Commons Sitting of 22 February 1971

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

    United Nations Charter
    Mr. Peter Archerasked the Secretary of State for Foreign and Commonwealth Affairs whether he has received from the Secretary General of the United Nations an invitation to submit views on review of the Charter, in accordance with General Assembly Resolution 2697 of the 25th Session; and what reply he has sent.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): I have not yet received such an invitation.
    Mr. Archer: When the right hon. Gentleman receives such an invitation,
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    will he, in the course of his deliberations, study the speech of Mr. Warren Allmand in the Canadian Assembly last February? Would he consult non-governmental organisations which have an interest in making the voice of the people heard, and would he press the Leader of the House to ensure that we have an opportunity of debating the subject in good time?
    Sir Alec Douglas-Home: I have not received the communication. I will take into account the speech which the hon. Gentleman has mentioned. This might well be a subject for debate at some future time.
    Mr. E. L. Mallalieu: Does not the right hon. Gentleman agree that if he received such an invitation it would be a splendid opportunity to show that Her Majesty's Government really mean business about improving the machinery of the United Nations, especially, perhaps, for peace-keeping, widening the responsibility of the United Nations, and the progressive handing-over by us, and others, of sovereignty to a really effective peace-keeping organisation?
    Sir Alec Douglas-Home: I made some proposals along these lines to the United Nations last September. I think there is often less wrong with the Charter and more wrong with the member nations.
    Mr. Longden: Is it not the case that the Soviet Union will refuse to consider a review of the Charter unless and until

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    the People's Republic of China is a member?
    Sir Alec Douglas-Home: Yes.

    International Human Rights
    Mr. Peter Archerasked the Secretary of State for Foreign and Commonwealth Affairs whether he will appoint a departmental committee of officials with responsibility for ensuring that domestic legislation proposed by the Government conforms with international human rights' obligations.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. Joseph Godber): Our international obligations are, of course, always taken into account when proposals for legislation are being considered. Existing arrangements provide for inter-departmental consultation as and when required, and I see no need to alter them.
    Mr. Archer: Is the right hon. Gentleman aware that Questions on this subject addressed to the Prime Minister are referred to the Secretary of State for Foreign and Commonwealth Affairs? Is he happy with the responsibility for domestic legislation? Would he not be assisted by some such review body as proposed in the Private Member's Bill of the hon. and learned Member for Dulwich (Mr. S. C. Silkin)?
    Mr. Godber: I should have thought that the present arrangements were sufficiently flexible to enable the objects which the hon. Member has in mind to be carried out. If any difficulty arises, I shall bear in mind the suggestion, but at present I see no difficulties.
    Mr. Goronwy Roberts: Will the right hon. Gentleman assure the House that existing arrangements will continue to include Ministerial arrangements to check domestic legislation against international obligation?
    Mr. Godber: The normal practice in drafting legislation is for interdepartmental consultation to take place at official level, but if any particular problem arose, it would certainly be referred to Ministers.

    European Economic Community
    Mr. Leonardasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement
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    on the progress of the negotiations for the United Kingdom to join the European Economic Community.
    Mr. Barnesasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the progress of the negotiations for Great Britain to join the European Economic Community.
    The Chancellor of the Duchy of Lancaster (Mr. Geoffrey Rippon): I have nothing to add at present to what I told the House on 4th February and in the debate on the 20th and 21st January.-[Vol. 810, c. 1936–7 Vol. 809, c. 1709–1219 and 1304–1412.]
    Mr. Leonard: I thank the Minister for that answer, as far as it goes. Would he now give urgent consideration to propagating more actively in the country the economic advantages of membership, and would he try to spell it out in much more detail than in the White Paper published by the previous Government?
    Mr. Rippon: I assure the hon. Gentleman that we will do everything in our power to see that the public understand the great issues involved.
    Mr. Barnes: Is the Minister aware that, despite the speech of one of my right hon. Friends last week, the only way in which the Government can get Britain into the Community is by relying upon some support from this side of the House, where there is, perhaps, more support than some may have supposed? [AN HON. MEMBER: "The hon. Gentleman is joking."] We shall see. The Minister should be very careful that he does not alienate their support. Does not he think that the Government may be forced to make up their mind about just how important getting into Europe is compared with the highly controversial domestic policies which they are following?
    Mr. Rippon: This is a matter which commands support on both sides of the House. There are hon. Members opposite who still adhere to the views expressed by the right hon. Gentleman the Leader of the Opposition in his statement of 2nd May, 1967. When in opposition we gave our support to that statement, and I am sure that in changed circumstances the present Opposition will also continue to support it.
    Mr. Lane: In view of the. increasing public interest in and appreciation of the probable advantages of joining the Common Market, will my right hon. and learned Friend seriously consider making a Ministerial broadcast in the near future on the subject of his negotiations?
    Mr. Rippon: Quite a number of broadcasts are made from time to time both by me and by others. I hope that they will continue.
    Mr. Jay: Can the right hon. and learned Gentleman tell the House about any major concession made so far by the the E.E.C. to the British point of view in these negotiations?
    Mr. Rippon: Quite a number have been made on a large number of matters, as the right hon. Gentleman will see if he studies my statements. For example, we have reached very satisfactory arrangements on transitional periods, we have reached a very satisfactory arrangement for Hong Kong, and so it goes on.
    Mr. Skinnerasked the Secretary of State for Foreign and Commonwealth Affairs what consultations have now taken place in Brussels regarding the introduction of a value-added tax upon entry into the Common Market.
    Mr. Martenasked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with Common Market Ministers or the Commission about value-added tax in the event of Great Britain joining the Common Market.
    Mr. Rippon: We have proposed to the Community a five-year transitional period for fiscal harmonisation. This would apply to the introduction of a value-added tax which we shall have to adopt if we join the Community.
    Mr. Skinner: Is the right hon. and learned Gentleman aware that many of us are finding it extremely difficult to explain the Common Market case without knowing the level of value-added tax likely to be imposed? In the absence of any specific percentage, will it be all right to adopt the Wilberforce formula and say that it is 10·9 per cent. as calculated by the Government and 15 per cent. as calculated by the workers?
    Mr. Rippon: It would be very unwise to do that. On the value-added tax, we shall have up to 1978 to make arrangements. There is no harmonisation at present in the Community about the value-added tax. A great deal depends upon the rates to be levied.
    Mr. Marten: Do not my right hon. and learned Friend, the Government, the Opposition and the Liberal Party agree that to surrender the freedom to arrange our own taxation is to make a significant surrender of our internal sovereignty?
    Mr. Rippon: All these are matters which will have to be considered in detail after we join. As I have said before, a great deal depends on the rates and the matters covered. The degree of harmonisation to be expected will be a matter for discussion between all the members of the Community after our entry.
    Mr. Heffer: Does the right hon. and learned Gentleman recognise that many right hon. and hon. Members on this side of the House who supported British entry in the past are now extremely disturbed by the sort of statement that he has just made? In the circumstances, will he understand clearly that he can no longer rely upon those right hon. and hon. Members on this side of the House, except for a few, who supported entry in the past?
    Mr. Rippon: I understand the hon. Gentleman's position perfectly well.
    Mr. Skinnerasked the Secretary of State for Foreign and Commonwealth Affairs how many civil servants are at present engaged in promoting Great Britain's entry into the Common Market.
    Mr. Rippon: No precise figure can be given since the majority of civil servants concerned with Britain's entry into the European Communities are engaged in the formulation and execution of Her Majesty's Government's policies towards Europe as a whole.
    Mr. Skinner: Is the right hon. and learned Gentleman aware that one of the more important emissaries engaged in pacifying the French was reported in the Guardian on Saturday as saying that we would be paying very much higher prices for our food from the first day

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    following British entry? Does the right hon. and learned Gentleman agree with that statement by Mr. Soames?
    Mr. Rippon: That does not arise out of this Question in any way.
    Mr. Maclennan: Does the right hon. and learned Gentleman agree that he might help in the promotion of the case if he explained in detail what he means by the Government's "reservation of their position" with regard to inshore fisheries?
    Mr. Rippon: That does not arise from the number of civil servants engaged in these negotiations. I have made it clear that the Government have reserved their position on the fisheries regulations.
    Mr. Martenasked the Secretary of State for Foreign and Commonwealth Affairs when he now expects to be able to quantify the economic advantages for Great Britain through entry into the Common Market.
    Mr. Rippon: Any attempt to quantify realistically the economic advantages of entry must depend upon the outcome of the negotiations. We hold to the view that our entry into the Community on reasonable terms would be in the long-term economic interests of this country.
    Mr. Marten: Does not my right hon. and learned Friend agree that if there are any economic advantages at the end of the negotiations they must be set out very clearly as a balance sheet, and that to fall back on the statement that in the end it must be an act of faith will only disclose the transparency of the case?
    Mr. Rippon: As far as one is able to make statistical assessments of the position in, say, 10 years' time, we will try to do so. There is always an element of judgment which must be exercised. As for the long-term advantages, I have often quoted the argument put forward by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) that if we get only a ½ per cent. increase in our gross national product over five years as a result of joining, that will be an advantage of £1,100 million a year.
    With regard to the negotiations turning on the maintenance of the balance of mutual advantages between ourselves, the
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    other applicants, and the Community in the early years, we are arguing that the burden placed upon us should not be so high as to deprive us of economic advantages in the longer run.
    Mr. Raphael Tuck: When discussing the Common Market negotiations, the right hon. and learned Gentleman refers constantly to the transitional period. Is he yet in a position to give any estimate of what the British contribution is likely to be after the transitional period is over?
    Mr. Rippon: A great many figures have been given both in the White Paper put forward by the previous Government and by me. I gave an indication in my statement on 16th December, and we also discussed the matter in the debate on 20th and 21st January. A great deal will depend on the size and shape of the budget at that time.
    Mr. Blaker: Will my right hon. and learned Friend clarify what he said in the recent debate and repeated today about the consequences of an extra ½ per cent. on the growth rate? Does he mean that after five years from the date of entry the benefit will be running at the rate of an extra £1,100 million per annum, and will he go a little further and say that as the years go by the rate will accelerate after the five years have elapsed?
    Mr. Rippon: That may very well be the case. That is what we have been discussing in the general debates which have taken place. I believe that the long-term advantages are very great, as did the previous Government when they made the application.
    Mr. Marquand: Is the right hon. and learned Gentleman aware that, provided that the terms are right, it should be possible to quantify the long-term benefits more precisely than they have been so far? The long-term benefits arising from access to the larger market are likely to be substantial, as are the long-term benefits arising from an increase in the rate of investment which are likely to result from them. Cannot the right hon. and learned Gentleman at least make sure that some work is done in Whitehall to quantify those benefits and produce some analysis of the results, so that the British people have a better idea of the

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    advantages than they have at the moment?
    Mr. Rippon: A great deal of work was done on this by the previous Government, and it has been continued by the present Government. The Confederation of British Industry has indicated the way in which it thinks industry will benefit in the longer term. One has to be careful about giving precise statistical estimates of what is likely to happen in, say, 10 years' time.
    Mr. Hayhoeasked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the progress being made in the negotiations over British membership of the European Economic Community; and if he will make a statement.
    Mr. Rippon: Yes. But, of course, much remains to be done if we are to succeed in breaking the back of the negotiations by the summer, and I have made this clear to the Community.
    Mr. Hayhoe: Is my right hon. and learned Friend aware that the overwhelming majority of new hon. Members on this side of the House are entirely behind him in these negotiations? Is he also aware that I believe that the majority of hon. Members of the House taken as a whole do not share the somewhat sour sentiments to which we have to listen from the perpetual pessimists-the anti. Marketeers?
    Mr. Rippon: I appreciate what my hon. Friend has said.
    Mr. Loughlin: Will the right hon. and learned Gentleman take the statement which has just been made and set it to music?
    Mr. Moate: Is my right hon. and learned Friend aware that my hon. Friend the Member for Heston and Isleworth (Mr. Hayhoe) was speaking entirely for himself? Many hon. Members are very much opposed to the present negotiations, and an even greater number are very much sitting on the fence and anxious about the way that the negotiations are going at present.
    Mr. J. T. Price: In face of all the unanswerable questions with which the right hon. and learned Gentleman has been struggling today and on many previous
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    occasions, may I ask how long he will cherish these illusions? Far from breaking the back of these negotiations before the end of the summer, if he were-in the unlikely event-to succeed in the task on which he is now engaged, he would break the backs and hearts of the British people.
    Mr. Rippon: I do not for a moment accept what the hon. Gentleman has said. He speaks for himself in these matters. I think that the House and the country would be well advised on many of these matters to await the outcome of some of the detailed discussions which are now going on.
    Dr. Gilbertasked the Secretary of State for Foreign and Commonwealth Affairs when he expects the official translation into English of the European Economic Community draft directive on harmonisation of company law to be ready; and if he will make a statement.
    Mr. Rippon: The first European Economic Community directive on the harmonisation of company law issued on 19th March, 1968, has been translated unofficially and copies have been placed in the Library of the House. Two further European Economic Community directives on company law are in a draft stage and the draft Statute of the European Company is under consideration by the Council of Ministers. At this stage unofficial translation of the latter only is envisaged.
    Dr. GilbertIs the right hon. and learned Gentleman aware that some hon. Members have received representations from responsible bodies which are concerned because they cannot get texts of these draft directives? For a lot of them, the question of what is likely to happen—we understand that it is a draft directive—in matters of this kind is far more important in determining their attitude to going into the E.E.C. than questions about transitional arrangements?
    Mr. Rippon: I shall certainly bear that point in mind. I can see the force of that observation at this stage. Hitherto, we have been accustomed only to providing the unofficial translations after directives have been made.
    Dr. Gilbertasked the Secretary of State for Foreign and Commonwealth

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    Affairs whether he will publish the full list of questions presented to the United Kingdom by the European Economic Community with respect to the United Kingdom's economic prospects and the future rôle of sterling, together with the answers he is giving.
    Mr. Rippon: No. Sir. These matters are confidential.
    Dr. Gilbert: Is the right hon. and learned Gentleman aware that an extraordinary list of them, confidential or not. has appeared in the serious Press in this country, and that most of them appear to be highly impertinent in nature? Will the right hon. and learned Gentleman assure the House, if he will not give us the list of questions, that he will either give the questioners a very dusty answer or start asking them in turn what, for example, they think will be the effect on the French franc of a renewal of the events of May, 1968, or on the Italian lira if there is a military coup d'etat in that country?
    Mr. Rippon: Many questions will arise for discussion in one way or another.
    Sir R. Russellasked the Secretary of State for Foreign and Commonwealth Affairs why he has decided in the negotiations with the European Economic Community not to seek safeguards for the primary produce of Commonwealth countries other than New Zealand and the sugar-producing and developing countries.
    Mr. Rippon: The arrangements for Commonwealth countries have been a central and important issue in the negotiations with the Community. We have reached provisional agreement on arrangements to safeguard the interests of Commonwealth countries in Africa, the Asian Commonwealth and the dependent territories.
    Sir R. Russell: Can my right hon. and learned Friend say why he has apparently asked for no concessions whatever for the primary produce of Australia—or, for that matter, Canada or South Africa—a question that is vital to those three countries? Will he reconsider this matter?
    Mr. Rippon: We very much appreciate the concern expressed about developed
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    Commonwealth countries and their position. I have been to Australia, and hope soon to go to Canada—and I hope to be able to convince the Governments there that their position will be safeguarded by the transitional arrangements, which will last through to 1978.
    Mr. Jay: Will the right hon. and learned Gentleman confirm that he has not even asked for any lasting safeguards for the countries mentioned by the hon. Member for Wembley, South (Sir R. Russell)?
    Mr. Rippon: The developed countries of the Commonwealth are involved in many trading arrangements. I do not think that between now and 1978 any problems will arise which, within the context of these negotiations, cannot he dealt with by transitional arrangements.
    Mr. Scott-Hopkins: Does not my right hon. and learned Friend agree that one of the best solutions of this problem might be associated status for those Commonwealth countries who wish to have it?
    Mr. Rippon: There would be great difficulty in trying to seek associated status for developed independent Commonwealth countries. If one of them wished to seek it, it could do so directly, and the British Government would give it every help. I do not think that the question has arisen in practice.
    Mr. Turtonasked the Secretary of State for Foreign and Commonwealth Affairs whether he has agreed the proportion of voting rights the United Kingdom would be granted in the event of entry into the European Economic Community, and whether it would operate concurrently with entry.
    Mr. Rippon: The negotiations with the European Economic Community are directed towards securing full membership, including full voting rights to operate concurrently with entry, on terms acceptable to this country.
    Mr. Turton: Is it not important that the Minister should negotiate to secure that the suggestion of the Prime Minister 10 days ago, that fresh institutions should be installed in place of the present ones, should be obtained by qualified majority, rather than by unanimous voting, as under the Treaty of Rome?
    Mr. Rippon: Unanimous voting, of course, applies only where it is expressly provided for in the Treaty of Rome or has been otherwise expressly agreed. But, whatever happens, and whatever institutions there are, we would expect to have our full voting rights.
    Mr. Shore: Can the right hon. and learned Gentleman make clear two points—first, whether or not the Six have accepted the fact that we would exercise full voting power from the day on which we signed the Rome Treaty, if we were to sign it; and, second, whether, in his view, the voting machinery of the Rome Treaty was superseded by the agreement, or disagreement, between the French and the rest of the Six in 1965? Or does he consider the voting provisions of the Rome Treaty to be still in force?
    Mr. Rippon: Article 148 of the Treaty of Rome, which is the basic article governing voting, is, clearly, still in force. As for the Luxembourg Agreement, or disagreement, this has been subject to a number of interpretations. In practice. of course, what has happened is that where any country considers that its vital national interests are affected it has, in effect, to reserve the right to disagree.
    Mr. Shore: On my first question, did the Six agree to the British demand that there should be full voting rights from the moment of our entry, if we were to enter?
    Mr. Rippon: I beg the right hon. Gentleman's pardon. There has been nothing but provisional agreement so far, so I cannot say that there has been a specific agreement on this point. Certainly, it has not been raised in negotiations, and I take it for granted.
    Mr. Turtonasked the Secretary of State for Foreign and Commonwealth Affairs what special arrangements he has secured in the current negotiations with the European Econimic Community for banana imports from Jamaica and the Windward Islands.
    Mr. Rippon: The nature of the arrangements for entry into the Communities of bananas from Caribbean sources will depend upon the availability of the alternatives in the Community's 1963 Declaration of Intent and which of
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    those alternatives the countries concerned opt for.
    Mr. Turton: As all the other countries of the Community give strict licensing or export equota systems to their banana producers, would it not be highly discreditable if Britain gave less favourable arrangements to Jamacia and the Windward Islands?
    Mr. Rippon: I see the force of my right hon. Friend's question. I hope to be making a statement after Question Time about my visit to the Caribbean, and will be dealing with this. The answer on bananas turns really upon the offer which the Community is prepared to make on association or alternative arrangements. Thereafter, we would expect the banana producers in our associated States and elsewhere to be given treatment no less favourable than that which the members of the Community now afford to their traditional producers.
    Sir D. Walker-Smithasked the Secretary of State for Foreign and Commonwealth Affairs whether he will cause to be published an addendum to the White Paper of February, 1970, on the economic consequences of entry into the European Economic Community, showing the cost to the United Kingdom of the payments under the Financial Regulations in the post-transitional phase, assuming no amendment of the regulations or of the common agricultural policy.
    Mr. Rippon: No, Sir. It is impossible accurately to assess our contribution 10 years from now in view of the uncertainties about the levels of Community and world prices, the pattern of United Kingdom imports, the scale of our domestic production, and the size of the Community budget.
    Sir D. Walker-Smith: is the House to understand, then, from that reply that we would have a wholly unlimited liability in the event of access? In that case, would it not be as well to spell that out in some clear form by way of an addendum to the White Paper, as suggested here?
    Mr. Rippon: It must also be borne in mind that we shall have a wholly

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    unlimited benefit as well. It would be premature at this stage to try to produce another set of detailed statistics. Clearly, there will come a point, if the negotiations reach a sufficiently successful conclusion for the terms to be presented to Parliament, for additional information to be provided so that we can give the House and the country the best guidance we can.
    Mr. Eadie: Is the right hon. and learned Gentleman aware that the vaguer he is in answering, the more he fans the flames of opposition to Britain's entry of the Common Market?
    Mr. Rippon: I appreciate the hon. Gentleman's difficulty in having, to some extent, to make a judgment on these matters, but it can only be done on the best information available and the best assessment which one can make of what may happen in 10 years' time. I am sure that it would not be helpful if I made up a set of figures just to please him.
    Sir D. Walker-Smithasked the Secretary of State for Foreign and Commonwealth Affairs whether he will define the scope of the negotiations relating to the entry to the European Economic Community, and ensure that the future scope is wide enough to include the possibility of amendment of the common agricultural policy and of the financial regulations.
    Mr. Rippon: Her Majesty's Government accept the common agricultural policy of the Community. We have also made it clear in the negotiations on the range of the United Kingdom contribution to the Community budget that we accept the financial system of the Community. Amendment of the common agricultural policy and of the financial regulations remain outside the scope of the present negotiations.
    Sir D. Walker-Smith: But does it not follow from that answer that the scope of the negotiations is far too narrow to achieve a result which, in the event, can possibly comply with the test prescribed by the Prime Minister in Paris in May last year, of securing the full-hearted approval of the British people?
    Mr. Rippon: No, Sir, I do not accept that. Nor did this House accept it when
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    the matter was debated when the Leader of the Opposition made his statement on 2nd May, 1967.
    Mr. Molloy: In addition to the points made by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), which I believe are very important, is the Chancellor of the Duchy aware that the answers which he has given this afternoon on all these Common Market Questions are extraordinarily ambivalent and that those which are not clearly say that no decision will be taken until we are in the Common Market, and that he is advocating to the British people that they should buy a pig in a poke?
    Mr. Rippon: If the hon. Gentleman views these matters objectively, and studies the statements made from 2nd May, 1967, onwards, including the Labour Foreign Secretary's statement in Brussels, our own statements, my statements in the House and our debate on 20th and 21st January, he will realise that these matters are being fully ventilated and that the House and the country are being fully informed of the progress of the negotiations.
    Mr. Biffen: Arising out of the question of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), is it the Chancellor's view that if the common agricultural policy is adopted the share of British food consumption supplied by the domestic farmer will increase? If that is his view, can be give a few facts and figures to help substantiate this judgment?
    Mr. Rippon: What one expects if our negotiations are successful is that the standard of living of Western Europe, including our own, will rise considerably and that we shall all benefit, including our domestic producers.
    Mr. Deakinsasked the Secretary of State for Foreign and Commonwealth Affairs when he proposes to discuss with the European Economic Council of Ministers the issue of free movement of labour, with particular reference to its effect on citizens of the United Kingdom and the Commonwealth.
    Mr. Rippon: We accept the Community policy on free movement of labour, but expect to clarify with the

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    Community before too long the type of problem suggested by the Question.
    Mr. Deakins: Is it not a fact that we have no real choice in this matter of acceptance of free movement of labour? Is the right hon. and learned Gentleman not aware that it will mean that Commonwealth citizens will be discriminated against in the job market in this country, including Northern Ireland, while aliens from Europe are allowed in?
    Mr. Rippon: There are a number of questions which have caused concern and which we want to explore in some detail with the Community to ensure that the difficulties to which the hon. Gentleman refers do not arise.
    Mr. Clark Hutchison: What sort of effect will this free movement of labour have on Scotland?
    Mr. Rippon: I would expect it to be beneficial.
    Mr. Pavitt: Have the Government accepted the three draft directives of 1969, which affect the free movement of doctors? If so, what effect does he think that will have on the National Health Service in that doctors from, say, Italy and this country will come into juxtaposition?
    Mr. Rippon: As the hon. Gentleman said, they are "draft directives". We are discussing their implications with the Commission.
    Mr. Deakinsasked the Secretary of State for Foreign and Commonwealth Affairs if he will publish in the OFFICIAL REPORT a list of all matters forming part of the current negotiations with the European Economic Council of Ministers, which have not yet been agreed between the United Kingdom and the European Economic Community.
    Mr. Rippon: The main questions for negotiation were specified in the opening statement to the Communities in Luxembourg on 30th June by my right hon. Friend the then Chancellor of the Duchy of Lancaster. I have since indicated in my regular reports to the House the matters on which agreement has been reached.
    Mr. Deakins: Would the right hon. and learned Gentleman agree that such a list would show a considerable num-
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    ber of controversial issues still outstanding? If Her Majesty's Government propose to deal with them in the way in which they have dealt with controversial matters so far—that is. with capitulation and not negotiation—is there not a very poor look-out for the British economy?
    Mr. Rippon: Certainly a large number of questions, many of them important, remain to be settled. I do not accept the conclusion of the hon. Gentleman's supplementary question.
    Mrs. Hartasked the Secretary of State for Foreign and Commonwealth Affairs if the Minister for Overseas Development has been present, or proposes to be present, at any of the meetings in Brussels concerned with British negotiations to enter the Common Market.
    Mr. Kershaw: No, Sir. But my right hon. Friend the Minister for Overseas Development keeps in close touch with the negotiations being conducted by my right hon. and learned Friend the Chancellor of the Duchy of Lancaster, and advises him on issues affecting the development of the Third World.
    Mrs. Hart: Is the hon. Gentleman aware that among the many aspects on which the House will wish to be very fully informed regarding the negotiations for entry is the question of the probable effects on developing countries to which at the moment we are giving a good deal of aid, particularly those in Asia? We shall wish to have the fullest information about that, and will the hon. Gentleman guarantee that it will be made available to the House by the Chancellor of the Duchy?
    Mr. Kershaw: My right hon. and learned Friend will have heard what the right hon. Lady has said. I assure her that we have very much in mind the status and future fortunes of countries which are at this stage of development and have in the past looked to us for help.

    Tanzania and Uganda
    Mr. Evelyn Kingasked the Secretary of State for Foreign and Commonwealth Affairs if, in view of the attitude of the Tanzanian and Ugandan Govern. ments to their Indian minorities, he will

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    ban the sale of arms and other aid to those countries.
    Sir Alec Douglas-Home: No, Sir. I do not think that this action would be appropriate.
    Mr. King: Are we to assume that a decision has been sensibly taken that no economic or arms sanctions will be imposed on African countries of whose policies we disapprove, and does that apply to all Africa?
    Sir Alec Douglas-Home: Any decision taken to sell arms to any country is considered in the context of British interests and the security of the free world. The internal politics of countries do not come into it.
    Mr. Healey: In view of the fact that the right hon. Gentleman regards the interests of the free world as a dominant factor, will he consult the views of the free world before taking any decision on the sale of arms to South Africa, especially in view of the fact that the United States Government are known to take a completely different view from that of the right hon. Gentleman about the nature of the threat in the Indian Ocean and the requirements necessary to meet it?
    Sir Alec Douglas-Home: The right hon. Gentleman is known to take a different view now from that which he held a year ago. No doubt people can change their minds. However, it hardly lies in the mouth of the right hon. Gentleman to pass strictures on us. I spoke about the security of the free world. This is a legitimate matter to take into account.

    Unlawful Seizure of Aircraft (Convention)
    Mr. Maclennanasked the Secretary of State for Foreign and Commonwealth Affairs if he will take steps to secure the ratification by the United Kingdom of the Convention for the Suppression of Unlawful Seizure of Aircraft.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Boyle): Her Majesty's Government intend to ratify the Convention as soon as the necessary legislation has been enacted. A Bill to give effect to the Convention will be submitted to the House as soon as possible by my right
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    hon. Friend the Secretary of State for Trade and Industry.
    Mr. Maclennan: Will the Government display some urgency in this matter? Can the hon. Gentleman say what amendments to our domestic law are necessary, particularly that on extradition?
    Mr. Royle: I am not in a position to give precise dates, but I hope that the necessary legislation will be passed during the present Session of Parliament. Each party to the Convention undertakes to make hijacking an offence subject to severe penalties. The Convention also contains provisions on jurisdiction, prosecution, and extradition, designed together to ensure that hijackers are brought to justice and thus provide an effective deterrent to hijacking.
    Mr. Scott-Hopkins: May I ask my hon. Friend whether he will be make an exception in the cases of those seeking political asylum?
    Mr. Royle: This matter is covered in the legislation which will be brought before the House.

    Israel (Arab League Trade Boycott)
    Mr. Greville Jannerasked the Secretary of State for Foreign and Commonwealth Affairs what representations he has received in 1971 from Arab League countries regarding the boycott of goods manufactured by British companies which trade with Israel.
    Mr. Godber: None. Sir.
    Mr. Greville Janner: Does the right hon. Gentleman agree that the recent boycott imposed by the Mobil Shipping Company on ships carrying goods of Jewish or Israeli origin or carrying the Star of David is scandalous? Will he use his best endeavours to dissuade companies with commercial interests in this country from giving way to the kind of commercial blackmail which gives rise to boycotts of this nature?
    Mr. Godber: I think that our policy on this matter is well known. We are, and always have been, opposed to the Arab boycott on Israel, and we are opposed to any measures which restrict the freedom of British firms to engage in foreign trade.

    U.S.S.R. (Treatment of Jews)
    Mr. Greville Jannerasked the Secretary of State for Foreign and Commonwealth Affairs what further approaches have been made to the Soviet Government regarding the trials of Jews, following the interview between Sir Denis Greenhill and the Soviet Ambassador concerning the sentences passed at the Leningrad trial.
    Mr. Gorstasked the Secretary of State for Foreign and Commonwealth Affairs what representations he intends to make under Article 13 of the Declaration of Human Rights to press the Government of the Union of Soviet Socialist Republics, which is in breach of that Declaration, to permit Jewish or other individuals wishing to leave the Union of Soviet Socialist Republics of their own volition to do so freely; and whether he will make a statement.
    Sir Alec Douglas-Home: On my instructions, Sir Denis Greenhill saw the Soviet Ambassador on this subject on 27th December. Since then no further approaches have been made. However. the Soviet Government are well aware of our views, and I myself mentioned our concern to Mr. Gromyko when he visited London last October.
    Mr. Greville Janner: While I welcome that answer, may I ask whether the right hon. Gentleman is aware of the deep concern felt on both sides of the House regarding the continued plight of Jewish people in the Soviet Union? Will he, through his answer to this Question, send a message to the International Conference, which is being held in Brussels later this week, expressing not only the Government's concern but that of the British people on this issue?
    Sir Alec Douglas-Home: Yes, Sir. It is true that there is very widespread concern, and I voice it here. This is a matter concerning the internal affairs of the Soviet Union, but we have made quite clear how much we think that the policies which they pursue damage the reputation of the Soviets in the world outside.
    Mr. Gorst: Is my right hon. Friend aware that on 9th February, 1882, a Question was put to the Prime Minister at the time about the persecution of Jews
    22
    in Russia and he undertook to make representations to the Russian Government? Is my right hon. Friend further aware that to have to wait 89 years to achieve something is by no means satisfactory? Will he assure the House that we shall not have to wait a further 89 years and put further Questions down to the Foreign Secretary regarding the persecution of Jews in Russia?
    Sir Alec Douglas-Home: My hon. Friend's quotation seems to suggest that the policy of the Russian Government does not change, and I am glad to say that in 89 years the policy of Her Majesty's Government has not changed either. [Interruption.]
    Mr. Mayhew: Is the Foreign Secretary aware that, though the Russians' treatment of their minorities, including their Jewish minorities, is plainly indefensible, it is not yet so openly racialist, nor has it caused such hardship and injustice, as the treatment of Palestinian Arabs by the Israelis, as is well shown? To establish this point, may I ask the right hon. Gentleman to study the reports of the International Red Cross, Amnesty International and the United Nations and to resist these calls to apply double standards of morality on points of this kind?
    Sir Alec Douglas-Home: I do not think that this point arises from the specific Question which I was asked. Persecution of Jews by anybody, or indeed persecution of all minorities, is abhorrent.
    I should have answered the previous supplementary question by saying that Her Majesty's Government's policy "on this matter" has not changed.
    Sir D. Walker-Smith: Is my right hon. Friend aware that when I raised this matter at the Interparliamentary Conference at Lima and drew attention to the concern felt in this country on this matter, one of the Eastern European delegates suggested that that concern derived from false propaganda? Will my right hon. Friend, with his higher authority. confirm that this concern exists and derives from the facts as we know them?
    Sir Alec Douglas-Home: Yes, Sir.
    Mr. Healey: Will the right hon. Gentleman accept that this is one matter

    23
    on which Her Government's Opposition are totally at one with Her Majesty's Government? There are many grounds for concern at the persecution of Jews not only in the Soviet Union but in various East European countries.
    Sir Alec Douglas-Home indicated assent.

