed by subsection (5), as amended by section 1 of the Shipbuilding Industry Act 1969, on the Secretary of State's liabilities on guarantees given under section 7, but so that the new limit shall not exceed £700 million less the amount of any sums which have been paid by the Secretary of State to meet a liability falling within the subsection and have not been repaid to him.

BOLTON (INDUSTRIAL OBSOLESCENCE)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Monro.]
10.0 p.m.
Mr. Laurance Reed: I represent the independent and robust town of Bolton in Lancashire—or at least one-half of it since the other half is represented by my friend and colleague the hon. Member for Bolton, West (Mr. Redmond). I should like to say how pleased we are to see him back in circulation following his illness.
Bolton is the third largest town in the North-West Region, second only to Manchester and Liverpool, and it has been described as the "quiet giant" of the North-West. The early fortunes of the town were founded on cotton—first bleaching and later spinning—and so successful were we that we became the world centre of fine cotton spinning. At one time there were 122 mills operating in the town, employing two-thirds of the town's work force.
Because of our commitment to and, therefore, our dependence on cotton, it was inevitable that Bolton should suffer severely when the Lancashire textile industry was forced to contract. By 1957 the total number of mills operating was down to 103, and by 1967 textiles lost their place as the leading source of employment for the first time, ceding that position to engineering trades. Today there are 26 mills still working and the closure of 80 mills during the past 13 years has resulted in the loss of 15,000 jobs. The rundown however is not yet
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complete because, if the present plans for streamlining the industry are fulfilled, a further 5,000 to 6,000 jobs will be lost before 1975—a cut of 50 per cent.—bringing the total number employed in textiles to less than 7,000 as against 37,000 in 1955.
Throughout this period the town has been successful in keeping the level of unemployment below the national average, and I believe that this accomplishment bears testimony to the skill and initiative of the people and their Corporation, for it has been done without Government assistance. Indeed, we can say that it has been done despite Government assistance because, when seeking new investment and new industry, we have had to compete on grossly unequal terms, not only with Merseyside, which enjoys full development area status, not only with four new towns that are being built in the area, but, of course, with the North-East Lancashire Intermediate Area which borders our northern frontier.
The Bolton Corporation Act, 1970, widened the powers available to the council to promote a programme of self-help, but there is one problem we are not able to solve single-handed and for which we are now seeking special assistance—namely, the problem of industrial obsolescence. By that term I do not mean technological backwardness. Bolton has always been innovation minded and our thinking remains orientated towards the future. It was no coincidence that two leading innovators of the 18th century, Crompton and Arkwright, lived and worked there. By "obsolescence" I mean both dereliction and decaying industrial premises. It is the last which gives us most cause for concern.
Immediately to the south and west of Bolton there is the largest stretch of derelict land in the county. Within the borough's boundary, however, there are comparatively few waste acres, although where they exist in Darcy Lever, adjoining Little Lever, they are particularly depressing. What we have is a number of derelict buildings and mills. When truly derelict, they attract the 75 per cent. grant established by the Local Employment Act, 1970. But we are pressing the Government to widen the definition of "industrial dereliction" to include abandoned and disused properties which

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are unlikely ever again to be accommodated with worthwhile activity because of their great age. These buildings are an eyesore in many neighbourhoods. They attract vermin and vandalism. They are dangerous to children. They take up valuable land space and are very costly to remove.
In common with representations made by the North-West Industrial Development Association, we are also seeking to persuade the Government to increase the 75 per cent. grant to the 85 per cent. enjoyed in development areas. It is all very well for the Department of the Environment to say that we can submit as many schemes as we wish and it will approve the lot, but we have the problem of finding the money because the grant relates only to 75 per cent. of the loss incurred after taking account of the after-use value. It does not mean 75 per cent. of the cash outlay needed to finance a clearance operation, and the loan charges on that are immediately chargeable to the rates.
The Hunt Committee described dereliction as
"one of the outstandng examples of the way in which unfavourable environment can depress economic opportunity … it deters the modern industry needed for the revitalisation of those areas and helps to stimulate outward migration."
But important as dereliction is, I must emphasise that it is not our major headache. Bolton has 600 acres of parks, and open spaces and there is some magnificent moorland immediately to the north. The new motorway network brings us to within an hour of the Lake District, the Peak District and the Yorkshire Dales. This enhanced mobility has dramatically improved the quality of life of people living in the area.
Far more dangerous to our future progress is the state of the working environment. Of a total of 39 million sq. ft. of industrial floor space in Bolton, no less than 80 per cent. was built before the First World War and as much as 40 per cent. before 1870. Altogether, 15,000 people, or one in five of the working population, are obliged to work in buildings more than 100 years old.