    Rhodesia
    Mr. Molloyasked the Secretary of State for Foreign and Commonwealth Affairs what further developments have transpired regarding Mr. and Mrs. Clutton-Brock of Cold Comfort Farm in Rhodesia, following correspondence concerning their detention by the Rhodesian régime sent him by the hon. Member for Ealing, North.
    Sir Alec Douglas-Home: Mr. and Mrs. Clutton-Brock were not detained by the Rhodesian régime. Mr. Clutton-Brock was deported after being deprived of his Rhodesian citizenship, and is now in this country. Mrs. Clutton-Brock has decided to remain in Rhodesia for the time being.
    Mr. Molloy: Does not the right hon. Gentleman agree that the actions taken by the régime against the Clutton-Brocks were deplorable, and that Cold Comfort Farm was a practical demonstration of racial harmony? I know that he is not reeponsible for Press reports, but Press reports have recently appeared to the effect that some form of negotiation is taking place between Her Majesty's Government and the illegal regime. Can the Foreign Secretary enlighten the House on that point?
    Sir Alec Douglas-Home: We should like to see a truly non-racial policy pursued in Rhodesia. If and when negotiations take place, that will be one of their purposes. I think that the experiment at Cold Comfort Farm was a successful experiment in multi-racialism.
    Mr. Alexander W. Lyon: In that case, will the right hon. Gentleman condemn the action of Rhodesia Government in depriving Mr. Clutton-Brock of his citizenship, on grounds never made clear either to him or to anyone else? Can he further say whether in the course of the negotiations now going on with Salisbury the attitude of the British Government has been made plain to the Rhodesian Government?
    Sir Alec Douglas-Home: Negotiations have not begun. Prelimainary exchanges to see whether a basis for negotiation is possible have taken place. I cannot say whether negotiations will be possible.
    Mr. Foley: Can the right hon. Gentleman indicate whether the Government have a view on the expulsion of Mr. Clutton-Brock?
    Sir Alec Douglas-Home: We think that Mr. Clutton-Brock's experiment on his farm was a good experiment in multiracial relations. Therefore, we would deplore that anybody should be deported for such reasons.
    Mr. Brocklebank-Fowlerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the circumstances in which South African armed forces and police are stationed in Rhodesia in support of the illegal régime.
    Sir Alec Douglas-Home: According to my information, there are no members of the South African armed forces stationed in Rhodesia. The South African Government are aware of our objections to the continued presence there of their police, and we shall continue to do what we can to secure their withdrawal.
    Mr. Brocklebank-Fowler: Does not my right hon. Friend agree that the presence of South African police in support of the illegal régime adversely affects his chances of negotiating an acceptable settlement to the Rhodesian deadlock? Can he assure the House that any supply of arms to South Africa will be conditional on the withdrawal of all South African police from Rhodesia?
    Sir Alec Douglas-Home: I do not know whether negotiations with Rhodesia would be adversely affected, but I know that I have made representations to the Foreign Minister of South Africa for the withdrawal of these police.
    Mr. Healey: Can the right hon. Gentleman tell the House what reply he has received from the South African Government to the protest that he says he has made? Is it not extraordinary that he should be proposing to supply arms to a Government which are keeping police and armed men in British territory against

    25
    the express will of the British Government?
    Sir Alec Douglas-Home: The right hon. Gentleman will recall that the police were there when he was Defence Secretary in a Socialist Government. The South African Government did not make any response to the requests that the right hon. Gentleman no doubt made for the withdrawal of those police. I shall continue my efforts with the South African Foreign Minister to try to get the police withdrawn. If there were a settlement with Rhodesia I would hope that there would be no need for them.
    Mr. Wall: Is it not a fact that the police are in Rhodesia to check incursions from another Commonwealth country—Zambia—and that assurances have been given that they will be withdrawn when the incursions cease? Should not Her Majesty's Government be bending their endeavours to check those incursions?
    Sir Alec Douglas-Home: I do not know about checking incursions; we can try to reach a settlement with Rhodesia which will remove the cause of the incursions and, therefore, the need to have South African police in Rhodesia.
    Mr. Thorpe: Is the right hon. Gentleman aware that the distinction between armed police and armed Servicemen is a somewhat academic one? There is little difference between the two. Can the right hon. Gentleman, with his knowledge of history, tell us of any occasion on which this country has supplied arms to a foreign Government whose nationals were actively supporting a rebellion against the Crown?
    Sir Alec Douglas-Home: I do not think that I can give any such example. I do not think that the right hon. Gentleman would expect me to give an example. The fact is that we have limited power in this matter, and we shall continue to apply it to the South African Government.

    South Africa (Simonstown Agreement)
    Mr. Brocklebank-Fowlerasked the Secretary of State for Foreign and Commonwealth Affairs if he is satisfied that the South African Government are meeting their legal obligations under the
    26
    Simonstown Agreement; and if he will make a statement.
    Sir Alec Douglas-Home: Yes, Sir. I had asked our ambassador in Cape Town to make inquiries on this point, and I will, with permission, circulate in the OFFICIAL REPORT the information he received.
    Mr. Alexander W. Lyon: Will the right hon. Gentleman look back to the report of an answer given early last week which specifically avoided any mention of job classification, of equality in rates of pay and equality in pension rights—all three of which are the most significant aspects of apartheid, in terms of job employment? If we are to sell arms to South Africa we should ensure that that country abides by its obligations under the agreement.
    Sir Alec Douglas-Home: I hope that the hon. Member will read the information that the ambassador has given me. It covers all those points. If he wants to come back at a later date on that question I shall be happy to answer. The South African Government are fulfilling the terms of the Simonstown Agreement.
    Mr. Thorpe: In view of the right hon. Gentleman's reply, is he aware that we shall read the ambassador's report with close attention? Is he further aware that since 1968 Simonstown has been declared as a white group area, as a result of which 400 coloured persons who have lived there for 200 years are being moved arbitrarily from the area, in direct contravention of one of the conditions of the Simonstown Agreement in 1955?
    Sir Alec Douglas-Home: That is curious, because actually more Africans have moved into the base, and are receiving fair conditions, as laid down in the Simonstown Agreement. I hope that the right hon. Gentleman will read the ambassador's account.
    Following is the information:

    1. At the date of transfer of the Simonstown Naval Base on the 1st of April 1957, 597 European and 713 non-European employees of the Admiralty were transferred to the South African Navy. Of this number only 23 European and 4 non-European employees were established, i.e. those who held permanent pensionable posts. The remainder were all casuals employed on a twenty four hour hire and fire basis.

    2. At present 854 Europeans and 1,231 non-Europeans are employed in the dockyard. Of

    27
    this number 540 Europeans and 167 non-Europeans are in permanent pensionable (established) posts. With the expansion of the dockyard these posts are being further increased.

    3. More non-Europeans than Europeans have been recruited and appointed subsequent to the transfer.

    4. There is no discrimination whatsoever based on colour in the rates of pay for comparable jobs. The conditions of service of all employees irrespective of race are governed by the Public Services Act of 1957.

    5. Further privileges now enjoyed by all established employees irrespective of race are, inter alia,

    (a) Accumulative vacation leave of between 30 and 38 days per annum depending upon length of service, including Admiralty Service, and 120 days sick leave on full pay during a three year cycle. Under the Admiralty they got ten days leave per annum.

    (b) 100 per cent. housing loans plus subsidies on bond repayments.

    (c) Working hours for industrials reduced from 44 hours per week to 42 and a half hours per week.

    (d) Pension contribution reduced from a minimum of 6 and a half per cent. to a fixed 4 per cent. on pensionable salary.

    (e) More posts of titular artisan have been created for employment of semi-skilled non-European labourers.

    (f) Salaries have nearly doubled: e.g. an artisan on the 1st April 1957 earned £894 per annum as compared to present salary of £1,725 per annuam.

    (g) All employees get all the paid public holidays of the Republic of South Africa.

    (h) All employees are eligible to join the Civil Servants' Medical Benefit Association under which approximately four-fifths of all medical expenses for an employee and his dependents are paid for by the Association.

    6. Several former non-European employees of the Admiralty have been transferred to the public service where they now fill senior posts in other Government Departments.

    7. No European or non-European ex-Admiralty employee or those recruited subsequently have been dismissed from the service other than through gross misconduct or inefficiency.

    8. From the foregoing it will be seen that the South African Government complied in all respects with the conditions laid down in the Simonstown Agreement and has in fact improved considerably thereon.

    South Africa (Sporting Visits)
    Mr. Ashtonasked the Secretary of State for Foreign and Commonwealth Affairs what advice he has given to sportsmen or sponsoring organisations or other Government Departments in con-
    28
    nection with sporting visits to South Africa.
    Sir Alec Douglas-Home: It is for sporting bodies to reach their own decisions about sporting contacts with South Africa. Consultations between Departments in the Government are, of course, confidential.
    Mr. Ashton: Is the Foreign Secretary aware that the Minister for Sport said that this was the responsibility of the Foreign Secretary? Is he aware that in regard to Scottish sea anglers the request was turned down by the Secretary of State for Scotland? Can he tell us where the buck finally stops? As a member of the M.C.C., would he, as Foreign Secretary, agree to the visit of a British cricket team to South Africa in present conditions?
    Sir Alec Douglas-Home: Leaving the hypothetical questions out of it, the responsibility here is that of the Minister for Sport. If there is any change in policy, he will come to the House and say so.
    Mr. Boyd-Carpenter: As much of the hope of peaceful change in South Africa depends upon the young generation of Afrikaaners, are not sporting visits of this kind, with the many contacts that they give among young people, likely to be helpful?
    Sir Alec Douglas-Home: My right hon. Friend knows that I have been one of the strongest advocates of contact as against boycott.

    Berlin
    Mr. Wilkinsonasked the Secretary of State for Foreign and Commonwealth Affairs what representations have been made by Her Majesty's Government to the Soviet authorities in Berlin since 7th December, 1970, about delays imposed on road traffic passing through East Germany en route to Berlin from the West German Federal Republic; and if he will make a statement.
    Sir Alec Douglas-Home: Since 7th December there have been three cases of harassment on the autobahn. On each occasion the Allies made joint protests to the Soviet Ambassador in Berlin, and on 3rd February we made an oral protest to the Soviet Ambassador in London.
    Mr. Wilkinson: Could my right hon. Friend urge the representatives of Her Majesty's Government in the current round of four-Power talks on the status of the City of Berlin to put pressure on the Soviet Union to curtail these acts of harassment, most of which have been perpetrated by the East German régime, because we would regard a curtailment of this harassment as evidence that the Soviet Union is genuinely interested in the relaxation of tension, not only in Berlin but in Eastern Europe as a whole?
    Sir Alec Douglas-Home: Yes, Sir. These acts of harassment are, of course, against the rules agreed by the allies for the conduct of affairs in the city and the approaches to the city.
    Mr. Scott-Hopkins: Would my right hon. Friend agree that these acts of harassment prove that the Russian Government have no intention of making any progress in East-West politics with the West German Government at present? Should not free access to West Berlin be given as a prerequisite to ratification taking place?
    Sir Alec Douglas-Home: This is, of course, largely a matter for the Federal German Government. The German Chancellor has linked the two treaties together—that is, the treaties with Poland and the Soviet Union—and has said that he looks for progress on Berlin before they are ratified.

    Persian Gulf
    Mr. Wilkinsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will now make a further statement on the outcome of discussions with the rulers and Governments in the Gulf about defence arrangements after 1971.
    Mr. Laneasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a further statement on his discussions about future relations with the Gulf States.
    Sir Alec Douglas-Home: Sir William Luce has only recently returned from his latest tour of consultations. His further report is being considered. I hope to be in a position to make a statement very shortly.
    Mr. Wilkinson: Can my right hon. Friend give an assurance that a statement
    30
    will be made before the two-day debate takes place in this House on the Defence White Paper at the beginning of next week, because this is an area of crucial strategic importance from which Western Europe derives three-quarters of its oil?
    Sir Alec Douglas-Home: Yes, Sir; in response to my hon. Friend's supplementary question, I will certainly try to do that. It is, however, important that we get this matter right; in other words, it is vital that we get the right decision made in relation to this area.
    Mr. Lane: Whatever may be the future defence arrangements, may I ask my right hon. Friend to confirm that Her Majesty's Government will continue to give full support to British commercial and trading activities in the Gulf area?
    Sir Alec Douglas-Home indicated assent.
    Mr. Healey: While I strongly support what was said by the hon. Member for Bradford, West (Mr. Wilkinson) about the need for a statement to be made in the House before next week's defence debate, may I ask the right hon. Gentleman if he is aware that such a statement should also be made before the debate on the Defence White Paper takes place in another place?
    Why has there been this long delay? The right hon. Gentleman must know that Sir William Luce expressed the view in December, 1969, that we should stick to the Labour Government's timetable for withdrawal and that this is the view of all the major Governments concerned in the area.
    Sir Alec Douglas-Home: Sir William Luce has looked into this problem with objectivity—he has not linked it to the policy of either the Socialist Government or the Conservative Government—and has recommended a policy, after consultation with the rulers, which he thinks would serve the area and British interests. I want to consider it. I could not make a statement before the debate takes place in another place, but I shall try to do so before the debate takes place in this House.

    Namibia
    Mr. Maclennanasked the Secretary of State for Foreign and Commonwealth

    31
    Affairs why Her Majesty's Government have not yet submitted a brief amicus curiae to the International Court of Justice in the proceedings to obtain an advisory opinion on the legal consequences for States of the continued presence of South Africa in Namibia.
    Sir Alec Douglas-Home: We did not submit a statement to the International Court on behalf of the United Kingdom because we did not think it necessary to add to the material already before the Court.
    Mr. Maclennan: As Her Majesty's Government intend to conceal their views on the legal consequences of South Africa's occupation of Namibia, may I ask the right hon. Gentleman to say what importance the Government attach to the present advisory proceedings which are before the Court?
    Sir Alec Douglas-Home: We are not concealing our views. We want to hear the views of the judges.
    Mr. Alexander W. Lyon: Cannot we at least have a legal opinion from the Attorney-General setting out the view of Her Majesty's Government of the application that is before the International Court?
    Sir Alec Douglas-Home: No, Sir. [Interruption.] I do not think it is necessary. It is better for us to wait for the view of the judges and hear what they have to say before we make any further statement.

    Overseas Aid
    Mr. Iremongerasked the Secretary of State for Foreign and Commonwealth Affairs what was the annual average rise in the percentage of the gross national product devoted to official aid to developing countries before 1964, and the annual average fall since then.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Kershaw): Net official flows counting towards the U.N.C.T.A.D. target amounted to 0·56 per cent of g.n.p. in 1960, and 0·52 per cent. in 1964, an average decline of 0·01 per cent. a year. In 1969 the figure was 0·39 per cent., an average decline since 1964 approaching 0·03 per cent. a year.
    Mr. Iremonger: How much better do we expect it to get, and how soon?
    Mr. Kershaw: Between 1960 and 1964 we managed, from public and private aid. to reach a flow of 1·03 per cent. From 1965 to 1969 it declined to 0·87 per cent. As my hon. Friend knows, it is our objective to reach 1 per cent. of the g.n.p. from public and private aid as soon as we can.
    Mr. Prenticeasked the Secretary of State for Foreign and Commonwealth Affairs what estimate he has made of the percentage of gross national product which the United Kingdom will donate to official flows of overseas aid in 1974–75.
    Mr. Kershaw: We do not publish such forecasts.
    Mr. Prentice: Would the hon. Gentleman agree, however, that the figure is almost certain to be less than 0·5 of 1 per cent.? If so, why was the Prime Minister so badly briefed as to tell me, in answer to a Parliamentary Question on 2nd February, that he thought it would be more than 0·5?
    Mr. Kershaw: As we do not publish our forecasts, I will not say whether it was good or bad. However, as I have said, we managed to reach 1·03 per cent. when we were last in office, from both private and public aid. I do not see why we should not do that again.

    Kenya
    Mr. Wallasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the progress of negotiations with the Government of Kenya regarding further resettlement schemes and the purchase of British-owned farms.
    Mr. Kershaw: As was said in the reply to my hon. Friend's Question on 25th January, a programme of further British aid for Kenya was agreed between the two Governments in April, 1970. This programme included £3·75 million to enable the Kenya Government to make further purchases of British-owned farms for settlement and other purposes. Discussions about implementing this agreement have since been proceeding between

    33
    the two Governments, and we hope to reach a settlement very shortly.—[Vol. 810, c. 6–7.]
    Mr. Wall: Why has there been this long delay after the agreement was reached—as my hon. Friend pointed out—last year? Is he aware that this continued delay is to some extent undermining confidence in the future of Kenya's agriculture? Will he do his best to persuade the Kenya Government to get this scheme into operation as quickly as possible?
    Mr. Kershaw: The Kenya Government asked us to defer, after the June talks, to November. This was, of course, a matter for them to decide. We have made good progress, and we hope to he able to make an announcement soon.

    Council of Europe (Overseas Development Policy)
    Mr. Juddasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the recommendations and resolutions passed unanimously by the Assembly of the Council of Europe in January, 1971, concerning priorities for the overseas development policy of member countries in the second development decade copies of which have been sent to him.
    Mr. Kershaw: My right hon. Friend is glad of the interest of the Assembly of the Council of Europe in this important subject, and sympathises with the general trend of its thinking, but I cannot usefully deal in a single statement with all aspects of these recommendations and resolutions, which range widely over many different elements in our aid policy.
    Mr. Judd: I thank the Under-Secretary for that answer. Is he aware that the unanimous view of the Assembly was that the present agricultural policy of the European Economic Community. with its protection of inefficient agriculture and support for the dumping of food surpluses, works directly against the crtical objective of agriculture and rural development in the developing countries? Is he aware that there are, for this reason, doubts about the implications of British entry into the Community, in view of its present policy? Will he seek an assurance from his right hon. Friend
    34
    to the effect that the conditions of entry will be changed on this vital front?
    Mr. Kershaw: We have noticed the Assembly's line of thought in this matter of agricultural produce in developing countries, with which we are in broad agreement. I am glad to acknowledge the hon. Gentleman's contribution as rapporteur of the round table on overseas development.

SOUTH AFRICA (SUPPLY OF ARMS)
The following Questions stood upon the Order Paper:
78. Mr. MOYLE: To ask the Secretary of State for Foreign and Commonwealth Affairs, what orders for arms the United Kingdom has now received from South Africa.
79. Mr. WILLIAM HAMILTON: To ask the Secretary of State for Foreign arid Commonwealth Affairs, if he is yet in a position to make a firm decision on the supply of arms to South Africa
The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): With your permission. Mr. Speaker, I should now like to reply to Questions No. 78 and 79.
The Government's position was made clear in the statement made by my right hon. Friend the Prime Minister to the House on 26th January and in the White Paper laid before the House on 4th February by my right hon. and learned Friend the Attorney-General.
No orders relating to any new arms deal have been received. In response to an inquiry, however, Her Majesty's Government have informed the South African Government that if orders are placed for Wasp Helicopters we will. according to our legal obligations, issue export licences at the appropriate time. Her Majesty's Government are also continuing the practice of the previous Administration in licensing the export of certain spare parts.—[Vol. 801, c. 321–40.]
Mr. Moyle: Is the right hon. Gentleman aware that his statement will be received with emotions varying from doubt as to its wisdom to angry despair

35
at all points between Washington and Singapore? Does he mean that he has indulged in negotiation about the selling of arms to South Africa without having received a single firm order for weapons? Does he think that this is really the price of the Commonwealth? Will he think again about it and undertake not to supply any arms to South Africa?
Sir Alec Douglas-Home: I hope that the hon. Gentleman does not share in the angry despair, and I hope that he is not asking us to break a legal obligation, which would have wide ramifications.
Mr. William Hamilton: Does the statement mean that the Government do not intend to go beyond their legal obligations as laid down in Simonstown? Second, why have the Government taken this action before the Commonwealth Committee of Eight has reported? Does the right hon. Gentleman recognise that any military advantages which might accrue are far outweighed by the political and economic disadvantages which will redound in the rest of Africa, the new Commonwealth and beyond it?
Sir Alec Douglas-Home: No, Sir; if there is a legal obligation, as the Attorney-General has advised the House there is, this must be fulfilled, and if a request comes from South Africa we must meet it. That is what I said to the House about our legal obligation. As regards any further sales to South Africa, we must reserve our own judgment and judge this matter in relation to British interests at a future date.
Mr. Dodds-Parker: Will my right hon. Friend agree that this decision will be acceptable to many people who, while totally rejecting apartheid, believe, like the right hon. Gentleman the Member for Leeds, East (Mr. Healey), I think it was, when Secretary of State for Defence, that the defence of the Southern sea routes depends on the Simonstown Agreement being observed not only legally but in the spirit?
Sir Alec Douglas-Home: Yes, Sir; we attach great importance to the Simonstown Agreement, as did the right hon. Gentleman when he was Secretary of State for Defence in the last Government. It is very valuable in the context of the
36
defence of the South Atlantic and the Indian Ocean.
Mr. Healey: The Foreign and Commonwealth Secretary has made a very serious statement, and many will regard it as particularly deplorable that Her Majesty's Government should have reached this decision before the 8-nation group, set up by the Singapore Conference, had even had its first meeting. Will the right hon. Gentleman take it that the House will wish to debate this decision at the earliest opportunity, for a full day at least, and may we hope that, before this exchange ends, the Leader of the House will be able to give an assurance that this will be possible?
On the substance of the right hon. Gentleman's statement, is he aware that the last Government, while maintaining that the Simonstown Agreement was useful, though not essential, also maintained on legal advice that there was no legal obligation to supply these helicopters? Further, is he aware that the consequences for the Commonwealth, for British interests, and for British lives and property in Africa, while damaging in any case, could be disastrous unless he gives an assurance this afternoon that the delivery of these helicopters will be an end of the matter?
Will the right hon. Gentleman, therefore, give an assurance that Her Majesty's Government will not supply any arms to South Africa which they do not believe themselves legally obliged to provide under the Attorney-General's finding? Otherwise, does not the right hon. Gentleman recognise that this decision will be seen as the thin end of the wedge and as the first of a series of arms deliveries which are in no way limited by legal obligations, and that in that case a catastrophe will follow of which the right hon. Gentleman and the Prime Minister had clear warning from all the members of the Commonwealth at the recent conference in Singapore?
Sir Alec Douglas-Home: I cannot accept the warning from the right hon. Gentleman after his record in the last Government, when, as everybody knows, he supported the sale of arms to South Africa. If he does not admit that, he will no doubt remember that there was a contract made with a French firm for the

37
sale of helicopters to South Africa. When the Government knew that the Puma contract was to be made and the proposal was to sell some of these helicopters to South Africa, they never objected.
Mr. Healey: We had no right to.
Sir Alec Douglas-Home: The right hon. Gentleman says that they had no right to object. That is his view. He could have objected. He knew that the sale of military helicopters to South Africa was to take place. He could have objected, but he did not, and neither did his Government.
I hope that the right hon. Gentleman is not suggesting that, if we have a legal obligation, we should not fulfil it. I do not think that he is. I think that he is saying that this is a matter for debate and that, no doubt, my right hon. Friend the Leader of the House will, through the usual channels, discuss the possibilities for debating the matter. I have no quarrel with a debate on the subject; this is a perfectly proper matter for debate.
As to the study group, my right hon. Friend the Prime Minister made perfectly clear at the Prime Ministers' Conference at Singapore that there was no connection between a Possible sale of arms to South Africa and the study group. The study group is meant to look at the whole problem of the defence of the sea routes and the Indian Ocean in the long term.
Mr. Healey: Will the right hon. Gentleman please attend to the very serious problem facing Britain and the Commonwealth as a result of this decision? Whatever the Prime Minister may have said in Singapore, leaders of the Commonwealth, including Mr. Trudeau and a number of African and Asian leaders, made clear that they expected the British Government not to take a decision on the supply of arms until the study group had reported. Will not the right hon. Gentleman accept—if he does not accept it now, the facts will force him to in the next day or two—that the way in which this decision is received by the Commonwealth will depend very much on whether Her Majesty's Government sees this, as reported in some newspapers, as the first in a series of deliveries going far beyond our legal obligations even as defined by the Attorney-General or as strictly obliged by the legal situa-
38
tion? Unless the right hon. Gentleman can give an assurance to the House on this question now, the consequences, before the House has a chance to debate it, may well be disastrous.
Sir Alec Douglas-Home: I deny that. But, at any rate, neither the Prime Minister of Canada nor any Prime Minister of the Commonwealth was left in any doubt whatever as to the legal obligations which fell on Her Majesty's Government, and it is that and that alone with which we are dealing today.
Sir F. Bennett: Before the debate, will my right hon. Friend arrange through the usual channels for publication of the memorandum submitted by the right hon. Gentleman the Member for Leeds, East (Mr. Healey) and Lord George-Brown to the Cabinet in which the sale of unrestricted maritime arms was advocated?
Sir Alec Douglas-Home: I do not know that that would be a proper course, but my hon. Friend could read Lord George-Brown's memoirs.
Mr. Michael Stewart: The right hon. Gentleman was earlier asked a question by one of his hon. Friends to which he did not reply; would he deal with it now? Apart from any other aspect of the sale of arms to South Africa, can the right hon. Gentleman give us an assurance that he will not do this so long as South Africa uses her police forces in support of a rebellion against the Crown in Rhodesia? Is it not the overwhelming legal obligation of Ministers of the Crown to be loyal to the Crown rather than to Dr. Vorster?
Sir Alec Douglas-Home: I replied earlier that I did not think that we could connect the two matters. Any British Government would have to reserve its position on any future sale of arms. We must consider this in relation to British interests and the necessity to keep the Simonstown Agreement in repair, and every Government, including the previous Government, have felt that that should be done.
Rear-Admiral Morgan-Giles: Does the Foreign Secretary recognise that the Wasp helicopters which it is proposed to sell are merely a replacement of the antisubmarine helicopters of the same type which have been worn out and broken

39
in the course of naval exercises undertaken by us with the South Africans during the time of the late Labour Government?
Sir Alec Douglas-Home: The legal obligations are set out in paragraph 60 of the White Paper which, on the present showing, we shall probably be debating before long.
Mr. Thorpe: Leaving aside both the wisdom and morality of the right hon. Gentleman's pronouncement, may I put two questions to him? Is he aware, first, that there is grave dispute as to whether there is a continuing legal obligation, and that this is a matter for argument? Will he remember the admirable precedent of the present Prime Minister, the present Leader of the House and the present Chancellor of the Exchequer when in December, 1957, they voted for a petition to the Queen for the then advice of the then Conservative Attorney-General to be referred to the Privy Council? Is he aware that that advice of that Attorney-General, no less eminent than the present, namely, Sir Reginald Manningham-Buller, was held to be totally wrong? Secondly and finally, in view of his very wide experience of Commonwealth matters and accepting all the reservations which the Government made plain at Singapore, would he say that the taking of this decision before the eight Powers have even had a chance to meet let alone report will strengthen or weaken Commonwealth ties?
Sir Alec Douglas-Home: I remind the right hon. Gentleman that the Attorney-General has advised the House and the Government accept the advice that he has given. Therefore, there is no need to have a further study. As for the study group—
Mr. English: On a point of order. The Foreign Secretary has just said that the Attorney-General advised the House. Is it not the case that that advice was presented in a White Paper by command of Her Majesty, which is quite a different thing?
Mr. Speaker: That may or may not be so. It is not for me to confirm the answers of Ministers.
Sir Alec Douglas-Home: I have always understood that that was one of the ways in which the Attorney-General advised the House.
I do not think that this decision by Her Majesty's Government ought to have any effect on the study group's progress in the minds of Commonwealth leaders. I must repeat that they understood that we had this legal obligation. The Prime Minister told them much of its nature, and they are therefore prepared that we should fulfil our legal obligations and the study group go on. That is the only answer that I can give to the right hon. Gentleman now.
Mr. Thorpe: Is the Foreign Secretary suggesting by that answer that all lawyers, not least the Attorney-General, are infallible?
Mr. Burden: Does not the Simonstown Agreement constitute a defence agreement? If it is a defence agreement, how can the Labour Party argue, to take it to its logical conclusion, that because of apartheid, if that defence agreement is invoked and there is war, we should still be unable to support South Africa with the arms necessary to carry out her part of the pact?
Sir Alec Douglas-Home: As did the previous Government, we value this as a military defence agreement in the context of the sea routes and the sea routes only.
Mr. Paget: If we are to discriminate in our arms sales against Governments which rule tyrannically and which exercise racial discrimination and which confine people without trial, would we have any available African customers?
Sir A. Irvine: Is the right hon. Gentleman aware that there will be general agreement on both sides of the House with the conclusion set out in paragraph 59 of the Law Officers' advice in the White Paper? Does he confirm that there is no general or continuing obligation to permit the supply of arms to South Africa?
Sir Alec Douglas-Home: As I under stand it, there is a legal obligation to do this, but surely that is a matter for debate rather than an exchange across the Floor of the House at Question time.
Mr. Harold Wilson: Is the right hon. Gentleman aware, one, that we do not accept the advice by the Law Officers in the White Paper, contrary as it is to the advice we have on this question by no less eminent legal advisers? Is he aware, two, that we do not accept his statement about what he was seeking to attribute to my right hon. Friend the Member for Leeds, East (Mr. Healey)? Is he aware that from my own personal knowledge I can say that his answer to that question was totally false?
Thirdly, he referred to French sales. Is he aware that we repeatedly—and I can give him the specific date when I did, June 1967, in Versailles—expressed our view to General de Gaulle that there should not be arms supplies by France to South Africa? Is the right hon. Gentleman further aware that he has given a very unsatisfactory answer about arms sales beyond what was in the White Paper and that there is no justification in law, morality or the interests of this country for supplying arms beyond what was in the White Paper, even if we were to accept what was in the White Paper?
Sir Alec Douglas-Home: I can understand the right hon. Gentleman's objecttions to the Attorney-General's point of view. This is a matter which can be debated and which should be debated. As I understand it, there are documents and facts available to the Attorney-General which were not available to, or not sought by, the Attorney-General in the last Government. This alters the situation. What the right hon. Gentleman has said about what he said to General de Gaulle about France not selling arms to South Africa and saying this in 1967 makes it rather worse that in 1968, when they had the opportunity to object to the French about helicopters, the Labour Government did not do so.
Mr. Harold Wilson: The right hon. Gentleman has just purported to say what my right hon. and learned Friend the then Attorney-General had before him and what he asked for. There is a very long convention that Governments do not ask for what was seen by the previous Government—we did not. By what right and on what evidence did the right hon. Gentleman make that accusation?
Sir Alec Douglas-Home: There are various quotations and letters in the White
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Paper which may have been studied by the Law Officers of the previous Government.
Hon. Members: Withdraw.
Sir Alec Douglas-Home: I do not think that I have said anything to the House that I need withdraw. All that I am saying is that if all those facts were available to the Attorney-General in the last Government he did not come to the same conclusion as the present Attorney-General. The advice of my right hon. and learned Friend the present Attorney-General has been given fairly and straight to the House.
Mr. Harold Wilson: The right hon. Gentleman is hedging on what he has just said. Is he aware that he has just said that my right hon. and learned Friend the Member for West Ham, South (Sir Elwyn Jones) did not ask for those documents and did not have them before him? That is untrue. The right hon. Gentleman has no justification for saying that. He cannot know, and has no right to ask, what papers were before any Minister. Will he now withdraw the implication that he made and say that this Government, unlike any previous Government, are now burrowing in the documents of their predecessor, which no Government have ever done before?
Sir Alec Douglas-Home: There is no question of anything of this sort. When it comes to the debate I am certain that my right hon. and learned Friend will confirm that I have said nothing improper whatsoever.
Mr. Leonard: On a point of order. My right hon. Friend the Member for Leeds, East (Mr. Healey) asked whether there would be an early opportunity to debate the decision. The House has not been told whether this can be done.
The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Further to that point of order. My right hon. Friend made it perfectly clear that I was prepared to consider and discuss any such request. That I will do.

QUESTIONS TO MINISTERS
Mr. Raphael Tuck: On a point of order. Twenty-nine Questions were

43
answered by the Foreign Secretary and the Chancellor of the Duchy of Lancaster. Seventeen Questions on overseas aid were put down, of which only five were answered. It appears to be almost impossible to put down a Question to the Minister for Overseas Development which will be answered orally. Would it be humanly possible to bring forward the Questions on overseas aid to begin at Question No. 20?
Mr. Speaker: That is a matter for arrangement through the usual channels, and no doubt they will have noticed what the hon. Gentleman said.

CARIBBEAN (MINISTER'S VISIT)
The Chancellor of the Duchy of Lancaster (Mr. Geoffrey Rippon): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about my visit to the Commonwealth countries of the Caribbean, from which I returned yesterday.
At the invitation of the Governments concerned, 1 visited Jamaica, Guyana, Trinidad and Tobago, and Barbados. In each 1 met the Prime Minister and Ministers concerned with our negotiations for entry into the European Economic Community. I also visited St. Lucia, where I met Premiers and representatives of each of the West Indies Associated States.
I was particularly glad to have the opportunity also of seeing representatives of trades unions as well as employers, and representatives of Opposition parties as well as Ministers and officials. In this way I was able to build up a more comprehensive idea of the many problems involved from different points of view. I am most grateful to all who made this possible, and above all to the Governments who were my hosts.
Our discussions covered three main problems: sugar, the future relationship which the independent Commonwealth governments may have with the Community, and the corresponding relationship of the West Indies Associated States, for whose external affairs we remain responsible.
First, sugar. From the very beginning of the negotiations, we have identified
44
the need for access for sugar from the developing Commonwealth countries to an enlarged Community as one of the three major problems of the negotiations.
I explained that we had put in proposals on this point to the Community, but had not yet received the Community's reply. I said that what indications we had had of the Commission's thinking showed that those concerned fully understood the problem and were anxious to find a solution which would permit continuity of access under a new sugar régime applicable to the enlarged Community as a whole.
So far as the Commonwealth Caribbean Governments and sugar producers are concerned, the principal problem is to be able to plan production ahead with a similar degree of assurance to that which they now enjoy under the Commonwealth Sugar Agreement. For this they require what the Jamaican Minister of Trade and Industry described to me as "bankable" assurances; in other words, assurances which would persuade bank managers to provide the credits necessary for the roll-on of sugar production. Cane sugar production, unlike beet sugar production, has, of course, to be planned a number of years in advance.
A number of anxieties were expressed to me, but nearly all turned on this point.
I was particularly impressed by the social aspects of the problem. The economies of the countries concerned are dependent upon sugar in varying degrees, but restriction or dislocation of the market would severely affect them all, and in some would lead to serious consequences in human as well as economic terms.
Similar considerations of course apply to the other developing members of the Commonwealth whose economies are dependent upon sugar, notably Mauritius and Fiji.
Next I turn to the question of the future relationship between the independent Commonwealth Caribbean countries and an enlarged Community. There seems to have been a good deal of misunderstanding on this point, which I hope I was able to clear up.
The problem is this: as the House will know, the Community has already reaffirmed the offer contained in its 1963 Declaration of Intent to the Commonwealth African countries. This offer in

45
no way commits the Governments concerned. But it will enable them to choose whether they wish to have a Yaoundé-type of association with the enlarged Community, or a looser form of association, or a simple trading agreement.
The Community has not yet renewed this offer to the Commonwealth countries, but I very much hope it will do so soon.
The problem of the Commonwealth Caribbean is not simply one of sugar. The countries concerned need continuing access to the British market and ultimately to the European one for such other tropical products as bananas, citrus fruits and rum. Without such access—especially for bananas—grave damage would be done to the economies concerned. These developing countries, who have for centuries been dependent on the British market, need arrangements, such as association would provide, which would give them the same sort of treatment now given to other developing countries associated with the Community.
Lastly I come to the future relationship of the West Indies Associated States with an enlarged Community. I am glad to say that at the meeting of Deputies in Brussels on 10th February, the Community lifted its reserve on the offer of association under Part IV of the Treaty of Rome to those territories, other than Gibraltar and Hong Kong, for whose external relations we remain responsible. This will ensure that their interests will be safeguarded.
Some concern was expressed to me lest there should be any difference in the positions of the various members of C.A.R.I.F.T.A., the Commonwealth Caribbean Free Trade Area, which includes both dependent and independent countries. I said that I hope that with an offer of association to them all, a common C.A.R.I.F.T.A. position might be elaborated. Without such an offer to the independent countries, the position would of course be more complicated. In any case we shall do our utmost to protect the interests of the West Indies Associated States, and give them all the help and advice they may require.
I have spoken today of serious problems which could affect the success of the negotiations. I have no doubt that solutions can be found to all of them.
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So far as the Commonwealth Caribbean is concerned, the most dangerous element in the situation is uncertainty. I hope this may be cleared up very soon.
Mr. Hattersley: The whole House will be very grateful to the right hon. and learned Gentleman for that very long statement.
Is he aware that we on this side of the House regard the provision of adequate safeguards for Commonwealth Caribbean interests as essential if we are to enter the E.E.C.? As the right hon. and learned Gentleman is clearly optimistic about obtaining such safeguards, judging by his statement today, can he tell us whether the Governments he visited share that optimism, or whether they were rather more pessimistic about the outcome in Brussels?
In the light of that, I have two specific questions about sugar. The right hon. and learned Gentleman says very properly in his statement that what is needed is bankable assurances for the sugar producers. Will he therefore say, first, whether the note of August, 1970, which outlined the Government's proposals to the E.E.C. for safeguarding Commonwealth sugar, still maintains the Government's position as to what is necessary rather than representing a negotiating position? Second, can he make it absolutely clear that the arrangement for sugar producers will be safeguarded and negotiated before entry into the E.E.C. and not allowed to wait until the Commonwealth Sugar Agreement comes to its natural break in 1974?
Mr. Rippon: Naturally, the various Governments to which I spoke expressed their anxieties. They did not seem unduly disturbed about the position as it now stands, and we reached agreement on the attitude which we should all best adopt.
As to the proposals which we have made to the Community, as I said in my statement, these are on the table and we await the Community's reply.
One of the matters which is of concern is not merely that we should be able to maintain our legal obligations until 1974 under the Commonwealth Sugar Agreement but that a view should be taken by the Community and ourselves as to what should happen thereafter to protect the position.
Mr. Hattersley: I am grateful to the right hon. and learned Gentleman, but perhaps I did not put my final two questions clearly enough, I asked him, first, not whether we needed to maintain our position until 1974, but whether our relationship with the sugar producers after we joined the E.E.C. would be made clear before we entered rather than awaiting the break in the Treaty in 1974. Secondly, I asked whether the August proposals genuinely represented what we regard as necessary rather than a negotiating position.
Mr. Rippon: Naturally our proposals represent what we regard as fair and reasonable. We must, however, await the Community's reply. I have no reason to suppose that the reply will be unfavourable or will not take account of the point the hon. Gentleman makes on the necessity for seeing beyond 1974 in as much detail as possible.
Mr. Turton: Does not my right hon. and learned Friend agree that associated status alone would not be a fair and reasonable provision, but that there must be some continuing arrangement for import-export quotas from the Caribbean and the Windward Islands, both for sugar and bananas, since otherwise we could not possibly agree to enter the E.E.C.?
Mr. Rippon: My right hon. Friend is right to say that a mere offer of association or arrangements of that kind would not be sufficient to cover sugar. That is why the matter is being dealt with separately. In any case an agreement about sugar would not of itself be sufficient to cover the problems relating to other tropical products, including, for example, bananas.
Mr. James Johnson: Is the right hon. and learned Gentleman aware that under the existing arrangements in the Community the Italians are allowed to buy all the bananas produced by their former colony, Somalia? Can there not be a similar arrangement for the West Indian Islands on the same basis?
Mr. Rippon: Where it is the case that association or community agreements have not obtained, then it is necessary for us to ensure—as we certainly would—that we got the same sort of arrangements for our own traditional suppliers
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as the present Community nations have arranged for themselves. Such arrangements have applied not only to Italy but also to Germany and France.
Sir J. Rodgers: Can my right hon. and learned Friend tell us what the attitude of the United States is to closer association between the Caribbean Islands and the enlarged Community? Is he aware that when I was in the area which he has just visited quite recently it was alleged that the United States was threatening retaliatory action if closer association were obtained? If that is so, when he visits the United States in March, will he make the strongest representations against this deplorable attitude on the part of the United States?
Mr. Rippon: The United States has indicated anxieties about the extension of association agreements to Commonwealth countries in Africa as well as in the Caribbean. It has also said that it will not include in its offer under the generalised preferences scheme countries which are members of preferential trading arrangements. This might present what one Caribbean Minister described to me as "Hobson's choice" to the countries of the Caribbean. They have their preferential trading arrangements with us and it seems to me that we should seek to preserve them. They also have trading interests with the United States. In my view, certainly they should not be obliged to choose in any way between the United States and Europe.
Mr. Hamling: Would not the right hon. and learned Gentleman agree that a continuation of the existing trading agreements is really insufficient and that what the Government ought to be considering is further assistance to the islands of the Caribbean, not only because of their general poverty but also because of the parlous condition of the banana production business and, on the island. of St. Vincent, of arrowroot production?
Mr. Rippon: Their economies are certainly vulnerable and the mere maintenance of their existing trade in such commodities as sugar and bananas by no means solves the problems of these developing countries. Therefore, there is need for further aid of various kinds, but that is not a matter for me to deal with today. One would envisage that

49
they would benefit from the funds available to the European Development Fund in addition to any aid we might continue to give ourselves.
Sir D. Renton: Is my right hon. and learned Friend aware that the present Commonwealth Sugar Agreement has the effect of giving a guaranteed price for substantial tonnages of sugar imported from the Commonwealth to this country, as well as a guaranteed price for sugar produced from beet in Britain? Can he tell us what form the support would take in the event of our entering the Community in relation both to Commonwealth cane sugar and sugar from beet in Britain?
Mr. Rippon: We have explained to the Community our existing obligations under the Commonwealth Sugar Agreement. It is a complicated agreement, but basically what it assures is continuity both as regards quantities and prices. These are factors we shall have to deal with in the course of our negotiations. One of the complications is that the Community itself has arrangements with its own associated States which fall to be renegotiated in detail in 1975. There is also the problem that, whereas we are members of the International Sugar Agreement, the Community is not at present. Thus, a rather curious situation might arise in which some members of the Community were parties to the International Sugar Agreement and others were not. We shall have to consider how to resolve that problem.
Mr. McBride: Will the hight hon. and learned Gentleman now confirm to the nation that there will be a steep increase in the price of sugar to the housewives from Commonwealth producers should we enter the Community? How can the right hon. and learned Gentleman say to the single-product nations of the Caribbean that they may plan ahead when such a position is reached?
Mr. Rippon: Negotiations take place periodically under the Commonwealth Sugar Agreement and the next round is due next autumn. I cannot forecast exactly what might happen then. Some of the people I spoke to in the Caribbean—including both producers and trade unionists-made representations to me that one of the best forms of aid is to
50
pay primary producers the proper price for what they produce.
Mr. Hugh Fraser: Would not my right hon. and learned Friend agree that the possible threat from the United States relating to its sugar quota—which is probably as important as ours—puts the West Indies into a very difficult situation regarding associated status? As my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) rightly pointed out, what really matters to the West Indies is a guaranteed price for sugar and bananas, and associated status for surplus produce will be of no great benefit.
Mr. Rippon: Each country in the Community has made special arrangements for bananas because there are no banana regulations at the moment in the Community. I think that we can deal with this aspect. The sale of sugar by the Caribbean countries is not dependent solely on the British market. They are concerned about their access to the United States market under the United States Sugar Act, which falls to be reviewed this year. Half their quota is borrowed from Cuba and a restoration between Cuba and the United States would create difficulty. This is why I said that small developing countries should not be faced with a choice between access to the United States and access to the British or European markets. They need them all.
Mrs. Hart: One is glad to know that the discussions held by the right hon. and learned Gentleman in the Caribbean were in a wider context which included development aid as well as trade. Did he make it clear that whether or not they benefit or lose from possible British entry to the Community and from our association with the European Development Fund will depend very much on whether they choose a Yaoundé-type of arrangement or a looser type of arrangement? In either case, is it not likely that the Caribbean countries will lose considerably on development aid from Britain?
Mr. Rippon: I can just say that I think it terribly important that they should have the widest choice possible, varying from a Yaoundé-type association to various forms of trade agreements, and that provided we negotiate an offer on the same basis as that of 1963 or a similar basis

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there would be full opportunities for discussions between us and them and directly between them and the Come munity about the form of that association or trade agreement and the way it would protect their vital interests.
Several Hon. Members rose—
Mr. Speaker: I should like to call everyone but it is simply not practicable.

PRIME MINISTER (SPEECH)
Mr. Dell: On a point of order. Last Thursday the Prime Minister said:
"The fact that these special arrangements"—
regarding special development areas—
"involve another £25 million expenditure will put them in a more advantageous position than they were at that time."—[OFFICIAL REPORT, 18th Feb., 1971; Vol. 811, c. 2256]
"That time" was that before 27th October, 1970.
Since this statement was made by the Prime Minister there have been reports in the Press that the Prime Minister made a mistake. Evidently, under pressure from this side of the House, he read the wrong figure out of his notes. I suggest to you, Mr. Speaker, that if statements of this sort, which are important, are to be corrected, they should be corrected by personal statements in this House, and not by means of leaks in newspapers. May I, therefore, ask you whether you have received from the Prime Minister any request to make a personal statement?
The Prime Minister: Further to that point of order. Perhaps I may be allowed to deal straightaway with the point which has been understandably raised by the right hon. Gentleman.
I pointed out in my speech that
"the differential benefit of free depreciation and increased assistance under the Local
52
Employment Acts is, broadly speaking, equal to what was being provided by other means by the last Government."—[OFFICIAL REPORT, 18th Feb., 1971; Vol. 811, c. 2256.]
I then went on to use the sentence which the right hon. Gentleman has read out.
I should have made it plain that these new arrangements, when fully effective, are estimated to cost an additional £10 million in a full year, for the special development areas alone, over and above the expenditure of £25 million for the development areas generally, estimated to arise in a full year from the increase in assistance under the Local Employment Acts announced last October.
I much regret, and I apologise for, any misunderstanding which I may have created.
Mr. Dell: Further to that point of order. I am, of course, grateful to the Prime Minister for correcting that statement and indicating that the figure of £25 million estimate should have been £10 million. But he made two statements; one was about the figure, and the other was that this was putting them
"in a more advantageous position than they were at that time."
Was the right hon. Gentleman correcting that statement as well?
The Prime Minister: No. That statement remains, for the reason I have explained in my further statement.

BUSINESS OF THE HOUSE
Ordered,
That the Proceedings on the Motion relating to Public Expenditure may be entered upon and proceeded with at this day's Sitting at any hour during a period of three hours after Ten o'clock, though opposed; and that the Proceedings on the Mr. Speaker King's Retirement Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Whitelaw.]

POST OFFICE (DISPUTE)
4.15 p.m.
Mrs. Barbara Castle: I beg to move, That this House do now adjourn.
A debate of the kind which we are having this afternoon, an emergency debate on an industrial dispute, is probably unprecedented; but this situation in which we find ourselves is unprecedented, too.
Here is a strike, the first all-embracing strike in the whole history of the Post Office, now entering its second month. It is certainly causing hardship to the workers concerned; it is causing growing inconvenience to the public, especially to commerce, to many mail order industries, many newspapers, and other sections of the business community; it is causing damage, perhaps permanent damage, to a great public service, not only in the commercial sense but in the human sense as well. And yet all that the right hon. Gentleman the Secretary of State for Employment could do last Wednesday was complacently to announce to the House that a state of deadlock had been reached, with no indication that he was willing to take any steps to break it.
Perhaps the right hon. Gentleman was hoping that, following the Post Office's rejection of the union's plea for a mediator to be appointed, and following the Government's clear indication that they were standing firm behind the Post Office, the strike would crumble away. If so, the right hon. Gentleman must have been very severely disappointed, because it is now clear that the strikers' ranks are unbroken, that the union's determination to carry on has, if anything, hardened, and the whole trade union movement is rallying to its support, and that the public is increasingly bewildered and certainly irritated by the right hon. Gentleman's continued refusal to make any effort whatsoever to mediate. The public now believes, as we believe, that the Government have deliberately chosen this union and this strike to make an example of, because they thought the union was weak, and they have done so with a completely irresponsible disregard for the consequences for this industry.
Here we have a new Corporation, set up by the Labour Government, despite
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some misgivings amongst the staff, so that it could bring this vital public service to the highest possible pitch of efficiency. This will require changes, which can be carried through only if the new Corporation can win the confidence and the cooperation of its staff.
In the White Paper which we produced at the time of the reorganisation of the Post Office, Cmnd. 3233 we gave this indication of what we felt it was essential for the Corporation to achieve in its staff relationships:
"52. Without detriment to the responsibilities of managers to manage, the Government will expect the Corporation to promote the most constructive relationships between the management and the staff. The new Corporation will not be taking over an industry marked by bad industrial relations: on the contrary, a fine tradition of co-operation and consultation between the management and staff has been built up in the Post Office. The Government will expect the Corporation to ensure that this develops further in the new conditions and to set the highest standards in relationships with the staff."
Yet, the Corporation, within months of coming into existence, is plunged into the first all-embracing strike the Post Office has even known, a protracted strike, an increasingly bitter strike, which, if it is not settled by means which seem fair to the workers involved, will poison relationships in the new undertaking for years to come.
That is what this debate is about. It is not about the details of the postal workers' claim, but about the way it has been handled by the Post Office and by the Government, and it is about the legacy of bitterness that it will leave. It is a plea to the Government, before it is too late, to take positive steps to achieve a settlement, not only to see that justice is done, but to make it patent to everyone that justice has been done.
I have no doubt that the right hon. Gentleman will retort, as he has done. that it is just because the Labour Government set up an independent Corporation that we should leave it alone to make its own decisions on purely commercial principles. We would not necessarily object to that, if that was what was happening. If the Corporation had been left alone by the Government it would probably have reached a settlement of this dispute a long time ago, just as the privately-owned Western Union did. There was no Government interference with that settlement, which gave a 13 per cent. increase

55
on all points of the scale, plus the shortening of an already more favourable incremental scale. When I raised this in the House—
Mr. Derek Coombs: On a point of order. I seek your guidance, Mr. Speaker. The right hon. Member for Blackburn (Mrs. Castle) continues to advocate in opposition an inflationary wage settlement which she knows would reject if she were now in Government. Is it therefore in order for her to speak on this matter?
Mr. Speaker: That is not a point of order. The content of a speech is not a matter for the Chair.
Mrs. Castle: I am sorry the hon. Gentleman has despaired of his chance of catching your eye, Mr. Speaker, because if he did he would be free to make any point he liked, as I am free to make my point, as I intend to do.
When I raised in the House the fact that the privately-owned Western Union had been left free to make this 13 per cent, settlement, the right hon. Gentleman asked me if I knew this was a two-year agreement. He failed to point out to the House that the Western Union agreement had a built-in cost of living escalator, an automatic increase of a further 4 per cent. every time the cost of living rose by 4 per cent. With the cost of living going up as it has done during the past three months, at an annual rate of 11 per cent.—a far faster increase than under the Labour Government—does anybody think that the Post Office Corporation would have been left free to make an offer like that to its workers? Is anyone in the House naïve enough to believe that the Government have had just one aim since it came into office—to leave the Corporation alone to operate on commercial principles? Leave it alone—when the first thing the Government did was to sack the Chairman in whom the workers had confidence? Leave it alone—when they put in a caretaker Chairman while they searched for someone who would accept their ideological discrimination against publicly-owned industries? Leave it alone—when the Chancellor of the Exchequer has made speech after speech saying that the sole cause of inflation is
56
wage demands, and only last Friday going on record, according to the Guardian, as saying that it was the union that was being totally unreasonable? Leave it alone—when within hours of the announcement of the strike the Minister of Posts and Telecommunications was on his feet in the House labelling it as "the 9d. letter strike", without a scrap of independent evidence to substantiate his claim. There can seldom have been a strike in which the Government have more clearly shown their hands. If this is neutrality, then the Americans are neutral in Vietnam—
Sir Arthur Vere Harvey (Macclesfield)rose—
Mrs. Castle: I am sorry—I will not be challenged on that statement of fact. This is not a long debate, and I do not want to protract my speech by giving way too often. The Government's neutrality is a myth. How can it be otherwise? How can the Government be neutral when their spokesmen, when they were in Opposition and since, have made it perfectly clear that they believe in an incomes policy, but an incomes policy which has just one method of enforcement, namely, the Government's determination to lean on the wage settlements of its own employees. The Prime Minister when he was Leader of the Opposition made this totally clear:
"Above all, the Government have the responsibility to ensure that the vast public sector which is now under their control does not grant wages which are more than productivity will justify. It is for the Government to stand up on this matter and take the action which is necessary in their own sector."—[0FFICIAL REPORT, 19th March, 1968; Vol. 761, c. 308.]
The right hon. Member for Barnet (Mr. Maudling) in November 1969 made it even clearer in an article in the Sunday Express when he was writing about the wages explosion and the right way to deal with it:
"What then should the Government do? It can take a firm line with its own employees and instruct nationalised industries to do the same."
This is the background against which this dispute and this argument are set. That is why the conciliation services of the right hon. Gentleman the Secretary of State have not been used as I would have used them to reach a settlement of the dispute.

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If he does not want to undertake this responsibility, why does he not set up a court of inquiry as he set up Wilberforce? The right hon. Gentleman has told us before, and he will no doubt tell us again, that he cannot do that because the union has refused to go to arbitration. As he put it the other day, "How can I condone such a breach of agreement when the Wilberforce Report denounced such breaches?" Surely this is the biggest non sequitur of all.
The breach of agreement which Wilberforce attacked was in regard to the electricity supply industry. That did not prevent the Secretary of State for Employment setting up a court of inquiry, it did not prevent that court making constructive recommendations to meet what is described as "just grievances", nor did it prevent the right hon. Gentleman coming to this House and saying that those recommendations would be implemented. But the Wilberforce Committee has never pronounced on the Union of Post Office Workers' refusal to go to arbitration. Indeed, any objective person would admit that this is one of the very matters which a court of inquiry ought to investigate.
The union's arguments on this matter are very powerful. First and foremost, is the fact that the right hon. Gentleman some time ago reported to the House that the union had had genuine misunderstandings about the agreement which it had signed. He told the House that he accepted that those misunderstandings were genuine. If that is so, why does he go on plugging away saying that he cannot take any action because the union ought to operate an agreement which he admits it interpreted in a different way from the Government?
There are other arguments, too, and they are supported by the other Post Office unions, like the Association of Post Office Executives which, contrary to the impression that the right hon. Gentleman has tried to give the House, has pointed out that no claims have yet been taken under the new Post Office arbitration agreement. Because the arbitration tribunal had not yet been constituted, any claims which have been taken to arbitration in recent months have all been ad hoc under the 1919 Industrial Courts Act. It is not the union's fault that the arbitration tribunal had not yet been
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constituted. Above all, it is not the union's fault that there is no basis in this industry on which arbitration can fairly operate, because there has been no agreement on the pay principles which ought to operate under the new Corporation.
As the Association of Post Office Executives points out, pay principles themselves are not arbitral within the arbitration agreement. Yet it is these very pay principles which are now in doubt following the Post Office Corporation's public declaration, only too readily endorsed by the Government, that it cannot increase its offer because this would mean putting up its charges. This is in direct breach of the understanding which the unions had with the Labour Government when they agreed to the reorganisation of the Post Office.
The transfer of these workers from ordinary Civil Service pay conditions and principles into the care of an independent Corporation meant that new pay principles had to be worked out. This is all spelt out in Cmnd. 3233. This is the promise that was made to the unions:
"The Corporation is expected to begin negotiations as soon as it has been established on the conditions of service which will apply after vesting day. To the extent that these are not completed by that day for any group of staff, pay and conditions of service as they stood immediately prior to vesting day will continue to apply to the group until they have been varied by negotiation or, where applicable, arbitration."
But the Post Office is repudiating the Civil Service pay principles.
The Minister of Posts and Telecommunications (Mr. Christopher Chataway): Is the right hon. Lady not aware that in the January, 1970 settlement for U.P.W. grades it was agreed by both sides that the direct linkage of pay and conditions of service which had hitherto existed between staff of the Post Office and those of the Civil Service should be broken? Therefore, what she has quoted ceased to have effect from that point. Is she further aware that the agreement on arbitration which was signed did not in any event lay down conditions about a new agreement on pay principles?
Mrs. Castle: The Minister of Posts and Telecommunications should study with care the letter which was circulated only two days ago by the Association of Post Office Executives, which is one of the

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unions that the Secretary of State for Employment has quoted approvingly because they have been good boys as compared with what he calls the bad boys of the U.P.W. [HON. MEMBERS: "No."] Yes, that is so. The Association makes clear in the letter of 19th February which it issued to newspapers—and I am certain it sent copies to the Government—that it entirely sympathised with the U.P.W. refusal to go to arbitration because the old Civil Service understandings had been breached, without any alternative having been put in their place. We are now told that the criterion—a criterion which the Government have used and quoted time and again in this House—is exclusively what the Post Office can afford without putting up postal charges or altering them in any way.
Of course we accept that agreements should be kept—[HON. MEMBERS: "Oh."]—provided, first and foremost, that they were agreements which the union was making consciously. [Laughter.] The right hon. Gentleman the Secretary for Employment is on record as exonerating the U.P.W. on this matter and telling the House that he accepted that there had been a genuine misunderstanding. I suggest that the hon. Gentleman turns up the references in HANSARD to that effect. Has the Post Office kept its side of the bargain? The union's answer is emphatically "No".
We all want to see confidence restored in arbitration, but do the Government feel they have played their part when they have shattered confidence of all unions in arbitration by the sacking of Professor Clegg? The Tight hon. Gentleman is wasting the time of the House and of the country in coming here time and again and saying that arbitration is the way out. He knows—for some reasons that he accepts and for some that he rejects—that arbitration is now not a possibility. That is why a court of inquiry is the only hope of reaching a settlement. That is what we are pressing on the right hon. Gentleman this afternoon.
No doubt in his reply the Secretary of State will take up the theme of some of his back benchers by quoting to me the Labour Government's White Paper "Productivity, Prices and Incomes Policy" and the statement that if prices
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are not to increase pay settlements should not exceed 4½ per cent. That, of course, is a statement of fact, but the question at issue that faces both sides of the House is how best we can move towards greater price stability. It cannot be done by singling out one group of public employees after another for the treatment that the Government have laid down, while allowing other workers like the Chrysler workers to pocket another £5 a week with impunity.
The Secretary of State for Employment (Mr. Robert Carr): Would the right hon. Lady indicate to the House with what sort of lack of impunity she would stop the Chrysler workers getting over £5?
Mrs. Castle: I am delighted to have the right hon. Gentleman admit his impotence. I am delighted to have him admit by implication that he did not even attempt to bring any pressure to bear on the Chrysler workers.
What we have said—this is something in the White Paper which the right hon. Gentleman never quotes to the House, though I will—
"The Government's continuing policy is that workers in the public services should be treated on the same basis as workers in other sectors of the economy."
In saying that, we were far nearer to the Wilberforce Report than the right hon. Gentleman will ever go. Paragraph 1023 of the Wilberforce Report pointed out that workers in a vital public service
"… should be properly paid and should have confidence that their case for improved earnings should not be overlooked but periodically and fairly reviewed."
We have always said that if any incomes are to be curbed all incomes must be curbed, and, above all, prices must be curbed as well. It is no good the right hon. Gentleman quoting in aid the White Paper when he repudiates its basic principles.
Does he believe in a prices and incomes policy? Does he accept, as the White Paper points out, that we cannot have a fair policy unless we set it in a fair framework, unless we have first clear criteria which apply to everyone, and unless we have notification of price increases as well as pay settlements, and above all unless we have
"…reference where necessary of individual cases to an independent authority"?

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The right hon. Gentleman has talked about the virtues of arbitration, yet it is his Government who have deliberately jettisoned all arbitration about prices, jettisoned the Prices and Incomes Board, the arbitration board for prices, and jettisoned the Consumer Council, the arbiter of the consumer's interests. Thus we have a unilateral policy in which the Minister for Posts and Telecommunications can quote to the House as a fact the Corporation's assertion that if it were to concede the union's claim a 9d. post would be inevitable. If the Government try to tell us that they are not taking sides, may 1 draw the attention of the House to what the Minister said on 18th January, when he was announcing the imminence of this strike:
"…the Post Office has made it absolutely clear that if it were to accept the claim of the U.P.W. it would amount to 19½ per cent. and that for anything like that it would be necessary to introduce a first-class letter rate of at least 9d. before the end of next year."—[OFFICIAL REPORT, 18th January, 1971; Vol. 809, c. 526.]
The Minister said "absolutely clear". But "absolutely clear" to whom? Not to the union, which has argued that whereas the difference for the postal workers between the Corporation's offer and the union's claim is some £19 million, the yield of an increase to a 9d. postal rate would be about £90 million. So it is not absolutely clear to the Union of Post Office Workers, and I suggest that it is not absolutely clear to the House either. How can we then accept the Corporation's argument without an independent scrutiny? Why should we be asked to do so? Why should these workers be pilloried because they will not accept a unilateral Post Office argument?
Mr. Tom Boardman (Leicester, South-West): Would the right hon. Lady give way?
Mrs. Castle: No, I am sorry. It is for that independent scrutiny that we ask this afternoon, and we believe that the public is asking for it, because this is the only way that we can now cut through the tangle of argument and counter-argument, and the mounting bitterness and suspicion, and end the alienation between the two sides. This is the only way to bring this unhappy strike to an end. Will the right hon. Gentleman not at least explore the possibility with the union to
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see whether they could agree on a chairman and to see whether the union would be willing to co-operate? The right hon. Gentleman has had very fair treatment personally—some would say over-generous treatment—at the hands of the General Secretary of the U.P.W. The right hon. Gentleman has made great play on that in the House, saying, "Look what tributes the General Secretary of this Union has paid to me". As Mr. Jackson said at that magnificent T.U.C. rally yesterday, the time has come for the Government to move to secure a settlement. If the Government do not move now but still refuse to lift a hand to end this deadlock, if they continue to commit this country, this union and this industry to a policy of drift, then Mr. Jackson will be forced to believe that the Government do not want to end the strike but to break it.
I say advisedly to the right hon. Gentleman that if that is the Government's aim, the consequences for this industry. and for industrial relations throughout the country, will be disastrous. That is why we urge the Government to act before it is too late.
4.48 p.m.
The Secretary of State for Employment (Mr. Robert Carr): Hitherto it has been the practice of Oppositions in the House, both Labour and Conservative, to mute the political battle about industrial disputes at least while they are in progress and until they have been resolved.
Mr. Stanley Orme: The right hon. Gentleman has changed that.
Mr. Carr: The right hon. Lady admitted that that has been the practice, although her right hon. Friend the Prime Minister of the past appears to think otherwise. The right hon. Lady and her predecessor, the right hon. Member for Southwark (Mr. Gunter), never had to operate in the sort of atmosphere in which the Opposition are forcing me to operate today.
Mr. Harold Wilson: The right hon. Gentleman referred to me. Would he now look up the records of what the Prime Minister, then Leader of the Opposition, did to make more difficult the settlement of the seamen's strike?
Mr. Carr: I will, and I am sure, when I do, that what I have just said will be

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confirmed. As the right hon. Lady said, denying her ex-Prime Minister, this is an unprecedented occasion. That is how she started her speech. That is on the record, if the Leader of the Opposition cares to look it up tomorrow.
The basis of this bipartisan convention of political restraint has been partly a common desire to make settlement of particular disputes as easy as possible and partly a firm, underlying traditional belief in this country, held hitherto by all parties, that political action and direct industrial action should be kept in separate compartments.
I repeat that no previous holder of my office, whether Labour or Conservative, has had to try to resolve a major industrial dispute involving a basic service to the community in which both the positions and the emotions of the parties to the dispute have been hardened and intensified to such an extent—
Mr. Norman Buchan: By the right hon. Gentleman's Government.
Mr. Carr:—by party political questioning and debate in the House of Commons. So the right hon. Lady has set, as she claims to have set, a precedent today. I leave the country to judge whether that precedent, those mischievously bipartisan remarks, those misrepresentations of her own past policy, that denial of the principles for which she stood when she was in office, will do anything to quicken the end of this dispute or any in the future.
Let us be clear what this is about—
Mr. Ron Lewis: Put on another record.
Mr. Carr: In its capacity as the Parliamentary Opposition, the Labour Party has chosen to turn this difficult and serious industrial dispute into a political battle against the Government. Perhaps unwittingly, the T.U.C. has chosen to play that game with them. A number of the big unions have decided to use this dispute not only as part of their political campaign against the Government but as a means of promoting their own industrial aims by using the postmen as the front line troops to fight their battles for them. That is a measure of the difficulty and the intensification
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of strife which occurs when the Opposition of the day throws convention and responsibility to the wind.
Today, the right hon. Lady has apparently come out 100 per cent. against the Post Office and in full support of the union's claim as it stands—
Mrs. Castle indicated dissent—
Mr. Carr: I do not want to misrepresent the right hon. Lady. If she has not come out in full support of the union's claim as it stands, perhaps she would like to make that clear.
Mrs. Castle: It is a great pity that the right hon. Gentleman wrote his speech before hearing what I had to say. I was careful to go out of my way to say that we were not discussing the details of the claim today. It will be in HANSARD for all to see, and even the right hon. Gentleman has not sufficient power to alter that. What I said was that we were discussing the way in which the matter was being handled. My whole case, to which the right hon. Gentleman should address himself, is the need now, if we are to cut through this tangled mess, to set up an independent court of inquiry without any more ado.
Mr. Carr: When anyone comes to read the right hon. Lady's speech, I think that there will be no doubt—certainly all those who heard it can be in no doubt—that her message had three main strands. The first is quite justifiable from her point of view because it is what debates in this House can be about: it is that the Government are wrong. The second and equally strong strand is that the employer, in this case the Post Office, is also wrong. The third strand, by implication, is that the union is right. That has been the effect, as I feared it was almost bound to be the effect, of seeking a debate on an industrial dispute when it is in the stage that it is now.
The line that the right hon. Lady has taken—the emotional atmosphere that she has created—is a denial of all that she and her right hon. Friends stood for when they were in government.
Mr. Harold Wilson: The right hon. Gentleman has heard my right hon. Friend twice say that she is not concerned with the details of the settlement but that she is concerned with the procedures.