In 49 mills taken over for purposes other than cotton, 4¾ million sq. ft. have been reoccupied. However, they are used
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for purposes very different from that for which they were originally constructed, and working conditions in them are less safe, less healthy and less comfortable than modern techniques and design would allow. Certainly they compare very unfavourably with modern, purpose-built factories, and it is not surprising that the restrictive physical layout leads to low productivity, or certainly lower productivity than in up-to-date premises. Thus, bad buildings mean not only that work-people have poor conditions but that the level of earnings remains relatively low in relation to effort expended.
Whilst statistically the reoccupation of these old mills has appeared to absorb several thousand of the jobs lost through the contraction of the textile industry, the figures conceal the fact of outward migration of people seeking work outside. Bolton has been losing population at the rate of 1,000 a year over the last 10 or 11 years. Twenty-three thousand people go out of the town and district every day to find work, 14,000 come into the district for work, leaving a net outward migration of nearly 8 per cent. of the working population.
During the emergency situation of the last 13 years, Bolton has had to run very hard to stay where it is, and we are noticeably losing ground. In the past 18 months, further mill closures have been accompanied by a wide variety of closures of other factories. In 1969, 1,000 jobs were lost in Bolton and district as a result of major closures. In 1970, the figure was 1,500. What is particularly worrying about last year's redundancies is the wide variety of jobs involved—400 in printing, 200 in paper, 370 in textiles, 300 in brewing, 120 in engineering and 130 in office and laboratory work.
Of the last seven major factory closures, four relate to former cotton mills more than 90 years old, involving as much as 650,000 sq. ft. of floor space. For the entrepreneur, the great asset of these old mills is that they provide ready-made factories at relatively low cost, but once this initial capital advantage of occupying cheap premises disappears, he is left with higher unit costs of producing in a multi-storey building.
He also has the problem of recruiting labour to work in very poor conditions, and sooner or later it pays him to move from those premises into a purpose-built

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plant. Because incentives elsewhere are better than in our own areas, the chances are that that will not be in Bolton. We are now seeing old mills falling empty for the second and third time, and with each change in occupation the activity attracted to them becomes of lower and lower grade, involving fewer skills and fewer jobs.
Because only a very small amount of modern industry with growth potential goes into these old mills, the town's whole manufacturing capability is being seriously undermined. It is in this context that I have been concerned to learn of Ministry officials stalking Bolton, trying to persuade long-established businesses to move out. It is one thing to ask us to compote on unequal terms for new industry and investment: it is quite another for us to lose existing firms, many of which have been there for generations.
I hope to have an undertaking tonight that this sort of "headhunting" will cease forthwith. I also want an assurance that industrial development certificates will not be withheld for new developments which authorities in Bolton and district can attract for themselves and for the development of existing firms which wish to expand in their present locality.
I have dealt primarily with this problem as it affects Bolton, but I make it clear that the views which I have expressed are held in common by other towns represented on the Bolton and District Industrial Development Committee. I know that the hon. Member for Farnworth (Mr. Roper) is anxious to speak before the Minister replies.
None of us on that committee is unaware of the needs of other areas in the North-West, but we do not see the value of a regional policy which discriminates against us so strongly that we have no chance of solving our own difficulties. We believe that the scale and implications of industrial obsolescence cannot have been fully understood, or older towns in the region, other than Merseyside and the Furness area and North-East Lancashire, would have received some special assistance before now.
I am asking the Minister to treat as a matter of urgency an in-depth study of the problems and implications of industrial obsolescence as I have defined it.
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I am asking that Bolton and district should be selected as the area for the study and the test bed for any pilot projects. The study should include a comparative study of productivity and earnings in old multi-storey buildings and purpose-built premises, and of working conditions in both.
In particular, it is important that an attempt should be made to discover whether there is any correlation between industrial accidents and disease and the age of industrial premises. This study would reveal the hard facts and the information needed before more specific policy recommendations can be made.
10.15 p.m.
Mr. John Roper: I am grateful to the hon. Member for Bolton, East (Mr. Reed) for raising this matter, and particularly for so raising it that it referred not only to the county borough of Bolton but also to the districts which I and the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) represent. This is an important problem to the northern part of my division just as much as it is to the area about which the hon. Member has spoken. I agree very much with what he has said and certainly with his request that there should be far more hard research and then action to solve the serious problems which exist.