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How does he justify the words used by his right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Trade and Industry on Friday about the postmen's claims, which were concerned with the details of the settlement?
Mr. Carr: Certainly I agree with what my right hon. Friends said. But there are two elements in this dispute which go to the heart of what the right hon. Lady and her Government said that they stood for in these matters when they were in power. The first was that claims from 1969 onwards must fall within a bracket of between 2½ and 4½ per cent. They brought that White Paper to this House and, admittedly with difficulty, insisted on it and the other matters of their policy being approved by their supporters. In view of that, is it now responsible to be saying to the Government that they are leaning on public employees when 9 per cent.—
Mr. James Callaghan: Yes.
Mr. Carr: The right hon. Member for Cardiff, South-East (Mr. Callaghan) should read what his right hon. Friend the Deputy Leader of the Opposition had to say at the Labour Party conference last year about credibility. Perhaps the right hon. Gentleman feels that he is promoting his own chances.
Mr. Buchan: Is not the right hon. Gentleman himself leaning on the workers when he says that he agrees with his right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Trade and Industry, who are undoubtedly leaning on the workers?
Mr. Carr: My right hon. Friend the Chancellor of the Exchequer—
Mr. William Ross: Who is that now?
Mr. Carr: —whose speech I have read, rests hard on arbitration, and I believe that he is right to do so—[Interruption.] Does the Prime Minister—[Laughter.]—of the Left wish to intervene? For the first time for some time the right hon. Gentleman seems to have positive views to put forward. We should like to hear what they are. Does he agree that a union which signed an agreement last August to go to arbitration is right in rejecting it? Does he agree that a 13
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per cent. claim without any strings about productivity of any kind is in the national interest, and is possible to sustain in either the private or the public sector without further increases in prices? Does the right hon. Gentleman agree that controlling the increase in prices is one of the most important factors? If so, let us hear it.
Mr. Harold Wilson: I agree with the right hon. Gentleman—[HON. MEMBERS: "Oh."]—when he says that there was a genuine misunderstanding between the two sides about arbitration.—[HON. MEMBERS: "Answer the question."]—I am answering the question by quoting what the right hon. Gentleman said last week; not what he is saying this week. I agree with the letter in The Times making it clear that the union was prepared to nominate the chairman of the arbitration tribunal and the Post Office was not until after the dispute began.—[HON. MEMBERS: "Answer the question."]—I am answering the question. The right hon. Gentleman wants to know what I agree with and I am telling him. I agree with my right hon. Friend when she says that it is not a matter for this House to say whether the claim is reasonable, but that it should go to an independent court of inquiry. 1 do not agree with the Chancellor of the Exchequer, whom the right hon. Gentleman quoted, when he said that the union was wholly unreasonable.
Mr. Carr: The right hon. Gentleman must surely agree that since the two parties, as recently as last August, made an agreement that if they could not agree between themselves they should go to arbitration, that is the right way to deal with it. The right hon. Gentleman referred to what I said in the House. I have what I said in the House before me. I said, and the acting Chairman of the Post Office also said, that we accepted—I do not go back on this—the sincerity of the misunderstanding on the union's side about the legal or compulsory nature of the undertaking to go to arbitration.
I sought the permission of the parties for the agreement to be placed in the Library so that hon. Members could read it. I think that anybody who reads the agreement—I also made this clear in the House—is likely to think that it was an obligation. But I am not pressing that point. Nevertheless, if it were not

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an absolute obligation, it was certainly a clear statement of intention of how the union and the Post Office would expect to settle disputes if they could not settle them by normal negotiation. Other unions in the Post Office have been prepared to do this.
I have specifically, in the course of my talks, put to both sides whether the problem is the nomination of people who could be trusted by the union as much as by anybody else. I have been told clearly: no; the objection is to arbitration in principle.
Mr. Ivor Richard rose—
Mr. Carr: So it is not true to say that arbitration is impossible because of the slowness to put forward names—I admit slowness—on the Post Office side. I do not know the reasons and I do not wish to judge the reasons for that relative slowness. [Interruption.] If I thought that that prevented arbitration, of course I should be interested. But other unions in the Post Office have not thought that it prevented arbitration. I admit the relative slowness of the Post Office to put forward names for the panel—it is a pity that the Post Office was so slow—but that has not prevented other unions from going to arbitration; nor need it prevent this union from going to arbitration. It has been made clear to me that the objection is on principle, not on names.
Mr. Richard: I am grateful to the right hon. Gentleman for giving way and for putting a copy of the agreement in the Library so that we can read it. Does the right hon. Gentleman agree, first, that the agreement provides for a tribunal consisting of an independent permanent chairman and of two other representatives, one drawn from a panel approved by the union and the other drawn from a panel approved by the Post Office, but that the person who picks the other two members of the tribunal is the chairman himself? Does the right hon. Gentleman also agree that this agreement states:
"Where on any reference the member of the Tribunal are unable to agree as to their award, the matter shall be decided by the chairman."
Is the right hon. Gentleman seriously suggesting that any union could agree to
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his nomination of an independent chairman for a tribunal after a dispute has taken place?
Mr. Carr: I have put to the parties whether there was any difficulty about people, and I have been told by both that this is not the objection; it is an objection in principle to arbitration. That is the state of affairs.
I think that the House must look at the facts about this dispute and, above all, about what might best now be done to bring it to an end. Opinions will differ for a long time whether this debate or the right hon Lady's speech will have contributed to its solution.
First, let me summarise the facts about the union's claim and the Post Office offer. The union's original claim was quantified in 1970 for implementation on 1st January this year for a minimum wage increase for almost all grades of 15 per cent. The total claim was equivalent to an overall increase of 19½ per cent. on the Post Office wages bill.
The Post Office, in reply to this claim, made an offer on 8th January of 7 per cent. and, when this was rejected, increased the offer to 8 per cent. on 14th January. The Post Office felt that 8 per cent. was the maximum addition to the wages bill which it could accept in view of the financial state of its business and the essential need to limit charges to its customers. The Post Office considered that to concede the claim would severely damage its financial position and that this would be against the long-term interests of the staff just as much as of the public because it believed that a further increase in charges, coming immediately on top of the largest increase ever which was due to come into force last week, would force a downward spiral in the volume of Post Office business. When the offer of 8 per cent. was rejected by the union, the Post Office asked the union, in accordance with the arbitration agreement, to join the Corporation in referring the dispute to arbitration.
I have reminded the House—I think it was right that the House and the country and the union as well as the employer should be reminded—that this agreement was made last August and that it is a serious matter indeed to pay no attention to it. However, the U.P.W.

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was not prepared to go to arbitration, and it argued that the agreement did not compel it to do so at the request of the Post Office.
I have already said—and 1 stick to it—and the acting chairman has said that as a matter of good faith we accept that misunderstanding about the obligatory nature of the agreement to go to arbitration. But it still does not take away from the fact that this was a declared intention, even if it were not an absolute obligation, written into the agreement and signed as recently as last August.
On 15th January the executive council of the union decided to call an all-out strike from midnight on the 19th. Before the strike began I had discussions with both the union and the Corporation and I found their positions unchanged since the negotiations had broken down. The union considered that the only basis for a settlement was a substantial increase in the offer. The Post Office said that its offer was limited by its financial position and it could not contemplate a further increase in the total size of its wages bill, for the reasons which I and the Post Office have given not only to the union, but to the public on a number of occasions. At the time of that meeting on 15th January, neither side had changed its attitude about arbitration.
Since 15th January I have kept in close touch with the union and the Post Office and on several occasions, as the House knows, I have had long discussions with them.
During the weekend before last, the Post Office put to the union a new proposal: namely, that it would increase its offer to 9 per cent. in return for the union's agreement to certain productivity measures. The union rejected that offer, and stated that it must be increased from 9 per cent. to 13 per cent. without any conditions relating to efficiency and productivity. The union made it clear that it was not opposed to improving productivity and efficiency, and would pursue that question with the Post Office. I made that clear, and I make it clear again. But it is also clear that the union insisted on putting it in writing that it would not have any conditions whatsoever attached to this settlement; the commitment to productivity was to be general, and could in no way be attached to the settlement.
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Negotiations having broken down again, the union proposed that the two sides should meet under a mediator. I again saw both parties without delay. In its discussions with me the union explained that the mediator's rôle would be limited to conciliation, in the strictest sense, and that it—the union—could not accept that the mediator should ever have any authority of his own to cut the knot if he failed to bring the parties to agreement.
At the union's request I conveyed this explanation to the Post Office and it, having gone away to think about it, announced that it felt unable to accept the union's suggestion about a mediator on those lines because, in the Post Office's view, what was needed was an independent judgment on the fundamental differences existing between the two sides, and it said that the only way to achieve this was by arbitration—to which it had agreed.
I had a very full discussion with Mr. Jackson on 17th February—last week— when we agreed that at this juncture further conciliation meetings might do more harm than good, in view of the wide gap between the parties. It had already been exhaustively explored both between the parties on their own and under my chairmanship.
The next step was that Mr. Victor Feather and Sir Sidney Greene saw me on 19th February—last Friday—to discuss what further possibilities there might be in terms of action to resolve the dispute. As they made clear publicly, they had not come to see me with any specific suggestion, and in our long discussion, unfortunately, we made no progress towards finding means of breaking the present deadlock.
The essential features of the current position are that the Post Office has increased its offer from 7 per cent. to 8 per cent., and then from 8 per cent. to 9 per cent—with the extra money to be found from productivity savings—while the Union of Post Office Workers has reduced its claim from 19½ per cent. to 13 per cent., without productivity conditions. The Post Office wishes the matter to be referred to arbitration, but the union is not prepared to go to arbitration.
That is the situation. Where can we go from there? How can we find a means of bringing about a resolution of this dispute—because I believe that that is the

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desire of the whole country and, equally, of the parties. First, there was the alternative of arbitration—which I shall not labour any more, except to repeat that it is still there and ought to be remembered as being here, because agreements, especially recent agreements, must be of importance in industrial relations.
The second alternative is that of conciliation. The union is determined not to accept the arbitration to which it agreed, and conciliation is the next most obvious alternative. In all the circumstances, that is certainly the method that I should prefer, especially since both parties have repeatedly stressed to me their wish, above all, to reach a negotiated settlement. I would like to try this course. If the Opposition allege—I think that they have done—that the meetings that I have had with the parties were merely going through the motions of creating the semblance of activity, let them heed not my testimony but that of the union's own leader.
The right hon. Lady knows from her own experience that whether conciliation can help to bring about a settlement depends on the attitude of the parties. The process of probing positions in depth may reveal common ground, not explicitly recognised by them before, which can sometimes lead to a settlement. Alternatively, one or both sides might, in the light of events, modify their positions, and if one is quick in conciliation and picks that modification up, that can lead to a settlement, But however energetically conciliation is pursued, in the final analysis the outcome depends on the attitude of the parties. It may help to realise the potentialities of a settlement, but conciliation cannot create them.
As for the future chances of conciliation, I can only assure the House and also the parties that my services remain available and that I shall be keeping in close touch with them in order not to lose any opportunity that may arise in the coming days. I repeat that I very much hope that it will be endorsed by the House and that both parties are listening to what I am saying.
The third alternative would be a court of inquiry. This is the popular remedy that is being pressed on me at the moment—in particular by the right hon. Lady. I understand it, and I do not
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complain about it. But I must ask the House to face with realism the difficulties of appointing a court of inquiry in present circumstances. I should like to examine that position.
First, it is wrong to assume that the appointment of a court of inquiry should be virtually automatic in a serious dispute that has gone on as long as this one has. The right hon. Lady will recollect the strike that paralysed a major motor assembly plant on Merseyside, in which —no doubt for good reasons—she waited for nine weeks before appointing a court of inquiry. She will remember the strike of Vickers of Barrow, which held up vital defence equipment, and in which, for equally good reasons, she waited until the strike had gone on for a further seven months before appointing a court of inquiry.
I believe that altogether the right hon. Lady appointed 13 or 14 courts of inquiry, and that in about half the cases the strike went on longer than this one has gone on before she appointed a court of inquiry. I am not saying that that is an argument of itself, or that we should not appoint one at any particular moment, but it is evidence to show that my immediate predecessor found in disputes circumstances that led her to delay the setting up of courts of inquiry, no doubt for good reasons—some of which are not always easy to explain, because there is always the question of confidentiality.
There are also questions of judgment—because the right hon. Lady will know that it is largely a matter of judgment to decide to appoint a court of inquiry and, if so, when. Judgment can be fallible. Judgment can be made only by those who are intimately concerned with the dispute. At no time has either the union or the Post Office asked me to appoint a court of inquiry. That is not conclusive, on its own, but it is an important differentiation from the recent electricity supply dispute, for example.
Are the Opposition claiming that it is always the untrammelled right of a union to decide at will, on the one hand, not to honour an agreement that it has recently made about arbitration, and, on the other, to accept a court of inquiry imposed upon it without any commitment whatsoever to call off the strike while it is sitting, or any commitment

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to accept what it recommends? Are they saying that the union has the right, thereafter, to continue or resume the strike, or even to require the employer then to observe an arbitration agreement?
Third, the House must realise that if the court of inquiry method is to maintain its unique value in British industrial relations it must be used sparingly. It cannot be applied too easily, readily or frequently, particularly in cases, let me repeat, where the parties have recent agreements about the method for resolving disputes and differences which arise between them—
Mr. Dan Jones: It would be infinitely preferable to a strike.
Mr. Carr: What would have been infinitely preferable to a strike would be to honour an agreement on arbitration.
Fourth—[HON. MEMBERS: "YOU are frightened of a court."]—and related to these arguments, is the fact that we have just had the Wilberforce court of inquiry, which reported less than two weeks ago. That court of inquiry, although dealing specifically with the pay dispute in electricity supply, was required by its terms of reference to take into account the interests of the public and of the national economy—
Mr. Stanley Orme: It said that it was not competent.
Mr. Carr: It did not say that it was not competent.
It made strong recommendations on a number of issues which are not only of universal application, but which are central to this dispute—namely, the need to carry out the obligations of procedure agreements, including particularly the obligation to go to arbitration, which was one of the strong points in the Wilberforce Report, and the need to relate pay increases to specific improvements in productivity and labour efficiency, another point which is a central issue to this dispute.
The Wilberforce Report underlined the fact that, in the country's present "dangerous state of spiralling inflation",
"…a large increase in pay beyond the growth of productivity … would be bound to give another twist to the spiral".
The Report also underlined the need for moderation in settlements other than in the electricity supply industry, because
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it said that if the increase which it had recommended in electricity supply and which it regarded as exceptional and justified by the record of labour productivity in that industry was to stand, other settlements could not be on a comparable basis.
These are matters of principle which the Government regard as of first importance. The appointment of a further inquiry, which would inevitably have to traverse this ground again within two weeks of the Wilberforce Report having traversed it and reported on it, would be both superfluous in the national interest and gratuitously damaging to the authority of the Wilberforce findings—[Interruption.]
Mrs. Castle rose—
Mr. Deputy Speaker (Miss Harvie Anderson): Order. Many hon. Members want to speak in this very short debate and it will be the wish of the whole House, I think, that both the opening speech and Mr. Secretary Carr's speech should be heard. I think that it would. be in the interests of the House to allow that with less interruption.
Mrs. Castle: I am grateful to the Secretary of State for giving way. He is getting to the heart of this. What he is universalising from the Wilberforce Report are those bits of the report which meet his claim. Will he not also read to the House what Wilberforce said about it being in the public interest that workers in a vital public service should be properly paid and should have confidence that their case for improved earnings should be not overlooked but periodically and fairly reviewed? Therefore, it came out against discrimination against the public employees, which has been part of the Government's policy.
Mr. Carr: It is true that Wilberforce said that, but then we get back to subjective judgments about what is the right amount, and one thing which the Report said quite clearly—I do not want to get back on to the "numbers game" in relation to Wilberforce if we can help it—was that increases unrelated to productivity—perhaps the right hon. Lady and I can agree about this—recommended in that industry should not be more than 10.9 per cent. in the September to September wage year or 11·3 per cent.

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on an annual basis. It also said that even that was justified only by the exceptional record in manpower reducing and productivity in this industry, and that if other settlements were allowed to come up to that sort of level this would not stand for the electricity power workers.
Finally, I want to give one other reason which the House must take into account in considering the court of inquiry possibility. In the Post Office, the job of unlocking the extra efficiency and productivity on which higher individual earnings can alone be soundly based is, in my view, a longer, more technically complicated job than can be done by a court of inquiry. In the electricity industry, the basic agreements were already there, the methods had already been applied and tested and proved to be right and to work for about 20 per cent. of the labour force. It was therefore easy for a court of inquiry to take over and say, "Let us encourage this, because it clearly works and if we give that an incentive it will benefit all the workers of the industry".
Unfortunately, that has not yet been reached here, and I believe that this unlocking of the productivity and efficiency which can provide higher earnings for the people in the Post Office requires determined negotiation between the two sides themselves over a considerable period, and that it cannot be done just by a court of inquiry sitting at the most for two or three weeks. Of course, this dispute—
Mr. Orme: What are you going to do then?
Mr. Carr: I have said that I believe that conciliation is the right course in this dispute.
Of course this dispute could be settled quickly, if pressure were put on the Post Office to increase its total labour costs by more than the 8 per cent. which its present offer entails, but if the dispute is to be settled in this way, one of two results must inevitably follow—either the Post Office must again put up its charges, or the increase in prices would have to be avoided by means of a subsidy from the taxpayer.
In advising the rejection of both those courses, I can do no better than quote
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from what the Union of Post Office Workers itself said in its journal a year ago, immediately after receiving a settlement of 12 per cent. As I sit down, I should like the House to consider those words—
Mr. Orme: What are you going to do now?
Mr. Carr: This is a quotation from the union's own journal of February last year:
"As result of this wages offer, the Postal business will be about £29,000,000 in the red. This is a serious business for all of us who earn a living in the Postal service. For if our wages and conditions are to improve in the future it is essential that we should be employed by a profitable industry.
The price of posting a letter will have to be increased, but even 1d. on both 4d. and 5d. mail will only bring in about £26,000,000. which is slightly more than the cost of the present offer to our Postal members. So, even if prices rise substantially, there is no guarantee of profitability.
There is also a danger in continually raising charges. This may lead to a reduction in mail posted, for telephone and telex are becoming increasingly competitive with the postal services. In addition, when prices were increased in 1968. the level of posted traffic dropped and this drop has not been completely recovered.
The danger we face is not dissimilar to that which existed until recently in British Rail, where every increase in charges led to a decrease in traffic and finally to a reduction in services."
It went on:
"In these circumstances there are some who would argue for Government subsidy. Those who do so forget recent history. Subsidy will bring in its train political interference. The Beeching Plan on the railways and the pit closures in the mining industry are examples of what can happen to a subsidised nationalised industry when the politicians start calling the tune. These are the basic stark facts facing us so far as postal services are concerned. All of us must realise that our future well-being is wrapped up in these facts. We cannot draw water from an empty well, nor good wages from a bankrupt industry."
I repeat that it is through hard, concrete productivity schemes that the door to higher earnings is to be unlocked. I am ready, and I repeat that I am ready, to conciliate in an attempt to bring that about, but I am sure that those words which were uttered by the union last year are as true today as they were then. I beg the union's executive to remember their own words when they meet on Wednesday.
5.31 p.m.
Mr. Charles R. Morris: The attitude of the Secretary of State to the formidable case advanced by my right hon. Friend the Member for Blackburn (Mrs. Castle) was to some extent predictable, but the nation and Post Office workers are asking the same question: how long is the drift to go on?
We have now lost six million working days in terms of the Post Office staff. In revenue terms, the Post Office has to date lost in excess of £17 million. The Secretary of State should not complain if people assert that he has merely been going through the motions in relation to his powers of conciliation, and the voices which are asserting that are not confined to these benches.
After the right hon. Gentleman's last intervention—or should I call it his first?—when he invited the Union of Post Office Workers and the Post Office management to discuss the issue with him, the acting Chairman of the Post Office Board put out a telex message to his head postmasters indicating that the meeting had been called as a political expedient to meet political pressures and to serve public relations. Can the right hon. Gentleman refute that? Can he deny that the acting Chairman put out that message to head postmasters?
Mr. Chataway rose
Hon. Members: No.
Mr. Deputy Speaker (Miss Harvie Anderson): Order. I have pointed out that this is a short debate. Many hon. Members want to speak in it.
Mr. Chataway: Because it is a short debate, I hesitated to intervene. I rise merely to remind the hon. Member for Manchester, Openshaw (Mr. Charles R. Morris) that his reference is out of context and relates to one paragraph from a long private message.
Mr. John Mendelson: Was it true?
Mr. Chataway: The hon. Gentleman knows that there was no charge whatever in it about my right hon. Friend having called the meeting for political expediency or whatever other reason the hon. Gentleman mentioned.
Mr. Morris: If that is the right hon. Gentleman's reaction, then let the Minister make the whole of the telex message available to hon. Members.
It is a privilege to be participating in this debate because I have been concerned with the interests of this group of loyally dedicated public servants for about a quarter of a century. It has been a privilege to be associated with these public-spirited employees for this length of time and it is a tragedy that they should now be in this position.
In the context of the speech of the Chancellor of the Exchequer last week, it is reasonable to ask what manner of men and women we are considering. Post Office workers are relied upon for the communications of the nation. They have among their numbers people who go out in all sorts of weather and in all kinds of terrain—from the Highlands and Islands to the rural and urban areas—to deliver the mail. They man our telephone exchanges, which serve isolated communities, and Post Office counters throughout the nation. They are basically decent people who seek nothing more than to serve the community. [Interruption.]
Mr. Charles Loughlin: On a point of order. Are you aware, Mr. Deputy Speaker, that there has been heckling from hon. Gentlemen opposite for some time while my hon. Friend has been speaking and that you have taken no notice of this—[HON. MEMBERS: "Withdraw."]—but that you are on your feet as soon as one of my hon. Friends says something?
Mr. Deputy Speaker: I have done my best to control the debate.
Mr. Loughlin: You should control hon. Gentlemen opposite.
Hon. Members: Order.
Mr. Deputy Speaker: I am sure that the hon. Gentleman would not wish to criticise the Chair.
Mr. Loughlin: I have criticised it.
Mr. Morris: I certainly do not take exception to the heckling of hon. Gentlemen opposite. It is an occupational hazard, anyway.
I emphasise that Post Office workers generally are responsible people and that

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their union leaders are not politically-motivated industrial anarchists. I urge hon. Gentlemen opposite to observe the lengths to which they have gone to ameliorate the effects of the strike among certain sections of the community. Indeed, has there ever been a union which has spent so much of its own money to serve the community while being involved in industrial action?
Only last week the Glasgow branch of the Union of Post Office Workers spent £1,100 of its own money to ensure that union staff provided emergency services, the union having undertaken to provide them, to the local community. These are the people who have been described in a number of speeches by hon. Gentlemen opposite as "wholly unreasonable". These are the people who are represented by the Union of Post Office Workers. They are not industrial Luddites. When I hear the Secretary of State say that productivity schemes will unlock the door to higher earnings, I am bound to wonder whether the right hon. Gentleman is aware that these are the people who have been conducting productivity negotiations with the Post Office for half a century or more.
Consider the various ways in which the staff side has co-operated. When subscriber trunk dialling came to this country, there was wholehearted support and co-operation from the staff side interests. Postal mechanisation was introduced with the wholehearted support and co-operation of the staff side. Indeed, the downgrading of hundreds of head postmasters came about with the cooperation of the union and the staff side. Yet we have a Secretary of State who prattles on about the time taken to unlock the door to efficiency and productivity. I invite the right hon. Gentleman to look at the Post Office workers' record on productivity.
Now, a few words on the nature of the claim itself. We hear it asserted that the Union of Post Office workers is a wholly unreasonable union, a wholly unreasonable element in the community, politically motivated. That is a travesty of the truth. As the Secretary of State himself said, the original claim was for 15 to 19½ per cent. Against the background of the discussions which they
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had, these so-called wholly unreasonable people said that they were prepared to consider a 13 per cent. increase. But this was dismissed. They were described as wholly unreasonable, although they indicated that they were prepared to reconsider their position on the claim.
Mr. Orme: Perhaps my hon. Friend would put to the House what these figures mean in monetary terms for the wage packets of the average worker.
Mr. Morris: That is another facet of the claim. The union is asking for a minimum increase of £3. That may seem a formidable increase until it is seen against the sort of wage about which one is talking. I shall deal later with the point made by the Minister of Posts and Telecommunications when he said in answer to a Question that a postman's average pay was about £25 a week. In fact. for the postman in the Provinces who has not access to the overtime which some people in London and other big centres are obliged to work, his take-home pay is about £16 a week. The Post Office cleaner has a take-home pay of about £12 to £13 a week.
What is the phrase we hear?— "spiralling inflation"—yet that is the sort of money we are talking about now; £12 to £13 is less than some hon. Members spend on a night out.
Next, I come to the question of incremental scales. I hope that I shall be forgiven if I am tempted to be a little emotional on this subject, for I was obliged to wait until I was 33 years of age before I reached the maximum of the scale in the grade in which I served in the Post Office. The question of incremental scales is a serious issue for the post and telegraph officer and telephonist grades. They are an anachronism, and any Post Office court of inquiry—call it what one will—ought to give attention to them.
As a result of the incremental scales, postal and telegraph officers are obliged to wait until they are 30 years of age to get the rate for the job. It may be said that this is a condition of employment and people knew what the scales were before they joined. But what is the effect? As a young counter clerk serving on a Post Office counter, I have been the youngest chap there in terms of years though in terms of experience I may have served

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longer than anyone else in the office. But, because of my age, I am denied the rate for the job. Moreover, in certain circumstances, one is obliged to train other staff who are receiving a higher rate of pay.
This is morally wrong, and the incremental scales ought to be abolished. A telephonist may be working alongside another telephonist on the same switchboard; she may be more efficient, she may be carrying a greater load of calls, yet she cannot have a higher rate for the job because the pay scales take account of age and not of the efficiency or merit of the individual concerned. This is one matter which, I very much hope, will be settled very soon.
As one postal worker said, the incremental scale is enough to make one look back in anger to the date of one's birth. That is the effect of it. For the P. and T.O. and telephonist grades, date of birth is the all-determining factor for rates of pay.
We have been talking about the principles for determining Post Office pay. This is not the first time that Post Office workers have come up against Conservative Governments on this issue. They had the same problem when they were civil servants and came within the ambit of the National Staff Side of the Civil Service. They had the problem repeatedly because Conservative Governments have tried to influence pay levels generally by seeking to depress the wage and salary scales of public servants. This is why in 1955 the Priestley Commission came to the conclusion it did, that civil servants, which included Post Office workers, had a right to the scale of pay which was paid by a reasonable employer in outside industry.
What was unreasonable about that? It was said, "We shall find this rate of pay as paid by a reasonable employer in outside industry by establishing an impartial independent Civil Service Pay Research Unit which can go to outside industry and determine the analogues, establishing the principle of comparability."
But in the transition from Civil Service to public corporation we have lost. The Post Office worker no longer enjoys access to the Civil Service Pay Research Unit. This is one of the anxieties now current in the Post Office. It is one of the anxieties influencing Post Office workers
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in their approach to arbitration. The Government should look again at the question of establishing a court of inquiry.
I warn the Secretary of State and the Minister of Posts and Telecommunications that there will be a great legacy of despair in Post Office industrial relations if this dispute is not resolved in the very near future. They must recognise, as all hon. Members recognise, the harm now done not only to industrial relations but to personal relationships in the Post Office, even when the dispute is settled. Let there be no mistake about it. One may judge Post Office workers in a variety of ways, but, certainly against the background of their attitude and approach during the past five or six weeks, no one can dispute their determination not to be ground into the dust either by the Post Office or by the Government.
I said that I should come back to the statement by the Minister, in response to a Question about two weeks ago, to the effect that the average pay of postmen was in excess of £25 a week. What he ought to have explained was that that average of £25 a week took account of a 51-hour week. Nor did he explain that it was based on a 1 per cent. one-week sample and that it was asked for by the union and when it was made available to the union, the management said that it should be treated with scepticism because it was based only on a 1 per cent. one-week sample. And that is in spite of the argument trotted out by the Minister. Those facts should have been made clear when he made his statement.
Mr. Chataway: I am sorry to take time with an interruption, but the hon. Gentleman has mentioned me directly. He will know that the survey was carried out according to the principles of the Department of Employment and Productivity, as it was then, and that nobody has suggested any reason why it should have been an over-estimate on that account.
Mr. Morris: One clear fact about this dispute which is emerging is that there is a growing public feeling that Post Office workers and their families are about to be starved into submission. I hope that the Minister will refute that suggestion and that the Secretary of State will do all he can to bring the two sides together and that we shall have a court

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of inquiry so that the Post Office workers get the fair and just wage which their contribution to the community entitles them to have.
Mr. Raphael Tuck: On a point of order. As time is short, I wonder Mr. Deputy Speaker, whether you would ask hon. Members to limit their speeches to five or ten minutes?
Mr. Deputy Speaker (Miss Harvie Anderson): I doubt whether the Chair would have great success in that, but hon. Members have heard what has been suggested.
5.51 p.m.
Sir Derek Walker-Smith: The hon. Member for Manchester, Openshaw (Mr. Charles R. Morris), who has himself an honourable record of service in the postal service as well as in the service of the House, devoted a substantial part of his speech to testifying to the work and value of the union and workers in the industry. From that I certainly do not in general dissent, although I shall criticise their attitude to arbitration in this case. I believe that this union has a good and responsible record, and I started my own Standing Order No. 9 debate on the postal charges in the last Parliament by testifying to my sense of the value of the postal workers and the debt which the community owes to them.
I want now, though, to come to the central and startling paradox of this matter—that in spite of a clear agreement to refer postal disputes to arbitration, it has not been possible to settle this dispute by arbitration. Indeed, the paradox goes deeper: it has not been possible even to attempt a settlement by arbitration. Therefore, the House must ask itself, "Why not?" What possible justification, what plausible explanation, can there be for this paradox in either the terms of the agreement, or the generality of the circumstances?
We start with the Post Office Act, 1969, the Act of the late Labour Government. It places a clear mandatory duty on the Post Office to institute machinery for the negotiation of terms and conditions of employment and for arbitration. That can be seen in Schedule 1(11)(1)(a). It is pursuant to that statutory duty that the agreement was entered
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into on 27th August, 1970. That agreement is between the Post Office and the various unions and at the end of it we see the signatures to it, and signing on behalf of the Union of Post Office Workers in a bold and confident hand, "Tom Jackson, General Secretary".
Clause 2 of that agreement says that in default of a settlement by negotiation of any case falling within the scope of the agreement—and to see what falls within the scope of the agreement, we turn to Clause 5 in which the first item is rates of pay—
"the Post Office and such one or more Unions shall if either or any of the parties so require jointly request the Secretary of State"
to refer the matter to the Post Office Arbitration Tribunal. Those are the words and they are crystal clear.
It is true that Clause 7 of the agreement opts out of legal enforceability, as it is entitled to do, of course. But the union has not taken that point. In view of its attitude and the attitude of Labour Members to the legal enforceability of the provisions of the Industrial Relations Bill, the union could hardly argue that arbitration could be effective only if there were legal enforceability. So it did not take that point.
However, the point it took was rather extraordinary. It took the view that the agreement did not require one party to accept arbitration if the other required it. How that meaning can be read into the plain language of Clause 2 of the arbitration agreement of 27th August I find difficult to understand. We are told that the misunderstanding is in good faith and for my part I entirely accept that, but it is a clear misconstruction of the plain language of the agreement.
Therefore, on the first matter we must come to the conclusion that the union is in clear breach of an agreement recently concluded and requiring reference to arbitration.
Mr. Dan Jones rose—
Sir D. Walker-Smith: In the ordinary way, as the House knows, I not only give way to interruptions, but welcome them; but in a Standing Order No. 9 debate one cannot do so, much as I should like to. I am sure that the hon. Gentleman will acquit me of any discourtesy in that regard.

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The fact that the union is in breach of the agreement does not end the matter. An equally important question is why it wants to be in breach, why it should want to resist arbitration. We have not had any very clear statements on that from the union itself, but two matters have been urged in justification on its behalf, and I propose shortly to deal with them. Those two matters are, first, that the union has lost faith in arbitration because of Government action or interference and, secondly, that it is impossible to find an appropriately independent chairman.
Mr. Edwin Wainwright rose—
Sir D. Walker-Smith: I am sorry, but I cannot give way; I explained why not.
Mr. Wainwright rose
Sir D. Walker-Smith: I have not given way.
Mr. Wainwright: Give way.
Sir D. Walker-Smith: No.
Mr. Deputy Speaker: Order. The hon. Member for Dearne Valley (Mr. Edwin Wainwright) knows that if the right hon. and learned Gentleman does not give way, he must resume his seat.
Sir D. Walker-Smith: I thought that I had clearly explained why I could not give way. I must point out to the hon. Member that in a short debate it is rather selfish to seek to interrupt and so to take up time at the expense of other hon. Members.
I find the proposal about the difficulties of finding a chairman particularly hard to understand. The composition of the tribunal is set out in Clause 2 of the agreement. It says that there shall be an independent chairman appointed by the Secretary of State, but only after consultation with both parties, and two other members each representing one of the parties. What could be fairer than that? It follows very closely the well-established practice of the Industrial Courts Act, 1919. Surely there can be no great difficulty in finding a suitably independent Chairman to preside over the tribunal? Surely there must in the great resources of this country be at least one just man? Otherwise we should be an even worse case than the Cities of the
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Plain.—[HON. MEMBERS: "What about Clegg?"]—There has been an effort to bring in a certain ex post facto justification of the union's scepticism as to the chairmanship by reference to the Government's decision not to continue the appointment of Professor Clegg. That is not a matter which is before us now.
Mr. Edwin Wainwright: Why was he sacked?
Sir D. Walker-Smith: We may have further discussion about that. The Government were clearly within their legal entitlement not to continue his appointment. Whether he was right to accept nomination as a trade union representative in view of his position as an indepenment Chairman, whether the Government were wise to dispense with his services and in the manner in which they did it. are matters which can be discussed on another occasion. [An HON. MEMBER: "What about Lord George-Brown."]—I am bound to say that if I had taken this decision I should have felt some momentary apprehension at the emphatic and instant endorsement of my action by that impulsive and idiosyncratic nobleman.
But these are matters which can no doubt be debated on another occasion. They are not immediately relevant to this situation. It is unthinkable that we cannot in the resources of this country find a Lord of Appeal in Ordinary, a judge, a retired public servant, or an eminent academic with the necessary objectivity, humanity and cerebral capacity to preside over his Tribunal.
I come, therefore, to the second suggested justification, that Government interference has devalued industrial arbitration by introducing general policy matters arising in the context of inflation. Of course, the reference to the national economy came in the terms of reference to the Wilberforce Court of Inquiry, but the Wilberforce Report deals quite clearly with this. It makes it clear at paragraph 4 that the court would have taken the wider questions of the national economy into account even in the absence of a Government directive. Of course it would. Inflation and its economic consequences will have to be taken into account by any industrial tribunal, just as judges in the courts of law take judicial cognisance of the general state of

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affairs in the world. But paragraph 4.2. adds:
"we are not required … to pronounce generally upon the national economy: this is a function of government …"
The court made it clear that it was directing itself to the matters referred to it, and that the Treasury Memorandum was not imposed on it. The court asked for the Memorandum, but evaluated its content for itself.
Here we come to another strange paradox overlooked by hon. Members opposite. The introduction of the reference to the national economy, of which complaint is made, came in the terms of reference of the Wilberforce Court of Inquiry because it was a court of inquiry and not an arbitration. When there is a court of inquiry such as the right hon. Member for Blackburn (Mrs. Castle) has demanded, it is the Secretary of State who formulates the terms of reference. But if the union and the Post Office has the arbitration according to their agreement it is not the Secretary of State who formulates the terms of reference. As can be seen from Clause 6 of the agreement, they will be formulated by the parties. Therefore, it is paradoxical for right hon. and hon. Members opposite to be demanding the very course that enables the Secretary of State, if he so desires, to write in the reference to the national economy.
Mr. Dan Jones: The Government will not accept a court of inquiry—that is what is paradoxical.
Sir D. Walker-Smith: What matters should the arbitration take into account? The tests for the arbitral tribunal are set out quite clearly in the Wilberforce Report:
"We shall consider the pay history of the industry, the recent pay settlements in it, arguments based upon productivity, upon comparison with pay in other industries, and upon the cost of living."
All those matters would be relevant in the arbitration assessed against the general knowledge of the background of the national economy, which no intelligent person can expect to ignore. The union could in such an arbitration produce evidence to show, if it be the case, that rates of pay lower than it claims will render the service unattractive, with a consequent undermanning of the industry
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or a lowering of its standards. The Post Office can seek to show that rates higher than it has offered will jeopardise the carrying on of the service. It is true that it has a monopoly, and therefore cannot show the effect in a competitive market as in a normal industrial arbitration; but it could still call evidence to show the effect of higher rates on consumers and on prices, itself surely a very relevant aspect of the public interest.
I conclude that there is nothing in the dispute which disqualifies it from benefiting from the well-tried processes of industrial arbitration. There is no benefit in substituting a court of inquiry. From the point of view of the union, there may be detriment. There is no benefit, either, in trying to seek the services of a so-called mediator. The mediator who is wanted is apparently a mediator not only with no power of decision but even with no power of recommendation—a sort of arbitral eunuch, a rôle which is neither dignified nor productive.
The House must face the position. If there be no arbitration, the only alternative is for the parties to find their own solution together. But is there to be no arbitration? Whatever other solution is proposed or adopted—a court of inquiry, so-called mediation, the forced capitulation of one side or the other, the prolongation of this injurious strike—none of these courses can bring any advantage which arbitration would not bring, and inevitably would bring much detriment that arbitration would avoid.
I believe that there is no valid objection to arbitration either under the agreement or in the normal practice of collective bargaining. There is no valid objection either in logic or in equity.
There is this further danger. If the repudiation of arbitration be accepted, it will inevitably be regarded, not by the union—I have testified to my high regard for its responsibility—but by some outside as a victory for intransigence. It will be said that it is possible and acceptable to enter into agreements and to abide by them only if it suits, to accept the decision of an umpire but only conditionally. That would, I believe, be an attitude and approach at variance with the basic practice and philosophy of the British people. It would do grave damage to the concept of collective bargaining, as

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the Wilberforce Report said, and also, I fear, to much else besides. It would constitute a weakening of the force of the pledged word, an erosion of the rule of law and an undermining of one of the central citadels of our way of life.
6.10 p.m.
Mr. Raphael Tuck: I cannot understand why the trade unions are always the whipping boy for every rise in price and every inflation we experience. Apparently they are always wrong. "Union" equals "strike" according to hon. Members opposite and much of the national Press. "Union" goes with "strike" like bread and butter go together, like Chamberlain went with his umbrella and Churchill with his cigar.
But trade unions are not unreasonable, nor always striking. Hon. Members opposite should read the booklet, "Reason", published by the T.U.C. I will give just one example from the first table of figures, which shows the working days lost by strikes per 1,000 persons. In Canada, the figure is 1,200, in Eire over 1,200, in Italy over 1,000, in the United States over 1,100, and in the United Kingdom 200. Does this figure for the United Kingdom reflect unreasonable people who are always striking?
I agree with the right hon. Gentleman when he talks of the national interest. I think that the national interest is a very good thing. Patriotism is a wonderful thing. But the national interest, to me, means the interest of the community as a whole which is bound up with the interests of its members. Patriotism is a very good thing here but vicarious patriotism is utterly contemptible. We talk about the interests of the community as a whole. Why expect the trade unions and the workers to do the job and to be patriots while other people can play the dirtiest tricks in the world and lower the country's standards without any rebuke from hon. Members opposite? Why was nothing said by hon. Members opposite when the financial speculators tried and almost succeeded in bringing the United Kingdom to its knees financially during the Wilson Administration? Nothing was said about that then.
Mr. Arthur Lewis: My hon. Friend is wrong. There was the well-known banker who said, "It may be anti-British, but it makes sense to me."
Mr. Tuck: Quite so. Nor has anything been said by hon. Members opposite about retailers and others who raise their prices far beyond what is necessary to counteract increases in labour costs. It is always the unions who are to blame. I urge the right hon. Gentleman to cry out against vicarious patriotism and to dragoon his people into falling into patriotic line with the interests of the community.
If the system I have advocated had been in operation, this strike would never have happened. If Tom Jackson and his colleagues had been on the board of the Post Office in equal numbers with the managerial staff, the strike would not have occurred because they would have considered the community's interests and the interests of their workers and would never have made too great a demand. They would have been planners, not bargainers. Their followers, the workers, would have fallen into line and would have agreed gladly to anything they suggested because they would have known that they had their interests at heart.
The trade unions are not unreasonable and never have been. They showed reason when we asked them to tighten their belts in 1966. They did tighten their belts, but when prices went up they could not be expected to tighten them indefinitely. What would have happened if my right hon. Friend the Member for Blackburn (Mrs. Castle) had still been in office? She would have spent day and night with the two sides around the table arguing and discussing until they were so exhausted that they would have had to agree. I ask the right hon. Gentleman to follow her example and not to sit on the fence with a benign smile on his face—as Churchill would have said, "Like a mugwump, with his mug on one side and his wump on the other."
If I were evil minded, I would say that this situation is pleasing and nectar to the right hon. Gentleman and his colleagues, that they like doing nothing, that they welcome a continuation of the strike because they can then bring the trade unions before the people and say, "Look at what the wicked trade unions are doing to the national interest." But I am not so evil minded. Some people are so evil minded, however. I urge the right hon. Gentleman to show them they are wrong by getting the two sides around

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the table for discussion and not just sitting as he is doing—doing nothing.
6.16 p.m.
Mr. Antony Buck: I hope that the hon. Member for Watford (Mr. Raphael Tuck) will forgive me if I do not follow him into the realms of mugwumpery. I am grateful for the opportunity of making what the House will be glad to hear will be a very short contribution in this small but important debate.
Some three weeks ago, I had an experience which I shall long remember. I had the privilege—and such it was—of addressing postal strikers in my constituency. It was a packed and lively meeting. Their courtesy was absolute, the puzzlement of many of them was considerable and the unhappiness of almost all of them deep. The invitation to address the meeting came because I had made a speech in which I had criticised the union leadership. I did not do so in any exaggerated terms, and I hope that the hon. Gentleman will not think that I did. I repeated my criticisms to the strikers' meeting.
My first criticism was that I thought it wrong that the union should have taken its members out on strike without there having been a ballot. This matter has not so far been mentioned in the debate. Secondly, I took the view that it was wrong of the union not to go to arbitration. When I repeated those criticisms, I felt that I had a deal of support from the meeting. Perhaps I can reiterate the points now, although not at great length.
The first question is whether there should have been a secret ballot. In my view, before a major mass strike is called in this period of our history, there should be a secret ballot. There were three particular reasons for a ballot in this dispute. First, the offer made by the Post Office of 8 per cent. was not unreasonable. It certainly was not so unreasonable as to justify calling everyone out on strike. It was certainly not the sort of offer which called for total rejection and precipitate strike action. It was a fair offer on which to base the process of going to arbitration. It would have been appropriate for there to have been a secret ballot.
The second reason was that the union in this case had no funds for strike pay.
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It seems to me that before a union asks its members to undergo this especial hardship, it should ensure that it has the support of the overwhelming majority. That was the view of a number of people in my audience who I talked to later. Thirdly, it seemed to me that the financial state of the Post Office made the whole thing unreal and a ballot especially necessary.
If I am wrong in these criticisms, the union can prove me wrong by having such a secret ballot. The union claims that it has overwhelming support and, of course, a union can get together a large mass meeting and get lots of cheers. The only way of judging the full degree of support for the union is by having a secret ballot. I do not feel that, if such a secret ballot were to be held, on continuing strike action or going to arbitration, there would be a majority in favour of continuing strike action. Maybe I am wrong, but it is easy for the union to put this to the test, and it ought to have done so long ago. Now it should do it, even at this late stage.
The second criticism which I made was on the matter which has already been gone through somewhat in this debate—the question of going to arbitration. It seems to me quite preposterous that the union should not have attempted to implement the agreement entered into as recently as 27th August last year. I appreciate the difficulties about the fact that the machinery under the 27th August agreement had not been set up. I appreciate that, and I think it appropriate to cast strictures on the Post Office Board for not having taken speedy action under the agreement of 27th August. I think it was quite wrong that it should not have taken action to see that the chairman was agreed on and to see that the panel, as it were, of both sides, the Post Office side and the union side, was set up. I think it was wrong, and is certainly placed the union, I fully appreciate, in a position of some difficulty, but, as has been pointed out by my right hon. Friend, this objection which the union raises, about the fact that the machinery has not been set up, does not seem to be the real objection which it is putting forward to arbitration.
If Mr. Jackson and my right hon. Friend were to get together I have little

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doubt that in a very short while they would be able to agree on a chairman of impartiality who would have the confidence of both sides. Why does not the union at least try, even now, and go to my right hon. Friend and take up his suggestion and consider the appointment of a chairman for the arbitration board? If it came back saying that someone totally unacceptable to the union had been suggested, it would lose nothing. Therefore, I urge again that there should be a procedure to arbitration here.
It is especially important, it seems to to me, in view of what was said in the Report by Lord Wilberforce in speaking of what happened in the case he considered. In paragraph 11.5 of this Report —even these reports seem to have gone metric—it says:
"Whether or not such an agreement is legally binding, we attach the utmost importance to the proper observance in good faith of procedural obligations once entered into."
The House should feel exactly the same type of concern for the
"observance in good faith of procedural obligations once entered into."
These were clearly entered into, and it is a great tragedy that they have not been honoured and pursued.
I took the view that it was a big mistake to have this debate at all, but it seemed to me possible that one good thing might come out of it, and it would be that there should be from both sides of the House a reaffirmation that we agree with the Wilberforce Report about the importance of the
"proper observance in good faith of procedural obligations once entered into."
I should have liked to have seen from hon. and right hon. Gentlemen opposite a strong exhortation to the unions to agree to the procedures which the union subscribed to and signed as lately as 27th August last year. if the debate were to show that the House is united in wanting the union to go to arbitration that would help. Perhaps the hon. Member who winds up on behalf of the Opposition will reaffirm his belief in the keeping of agreements entered into. If he does that, perhaps the debate may do some good.
6.26 p.m.
Mr. Eric S. Heffer: I want to take only a few minutes of the
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time of the House to make a comment on the speech of the hon. Member for Colchester (Mr. Buck). He suggested that the union should have had a secret ballot and that it ought to have had a strike benefit organisation. Let me make it absolutely clear to the hon. Gentleman that this is something we have been trying to explain to him and his hon. and right hon. Friends for some time—that each trade union, in our democratic society, has its own system of rules determined by the membership of that organisation. The miners have a ballot, and they have to have a two-thirds majority. If there had had to be a simple majority we should have had a national coal strike not long ago. The Union of Post Office Workers allows its national executive to decide whether there should be a strike or not. My own organisation also determines the question in the same way. Different unions have different sets of rules and I should like to say to the hon. Gentleman the Member for Colchester that this is a matter for the unions to decide; it is for them to decide what rules they are going to have; and it is not for this House, and certainly not for members of the Conservative Party, whether a union should have a strike fund, but this is also a matter for the trade unions and not a matter for the hon. Gentleman.
In any case, I should like to say to him that there is no question that the postmen will be let down by the trade union movement, because they are going to get the full support of the trade union movement. They are getting the full support of the trade union movement, irrespective of the fact that hon. Gentlemen opposite really want to see the postmen driven into submission. If they did not want to see the postmen driven into submission they would have accepted the very sensible proposal by the General Secretary of the union when he urged the establishment of a mediator. What was wrong with that proposal? It was not accepted. Now we have a further proposal—the establishment of a court of inquiry.
It is very interesting. I note that on every occasion the Government get into difficulty they always have to call upon the right hon. and learned Gentleman the Member for Hertfordshire, East (Sir D. Walker-Smith) to help them out of their difficulty, because he is the one man on

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their side in the House who can put up some sort of presentable case on behalf of the Conservative Party. There is nobody on that Front Bench who can put up a sensible case. Right hon. Members there are the most bankrupt group of people I have ever seen in my life. If we listen to them this country will go from bad to worse—as it is going from bad to worse in industrial relations at the present moment. On each occasion they have to call upon the right hon. and learned Gentleman, who very nicely and very interestingly pointed out that Wilberforce was obviously not laying down the whole future of wage levels, but, of course, the right hon. and learned Gentleman tried to make a case that Wilberforce had determined the whole future of the wages situation. Wilberforce was set up to look into one specific case, not the whole of the wages situation for every industry, and the right hon. and learned Gentleman knows it. He has got to find some way out of that difficulty.
Let me make this quite clear—and I have promised to be only five minutes because there are hon. Friends of mine who wish to speak in this debate. It has been said during the debate that we are not discussing the actual wages claim and conditions claim of the Post Office workers. Well, perhaps some hon. and right hon. Members do not want to discuss that question, but I want to say this, and I want it to be put on record, that, so far as I am concerned, the postmen and the postal workers have a 100 per cent. case, and I want that clearly put on the record that they have a just case. They have a just case, quite frankly, on the basis, as one of my hon. Friends has pointed out, speaking with great knowledge of the post office industry, that the Post Office workers have agreed to the mechanisation of their industry and have done all sorts of things in relation to the modernisation of their industry, and they deserve to have the full fruits of what they have done. I believe that the workers have a just case and that we in the House of Commons should not be discussing whether there should be a court of inquiry or whether there should be arbitration. We should be telling the employers, "It is time you settled with these workers to meet their justified claims." Of course the Government have no intention of saying that.
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I said in the House of Commons recently that hon. Gentlemen opposite were totally hypocritical in their attitude to the strike. The Secretary of State comes to the House, puts his hand on his heart and says, "We are fair. We are neutral. We are not on the side of the employers. We are standing above the battle". That is the image he tries to create inside the House, but outside his right hon. Friend the Chancellor of the Exchequer on every conceivable occasion goes out of his way to attack the trade unions and the postal workers. What is happening in the Cabinet? Who is on which side? Perhaps the Secretary of State is fair, perhaps he wants to reach a settlement, perhaps he wants to get back to the traditional methods of his Department. If he wants to make a stand he can do what other Ministers have done when they have come up against difficulties within the Cabinet; he can resign and tell the country what is happening.
If he does not resign, then he should not come to the House and try to tell us that he is neutral, because he is not being honest with the House. He is standing behind his hon. Friends and trying to put the postmen into the dust. It will not happen. We will not let it happen. The trade union movement will support those workers until they get their just demands.
6.32 p.m.
Mr. Geoffrey Finsberg: May I declare three interests? I am an employee of a mail order company, I am chairman of the C.B.I. Postal Committee and I am the only Member of Parliament who is a member of the Post Office Users' National Council appointed by the last Labour Postmaster-General, the right hon. Member for Wednesbury (Mr. Stonehouse). Presumably he thought that I was a reasonable person to represent the consumer interest.
No responsible statesman who has held office, only someone trying to gain political advantage, would have aligned herself so blatantly with one side in this dispute as did the right hon. Member for Blackburn (Mrs. Castle), who is desperately trying to work her passage with the trade unions after the hammering they gave her over "In Place of Strife".
Under the previous Government we had two devaluations, the devaluation of

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the pound and the devaluation of the Ministry of Labour. The right hon. Lady was responsible for devaluing the proper procedures of that Ministry with the last minute huffings and puffings and pipe-smoking which took place in Downing Street instead of in St. James's Square. We on this side of the House are getting tired of the constant vicious attacks, such as the one we have just heard, made by the hon. Member for Liverpool, Walton (Mr. Heffer) against my right hon. Friend the Secretary of State. Some hon. Gentlemen opposite seem to think that "honest Bob" is a term of derision, but to the country outside it is a term of praise.
Mr. Buchan rose
Mr. Finsberg: Like the right hon. Member for Blackburn, I have no time to give way. No series of speeches opposite can obscure the plain fact that we have all been finding out in the past few days from our constituency postbag—[Laughter.]—that the Government are right in saying that they should remain neutral. It is right that the Government are still taking the line which my right hon. Friend put before the House this afternoon. The Labour Party appears to be more interested in supporting strikers, irrespective of the merits of their cases, than in looking after the national interest. One has only to look at the party's attitude to the power workers' strike and, today, at the effrontery of the right hon. Lady's speech in which she started by saying that she would not discuss the details and then, as HANSARD Will show, proceeded to discuss the merits and demerits of the case and attack one side and defend the other side.
Strikes used to be directed against the wicked capitalist bosses, but not any more. They are directed against the innocent public and the public interest. Champions of the public interest are to be found on the Government benches and not on the benches opposite. I have been careful, as has my right hon. Friend, unlike the party opposite, not to attack the Union of Post Office Workers or its leader. I was careful not to be drawn in a radio broadcast on Friday, and I will not be drawn now.
I do not believe that Mr. Jackson realises the full effect of his strike on
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innocent people. I am not, as the hon. Member for Watford (Mr. Raphael Tuck) said, using the unions as a whipping boy. That is not my purpose. I want to put these facts to Mr. Jackson—he was sitting here earlier—[HON. MEMBERS: "Order."]—I put them to you, Mr. Speaker, very plainly. I am sure they will be conveyed to the right quarter through HANSARD.
Pensioners going to their usual Post Office to draw their pensions are being met outside by strikers who hand out leaflets and say, "Sorry, you cannot have your pension because the Post Office has persuaded volunteers to open the Post Offices and we are withdrawing our labour." There is a notice in the Post Office in Parliament Street making this clear.
Mr. Orme rose—
Mr. Speaker: Order. If the hon. Gentleman does not give way the hon. Member for Salford, West (Mr. Orme) must resume his seat.
Mr. Orme rose—
Mr. Finsberg: I am sorry, I have not time. It is cold comfort for elderly people, who are often bemused, to find that the place where they were told to go for their pension is no longer available. I am certain that the executive of the union does not want this to happen and I do not believe they know about it.
Charities like Shelter and the Simon Trust are in a desperate plight because they cannot get their regular flow of money. Untold harm is being done to the long-term interests of these charities by the continuation of the strike.
Factories and mail order companies have had to lay off many thousands of workers and, because some of this business is seasonal, not all those workers can look forward to re-engagement. Small and large firms are suffering from a cash shortage, and their liquidity is desperately threatened. If these firms go bust more people will be put on the labour market, and it will be of little use for the Labour Party to say that the figures of unemployment have gone up. I do not think that the union realises the chain effect of the strike. It is time for the union to think again of its interests and of the public interest. I have not criticised the union

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and hon. Members cannot say that I have.
There is no doubt that many firms, banks and insurance companies will not go back to using the postal services when the strike is over. There are many jobs which the Post Office would not be able to fill because the business will not be there when the strike is over.
The hon. Member for Walton made play of the fact that different unions have different rules. As somebody who has been in industrial relations for eleven years, I know that. I know that the Union of Post Office Workers has provision in its rules in certain circumstances for the executive to recommend to its members a ballot on a pay claim. I notice that is not denied. I believe that the union has nothing to lose by going to a ballot and recommending the 9 per cent. If a majority endorses it it will show that the union has put up a good fight but that the members are prepared to accept it. If they reject it the union executive will be in exactly the same position: it will know that it has been fighting the correct fight. If a majority rejects the recommendation of 9 per cent. with productivity strings the union could, with justification, go to arbitration or to a court of inquiry knowing that it had the support of its members, and also knowing full well that it was mandated by its members to get even better terms.
There is one matter of which I am certain, and that is that if the U.P.W. wishes to regain and retain public sympathy and public support, it has nothing to lose by the two suggestions I have made. But it will lose if it listens to the siren voice—"siren" is hardly the word the vicious calls by hon. Members opposite that will allow the union to be used in this battle as the "fall guy" for Jones and Scanlon.
6.42 p.m.
Mr. Ivor Richard: This of necessity has been a short debate, and I start by apologising to my hon. Friends who clearly will be unable to take part; but it is important that I should try to answer some of the points that have been raised.
The Secretary of State for Employment in his opening speech castigated hon. Members on this side of the House for
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asking for a debate at all. He asked the question rhetorically: why have a debate on an industrial dispute? The reason why we sought to have a debate on this subject was that the right hon. Gentleman seemed to be doing nothing to bring the dispute to an end. It was therefore thought right, as I am sure the House will agree, having heard this debate, that this matter should be given a proper airing in the place where it should be aired, namely the Chamber of the House of Commons.
The Secretary of State today gave us a message of despair. He gave us an analysis of his own inaction. He spent half an hour telling us how difficult it would be to do anything about this dispute. With respect to the right hon. Gentleman, we know that it would be difficult for him to do anything about the dispute—but that is the reason why he is Secretary of State.
Time and again in this debate we have heard reference to the so-called arbitration agreement into which the union is supposed to have entered. I should like to take two or three minutes to look at that agreement in view of the extreme importance that is being attached to it by hon. Members opposite. It is important that we should look at that agreement coldly and objectively.
The arbitration agreement was entered into last year and provides for the setting up of a Post Office arbitration tribunal. That tribunal is to consist firstly of
"An independent Chairman nominated by the Secretary of State"
and I would ask the House to note the following words:
"after consultation with the Post Office and the unions".
It is then to consist of a second member, namely one
"drawn from a Panel of persons constituted by the Secretary of State as representing the Post Office after consultation with the Post Office."
And thirdly:
"One member drawn from a Panel of persons constituted by the Secretary of State as representing the unions after consultation with them."
So there are to be three members of the tribunal: an independent chairman, who is to be permanent, with the other two members, one from each side, to be drawn from a panel of persons approved and accepted by the Secretary of State.