We in Farnworth are proud to say that it was a Farnworth man, Sir Joseph Hunt, whose committee produced the excellent report which diagnosed the cumulatively depressing picture of industrial obsolescence and the depressingly slow rate of industrial building in the North-West. We have the lowest rate of growth in industrial building of any region in the country. We certainly have the lowest rate of any sub-region in the Bolton area in comparison with the rest of the country.
The hon. Member for Bolton, East referred to the problem of the mills. In the northern part of my division we have some of the largest mills in Lancashire. Some are historic buildings and appear in Pevsner's Buildings of Lancashire. Certainly some will be preserved as archaeological relics unless rapid action is taken. These mills, the top floors of which are empty, give a depressing and gloomy appearance in the towns which we represent. They put up factory costs

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of production. They often stay on the market for 10 years lying empty; they are derelict and cast gloom around them.
The Financial Times in a supplement today on Trafford Park went outside Trafford Park and looked at the rest of the region and said:
"Too many factories are left overs from an earlier industrial age and are frankly worn out."
The article goes on to point out
"New roads are simply bringing closer together a great many tired industrial installations which have small chance of being competitive in modern conditions."
The North-West Industrial Development Association and the Bolton Industrial Development Association have both pressed for 100 per cent. grants to deal with these relics of the nineteenth century and for clearing useless industrial buildings. There are gaps in our legislation in this respect. Furthermore, in an area such as Bolton we need to have the same arrangement as applies in the intermediate areas in regard to building grants. Finally, we need to have industrial development certificates available so that we can develop properly in our own region.
In my division house building is going well, but we are not getting the rebuilding of industrial premises to go with it. Existing grant structure is not satisfactory to enable us to reorganise our land use on a sensible pattern and to get away from the land use pattern of the nineteenth century with a mill at the end of every street. We want a new and imaginative approach to this problem if we are to get any progress in this matter.
The rate of unemployment in the past has been relatively low but only yesterday in my division I heard of 400 redundancies in one of the large engineering works, a subsidiary of Hawker Siddeley. We are now in a situation of great danger which is liable to lead to rapid industrial decay.
The final paragraph of the Financial Times supplement says:
"The Government are in the middle of recasting their policy for regional development. If the new policy is to be an advance on the methods of the 1960s, they will have to make provision for the special problems arising from industrial old age."
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I hope that we shall hear that the Government are aware of these problems and will take urgent action to deal with them.
10.20 p.m.
Mr. Charles Fletcher-Cooke: The hon. Member for Farnworth (Mr. Roper), who is a constituent of mine, and my hon. Friend the Member for Bolton, East (Mr. Laurance Reed), who is a neighbour of mine, have put the case for Bolton and district so well that I need add very little. Both Front Benches have neglected the problems of Bolton and the people in that part of Lancashire who have had none of the advantage of those in other parts of Lancashire. I know that my hon. Friend the Under-Secretary of State is sympathetic to our problems, and I hope that he will consider the pleas which have been made much more ably than I could have made them. I will not take up the limited time of the House further beyond saying that I endorse all that both hon. Members have said.
10.21 p.m.
The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): I must first congratulate my hon. Friend the member for Bolton, East (Mr. Laurance Reed) on his choice of subject in this Adjournment debate and the skill and conviction with which he has spoken on a subject which I know both he and his constituents have very close at heart. I am also grateful for the interventions of the hon. Member for Farnworth (Mr. Roper), and also that of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke). I congratulate them both on the crisp way in which they have managed to express their points. Industrial obsolescence is an important subject and one with which the Government are much concerned.
I should like to say a word or two in general about the problem of dereliction and obsolescence, and in particular about these problems as they appear in Lancashire. There is of course no room for complacency and none of us would deny that, from the point of view of amenity and of industrial efficiency, it would be very desirable that all our factories should be new and should have the most modern layout. There is no doubt that in Bolton and elsewhere in Lancashire the harsh features of industrial architecture of the last century—in some cases

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of the century before that—cast a gaunt shadow over the lives of those who live and work in the area today. Nor, too, can one deny that old, multi-storey buildings are in use today by firms whose activities demand carefully planned, single-planned premises where there can be a proper flow of work.
At the same time, it must be recognised that the problems of Lancashire have been immeasurably assisted by the existence of sound, but serviceable industrial premises, available for acquisition at very reasonable cost and into which new industry has moved. Unlovely and indeed hideous as many of these buildings are, I know that many areas have envied Lancashire of their availability. Because of them the industrial structure of the area has been changed and diversified in recent years with a great measure of success.