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It is important to note that
"For the purpose of dealing with any matter which may be referred to it, the members of the Tribunal shall be such members of the Panels as the Chairman may direct."
Therefore, the chairman's position in the whole arbitration procedure is quite crucial. Without a chairman having been appointed, it is clear that no tribunal can be validly constituted under the agreement. Again, I would point out that in paragraph 4 of the agreement the powers given to the chairman are positively draconian. The paragraph says:
"Where on any reference the members of the Tribunal are unable to agree as to their award, the matter shall be decided by the Chairman."
In circumstances in which no chairman has been agreed and in which no consultation has even taken place in reference to the appointment of that chairman, it is wrong for the Government to castigate that union for failing to go to arbitration.
It is perhaps instructive to look at how far the unions have tried to implement their part of this agreement. Last October the Council of Post Office Unions submitted a nomination for the chairmanship of this Post Office arbitration court. The nomination then submitted apparently was not acceptable to the Post Office Board. I am informed that since then the Council of Post Office Unions has made repeated attempts to discuss the appointment of a chairman with the Post Office Board, but there have been no such discussions because the Board has not been prepared to enter into them. Again I am told that last November the Council of Post Office Unions submitted its lists of nominees for the trade union panel to the Post Office, but it was not until 15th February, in the fourth week of the present strike, that the Post Office Board submitted its nominations. They have still been in discussion on the appointment of a chairman.
In this situation, when a withdrawal of labour was under way, the Post Office Board and the Government then suggested a type of ad hoc arrangement. In the light of what has happened to Sir Jack Scamp, and more recently to Professor Clegg, it is clear that the union has no confidence that the ad hoc
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arrangement suggested by the Post Office will result in its receiving a fair and impartial hearing and in the case being judged on its merits. I have taken time to go into the arbitration point, since the way in which the Government are using this matter is utterly fallacious and it is time the Government dropped it.
Three main points have emerged from the debate, and I shall examine them as briefly as I can in the time that remains to me. First, the rôle that Ministers themselves have played in this unhappy affair. Secondly, the misjudgments which have bedevilled Government policy. Thirdly, the question in everybody's mind, what should now be done? The House will understand the situation if in regard to Ministerial responsibility I tend to concentrate on the part played by the right hon. Gentleman the Minister of Posts and Telecommunications. After all, it is his Department that is most directly involved, and in the first instance it is with him that direct responsibility primarily lies.
The main charge I make against the right hon. Gentleman is in essence a simple one. It is that he has failed to prevent a dispute over pay being inflated into a major confrontation between the Government and the unions. He could and he should have seen that it was dealt with inside the Post Office itself. Instead. the Minister sat idly by and watched his right hon. Friends use this dispute as one of the wage claims on which the Government feel it necessary to demonstrated to the country how tough they are.
Mr. W. R. Rees-Davies rose—
Mr. Richard: The Minister has allowed this to happen regardless of the bitterness which is bound to survive the dispute, however it ends for even if the Government force this strike to continue, and even if at the end of the day they gain a notional victory, they will in the process be putting back the Post Office by decades. The Minister himself has done nothing to prevent it, or if he has tried to prevent it—
Mr. Rees-Davies rose—
Mr. Richard—he has been unable to persuade his colleagues. Like other hon. Members, I am trying to be reasonably brief. If I give way to anybody it will

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be, if I may say so to the hon. Member for Isle of Thanet (Mr. Rees-Davies), to somebody who has been present in the Chamber for the debate. To continue with the point which I was making, if the Minister has done nothing himself to prevent it, and if he has tried to prevent it, it is clear that he has been unable to persuade his colleagues to pursue a different course. Either way, the Minister has failed.
From time to time there has been rumours of disagreements between the Minister and some of his colleagues. Relations between the right hon. Gentleman and the Secretary of State for Employment seem correct if a trifle frigid this afternoon. But not even the Minister himself would surely be happy with the extraordinary performance—I use the word advisedly—of the Chancellor of the Exchequer last Friday. After his disaster in the House of Commons on Thursday afternoon in the recent debate, I am surprised that the Government let him out again quite so soon.
On Friday, at a meeting in his constituency, the Chancellor displayed again all that delicacy of tact which we have come to expect from him. He is reported as having said that it was the union and not the Post Office which was being wholly unreasonable in the circumstances. If that is meant to be neutrality and impartiality, it is straining language. That surely cannot be the considered view of the Minister. I cannot believe that he found that utterance either helpful or timely.
The Chancellor of the Exchequer is fast becoming the demon Spiro Agnew of Whitehall. He is saying from No. 11 what No. 10 would like to say but dare not. I hope that the House will treat the Chancellor's views as many people in the United States have come to treat Mr. Agnew's, initially with incredulity and later with amusement.
I am told. moreover, that at no time since this dispute began has the Minister called in the union openly and frankly to discuss its claim. I ask the House to note that. At no time, I am told, did the Minister request the union to come and discuss its claim, even when strike action was being openly contemplated. It is almost unbelievable that a Minister
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in charge of a Department in which major industrial action was about to take place should fail to try to settle it direct with the union. It is almost unbelievable but it seems to have happened here.
The second failure of the Minister—and, I gather, of the Government as a whole—was in totally misjudging the mood of the Post Office workers and in misjudging the support that they would get in the country, which, frankly, is remarkable. I am sure that the Government banked on a slow trickle back to work which would gradually undermine the union, but they were wrong.
In last Wednesday's Guardian, Mr. Keith Harper wrote:
"Try as it will, the Post Office has completely failed to break the backbone of the strike. Young telephone girls have walked side by side with middle-aged postmen in the many demonstrations which have been arranged throughout the country by the Union of Post Office Workers."
[Laughter.] I am surprised that hon. Members opposite should laugh at this quotation.
"None have been more successful than the Thursday mass meetings in Hyde Park, which have … brought attendances of upwards of 25,000 postal workers.
Some union officials feared that the weekend negotiations, and the hopes they first inspired, might result in a considerable drift back to work. Not a bit of it. The strike is as solid as ever, though there is bound to be bitterness, perhaps even internal strife among the membership over the terms of the eventual settlement."
Mr. David James rose—
Mr. Richard: Mr. Harper went on:
"Many postal workers have been preparing for an all-out strike for several months. They have become disillusioned that the traditions of the Post Office are being abandoned, that they are being subjected to over-supervision, and that they have to tolerate a six-day working week in 1971 to try to make a living wage. There is sufficient evidence coming into the union to suggest that the strike has made many people decide to leave the service. The rest have hung on, hoping that the dispute may bring long nursed grievances to a head. Why does Tom Jackson, the ebullient postal workers' leader, persist in making this stand when he knows that the Union's claim will not be met? The answer is that he has ben pushed by his 205,000 members into action."
That is Mr. Harper's opinion—[HON. MEMBERS: "Who is he?"] For those hon. Members opposite who say "Who is

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he?" all I can tell them is that they display by their question their abysmal ignorance of industrial relations.
That is the position that the Government now face: a determined body of workers who feel a real and genuine sense of personal grievance and who, despite no pay, are now in their fifth week on strike. It is this determination and solidarity which surely should make the Government think again. They must recognise now that this is not simply a dispute over pay. It is now far more deeply felt than that. It involves the whole status and future of an industry in which men and women have given their lives. It is, therefore, a dispute which is now different in kind and not merely in degree from many disputes which the Government may have to face, and it is time that they recognised it as such.
What we must try to do is to avoid a situation in which this dispute comes to be a major confrontation between the Government, on the one hand, and the body of the trade union movement, on the other hand. In the short term, Governments probably win such confrontations —they have the whole power and apparatus of the State behind them—but in the long run they will assuredly lose such a confrontation. Good industrial relations can be built only on mutual trust and co-operation. If this thing is pushed to a conclusion the Post Office as we have known it will be destroyed.
What, then, can now be done? In this dispute, as in other disputes, some independent body will eventually have to decide whether this is a justified claim. I must say to the Secretary of State that the fact that this claim is different from the claim which the Wilberforce Tribunal looked at is no ground for failing to set up a court of inquiry in this dispute if the facts justify it. That is the essence both of independent arbitration and of a court of inquiry.
As far as one can see, the position between the parties is now this. The Post Office accepts arbitration and would, I gather, accept a court of inquiry. The union denies its liability to arbitrate but, I hope, would be induced to accept a court of inquiry. The Government, however, seem more interested in establishing that the union should accept arbitration under the agreement to which I have
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referred than in setting up a court of inquiry.
There is only one course now left to the Government—that is that they should forthwith appoint a court of inquiry to examine this whole dispute. It is time that the strike was settled, and that, in our view, is the only way.
6.58 p.m.
The Minister of Posts and Telecommunications (Mr. Christopher Chataway): This debate, although it has been a short one, has been sufficient to show the very real concern that exists in all parts of the House about the postal strike and the very real concern there is to try to find a settlement which is both fair to the individuals involved and consistent with the prosperity of the Post Office as a business.
Two main lines of argument have been advanced from the Opposition benches. The first is the argument for a court of inquiry, which was made by the right hon. Lady the Member for Blackburn (Mrs. Castle), by the hon. Member for Barons Court (Mr. Richard) and by a number of other hon. Members who spoke from the benches behind them. I would like presently to return to some of those arguments, although my right hon. Friend the Secretary of State—with whom I assure the hon. Member for Barons Court, in case he is worried, my relations are of the most cordial variety—has dealt at some length with them.
The other main line of argument which has been adduced is quite simply that the Post Office Board should have increased its offer and ought now ro be made to do so. That has been the burden of the argument to which we have listened.
The right hon. Lady suggested that she did not want to get involved in the detail of the case, but it would have been difficult to listen to her speech without thinking that what she was urging on the Post Office Board was a much higher offer and that what she was criticising the Government for was not having forced the Post Office into that higher offer before. [An HON. MEMBER: "That is a distortion."] The hon. Member says that it is distortion, but a number of his hon. Friends, including the hon. Member for Liverpool, Walton (Mr. Heffer), were very careful neat to

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indulge in any hypocrisy. He made absolutely clear that he was solidly behind the Union of Post Office Workers in their 13 per cent., and that is the view of a large number of people The right hon. Lady was quoted over the weekend as saying exactly the same thing in a talk which she gave to postal workers.
I have been criticised for not having engaged myself in negotiations and directly intervened in the strike. The hon. Gentleman said that he thought it was entirely wrong that I had not called the union to see me and that I had not negotiated with them direct. I am sure the majority of the House will appreciate that since the Post Office has become a Corporation that is not my function. I do not for a moment say that I do not have responsibility; I am coming to that. I am not trying to shrug off responsibilities. I believe that it will be generally accepted that the purpose of the Post Office Act, 1969, was that the Post Office should be set up as a Corporation capable of running its own business, and that the Minister's responsibilities are fairly carefully defined and curtailed. But on behalf of the Government I have very clear responsibilities for both the level of investment in the Post Office and, by custom, as with all nationalised industries, I have a responsibility over tariff increases.
Like other nationalised industries, the Post Office will come to the Government to secure their acquiescence in major tariff increases. It would therefore have been possible for me—I accept this—to exert pressure, on behalf of the Government, on the Post Office to come up with a higher offer. It would have been possible for me to make it clear to the Post Office that the Government were either prepared to advance a subsidy to the Post Office to enable it to produce a higher offer whilst not raising the tariffs, or to sanction a higher, earlier tariff increase than had hitherto been envisaged. I accept that, and I have not done either of those two things. It would have been wrong for me to do either of those two things.
Mr. Dan Jones rose—
Mr. Chataway: I should like to make progress. I have taken the view that it would not have been right for me to try
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to make any suggestion along those lines to the Post Office Board. I have taken that view because I do not accept the one advanced from the other side that the Post Office Corporation has behaved unreasonably in this matter. If in what I have to say today I deal with the Post Office case, I hope that I shall not be criticised on that score. As I have explained, that is the constitutional rôle which I have to fulfil. I believe in the Post Office case—like a parrot, the hon. Member for Willesden, East (Mr. Freeson) has been saying, "Are you impartial throughout?" I am explaining—
Mr. William Molloy rose>—[Interruption.]
Mr. Speaker: Order. If the right hon. Gentleman does not give way the hon. Member for Ealing, North (Mr. Molloy) must resume his seat.
Mr. Reginald Freeson: Would it be within the recollection of the Minister that his right hon. Friend has said, on a previous occasion in the House, that the Government were being impartial in this matter, and that he stressed it time and time again? Would it also be within the knowledge of the Minister that there was another possibility open to him—at least to try to get the Post Office Corporation talking with the trade union round the table? This has been done by other Ministers with nationalised industries.
Mr. Chataway: I regret having given way to a rather long intervention in the few minutes that I have left. The only way in which a breakdown could have been avoided, when the breakdown occurred, was by a higher offer. The majority of hon. Members opposite will accept that. Equally, I accept that my responsibilities for the Post Office make it essential for me to satisfy myself that the Post Office Corporation is behaving in the reasonable manner which I have described, and that the kind of initiative which I have suggested would not be justified.
Before coming to the essential question as to whether the Post Office should have made a higher offer, I should like to deal with one or two matters raised in the debate.

109
I deal first with the basis of pay settlements. It has been suggested that the Post Office lost through giving up arrangements prevailing in the Civil Service and that this constitutes a special feature of their claim. As will be known to the House, pay in the Civil Service is adjusted under the procedures agreed on the National Whitley Council with the assistance of the Civil Service Pay Research Unit. That unit ensures, broadly speaking, that the pay of the Civil Service moves in line with selected fields outside. When the Post Office became a Corporation it inevitably, I think, lost that particular means of settling its pay disputes.
I may have been wrong, but I thought that the right hon. Lady seemed to be suggesting at one point that it ought not to have done and that it ought to have been returned to pay research unit machinery. This would not have been a possibility, and few people would suggest that. If a duty is being laid upon the Post Office Corporation to conduct its business on commercial lines and it is being set certain targets, obviously it cannot have the pay of its members determined entirely by relation to pay prevailing in other areas.
Mr. John Golding rose—
Mr. Chataway: It was intended then, and it is intended, as explained during the debate, to negotiate on pay principles to help in the determination of these awards. All that has been achieved so far was an agreement in January, 1970. It was a condition of the January, 1970, settlement that the direct linkage of pay and conditions of service hitherto existing between staff of the Post Office and those of the Civil Service should be broken. There is therefore no question, by means of a White Paper or anything else, that the arrangements prevailing then should now prevail. [Interruption.] It has been further objected to arbitration that because—
Mr. Richard rose—
Mr. Chataway: It has been further objected by a number of speakers today that because the chairman has not been appointed to the arbitration tribunal this constitutes a sufficient reason for not going to arbitration. My right hon. and
110
learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) dealt very fully and adequately with that point. I do not intend, therefore, to labour it. But it should be understood in all parts of the House that it has never been suggested by the union, so far as I know, that it was the impossibility of finding a chairman for arbitration which was the reason for their resisting a tribunal. Indeed, the general secretary, in public, talked about a certain name as a possible chairman of the tribunal. He later withdrew it and said that it was a joke. If there is a chance of finding a chairman who will be accepted by the Union of Post Office Workers, I know that my right hon. Friend will, as he has on a number of past occasions, be only too willing to explore that avenue.
There is nothing in the workings of arbitration of recent months to justify any resistance on the part of the union to arbitration. Perhaps I might cite one or two recent agreements. Recently there have been claims by Post Office unions put to arbitration which in some cases have come out a great deal nearer to the union demand than to the Post Office offer. One example was the claim of the Association of Post Office Engineers on behalf of its assistant executive engineers and inspectors. The claim was for about 15 per cent. from 1st July, 1970. The union was offered 12–4 per cent. by the Post Office. An arbitration award of 14–6 per cent.— overall clearly was in the union's favour. That was a case in which there were special arguments and circumstances.
Mr. Orme: But the Government sacked the man—[interruption.]
Mr. Chataway: It is depressing that right hon. and hon. Members opposite have so little faith in their case that they have to resort to chanting on these occasions. [HON. MEMBERS: "You sacked him."]
That arbitration took place in the—[Interruption.] The noble Lord, Lord George-Brown, said only yesterday that if he were in the same position he would take exactly the same decision—[Interruplion.] But, as right hon. and hon. Members opposite know that that was never the reason advanced by the Union of post Office Workers for not acceppting

111
arbitration—[Interruption.] They refused arbitration—
Mr. Speaker: Order. The Minister is entitled to a hearing. The hon. Member for Barons Court (Mr. Richard) was heard in silence.
Mr. Chataway: I cited that award because it happened to be a high one. There were special circumstances in that case where differentials—[Interruption.] That has nothing to do with it. I point to that award because it gives the lie to so many of the charges made by right hon. and hon. Members opposite that by virtue of this action the Government are somehow bearing down exclusively and unfairly upon the public sector—
Mr. Callaghan: Yes, exactly.
Mr. Chataway: The right hon. Lady and the right hon. Member for Cardiff, South-East (Mr. Callaghan), who has shouted throughout most of the debate, have both pointed to the Chrysler settlement as an example of the way in which we discriminate against the public sector as opposed to what is allowed to go on in the private sector. However, the right hon. Lady may care to note that the award which I mentioned just now covered some 10,000 people, whereas the one to which she drew attention covered about 6,500.
What this debate has been about is the level of settlement. Right hon. and hon. Members opposite have been arguing—
Mr. Golding rose—
Hon. Members: Sit down!
Mr. Chataway: They have argued that the Post Office offer of 9 per cent. is inadequate. They have not argued that there are special reasons here to justify an offer of much more than 9 per cent. I am sure that anyone who reads the debate will agree that the argument which has been advanced from the benches opposite is for settlements well over 9 per cent right across the board. It has not been suggested that it is only the Union of Post Office Workers which should be treated in this way. Very few of those who remember the speeches made by the right hon. Lady and her colleagues in favour of a norm of between 2½ per cent. and 4½ per cent. will treat today's Motion other than with contempt. The vast majority of people have had enough of settlements of 10 and 12 per cent., and I believe that they will support the Government in the line that they have taken—
Mr. Joseph Harper rose in his place and claimed to move, That the Question be now put—
Question, That the Question be now put, put and agreed to.
Question put accordingly, That this House do now adjourn:—
The House divided: Ayes 259, Noes 304.

Division No. 184.]

AYES

[7.14 p.m.

Abse, Leo

Campbell, I. (Dunbartonshire, W.)

Davis, Clinton (Hackney, C.)

Albu, Austen

Cant, R. B.

Deakins, Eric

Allaun, Frank (Salford, E.)

Carmichael, Neil

de Freitas, Rt. Hn. Sir Geoffrey

Allen, Scholefield

Carter, Ray (Birmingtt'm, Northfield)

Delargy, H. J.

Archer, Peter (Rowley Regis)

Carter-Jones, Lewis (Eccles)

Dell, Rt. Hn. Edmund

Ashley, Jack

Castle, Rt. Hn. Barbara

Dempsey, James

Ashton, Joe

Clark, David (Colne Valley)

Doig, Peter

Atkinson, Norman

Cocks, Michael (Bristol, S.)

Dormand, J. D.

Bagier, Gordon A. T.

Cohen, Stanley

Douglas, Dick (Stirlingshire, E.)

Barnes, Michael

Coleman, Donald

Douglas-Mann, Bruce

Barnett, Joel

Concannon, J. D.

Driberg, Tom

Beaney, Alan

Conlan, Bernard

Duffy, A. E. P.

Bennett, James (Glasgow, Bridgeton)

Corbet, Mrs. Freda

Dunn, James A.

Bidwell, Sydney

Cox, Thomas (Wandsworth, C.)

Dunnett, Jack

Bishop, E. S.

Crawshaw, Richard

Eadie, Alex

Blenkinsop, Arthur

Cronin, John

Edelman, Maurice

Boardman, H. (Leigh)

Crosland, Rt. Hn. Anthony

Edwards, Robert (Bilston)

Booth, Albert

Crossman, Rt, Hn. Richard

Edwards, William (Merioneth)

Bradley, Tom

Cunningham, G. (Islington, S.W.)

Ellis, Tom

Broughton, Sir Alfred

Dalyell, Tam

English, Michael

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

Darling, Rt. Hn. George

Evans, Fred

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

Davidson, Arthur

Fernyhough, Rt. Hn. E.

Brown, Ronald (Shoreditch & F'bury)

Davies, Denzil (Llanelly)

Fitch, Alan (Wigan)

Buchan, Norman

Davies, G. Elfed (Rhondda, E.)

Fletcher, Raymond (Ilkeston)

Butler, Mrs. Joyce (Wood Green)

Davies, Ifor (Gower)

Fletcher, Ted (Darlington)

Callaghan, Rt. Hn. James

Davies, S. O. (Merthyr Tydvil)

Foley, Maurice

Foot, Michael

Lewis, Ron (Carlisle)

Probert, Arthur

Ford, Ben

Lipton, Marcus

Rankin, John

Forrester, John

Lomas, Kenneth

Reed, D. (Sedgefield)

Fraser, John (Norwood)

Loughlin, Charles

Rees, Merlyn (Leeds, S.)

Freeson, Reginald

Lyon, Alexander W. (York)

Rhodes, Geoffrey

Galpern, Sir Myer

Lyons, Edward (Bradford, E.)

Richard, Ivor

Garrett, W. E.

Mabon, Dr. J. Dickson

Roberts, Albert (Normanton)

Gilbert, Dr. John

McBride, Neil

Roberts, Rt. Hn. Goronwy (Caernarvon)

Ginsburg, David

McCartney, Hugh

Robertson, John (Paisley)

Golding, John

McElhone, Frank

Roderick, Caerwyn E.(Br'c'n&R'dnor)

Gourlay, Harry

McGuire, Michael

Rodgers, William (Stockton-on-Tees)

Grant, George (Morpeth)

Mackenzie, Gregor

Roper, John

Grant, John D. (Islington, E.)

Mackie, John

Rose, Paul B.

Griffiths, Eddie (Brightside)

Mackintosh, John P.

Ross, Rt. Hn. William (Kilmarnock)

Griffiths, Will (Exchange)

Maclennan, Robert

Sheldon, Robert (Ashton-under-Lyne)

Gunter, Rt. Hn. R. J.

McMillan, Tom (Glasgow, C.)

Shore, Rt. Hn. Peter (Stepney)

Hamilton, James (Bothwell)

MacPherson, Malcolm

Short, Mrs. Renée (W'hampton,N.E.)

Hamilton, William (Fife, W.)

Mahon, Simon (Bootle)

Silkin, Hn. S. C. (Dulwich)

Hamling, William

Mallalieu, E. L. (Brigg)

Sillars, James

Hannan, William (G'gow, Maryhill)

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

Silverman, Julius

Hardy, Peter

Marks, Kenneth

Skinner, Dennis

Harrison, Walter (Wakefield)

Marquand, David

Small, William

Hart, Rt. Hn. Judith

Marsh, Rt. Hn. Richard

Smith, John (Lanarkshire, N.)

Hattersley, Roy

Mason, Rt. Hn. Roy

Spearing, Nigel

Heffer, Eric S.

Mayhew, Christopher

Spriggs, Leslie

Hilton, W. S.

Meacher, Michael

Stallard, A. W.

Hooson, Emlyn

Mellish, Rt. Hn. Robert

Steel, David

Horam, John

Mendelson, John

Stewart, Rt. Hn. Michael (Fulham)

Houghton, Rt. Hn. Douglas

Millan, Bruce

Stonehouse, Rt. Hn, John

Huckfield, Leslie

Miller, Dr. M. S.

Strang, Gavin

Hughes, Rt. Hn. Cledwyn (Anglesey)

Milne, Edward (Biyth)

Strauss, Rt, Hn. G. R.

Hughes, Mark (Durham)

Molloy, William

Summerskill, Hn. Dr. Shirley

Hughes, Roy (Newport)

Morgan, Elystan (Cardiganshire)

Swain, Thomas

Hunter, Adam

Morris, Alfred (Wythenshawe)

Taverne, Dick

Irvine, Rt. Hn. Sir Arthur(Edge Hill)

Morris, Charles R. (Openshaw)

Thomas, Rt. Hn. George (Cardiff,W.)

Janner, Greville

Morris, Rt. Hn. John (Aberavon)

Thomas, Jeffrey (Abertillery)

Jay, Rt. Hn. Douglas

Moyle, Roland

Thomson, Rt. Hn. G. (Dundee, E.)

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

Mulley, Rt. Hn. Frederick

Tinn, James

Jenkins, Hugh (Putney)

Murray, Ronald King

Tomney, Frank

John, Brynmor

Ogden, Eric

Tuck, Raphael

Johnson, Carol (Lewisham, S.)

O'Halloran, Michael

Urwin, T. W.

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

O'Malley, Brian

Varley, Eric G.

Johnson, Walter (Derby, S.)

Oram, Bert

Wainwright, Edwin

Jones, Barry (Flint, E.)

Orbach, Maurice

Walker, Harold (Doncaster)

Jones, Dan (Burnley)

Orme, Stanley

Wallace, George

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

Oswald, Thomas

Watkins, David

Jones, Gwynore (Carmarthen)

Owen, Dr. David (Plymount, Sutton)

Weitzman, David

Jones, T. Alec (Rhondda, W.)

Paget, R. T.

Wellbeloved, James

Judd, Frank

Palmer, Arthur

Wells, William (Walsall, N.)

Kaufman, Gerald

Pannell, Rt. Hn. Charles

White, James (Glasgow, Pollok)

Kelley, Richard

Pardoe, John

Whitehead, Phillip

Kerr, Russell

Parker, John (Dagenham)

Whitlock, William

Kinnock, Neil

Pavitt, Laurie

Willey, Rt. Hn. Frederick

Lambie, David

Peart, Rt. Hn. Fred

Williams, Alan (Swansea, W.)

Lamond, James

Pendry, Tom

Williams, Mrs. Shirley (Hitchin)

Latham, Arthur

Pentland, Norman

Williams, W. T. (Warrington)

Lawson, George

Perry, Ernest G.

Wilson, Alexander (Hamilton)

Leadbitter, Ted

Prentice, Rt. Hn. Reg.

Wilson, Rt. Hn. Harold (Huyton)

Lee, Rt. Hn. Frederick

Prescott, John

Leonard, Dick

Prescott, John

TELLERS FOR THE AYES:

Lestor, Miss Joan

Price, J. T. (Westhoughton)

Mr. Joseph Harper and

Lewis, Arthur (W. Ham, N.)

Price, William (Rugby)

Mr. Ernest Armstrong.

NOES

Alison, Michael (Barkston Ash)

Boardman, Tom (Leicester, s.W.)

Carlisle, Mark

Allason, James (Hemal Hempstead)

Body, Richard

Carr, Rt. Hn. Robert

Amery, Rt. Hn. Julian

Boscawen, Robert

Cary, Sir Robert

Astor, John

Bossom, Sir Clive

Channon, Paul

Atkins, Humphrey

Bowden, Andrew

Chapman, Sydney

Awdry, Daniel

Boyd-carpenter, Rt. Hn. John

Chataway, Rt. Hn. Christopher

Baker, Kenneth (St. Marylebone)

Braine, Bernard

Chichester-Clark, R.

Baker, W. H. K. (Banff)

Bray, Ronald

Churchill, W. S.

Balniel, Lord

Brewis, John

Clark, William (Surrey, E.)

Barber, Rt. Hn. Anthony

Brinton, Sir Tatton

Clarke, Kenneth (Rushcliffe)

Batsford, Brian

Brocklebank-Fowler, Christopher

Clegg, Walter

Bell, Ronald

Brown, Sir Edward (Bath)

Cockeram, Eric

Bennett, Sir Frederic (Torquay)

Bruce-Gardyne, J.

Cooke, Robert

Bennett, Dr. Reginald (Gosport)

Bryan, Paul

Coombs, Derek

Benyon, W.

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

Cooper, A. E.

Berry, Hn. Anthony

Buck, Antony

Cordle, John

Biffen, John

Bullus, Sir Eric

Corfield, Rt. Hn. Frederick

Biggs-Davison, John

Burden, F. A.

cormack, Patrick

Blaker, Peter

Campbell, Rt. Hn. G.(Moray&Nairn)

Costain, A. P.

114

115

Critchley, Julian

Jessel, Toby

Quennell, Miss J. M.

Crouch, David

Johnson Smith, G. (E. Grinstead)

Raison,, Timothy

Crowder, F. P.

Jones, Arthur (Northants, S.)

Ramsden, Rt. Hn. James

Curran, Charles

Jopling, Michael

Rawlinson, Rt. Hn. Sir Peter

Dalkeith, Earl of

Joseph, Rt. Hn. Sir Keith

Redmond, Robert

Davies, Rt. Hn. John (Knutsford)

Kaberry, Sir Donald

Reed, Laurance (Bolton, E.)

d'Avigdor-Goldsmid, Sir Henry

Kellett, Mrs. Elaine

Rees, Peter (Dover)

d'Avigdor Goldsmid, Maj.-Gen. Jack

Kershaw, Anthony

Rees-Davies, W. R.

Dean, Paul

Kilfedder, James

Renton, Rt. Hn. Sir David

Digby, Simon Wingfield

Kimball, Marcus

Rhys, Williams, Sir Brandon

Dixon, Piers

King, Evelyn (Dorset, S.)

Ridley, Hn. Nicholas

Dodds-Parker, Douglas

King, Tom (Bridgwater)

Ridsdale, Julian

Drayson, G. B.

Kinsey, J. R.

Rippon, Rt. Hn. Geoffrey

du Cann, Rt. Hn. Edward

Kirk, Peter

Roberts, Michael (Cardiff, N.)

Dykes, Hugh

Kitson, Timothy

Roberts, Wyn (Conway)

Eden, Sir John

Knight, Mrs. Jill

Rodgers, Sir John (Sevenoaks)

Edwards, Nicholas (Pembroke)

Knox, David

Rossi, Hugh (Hornsey)

Elliot, Capt. Walter (Carshalton)

Lambton, Antony

Rost, Peter

Emery, Peter

Lane, David

Royle, Anthony

Farr, John

Langford-Holt, Sir John

Russell, Sir Ronald

Fell, Anthony

Legge-Bourke, Sir Harry

St. John-Stevas, Norman

Fenner, Mrs. Peggy

Le Marchant, Spencer

Scott, Nicholas

Finsberg, Geoffrey (Hampstead)

Lewis, Kenneth (Rutland)

Scott-Hopkins, James

Fisher, Nigel (Surbiton)

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

Sharples, Richard

Fletcher-Cooke, Charles

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

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

Fookes, Miss Janet

Longden, Gilbert

Shelton, William (Clapham)

Fortescue, Tim

Loveridge, John

Simeons, Charles

Foster, Sir John

McAdden, Sir Stephen

Skeet, T. H. H.

Fox, Marcus

MacArthur, Ian

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

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

McGrindle, R. A.

Soref, Harold

Fry, Peter

McLaren, Martin

Speed, Keith

Galbraith, Hn. T. G.

Maclean, Sir Fitzroy

Spence, John

Gardner, Edward

McMaster, Stanley

Sproat, Iain

Gibson-Watt, David

Macmillan, Maurice (Farnham)

Stainton, Keith

Gilmour, Ian (Norfolk, C.)

McNair-Wilson, Michael

Stanbrook, Ivor

Gilmour, Sir John (Fife, E.)

McNair-Wilson, Patrick (New Forest)

Stewart-Smith, D. G. (Belper)

Glyn, Dr. Alan

Maddan, Martin

Stodart, Anthony (Edinburgh, W.)

Godber, Rt. Hn. J. B.

Madel, David

Stoddart-Scott, Col. Sir M.

Goodhart, Philip

Maginnis, John E.

Stokes, John

Goodhew, Victor

Marples, Rt. Hn. Ernest

Stuttaford, Dr. Tom

Gorst, John

Marten, Neil

Sutcliffe, John

Gower, Raymond

Mather, Carol

Tapsell, Peter

Grant, Anthony (Harrow, C.)

Maude, Angus

Taylor, Sir Charles (Eastbourne)

Gray, Hamish

Maudling, Rt. Hn. Reginald

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

Green, Alan

Mawby, Ray

Taylor, Frank (Moss Side)

Grieve, Percy

Maxwell-Hyslop, R. J.

Taylor, Robert (Croydon, N.W.)

Griffiths, Eldon (Bury St. Edmunds)

Meyer, Sir Anthony

Tebbit, Norman

Grylls, Michael

Mills, Peter (Torrington)

Temple, John M.

Gummer, Selwyn

Miscampbell, Norman

Thatcher, Rt. Hn. Mrs. Margaret

Hall, Miss Joan (Keighley)

Mitchell, Lt.-Col.C.(Aberdeenshire,W)

Thomas, John Stradling (Monmouth)

Hall, John (Wycombe)

Mitchell, David (Basingstoke)

Thomas, Rt. Hn. Peter (Hendon, S.)

Hall-Davis, A. G. F.

Moate, Roger

Thompson, Sir Richard (Croydon, S.)

Hamilton, Michael (Salisbury)

Money, Ernie

Tilney, John

Hannam, John (Exeter)

Monks, Mrs. Connie

Trafford, Dr. Anthony

Harrison, Brian (Malden)

Montgomery, Fergus

Trew, Peter

Harrison, Col. Sir Harwood (Eye)

Morgan, Geraint (Denbigh)

Tugendhat, Christopher

Harvey, Sir Arthur Vere

Margan-Giles, Rear-Adm.

Turton, Rt. Hn. R. H.

Haselhurst, Alan

Morrison, Charles (Devizes)

van Straubenzee, W. R.

Havers, Michael

Mudd, David

Vaughan, Dr. Gerard

Hawkins, Paul

Murton, Oscar

Vickers, Dame Joan

Hay, John

Nabarro, Sir Gerald

Waddington, David

Hayhoe, Barney

Neave, Airey

Walder, David (Clitheroe)

Heath, Rt. Hn. Edward

Nicholls, Sir Harmar

Walker, Rt. Hn. Peter (Worcester)

Heseltine, Michael

Noble, Rt. Hn. Michael

Walker-Smith, Rt. Hn. Sir Derek

Hicks, Robert

Normanton, Tom

Wall, Patrick

Higgins, Terence L.

Nott, John

Walters, Dennis

Hiley, Jeseph

Onslow, Cranley

Ward, Dame Irene

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

Oppenheim, Mrs. Sally

Warren, Kenneth

Hill, James (Southampton, Test)

Orr, Capt. L. P. S.

Weatherill, Bernard

Holland, Phillip

Osborn, John

Wells, John (Maidstone)

Holt, Miss Mary

Page, Graham (Crosby)

White, Roger (Gravesend)

Hordern, Peter

Page, John (Harrow, W.)

Whitelaw, Rt. Hn. William

Hornby, Richard

Parkinson, Cecil (Enfield, W.)

Wiggin, Jerry

Hornsby-Smith, Rt. Hn. Dame Patricia

Percival, Ian

Wilkinson, John

Howe, Hn. Sir Geoffrey (Reigate)

Peyton, Rt. Hn. John

Wolrige-Cordon, Patrick

Howell, David (Guildford)

Pike, Miss Mervyn

Woodhouse, Hn. Christopher

Howell, Ralph (Norfolk, N.)

Pink, R. Bonner

Woodnutt, Mark

Hunt, John

Pounder, Rafton

Worsley, Marcus

Hutchison, Michael Clark

Powell, Rt. Hn. J. Enoch

Wylie, Rt. Hn. N. R.

Iremonger, T. L.

Price, David (Eastleigh)

Younger, Hn. George

Irvine, Bryant Godman (Rye)

Prior, Rt. Hn. J. M. L.

James, David

Proudfoot, Wilfred

TELLERS FOR THE NOES:

Jenkin, Patrick (Woodford)

Pym, Rt. Hn. Francis

Mr. Reginald Eyre and

Jennings, J. C. (Burton)

Mr. Jasper More

PUBLIC EXPENDITURE (WHITE PAPER)
Mr. Speaker: Order. Before calling upon the Minister to move the Motion, I should tell the House that I know of 25 right hon. and hon. Members who wish to speak in the debate. I hope, therefore, that speeches from both the Front and back benches will be reasonably brief.
7.26 p.m.
The Chief Secretary to the Treasury (Mr. Maurice Macmillan): I beg to move,
That thie House takes note of the White Paper on Public Expenditure 1969–70 to 1974–75; (Command Paper No. 4578).
In the debate last year on the first White Paper of this kind the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) rightly forecast that it would affect the whole manner in which discussions on public expenditure, programmes and policy are conducted in this House.
The late lain Macleod, welcoming the advance represented by that White Paper, regretted that at that time there was no follow-up. At the same time he hoped that a consensus would grow between the House of Commons and the Executive on the way in which these matters should be debated.
This year we can say, as a House, that we have achieved both. The House returned to the problem with the debate on the Green Paper, Cmnd. 4507, presented by my right hon. Friend the Leader of the House in October. I think that the House will wish me to express gratitude to the Leader of the House, to my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), to the Select Committee on Procedure and, indeed, to many Members on both sides whose efforts have enabled us to reach a consensus, and a follow-up has been organised with the new Select Committee on Expenditure established in Standing Orders. I congratulate my right hon. Friend the Member for Taunton (Mr. du Cann) as its first Chairman.
The work of this Committee, and its sector sub-committees, is essential especially in view of the nature of these White Papers on Public Expenditure, for they are essentially published versions
118
of working documents giving very full and detailed information both of the whole public sector and demands on the economy and of the individual programmes within it.
It is not an economic plan; nor, indeed, as the right hon. Member for Stechford pointed out in last year's debate, should it be allowed to take us into the wider issues of economic management and forecasting. It is necessary, therefore, that the programmes and expenditure contained in the White Paper should be examined in detail in a way which cannot be done properly and effectively in debate in this Chamber on the White Paper as a whole. I think that it requires the Select Committee on Expenditure going beyond the Select Committee on Estimates, just as the Government, in successive White Papers, have gone beyond simple cash requirements. I am sure that the whole House will wish my right hon. Friend the Member for Taunton and his colleagues well in the important task which they are taking up.
The programmes set out in the White Paper, Cmnd. 4578, have already been seen in "New Policies for Public Spending", Cmnd. 4515, which gave figures for the individual programmes for the years 1971–72 and for broader groups of programmes for 1974–75. In both cases it related them to the programmes of the previous Government as at the time of the General Election.
The White Paper that we are now considering gives a fuller presentation of all the programmes in each year from 1969–70 to 1974–75. It differs considerably from the previous Administration's programmes, as set out in their White Paper—Cmnd. 4234. The changes are set out in detail in Appendix A to our White Paper. We distinguish between the changes made before and those made since the present Government took office, by showing the programmes as they were at the time of the publication of Cmnd. 4234 and, under the heading of "previous programmes", as they had become by June, 1970, with the alterations made in Cmnd. 4515 and, finally, the changes since then as set out in the present White Paper.
Before I go further into the details of these programmes and their presentation I want to touch upon the objectives that they are designed to achieve in relation

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to the Government's policy in the public sector generally and our ideas for further changes and developments. The purpose underlying our policies is set out in the Introduction to the White Paper, which says:
"When the Government took office last June they carried out an immediate review of public expenditure up to 1974–75 in order to concentrate the activities of public bodies on the tasks which they alone can perform, to reduce substantially previous plans for public spending and to permit taxation, including personal taxation, to be reduced. The individual can then expect to keep more of what he earns and has a greater incentive to productive effort. A similar prospect, and a greater freedom of decision, is opened for industry and commerce. This is the way to faster growth of the nation's resources; while more resources are devoted to meeting the essential needs of the public sector."
Hon. and right hon. Gentlemen opposite ought not to object to these objectives, for the need for such a policy was implied by the right hon. Member for Stechford when, speaking in last year's debate, he said:
"But if expenditure, with anything like its present composition, were to grow appreciably faster than the national output other claims to our resources would have to give way continually, and this would primarily mean personal consumption. There is a limit to what is feasible or desirable in this respect. If, on the other hand, we were to keep the growth of public expenditure down to a significantly lower level—as we had to in the period immediately following devaluation—we should before long find the standards of public service falling back."
He then referred to some of the tasks that only public bodies can perform, and to the fact that a rising population means an increase in public expenditure. He continued:
"But one cannot allow the increase to be unrestrained and to assume that the required resources can be found when the time comes by preventing their use in the private sector without limit by higher taxation. The balance between the provision of services by the community and the right of individuals to spend their income as they themselves prefer is at all times. as I have pointed out before, a difficult one to maintain. Taxation raised on the scale that our society now requires affects a very wide range of people, and we must be realistic in realising that they are concerned both with the standards of the public services and with their own personal standard of living—not with either to the exclusion of the other …"—[OFFICIAL REPORT, 21st January, 1970; Vol. 794, c. 527.]
It is a pity that the right hon Gentleman's policies were not framed to prac-
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tise what he preached; instead, in last year's debate he assumed that public expenditure had been brought under control on the basis of the December, 1969 White Paper, whereas when we took office six months later, in June, it was clear that it had risen sharply enough to make it necessary to cut it back to avoid a probable need for further tax increases if the previous Government's programmes were to be maintained unaltered.
It was clear, too, that even as the right hon. Gentleman spoke in that debate, the process had already started that wrecked the underlying assumptions of his calculations. Even then industrial investment was falling off as profit margins were being more tightly squeezed. Even then the wages explosion had started and ever more inflationary wage settlements were pushing up prices, creating bigger deficits in nationalised industries, and helping to reduce company liquidity still further. It is no wonder that the "balance" referred to by the right hon. Member for Stechford in introducing the previous Government's White Paper had gone so wrong. It was in order to restore that balance that we carried out an immediate review of public expenditure up to 1974–75.
Mr. Peter Shore: The hon. Member is making a reasonable point in terms of the relationship between the growth of G.D.P. and the growth of public expenditure, but he cannot blame my right hon. Friend if the growth of G.D.P. falls when he and his colleagues are pursuing policies aimed at keeping down the rate of G.D.P. and justifying lower public expenditure targets on that basis. Why has he not put in the White Paper some of his own estimates of G.D.P. for the next five years?
Mr. Macmillan: If the hon. Member will allow me to make my speech in my own way we shall spend less time and get to the point just the same. I am not justifying reductions in public spending by recent falls, and the troubles that I have described. This is what happened in the last six months of the last Government. The difference between the situation as forecast by the right hon. Member in January and as it turned out in June was one of the biggest and relatively unexpected difficulties that this Government had to face on first taking office.

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The White Paper that we are now debating gives a picture of our plans for future public spending. First, for industry and industrial investment public spending should not seek to undertake what could and should be left to individual organisations. It should be adjusted to the requirements of Government policy and should be really effective in achieving its object. In the White Paper the share of total public expenditure going to help industry and commerce is reducing from 8 per cent. this year—including investment grants—to about 4 per cent. by 1974–75. This is due in part to structural changes in agricultural support and investment incentives, and in part to other changes, by which other spending is falling at an average of about 7 per cent. a year.
The general schemes of support, including investment grants and regional employment premiums, were taking large sums, and there was little evidence that they were proving in any way cost-effective. I am inclined to agree with the hon. Member for Heywood and Royton (Mr. Barnett). His views on the subject are known, and he will doubtless forgive me if I quote what he said in the debate in January last year. He said:
"I have always made clear my opposition to the R.E.P. It is money for which we do not get an adequate return. My experience—and the figures confirm this—is that it is not justified."
He felt similarly about investment grants. He said:
"The biggest figure relates to investment grants … This would be cheap socially and economically, if it did the job; if, for example, it produced more employment in the regions, and more investment both in the regions and elsewhere. But there is very little evidence that it is doing that."—[OFFICIAL REPORT, 21st February, 1970; Vol. 794, c. 640.]
I entirely agree with that, as would my right hon. and hon. Friends. It is for this reason that our new policies are designed to relate investment grants in the form of tax allowances to profitability and have been reinforced at the same time by a start on reduction of industrial taxation.
Second, we are applying to nationalised industry the same criteria of cost-effectiveness as we are seeking to apply throughout the whole public sector, and indeed the private sector, too. As I said in the debate on 5th November:
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"… industry and commerce feel, with a certain amount of justification, that public sector investment and wasteful public help for private lack of enterprise is taking too much; with the result that the private sector takes the burden in falling profit margins and credit squeezes while the public sector remains relatively unchecked and sometimes inadequately controlled."—[OFFICIAL REPORT, 5th November, 1970; Vol. 805, c. 1303.]
One cannot ever judge public sector investment entirely by the same criteria as one would seek to apply to the private sector. That is obvious. But this does not mean that the investment programmes of nationalised industries must remain sacrosanct or that their needs can be judged purely subjectively and regardless of the state of the economy. so that they are exempted from all the pressures falling on the private sector. The old false claim that what is good for General Motors is good for the United States does not become true because the industry concerned is nationalised.
I know that we have so far made relatively little progress in this direction which can be described in the White Paper, but we are not considering plans which are static. As paragraph 4 in the White Paper says:
"Changes will continue to be made in the programmes as the review of Government functions and other public sector activity progresses."
The Government's approach was described in the White Paper "The Reorganisation of Central Government". The investment needs of the nationalised industries represent a significant demand on resources and a review of their activities has therefore been put in hand to complement the review of the Government's own functions. Forward expenditure plans will reflect the outcome of these further reviews, the results of which will be made known as decisions are taken.
In considering our policies after the review of public spending, and in setting them out in these White Papers, we had a third thing to do. We had to regain control of public spending, to reduce the previous expenditure plans without damaging the essential programmes which the Government alone can carry out. This, indeed, was a considerable change from past policies.
Public expenditure has been growing at a rate so wildly out of step with the growth of G.D.P. that the cuts from right hon. Gentlemen opposite, when they came,

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were sharp indeed. In the four years 1965–66 to 1969–70 successively—this is excluding investment grants, selective employment premium and regional employment premium—public expenditure was rising by 6·6 per cent. and the gross domestic product by 1·8 per cent. in the first year; public expenditure was up by 9 per cent. and G.D.P. by 2 per cent. in the second year. Then came the cuts. In 1967–68 to 1968–69, public expenditure rose by only 1·6 per cent. and the gross domestic product by 2·4 per cent. In the last year, there was no increase in public expenditure and the increase in G.D.P. was down to 1·7 per cent.
So there was no growth, and the effect of the cuts can be shown by the fall in the purchase of resources net of charges. In the first two years, the increase in the Government's direct purchase of resources was as much as or greater than the increase in public expenditure as a whole. In the last two years, there was an actual decrease. This meant that the programmes themselves—programmes which only Government can carry out—were, as we all know, reduced and their continuity damaged.
As a great contrast, as we describe in the White Paper, we increased spending which we considered too low—on primary schools, hospitals, services for the care of the old, and help for the low-paid families in full-time work. We have changed other policies to concentrate the help, often increased, on the various free services, benefits in kind and subsidies for housing, where need is greatest. Indeed, as I said in the debate on our previous White Paper, our savings have not reduced the resources available for main line activities, nor do they cut capital programmes. We are increasing the real resources, public and private, which will be devoted to education, health and welfare.
This question of the use of real resources is nothing new, as Mr. Peter Jay implied in The Times, commenting on Mr. Godley's analysis. Indeed, in table 1.4 in the White Paper, the point is made quite clear, that this policy involves, between 1970–71 and 1972–73, an increase in the purchase of resources by an average annual rate of 3·3 per cent., compared with the rate of growth of public expenditure as a whole of 2·6 per cent. The calculations which have been done beyond
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those years cannot have been derived from the White Paper itself, because no information has been published of the composition of programmes, for the simple reason that, for a number of them, the relevant decisions have not yet been taken.
Nor indeed, can one—as Mr. Jay did in The Times—compare the steady increase shown in Table 1.4 with 1965–66 to 1970–71, a period which includes the three years post-devalution, when the Government reversed the public expenditure trend. So any average of those years is the result of two years massive direct claims by Government on resources, followed by two years when claims were actually reduced.
But there is one comparison—and only one—which takes into account all the programmes published. It is between last year's White Paper, the programmes as they stood when we took office, and the programmes as they stand now. That comparison can be made only for 1970–71 to 1971–72.
If one looks through that change at the increase in the purchase of resources at constant prices by the Government, one will find that, in the programmes set up in Cmnd. 4234 the previous Government's White Paper, gross of charges, the rate of increase was 3¾ per cent. per year. At June, 1970, the rate of increase of these programmes was at 4 per cent. a year. In this White Paper, they are 3¼ per cent. Net of charges, the figures are the same for the previous Government's programmes and reduced by ¾ per cent. for our programmes.
Mr. David Marquand: I been trying to follow the Minister, and it it is a little difficult. Can he say now, definitely, whether Mr. Godley was right about the last two years of the five-year cycle, in saying that the public sector's claim on resources will be rising more rapidly in the last two years of those five years than in the first three?
Mr. Macmillan: My hon. Friend the Financial Secretary will hope to develop this, among other points, when he speaks later. In the meantime, I will not comment on Mr. Godley's analysis. He is making an assumption on matters of policy which the Government have not yet decided.
He may think he knows what we shall do, but it is not possible, as I have said,

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to make such a calculation involving the rate of increase in the purchase of resources from the information contained in this White Paper beyond 1972–73, because no information on the composition of programmes beyond that point is published in the White Paper. Thus, any calculation which anybody makes, be it Mr. Godley or anyone else, must be his own and cannot be derived from the information in the White Paper.
Mr. Joel Barnett: Is the Minister saying that Mr. Godley is wrong in his estimate because the figures given in the White Paper relating to the period beyond 1972–73 are meaningless?
Mr. Macmillan: Mr. Godley has drawn some conclusions from assumptions he has made based on an analysis which is entirely his own. It is not a conclusion that can be drawn in any way from the White Paper and it must have been drawn from information which is not published in the White Paper, since no information so published in it would enable him to make such an assumption.
It is, therefore, open to virtually anybody to make that sort of assumption about the future; and the judgment of any person must depend on that person's skill and ability to forecast. But it cannot depend on any link that is made between that judgment and this White Paper because the necessary information is just not in it. There is, therefore, no connection between the two.
Mr. Godley has made his own mediumterm assessment and has published the result of that, relating it to the White Paper in a way which implies that the White Paper is also a medium-term assessment. However, this White Paper, like that produced by our predecessors, is not. We have made it as clear as hon. Gentlemen opposite did last year that this document does not contain the material necessary to make such an assumption.
As the right hon. Member for Stechford said, it does not include material to adduce a balanced argument about economic judgments or management. This is why I cannot give an opinion, based on this White Paper, of Mr. Godley's judgment; simply because, as I have said several times, the information
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on which to do is not contained in this White Peper.
Mr. Douglas Jay: rose—
Mr. Macmillan: I will not give way. I have given way quite enough.
This comparison of the change in the purchase of resources shows that despite keeping our main programmes intact, and increasing some, the purchase of real resources by the Government is now running at a reduced rate of increase. It is less than that of the previous Government, as published in the White Paper, and as the position stood at the time of the last election. This is true both taking charges into account and ignoring the effect of them. Reductions in expenditure on the direct use of resources are not solely due to increased charges, as has been suggested—[Interruption.] This was the clear implication of the line taken by Mr. Jay in The Times.
I have gone into this detail because there has been a misunderstanding, perhaps a wilful misunderstanding on occasions, on this issue. The fact that Government purchases of real resources, though rising faster than public expenditure as a whole, have been slowed down, is a factor which is being ignored.
If hon. Members are seeking to find in this some prospect of forecasting the Chancellor's Budget judgment, then I must remind them that we are in agreement in saying that such a use cannot be made of this White Paper. The prospect of tax reductions depends not only on—[Interruption.]—resources but on public expenditure as a whole and on the whole prospect of the economy.
Mr. Robert Sheldon rose—
Mr. Macmillan: I will not give way. I have given way sufficiently.
Mr. Sheldon: Is the hon. Gentleman so dependent on his brief that he cannot depart from it for a moment and give way to me?
Mr. Macmillan: Whatever the hon. Gentleman chooses to say, my hon. Friends and I know his motive. I will not be put off by what he says and I will not give way.
Mr. Sheldon rose—
Hon. Members: Give way.
Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. It is obvious that the Minister has no intention of giving way. That being so, the hon. Member for Ashton-under-Lyne (Mr. Sheldon) must not persist.
Mr. Sheldon: Another frightened Minister.
Mr. Macmillan: The point I made in relation to resources is also important in the light of our new approach, which is, first, to consider the need of public expenditure and for what it will be required—how much is needed and for what it is needed. We are doing this first, rather than trying to predict the rate of growth of total output and then seeking to justify the rate of growth of public expenditure in reference to it.
It is partly this new approach which has led to a number of changes in the presentation of the White Paper. For example, it is partly for this reason—because it would have been inconsistent with our new approach—that we have left out the revenue table. We have taken this line for other reasons as well. Our predecessors made ambitious plans on the basis of optimistic and unrealistic assumptions about the rate of growth of output and this led successively to disillusionment and crisis cuts in expenditure. We do not intend to follow that road. We are not in favour of presenting forecasts when there is no reasonable basis for them. For this reason there are no revenue projections in this White Paper.
After all, revenue projections depend on taking a view of a whole range of future developments, including the future rate of growth of real resources, the rate of growth of wages and salaries, the future level of profit margins, the movement of world prices and of individual savings, investments and so on. We believe that no Government should make the sort of assumptions which have been made hitherto about these developments, and when the right hon. Member for Stechford was Chancellor, he did not make them, either. It is difficult, in any case, to judge such projections on their merits. In a static situation it is hard enough to complete this exercise. In the present situation of inflation, with a very
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wide range of possibilities being plausible, it is even more difficult.
It is not surprising that past projections constructed in this way proved to be unsound. It is not surprising that revenue projections are liable to be wholly misleading. In view of the policy which we have announced—of making major changes in the tax structure—such projections, which depend on the tax structure being unchanged, would be likely to be even more irrelevant.
I think that the whole House appreciates the reasons which led to this innovation in last year's White Paper. I must say that I think that it was a fine idea, but I do not believe that it really worked. We have tried to make the public expenditure picture clearer in other ways, by a careful comparison with past programmes, as I described at the beginning of my speech, by carrying through the relative price effects into individual programmes, by trying to provide even more detail than before, and by setting out programmes for a lull period with varying degrees of firmness for the later years rather than dividing them into two sections, firm for the first two years and provisional thereafter.
A word now about these aspects of the White Paper. I think that the setting out of programmes at constant prices is a convention which tends to distort their cost in terms of the calls which they make on the nation's resources. It pretends, as it were, that public sector prices do not move at all or that they move all together in step with one another and with the economy generally.
It has long been recognised that some adjustment was required to reflect the position more accurately. In last year's White Paper, the innovation was made and this adjustment for the relative price effect was made to the totals of public expenditure. This year, we have been able to go a step further and carry through the adjustment to individual programmes, whenever this is practicable, though in some cases—for instance, overseas aid, housing and agriculture—it is not possible to do that.
I hope that the House will feel that this provides the more realistic detail which, I think, is especially appropriate in the year in which the distinction has

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been abolished between "decided programmes" and "provisional allocations". I am glad that we were able to do this, because there was always something a little unreal in the contrast, with one section of programmes which it was hardly possible to modify from years one to three, then suddenly becoming open to change, as it were.
I think that the distinction of "decided" and "provisional" is a great deal clearer on paper, than it is in the real world. In fact, all the programmes set out in the White Paper are open to discussion, although, as is said in paragraph 7 of the White Paper:
"Subject to the points in the previous three paragraphs the totals given in this White Paper for various programmes are those which the Government have decided upon for the purposes of managing public expenditure up to 1974–75. In general there is scope for greater flexibility the further one looks towards the end of this period."
That is obvious. The firmness of the figures is clearly indicated in the White Paper. It has been suggested to me that this system gives less opportunity for right hon. and hon. Members to discuss the programmes, but this is not so, because in the White Paper a lot of trouble is taken to make plain exactly what is the status of the particular programmes concerned, either in the introductory passage or in the individual chapters.
This change is in line with the change of approach which I referred to earlier and which we intend to develop further. Admirable though the system of controlling public expenditure is as it has been developed over the years, it is not yet an effective system for considering expenditure in terms of the objects of particular programmes in relation not only to the particular policy or particular need but also to other objectives and other needs.
We are determined to make improvements in this method of handling and managing public expenditure, and the first step is a scheme of programme analysis and review for selected programmes, designed to improve the basis of public expenditure decisions. My right hon. Friend the Prime Minister announced this in the House last month, and I understand that my hon. Friend the Financial Secretary, if he catches the eye of the Chair later, will refer to that aspect of the future in more detail.
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I hope that this method of programme analysis and review, and the various improvements which we have made in the White Paper, will be part of a continuing process of improving arrangements for public expenditure and clarifying the methods by which programmes are put before the House in the White Paper. I am sure that a number of refinements can still be made. I have no doubt that this debate and future discussions by the Select Committee will bring out many suggestions, and I look forward to hearing and seeing them. Meanwhile, I commend the White Paper to the House.
8.6 p.m.
Mr. Dick Taverne: When last year's White Paper on Public Expenditure was debated for two days, it was universally agreed on both sides, I think, that similar debates in the future would last two full days and would be one of the two main economic debates of the year.
No doubt it was to be expected that it would take time before the House recognised the full significance of this debate. and before it attracted the attention and attendance of a Budget debate. Budget debates are, after all, part of a long tradition, with their special drama and their own ritual, with some hon. Members arrayed in special sartorial display. Moreover, they are more immediately controversial because the Chancellor's tax proposals give rise to divisions on party lines.
But many of us feel that this debate is potentially far more important even than what is debated at the time of the Budget, for we are here looking five years ahead at decisions which determine the spending of something between one-quarter and one-third of the goods and services which the country produces. We are looking at the pattern of social development which is laid down for many years ahead. We are looking at the major determinants of the quality of our society. It is, after all, from public expenditure that the basic standards for a large section of our population are provided, and it is on public expenditure that the majority of the population depend for some of the most important things in life.
Again, the decisions which we are considering today are decisions which themselves create in future years the framework within which the Chancellor of the

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Exchequer has to operate. Moreover, while what is done in the Budget can be reversed through the use of the regulator, it is far more difficult to alter the decisions on public expenditure in the short term. One cannot, therefore, overemphasise the importance of the sort of debate upon which we are now engaged.
In these circumstances, it is utterly deplorable that we are restricted to one day and, owing to unfortunate circumstances, to the tail end of the day, ending at one o'clock in the morning.
Mr. Kenneth Baker: It is not the Government's responsibility that we are beginning this debate at seven o'clock and going on till one o'clock in the morning. The responsibility lies with the right hon. Lady the Member for Blackburn (Mrs. Castle). Is it not usual for members of the Opposition Front Bench not to move the Adjournment under Standing Order No. 9 but to take a half-day on Supply? That is the way it should have been done, and in that way we could have taken full advantage of our time on this important subject.
Mr. Taverne: A very urgent matter had to be raised, and it could not be postponed and taken under the ordinary Supply Day procedure, The reason why we have to go until one o'clock today is that we are restricted to one day instead of the two days which should have been allotted.
Mr. R. H. Turton: One cannot allow that to go uncorrected. The rules of the House always allow for an emergency half-day on Supply to be taken by the Opposition when they want a debate to come on quickly. My hon. Friend was alluding to that. That is the normal behaviour for the Opposition Front Bench.
Mr. Taverne: It was nevertheless in order to get a quick debate on the subject that we had to break into this debate, and we have been restricted to having this debate at this time because we are not to have the two days which it was originally envisaged would be devoted to a debate on public expenditure.
The reason why we have not had two days is that the Leader of the House said that we had already had two days on the November mini-budget, but that is
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not even the beginning of an excuse, because in November the debate inevitably concentrated on the immediate impact of the Government's measures, on the tax cuts and spending cuts then announced, and their relation to this debate is much the same as that of an autumn Budget to the main Budget, and it certainly has never been used as an argument to restrict the debate on the main Budget that there has been an earlier debate in the autumn.
In future, there may well be announcements in the autumn when not only budgetary measures, but changes in public expenditure are announced. If the Government are to follow the policy of the Labour Government and encourage a full and considered discussion of the future patterns of public expenditure, they must help to build up the debate, not down-grade it.
Mr. J. Bruce-Gardyne: As the hon. and learned Gentleman is making such a meal of it, would be acknowledge that the Leader of the House has already undertaken that in future there will always be a two-day debate?
Mr. Taverne: It would have been more appropriate if we had started with two days on this occasion. This is not a very encouraging atmosphere in which to build up a debate which must be built up in importance in the course of time.
There is one thing which we will all welcome as the Chief Secretary welcomed—the setting-up of a Select Committee on Public Expenditure. I am sure that future debates and future White Papers will gain enormously from the work of that Committee. It will enable the House to play a greater part in the consideration and formulation of public expenditure plans, and I believe that it will assist the Treasury.
Personally, I have only one reservation. Because of the restricted size of the Committee, the scope given to its specialist sub-committees is far too wide. Some will have an enormous range to cover, and with only eight members it will be difficult if not impossible adequately to cover all that they have to cover. I appreciate that the Leader of the House had qualms about the burden on back-bench Members if too many were appointed to the Committee, but there are many hon. Members on this side of

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the House, and I am sure that there are many hon. Members opposite, who would have been only too glad to have been added, and I hope that as soon as possible the Leader of the House will see fit to enlarge the Committee so that its job may be done properly.
Before coming to the specific details of the White Paper, I should like to make some general comments, as did the Chief Secretary, about the proportion of public expenditure to the gross national product as a whole. It is the constant theme of the Government that public spending in Britain is far too high and should be urgently reduced, and in the White Paper they have boasted that they have considerably reduced it. I shall return to an examination of the boast.
Contrary to popular belief, it is a surprising fact that this country does not devote a particularly large part of its gross national product to public spending. It is true neither of spending on goods and services nor transfer payments. International comparisons are somewhat difficult and possibly misleading because different items appear under different headings in national accounting systems which different nations use, but a careful analysis published by Professor T. P. Hill in the National West inster Bank Quarterly Review of February 1969 shows clearly that public spending is higher in countries like West Germany, France, the Netherlands, Norway and Sweden than it is here. That article was published some time ago, but its main point is still perfectly valid. Those countries spend a higher proportion of their total national wealth on education, health and the social services. The only areas in which our spending is relatively high are defence and servicing the National Debt. In Britain we spend a larger proportion of our national wealth on consumption.
The picture of Britain as a country where far too much of our national wealth is spent for us by the State, a picture which hon. Members opposite are so eager to create, is therefore totally misleading. It is true that investment takes too small a proportion. It is also true that the total which goes on providing the basic needs for those who have less than average or average incomes compares unfavourably with most advanced countries in Europe.
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The limiting factor, of course, is the rate of growth. It is far easier to follow a policy of redistribution in a climate of expansion than in one of relative stagnation. It may be tolerable to limit the rate of expansion of consumption below the average rate of the growth of national wealth if the latter is going up fast and still leaves room for a considerable increase in personal wealth. There are enormous difficulties in the way of increasing the share of public expenditure if as a result the ordinary person's expectation of a rising standard of living is severely disappointed. A recent O.E.C.D. report shows that public expenditure grew fastest, both in absolute and relative terms, in those countries where the overall growth rate was fastest and so growth must be our top priority at the moment.
But to create a civilised society it is essential that we seek to influence public attitudes to public spending, and everything the Government have said has had the opposite effect. The boast of the White Paper is that they have cut public spending for the next few years but when carefully analysed this is seen to be vastly overstated. In all their speeches and propaganda they seek to turn the public away from a civilised society which requires a high level of public spending and they propagate individual enrichment as the main purpose of the social life.
I come to the particular contents of the White Paper. First, I should like to welcome one new development, the inclusion of the relative price effects in the estimates for the individual programmes to which the Chief Secretary referred helps us a great deal, because it enables us for the first time to make a proper comparison between future growth rates and past growth rates of particular programmes. It is an important advance and it is fair to congratulate the Government upon it.
But the main difference of presentation between this year's White Paper and the last, as most hon. Members on the backbenches would agree, is regrettable and it is to leave out the public sector receipts and the balance between receipts and expenditure. The Chief Secretary said that it was necessary to do so because the forecasts of these receipts were inevitably unreliable, because the Government did not wish to make forecasts of a kind on

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which we could not rely. But the whole of the Budget is based on uncertain forecasts and the Treasury has medium-term assessments and there is no reason why forecasts of this kind should not be published. Not having them leaves our discussion of public expenditure as a whole in a kind of vacuum.
We are left to guess or to rely on outside estimates for a broad measure of the buoyancy of the revenue. We have no indication of the kind of borrowing requirement in the public spending programme on the basis that present policies for taxation would imply We are in a poor position to judge whether the overall view of public expenditure would enable it to be increased, or would require its further reduction. We are without the tables which were published last time and which the House found useful, tables 1.2 and 1.7, which appeared in last year's White Paper and which helped us to assess the implication of the public expenditure projects therein contained.
To get the proper picture of the demand effect, one needs the medium-term assessment itself, and this has always been one of the pieces of information which the Treasury has been reluctant to impart. It has been afraid that the debate would become a not so much a public expenditure debate, but a general economic debate which would include consideration of future levels of taxation. Whether or not there are reasons for not going the whole hog, it seems regrettable that we now take a huge step back and that the Government are to withhold information which could of itself be useful. The Chief Secretary said that the assumptions must be arbitrary and uncertain. But they never did represent Government commitments and explicit Government decisions. This was all fully set out in the last White Paper, at paragraphs 18–21. Everybody knows that there will be tax changes, but at least the receipts gave us some sort of guide to what effect public sector operations would have on real demand.
If uncertainty is the reason, then the whole White Paper is riddled with uncertainties and arbitrary assessments. The figures for the saving on assistance for housing are not even published. An
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overall figure of £150 million is given. The whole increase in social security programmes is specifically and rightly said to be based on certain projections which in the event will not be realised. There are constant references to previous programmes, which refer to long-term costings which represented not firm decisions by the previous Government but the kind of projections on the basis of no change in policy which the receipt projections were based on. This is a most regrettable regression, and not an advance.
I now come to the nature of the cuts. Paragraph 8 proclaims that public expenditure for 1974–75 is
"… over £1,500 million lower than the previous programmes as they stood when the Government took office."
That was the message that obviously featured very prominently in the Lobby briefing given by the Chancellor when the White Paper was published. But the figure is a phoney. The savings have to a large extent been falsely claimed, and the right hon. Gentleman must have known it when he briefed the Lobby to that effect. Indeed, we can see from the White Paper that it is a totally unrealistic figure. First, part of the £1,500 million is accounted for by shortfall. "Shortfall" is simply a way of stating that in practice the money allocated to a particular programme is never fully spent when it comes to the end of the year. There is always some over-estimating. It is not a cut but simply a reflection of the money that would not have been spent in any event. To claim that it is a cut is to mislead. The Government are again guilty of the kind of misleading of which they were guilty at the time of the November mini-budget, when they said that they had cut back expenditure for the year 1971–72 by £350 million, when in fact £100 million of that was the latest estimate of shortfall. The same kind of claim is again made now.
Next, it is noteworthy that the claim of a £1,500 million saving over the programme for 1974–75 is a comparison with so-called previous programmes of the Labour Government. But in fact no firm estimates had been made by the Labour Government for a period after 1971–72, which was year 3 in the last White Paper, and no figures of any kind were published for a period after 1973–74.