The point that I want to make is that we must not assume that all old industrial buildings are an unmitigated evil in an area or conclude that all old industrial buildings are derelict buildings. Indeed I do not think that hon. Members would disagree that some old industrial premises in Lancashire were built to exceptionally high standards and have been adapted with great ingenuity. Nor do I think that hon. Members would dispute that obsolescence and dereliction are not a question of historical age. I have seen plenty of factories which are not so very old that are certainly candidates for early demolition on environmental and efficiency grounds.
Having said that—and I say it only to put the question a little into perspective—I must emphasise how very much importance this Government attaches to the clearance of dereliction: and obsolescent industrial premises when left empty are an aspect of dereliction. That is of course a matter for my right hon. Friend the Secretary of State for the Environment. He has pledged in this House before that the first decade of his new Department will be the decade for the substantial removal of dereliction. That is the measure of the importance which the Government attach to the matter.
The hon. Member for Bolton, East has pointed out the grants which are available. It is because so much importance
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is attached to clearing dereliction that, above the 50 per cent. grant available to local authorities for restoration schemes, grants of 75 per cent. are available in the intermediate and derelict land clearance areas and 85 per cent. in development areas—provided, in the case of the 75 per cent. and 85 per cent. grants, that my Department certifies that the scheme is
"expedient with a view to contributing to the development of industry"
in the area. We interpret that phrase very liberally. This means that a large proportion of the derelict land clearance projects in the Bolton area will attract grant at 75 per cent.
When all this is said and done, I remain only too well aware that there are still far too many elderly industrial premises which, while not derelict, are obsolescent and do not provide satisfactory places in which to work.
The onus here must rest on the firms themselves. Modernisation of premises would, naturally, enhance the value of the buildings, and the return on investment of this sort would doubtless be considerable.
Mr. Reed: The point is that they are being given incentives to go elsewhere than Bolton and district.
Mr. Grant: Inherent in any regional policy must be that attractions in some areas are greater than in others. If there is time I shall come back to the question of status.
The point which I was trying to make was that there is strength, in many cases, in the argument that the Government should not have to give a grant to encourage industry to do what it should in any case do in its own interest. My hon. Friend will appreciate that the provision of grant in such cases would involve great difficulty. In equity it would only be right to ensure that the amount of the grant took into account the increase in the value of the premises concerned. This might involve the necessity to deduct betterment value, which would involve a good deal of administrative complexity. My hon. Friend deplored the effect of obsolete premises on productivity. I deplore it, too. But I do not believe that this is something the

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Government can solve. Those concerned in the firms—both management and labour—have an interest in ensuring that they maximise their level of productivity. I believe it would be naïve—wholly mistaken—to think that productivity can be increased by subsidy paid in relation to one feature of a firm's activities. The firms which will increase productivity are those with enterprise, and enterprise was never called forth by subsidy. I must say here that the Bolton County Borough has a fine record of self-help and initiative in trying to solve its own problems, and I should not like this occasion to pass without this being recognised.
I should like to say something about the accusation made by my hon. Friend about various officials seeking in droves to take industry out of the area. This is not true and not our desire. If my hon. Friend does not agree, I should be pleased to receive any evidence that he may have.
I.D.C.s will be freely granted in this area. Indeed, as evidence of that I should point out that no I.D.C.s have been refused for nine years in Bolton. I emphasise that I.D.C.s are freely available in this area.
My hon. Friend expressed concern about the level of unemployment in the Bolton area. I appreciate and share his concern. But my hon. Friend will understand that at 3·5 per cent., which is abut the national average, it does not compare with other areas—for example, 60,000 unemployed in West Central Scotland and 22,000 on Tyneside. We must look at the country as a whole.
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My hon. Friend suggested that the Bolton area might he used for a pilot study scheme. This is not for me to pronounce upon. It is for my right hon. Friend the Secretary of State for the Environment and my hon. Friend the Minister for Local Government and Development. I shall certainly discuss my hon. Friend's suggestion with them. I should point out that consultants are already carrying out pilot studies in Nelson and Rawtenstall, and the results are expected in the summer.
I am sorry that time is against me. However, I agree with some of the points raised by my hon. Friend about the need for hard statistical facts to be available Here he strikes a sympathetic chord, and I shall certainly study carefully what he has said.
I again emphasise that in dealing with the higher rates of grant my Department liberally interprets the phrase in the Act
"expedient with a view to contributing to the development of industry in the area."
I hope that in the short time available this evening I have been able to show that the Government are not at all complacent about the real and serious problem which hon. Members have raised. They are, however, continuing problems and there is no instant solution. It is right, however, as my hon. Friend has shown, that we should be constantly looking at practical and realistic ways of tackling the legacy of industrial obsolescence. This the Government are doing, and will continue to do.
Question put and agreed to.
Adjourned accordingly at half-past Ten o'clock.