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As far as I know, no Treasury Ministers ever considered the 1974–75 figures as a whole. Of course, individual Departments had their plans, and officials in those Departments may nor may not have submitted them to their Departmental Ministers, but until comprehensive figures have been considered by the Public Expenditure Survey Committee and submitted to Treasury Ministers and decided by the Government, there is no programme for the year in question. To claim that these were savings on 1974–75 is to mislead. Indeed, when dealing with the article by Messrs. Godley and Taylor, the Chief Secretary is now at pains to emphasise that there have been no decisions for 1974–75. There have been no firm decisions for that year, yet it is claimed that £1,500 million has been saved on the 1974–75 figures over the previous programmes of the Labour Government.
This operation is most blatantly obvious in the case of defence. It is claimed that there is a saving of £132 million on Labour's defence budget for 1974–75, which in fact did not exist. Once again, the last two firm estimates of the Labour Government covered the years 1970–71 and 1971–72. No figures were decided for 1974–75, even in outline.
To discover the truth we must look at Table A.7 in Appendix A, where we find the words "previous programmes" marked with an asterisk. That is at the top of page 67. The asterisk takes us to the small print on the next page, that is to the asterisk at the top of the page. which refers us in turn to the foot of page 5 of the October statement, which shows that what is referred to is
"long-term costings of defence policy."
That is a very long way from definite decisions taken by the previous Government. In the Government's own defence projections for 1974–75 we find the total exceeds by over £100 million the last agreed firm figures for three years back.
Where are the policy changes that have produced the cut of £132 million? Where are the decisions about cancellation of equipment, or the reduction of the number of Servicemen? Programmes are cut not by juggling with figures but by policy decisions.
We find, first, in Table A.7 that the total savings under "Expenditure" add
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up to £1,267 million. However, we must add to that the £150 million which is postulated for housing subsidies, making a total of £1,417 million. But the major part, from which we must deduct £132 million for defence, is made up by the substitution of investment allowances for investment grants, which accounts for do less than £600 million of the total. In real terms the saving on balance between the end of grants and the introduction of allowances is very small. We learn today that it is even smaller than had been supposed. The Government should be clear about the kind of assistance they are giving industry. On Thursday we heard from the Prime Minister that the new measures for special development areas would add another £25 million. But a correction is to be issued which makes a difference for this year of the complete £25 million, since there is no expenditure for this year. Far from an extra £25 million, there is to be an extra £2 million for next year, rising eventually to £10 million. These are not minor differences but represent a major mistake, and I hope that a major apology will be made pretty soon.
But the main point is that this major cut of £600 million is no cut at all. This is recognised at the end of the White Paper, where the effect of replacing investment grants has been discounted. We are left with some figures for a cutback in nationalised industries' capital expenditure, some reduction in the expenditure on roads, research councils and "other expenditure on agriculture", and otherwise, with reductions in purchases of assets, the increases in charges, and, above all, with the two biggest items, the replacing of the agricultural subsidies by levies and the reduction of the housing subsidies. Of the total of over £1,500 million claimed, if one deducts the shortfall, the changes in estimates, the £132 million phoney saving on defence and the £600 million saving on investment grants, one is left with some £500 million, most of it a straight redistribution from the poor to the rich. It is a transfer from taxation to consumption, and that is the true story behind the much boosted cuts.
So what we are discussing in the programme outlined in the White Paper is, over all, a programme of cuts mainly concentrated in the transfer category of public expenditure. There are some savings

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in the assets category, such as the ending of the I.R.C. and the Land Commission. But what, after we see the true nature of the cuts, are the implications for future levels of taxation? We know from the first Green Paper and the previous White Paper that public expenditure on the acquisition of assets has little effect on demand. We also know that the demand savings of cuts in transfer payments are limited and have little effect on resources. The amount spent on council house rents after all will not be lower; council house tenants will just have to pay more—a great deal more, because, in addition, some of the less money available will go to private tenants. Somewhat less, I suppose, may be spent on food because those worst off may be less able to afford food, but basically the substitution of agricultural levies for subsidies transfers the burden from the taxpayer to the housewife. School meals will still be served, but what the taxpayer is saved the parents will have to pay instead.
The crucial category of public spending in its effect on demand—the room it allows for private investment, exports and consumption—is that of spending on goods and services, and here there are no cuts. How far, therefore, do the plans of the White Paper allow room for the lower level of taxation on which the Government have set their hearts? I come to the article to which the hon. Gentleman referred, by Messrs. Godley and Taylor.
In the first article, the authors have done some of the calculations which one might have hoped to get from the Treasury. They certainly cannot provide hon. Members opposite with any great joy. They point out that the public sector's claim on resources has not been reduced and is likely to rise faster. The Chief Secretary said that there were no decisions for after 1972–73, but Messrs. Godley and Taylor say:
"…the Government have been at great pains to show in detail how their plans relate to those published by the Labour Government in December, 1969, … and also to show the consequences for tax revenue of their own expenditure decisions to date."
So they have done a comparison with Labour's plans. They state:
"As the economic classification contained in Cmnd. 4234"—
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that is the Labour Government White Paper—
"is a very detailed one, it has been possible by using information from both White Papers to construct an economic classification for the whole period to 1974–75."
That is the point which the Financial Secretary will have to answer. If one combines with that the fact that there is a drop in shortfall—and this is probably largely to be attributed to the public use of resources—one comes to the conclusion that there is a rise in the public use of resources which is going to continue at a much greater rate than the growth of the national product envisaged.
But the omens are less favourable than that because the Government seem to regard a rise in unemployment as an important part of the anti-inflation campaign and the prospects of a recession cannot be discounted. The signs are ominous for growth rate over the next few years. What does the analysis imply? That the level of taxation will not be reduced or that we are likely to see a far more drastic reduction in public spending, particularly in the goods and services sections, than anything we have so far envisaged?
I have not dealt with any of the particular items in the projections, and no doubt many of my hon. Friends will deal with them in detail. I have not dealt with the question of the Policy Analysis and Review or the Central Capability Unit. The issues which should be discussed are numerous and this only emphasises how inadequate is the time we have been allotted this year. The form of this White Paper, despite some progress, is, on balance, a step backwards. The savings which are claimed by the Government by their policies embodied in the White Paper are, to a large extent, a sham and an illusion. The implications of the White Paper seem to be that the Government must either abandon their promises of further tax cuts or make far more damaging cutbacks in public spending.
Lastly, the purposes of the civilised society are not served by a Government who whip up public opinion against public spending, and whose main changes from the previous programmes have been to transfer wealth from the worse off to the better off.
8.35 p.m.
Mr. R. H. Turton: To revert, if I may, to the early part of the speech by the hon. land learned Member for Lincoln (Mr. Taverne), I think we are in danger of misunderstanding the position about the two days on the White Paper, because I, and other hon. Members who were members of that Select Committee on Procedure which recommended a two-day debate, had understood it to be one day provided by the Government and one day on the Vote on Account when we should be reviewing the work of the Select Committee on Expenditure we were recommending being appointed.
As that Select Committee has just been appointed, and as we had a debate in November on public expenditure, I think we can be fairly content with the allowance of one day this year, when we have got the promise of two days in future. However, I should like to know, when my hon. Friend winds up, whether it is intended that the second day in future will be a day on the Vote on Account or whether that recommendation is not being adopted.
The Financial Secretary to the Treasury (Mr. Patrick Jenkin): Perhaps I may be allowed to intervene to say that I gave my right hon. Friend the undertaking that in future years the Vote on Account would be taken at the same time and would be, as it were, debated at the same time though the Question would be put separately. Whether it means in fact a day on the Vote on Account, which is purely an arithmetical figure taken from last year's Estimates, is, I think, very much open to question.
Mr. Turton: That was the recommendation, and I mention it only because there was in the House last Thursday a passage which led people to think that there had been some change. Today it is unfortunate that we have to debate this so late in the day and so early in the morning.
What I would draw to the attention of the hon. and learned Member for Lincoln is that Standing Orders provide for the Opposition at 24 hours' notice to demand a half Supply Day on a matter of urgent importance. It is quite additional to Standing Order No. 9, which is designed for the use of back benchers. It is a pity,
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I think, that the right hon. Lady the Member for Blackburn (Mrs. Castle) did not exercise her prerogative and ask for that half-day. The Opposition is allotted one half-day in each quarter of the year.
Let us move away from that, though, as there is little time, because I know that many hon. Members want to speak and I want to limit my remarks to the bare minimum.
First let me take up the matter of the form of the White Paper. The Select Committee, of which I was a member, during July, 1969, recommended seven changes in the then form of the White Paper, and I should like to pay my tribute both to this Government and to their predecessors for adopting four of those changes. In particular, this White Paper which we are discussing has a far better comparison in detail with the previous White Paper and the changes of policy than has been done hitherto. That was a recommendation of the Select Committee and is an advantage.
The other advantage of this White Paper is that we have capital expenditure by function, and we pressed for that in our Report, and I think that it enables one to see a very good picture of the capital side.
May I touch on two points where we have not been met; or, in one case, we have not been met, and, in the other, as the hon. and learned Member for Lincoln said, there has been a withdrawal. First of all, on expenditure overseas, we have pressed that there should be a table showing overseas expenditure so that the country can see exactly how far Government expenditure is affecting our balance of payments. We raised this with the then Chief Secretary, before we made our recommendation, and Lord Diamond, as he now is, said:
"The frank answer is that the purpose of this document is not to assist hon. Members in their understanding of the balance of payments problem."
This strikes me as—
Mr. Arthur Lewis:—a typical Treasury answer.
Mr. Turton:—as the hon. Gentleman says, a typical Treasury answer. When I renewed the appeal I was hoping that this would help all hon. Members and the public. We must remember that White Papers are designed not only for

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our special delight but also to help the country to understand public expenditure. Whatever differences we may have, we are all concerned about the effects on the balance of payments of Government expenditure overseas. I beg the Chancellor of the Exchequer to reconsider this unanimous recommendation of the Select Committee and a future White Paper to introduce it.
My one great regret about this White Paper has already been touched on. Unlike its predecessors, it is completely silent on the future of receipts. It is an extraordinary position. We are told that this is so because anything on the receipt side looking forward is bound to be an arbitrary assumption, but so is everything else in a public expenditure White Paper. We are told that it is misleading, paragraph 30 of the Green Paper "Public Expenditure: A New Presentation", Cmnd. 4107, states:
"The third change will be to present, along with expenditure, projections of all receipts from taxation, contributions and charges … The main purpose is to overcome the problem that public expenditure figures may always be misleading so long as the revenue side is not presented at the same time."
I should have thought that that still holds I feel sure that errors have been made in the past, and I hope that whoever replies to the debate will lift the curtain a little on how far the public expenditure receipts in the White Paper Table 1.2 were wrong last year. I should have liked more detail to be given in that table. We have no detail at all, and it is important that we should have. I am not asking for any disclosure of a Budget judgment but merely, with the tax system as at present, what is the Chancellor of the Exchequer's estimate, the Treasury estimate, of what the receipts will be one, two or three years ahead. I can see that there is difficulty in going to the fourth and fifth year, although the Select Committee did ask for that information.
Mr. John Nott: I am sorry to interrupt my right hon. Friend, but I should like to make this point: we have to go to today's Defence White Paper to get the Treasury's estimates for inflation next year. If it is possible to put these figures in the Defence White Paper, we should have them in this White Paper.
Mr. Turton: I hope that my hon. Friend will be able to make that point. I want to be as short as I can. He seems to be agreeing with me, which is a delightful occasion.
To come from the form to the substance of the White Paper, here I part company with the hon. and learned Member for Lincoln. I find no difficulty in understanding the Government's reductions in expenditure both in the present year and in the five years ahead. The White Paper surely gives the picture of the effect of a decision to make certain cuts. For the current year there will be a reduction of £469 million, but the full effect of the reductions in expenditure will not be seen until five years forward, when the figure increases to £1,500 million the year 1974–75. What was the Labour Government's policy for 1974–75? They had no such policy and nobody would accuse them of having one. Obviously that would have been unwise since they knew all along that they would lose the election.
Mr. Arthur Lewis: Harold did not think so!
Mr. Turton: The expenditure and the consequences of growth are being cut by that amount. The hon. and learned Gentleman said that it was improper to bring in a shortfall, but it must be remembered that that shortfall is an element of £100 million out of £1,500 million. It may be a wrong thing to put in, but it does not affect the matter.
The decision of the present Government to cut expenditure by roughly £500 million means in effect that in four years time the figure will rise to £1,500 million. It is an extremely small cut when one realises that public expenditure is now running at a rate of £21,000 million. This, to me, is the worrying aspect. I do not know from what source the hon. and learned Gentleman got his brief, but I understand that the proportion of gross national product now going in public expenditure is in the region of 51 to 53 per cent. Those are the figures I have seen published and I believe them to be correct.
It is interesting to note that in the last seven years public expenditure has risen from £12,000 million to £21,000 million—that is a £9,000 million increase. This has meant hat the share of G.N.P. taken

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by public expenditure has gone up from 44 to 53 per cent. I take that figure from the I.P.G. Paper on Taxation. How can we reduce this percentage? My right hon. Friend the Chancellor has taken certain wise steps. Although he has increased the capital expenditure in the social services, he has managed to cut administration and also to cut such things as regional employment premium and investment grant.
We are faced with the fact that since 1956 there has been a change of policy. Up to that date capital expenditure for the nationalised industries and local authorities was raised in the market, but now the vast sum of £3,600 million is taken out of taxation. I believe that we must reconsider the decision of 1956. I appreciate that it would not be easy to raise money for certain nationalised industries on the market today, but there are others, such as the Central Electricity Generating Board, in which savers would be ready to invest their money. That would have the great advantage of cutting the huge sum of £3,600 million of public expenditure raised by taxation. This is particularly true of local authority capital expenditure. I regret that the old system of borrowing by local authorities has been changed. We should take a lesson from what is being done in other parts of the world where, to give the ratepayer or citizen more pride in his locality, the Exchequer gives tax inducements to ratepayers who lend their money to local authorities. This is done in most of the States in America where an investor gets the advantage of tax-free loans to local authorities provided they are at a reasonable rate of interest.
I ask my right hon. Friend the Chancellor to consider this matter, because here is a way in which we could encourage thrift. I believe that we could get a good deal of new savings from where they are at present into local authorities. At the moment, I am told, £27,000 million of liquid savings is available. I therefore suggest to my right hon. Friend that in his next Budget, he might allow every rate payer to lend to his own local authority up to £2,000 free of tax, provided that the rate of interest was not higher than the rate which is paid on National Savings bonds. That would give the citizen an attractive rate of interest. I believe that by this means we
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could cut a great deal of the present public expenditure.
I think that it would also achieve something more important than that. This situation may be altered when the local government White Paper becomes policy, but I believe that throughout the country there is a feeling of remoteness between the citizen and his local authority. If the ratepayer could feel that he had his money in the local swimming baths or the local old people's hostel, that would do a great deal of good in creating an awareness of the involvement of the citizen with his local authority.
Mr. Arthur Lewis rose—
Mr. Turton: Perhaps the hon. Member will allow me to finish. He usually gets plenty of opportunities to express his views.
I think that in his Public Expenditure White Paper, except for the omission on the receipts side, my right hon. Friend the Chancellor of the Exchequer has given a clearer presentation than we have had before, and I thank him for it. In his policy, he has started the difficult task of reducing the proportion of the gross domestic product which is taken by public expenditure. He has to go much further, however, and to encourage more thrift. I believe that one of the ways of doing it is by altering the policy of raising capital for nationalised industries and local authorities.
8.53 p.m.
Mr. Edmund Dell: The right hon. Member for Thirsk and Malton (Mr. Turton) referred to certain respects in which, in the White Paper as compared with its predecessor, there is a reduction in information. I should like to devote my speech to expressing regret, and, indeed, deploring the fact, that there is a reduction in information in the White Paper and in what the Government are providing outside the White Paper in respect of aid to development areas.
I drew this fact to the attention of the Financial Secretary to the Treasury in a debate in November last year, when the hon. Gentleman replied to me in these terms:
"We shall certainly consider the right hon. Gentleman's suggestion as to how far we should go in producing further statistics on investment allowances. I hope that he will

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take that as sincerely intended."—[OFFICIAL REPORT, 17th November, 1970; Vol. 806, c. 1112–13.]
There is certainly nothing in the White Paper that helps us in that respect. The Government say that they will consider the effectiveness of their development area policy, and yet there appears to be no information, either in the White Paper or prospectively, as to the basis on which they can consider it.
Nevertheless, I will put before the House certain propositions which I derive from the White Paper and associated information which the Government have provided which seems to me to indicate that the situation concerning public aid to the development areas has seriously deteriorated as a direct result of the present Government's policy. My view is that total aid to the development areas has been heavily reduced.
The Government have refused to answer questions on this subject. The questions are not answered by the White Paper. When I have asked Treasury Ministers to provide me with figures of total aid to development areas, they have refused to answer. In a letter of 17th December last, the Minister of State, Treasury, gave me two reasons why he refused to answer. The first was that:
"it is impracticable to give a total figure for the benefit to the development areas under the new system."
It is interesting that he said that, because on Friday there was a debate in the House on aid to the Northern Region. In replying to that debate, the Under-Secretary of State for Trade and Industry said:
"I tell him …"
—that was my hon. Friend the Member for Sunderland, South (Mr. Bagier)—
"… clearly that the Government consider that the N.E.D.C. is quite wrong about the question of cash inflow into the Northern Region. Our view, broadly, is that it is the same as a result of the October measures. The measures announced yesterday are additional."—[OFFICIAL REPORT, 19th February, 1971; Vol. 811, c. 2390.]
So the Minister of State for the Treasury is saying that it is impossible to give figures and the Under-Secretary of State for Trade and Industry is not merely giving figures but stating specifically that broadly it will be the same.
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I hope that when the Financial Secretary replies he will make clear exactly what the position is, because he must repudiate either his colleague the Minister of State or the Under-Secretary of State for Trade and Industry.
The second reason why the Minister of State refused to answer questions about aid to development areas is extraordinary. He said in his letter:
" … discussion of incentives in the context of regional policy normally centres on the value of the differential arrangements. The extent to which the development areas get benefits which are not available elsewhere is the only meaningful basis for measuring the aid which is given to them."
With deep respect to the Minister of State—I have considerable respect for him—that statement is nonsense. The total level of aid to development areas, as well as the differential, will determine whether investment will take place. The number of postponements and cancellations of investment projects which we are seeing at present is evidence of the fact that the reduction of aid is having an effect on investment. It is not just a matter of redistributing a given level of investment in favour of development areas but one of the absolute level of investment in the development areas. That statement by the Minister of State is nonsense and ought not to have been made. I hope that the Financial Secretary will be able to give us better reasons for refusal to provide the sort of information which we need.
The differential, which, according to the Minister of State, is the only thing which is important, and to which the Government have referred again and again as having been unchanged by the October measures, quite clearly has been changed.
To clear a misunderstanding which may arise, I make my first point by quoting from the investment incentive White Paper of last October, at page 5, paragraph 15:
"It is also estimated that the differential benefit provided to the development areas by free depreciation in conjunction with these additional grants and loans will be broadly equivalent to the present cost of the regional differential in the investment grant scheme,"
The words which I emphasise are "the present cost". There is no suggestion that the differential will rise proportionately with any increase in investment. This point was emphasised in the letter from

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the Minister of State which I have quoted, in which he said:
"The Government have never claimed that the value of the regional differential under the new measures is expected to keep pace with the rate of increase which might have taken place had the system remained unchanged."
It is clear from that alone that, even on the Government's estimate, the proportional differential will fall. This fact at least is shown by Answers given in the House. On 6th November, 1970 the Minister of State for the Treasury said that the regional differential element in 1973–74 under the investment grant system would have been £130 million. That has to be compared with an answer given by the Chief Secretary on 24th November, 1970 when he said that the regional differential element under the new system will, in 1974–75, that is a year later, be £110 million, including the additional £25 million under the Local Employment Acts. That is clear evidence of the reduction in the differential.
The second point to be made about the differential is that what the Government are saying, though they never admit it, is that the way in which they are measuring the differential is in terms of the cash flow to firms which invest in part or in whole in the development areas. Therefore, in calculating the differential, they are including investment grants which they are paying on contracts entered into before 27th October, 1970.
Mr. Patrick Jenkin: I cannot understand why the right hon. Gentleman should be so surprised. I told him that in my reply to the debate on the Clause in the Income and Corporation Taxes Bill.
Mr. Dell: I know that the hon. Gentleman told me that, and it may be that in my case the surprise is wearing off. At any rate, the House should be aware of the fact that the calculation of the differential which leads the Government to say that it is unaffected includes large sums of investment grants paid on contracts entered into before 27th October, 1970, which, from the White Paper, we know extend as far as 1974–75 and beyond.
How anyone can claim that it is differential incentive to investment in the development areas that one has invested before 27th October, 1970, I cannot
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imagine. Nor can I imagine how the Government can say that the differential is not altered when they are saying that, because people invested before 27th October, 1970, and will be receiving cash, that will be an incentive to them to invest further in development areas.
This money goes to firms which do not even have their headquarters necessarily in development areas. The money can be invested or distributed where those firms like. There is no incentive here to invest in development areas at all.
Mr. Bruce-Gardyne: I was under the impression that the right hon. Gentleman had been a Minister at the Ministry of Technology. If that is so, surely he must have noted that investment grants are attracted not only by investment which had taken place before the terminal date but by investment which was in a stream related to investment which was planned before that date but had still not taken place and would take place in the future.
Mr. Dell: The hon. Gentleman should know that what is involved here is proof that contracts have been entered into before 27th October. Where such proof is available, investment grants will be paid. However the fact that those contracts have been entered into is no incentive for future investment in the development areas.
It is nonsense to talk about the differential in this sense. The statement that the differential is unaffected is totally misleading. If I thought that the Chancellor of the Exchequer understood these matters, I might accuse him of deliberately misleading the House. But the fact is that the statement is not merely misleading. It is totally meaningless. I say that not simply because the differential is calculated to include these investment grants on contracts entered into in the past but also for the reason that I have given already, that the money goes to firms which can invest it anywhere in the country. The question which is decisive is what are the current incentives to investment in the development areas.
My next point concerns this additional £25 million worth of expenditure under the Local Employment Acts. Whenever hon. Members on this side of the House draw the attention of Ministers to the fact that the differential in effective terms has

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been reduced, the additional £25 million of expenditure under the Local Employment Acts is trotted out. The first thing to be said about it, although it has been revealed since and is shown by the White Paper, is that it was not stated in the original statement by the Chancellor on 27th October that this additional £25 million is not reached until 1974–75.
The situation here is very interesting. If one looks at the increase in expenditure under the Local Employment Acts under the Labour Government, one finds, according to an answer given by the Minister for Industry on 24th November, 1970, that it increased from 1964–65, when it was just over £27 million, to 1969–70, when it was just over £58 million. I take it that these are gross figures against which should be netted certain repayments of loans.
That is a higher rate of increase of expenditure under the Local Employment Acts than is proposed in the White Paper, which says that the figure will go up from 1969–70 when it was £45·6 million—I take it that that is net—to 1974–75 when it will be £74 million. These figures not merely show a lower rate of increase than took place under the Labour Government but a lower rate of increase than was stated in the Labour Government's White Paper on Public Expenditure last year. To put it at its mildest, to regard this as an additional £25 million expenditure under the Local Employment Acts over what would have taken place under a Labour Government has yet to be justified. On the evidence with which we have so far been provided, it does not exist.
My next point concerns the announcement last Thursday about special development areas. We now know that the Prime Minister got his figures mixed up. The right hon. Gentleman gallantly apologised about that today. An apology from the Prime Minister for making a mistake is such an historic occasion that I do not think we should dwell too long on it. The right figure is an additional £10 million, not £25 million, as the Prime Minister said.
The right hon. Gentleman re-asserted today that this meant that the special development areas would be better off than they were as development areas
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before 27th October, 1970. The right hon. Gentleman professedly based that statement today and on Thursday on the premise that the differential was unaltered. I have already shown that the statement that the differential is unaltered is meaningless and misleading. The Prime Minister is entirely wrong in stating that the new special development areas will be better off as a result of the decision on Thursday than they were before 27th October, 1970.
I intervened in the Chancellor's speech on Thursday to suggest that the new proposals regarding special development areas merely brought them back to their position before 27th October, 1970. That was an immediate reaction. Having considered the matter further, in the light of such information as I have been able to obtain, I think that I did the Chancellor of the Exchequer too much honour. I think that those areas will still be worse off than before 27th October.
One thing is clear. Merseyside is clearly down-graded as a result of the decision which has been taken. Merseyside—an area with increasing redundancy and unemployment—has not been selected for this benefit. Therefore, its relative attractiveness, compared with the new special development areas, is clearly down-graded.
I turn to a subject which we shall discuss in more detail on the Finance Bill—namely, the argument that all this aid, though smaller in quantity, will be more effective. I refer to this matter because of what the Chief Secretary said today. The proposition that it will be more effective appears to be based on the idea that to relate incentives to profitability is more effective than outright grants. If the Government have any consistent philosophy—in so many spheres, for instance their disengagement from industry, they have shown that they have no clear philosophy—I wonder how their actions can be consistent with that philosophy.
Let us consider the assistance given to special development areas on the principle whether it is related to profitability or is an outright grant unrelated to profitability. The new tax allowances are related to profitability. The following forms of aid—rent-free factories for up to five years, increased building

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grants, removal and training grants—are grants unrelated to profitability. Operational grants for wages of people employed in special development areas are unrelated to profitability.
The difference between the incentives introduced by the present Government and those introduced by the last Administration is that it is a different mix of tax allowances and grants. There is no evidence that the lower level of assistance, plus the lower differential of assistance, will be more effective in any way.
I come, therefore, to my conclusion, on the case that I have argued. First, there has been a reduction in aid to the development areas; secondly, the statement that has been repeatedly made by the Government that the differential is unimpaired is meaningless and misleading; thirdly, the statement concerning the £25 million additional expenditure under the Local Employment Act is, to say the least, of doubtful validity, and has yet to be proved—the White Paper does not prove it—and fourthly, the new special development areas will be worse off under the new proposals than were the development areas before 27th October, 1970.
Finally, there is no reason to believe that the methods introduced by the Government will be more effective than those employed by the last Government. I am afraid that this White Paper's implications for the development areas are a continuing if not increasing level of unemployment.
9.10 p.m.
Mr. Peter Hordern: One difference between this debate and the last debate on public expenditure is the absence of Lord Diamond. The late kin Macleod used to say "Labour Chancellors come and Labour Chancellors go, but diamonds are forever." The fact that Lord Diamond is now in a different setting does not prevent my wishing him the best of luck and saying how much his contribution to this debate is missed.
The hon. and learned Member for Lincoln (Mr. Taverne) referred to the absence from this White Paper of a revenue statement of the kind that was included in the White Paper produced by the previous Administration. I did
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not feel that that was a very strong point, if for no other reason than that that revenue forecast was based simply on a projection of the same rate of taxes at a growth of 3 per cent. I submit that that was not a significant projection. The essential point to remember is that taxes cannot reasonably be expected to stay at exactly the same rate, or even that we shall have the same taxes throughout a period of five years. Therefore, the hon. and learned Member's criticism that there is no revenue projection in this White Paper is not a strong one.
I do not know why, but it seems to be a matter of some surprise on the part of hon. Members opposite that expenditure on resources by a Conservative Government should exceed that proposed by the last Labour Administration. Instead of spending only £13 million on new primary school buildings in 1972–73, we shall be spending £44 million. We shall be spending £110 million extra between 1972 and 1975, concentrating on facilities for the elderly and mentally handicapped. Surely no hon. Member could deny that these are essential priorities. We can all think of examples in our own constituencies that bear out this proposition. But it is even more important that the distribution of expenditure should not fail once it has been decided to increase the global amount.
I submit that rural areas are not receiving the standard of services to which they have been accustomed in the past. Too often the argument is trotted out that the demands of medicine make it essential to have large and comprehensive hospitals. That argument has been used to justify the closure of small rural hospitals, such as Petworth Hospital, in my constituency. There is also a suggestion that the casualty department at Horsham Hospital should be closed. I recognise such an argument for the total nonsense it is. It cannot be denied that a withdrawal of a service to which a community has become accustomed represents a real decline in standards. There is no use pretending that it does not.
I naturally welcome the fact that we propose to spend an additional £110 million, but that expenditure will be closely watched, to see that the country areas suffer no further deterioration. If, therefore, it is a fault that we propose to spend

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more on resources than did our predecessors, we should plead guilty.
That brings me to Messrs. Godley and Taylor, and Mr. Jay of The Times. I hesitate to suggest that if The Times had printed Table 1.4 of the White Paper it might have saved itself a lot of trouble and expense, but the essential information is all there. The question is what one makes of it.
The Godley argument, if that is not as big a misnomer as the hon. Member for Erith and Crayford (Mr. Wellbeloved), is that the share of resources taken up by public expenditure is growing rather more quickly than resources themselves. But they have no idea how fast productive capacity or output will grow in future.
We object absolutely to the notion that any realistic assessment of future growth can be based on the experience of the last five or six years. Between 1966 and 1968, public expenditure grew 6·7 per cent., 6·8 per cent. and 9·0 per cent., while growth of the G.N.P. averaged well under 3 per cent. The inevitable result was that the share of resources taken up by the public sector rose very fast, as did taxation, to pay for it. Increases in corporation tax, income tax, purchase tax, fuel duty and the wholly new tax of S.E.T., amounting in all to £3,000 million, meant that the private sector was driven to the wall.
We should recall the position last June, when the party opposite were driven from office. The hon. and learned Member for Lincoln in a debate on 15th April, said:
"First, we were quite right to avoid a pre-election boom that could be seen to be a pre-election boom …".—[OFFICIAL REPORT, 15th April, 1970; Vol. 799, c. 1410.]
How right he was. What happened was that inflation was already completely out of hand, and the right hon. Member for Birmingham, Stechford (Mr. Jenkins) was himself responsible as Chancellor for pumping as much money into the economy in the three months before the election as he previously proposed to increase it by in the course of a full year. One does not need to be a disciple of Milton Friedman to accept the enormous boost to inflation which this action would bring.
The party opposite, who had already surrendered to the trade unions, had
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neither the will nor the capacity to do anything about inflation. Nothing was then as incredible as the Leader of the Opposition, except possibly the opinion polls, and neither of these will ever fully recover.
It is strange that the Leader of the Opposition and the right hon. Member for Stechford should be forming a mutual admiration society in agreement about only one matter, and that is that we are wholly to blame for the present situation. But I have no doubt that had they been re-elected taxes would have been increased still further and the burden on companies would have become even more intolerable. We are inclined to accept the position as it seemed to be on 18th June, but the damage to companies had been done years before and I fear that it will take a long time to retrieve this position.
Industrial profits fell every year from 1967 onwards, and 1970 was the lowest for any year since 1965. If industry was merely to keep pace with other sectors of the economy, industrial profits should have risen by about 50 per cent., and by another 25 per cent. if price inflation were to be taken into account.
But the position is even more serious than that. Industry employs net assets of about £28,000 million. If one deducts depreciation and stock appreciation, trading profits were about £3,000 million before tax, or about 10 to 11 per cent. on assets employed. That is about the same as it would cost those same public companies to raise money on the capital markets, so there is virtually no incentive for industry at present to invest in new plant and machinery, when it could get just as good a return from investing in loan stocks, always assuming that it had the money to invest in the first place. No wonder investment intentions are as they are.
The first priority, if we are to get the growth on which our future public expenditure depends, is to encourage profits. That is why the cut in corporation tax is welcome and why the change from investment cash grants to investment allowances is also welcome. Under the old system companies received grants whether or not they were profitable, and if ever there were a misallocation of resources it was there.

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In the past five years, industry has been like a man banging his head against a brick wall. The difference now is that we have taken the wall away. Although he is still wandering about slightly bemused, the chances are that he will soon wake up to find that it is no longer considered anti-social to make higher profits. Corporation tax and income tax have been cut for the first time in 11 years. The I.R.C., the P.I.B. and the Ministry of Technology have gone and there is not a moist eye to be found. I do not think it will take businessmen long to see the change, and I expect that the Budget will help them. What is so refreshing is that growth no longer depends on the fulfilment of some grandiose national plan but on the natural inclination of business and industry to earn higher profits.
It is the gross total of public expenditure in the next four years and the ability to change taxation and monetary policy that will really determine what growth we shall achieve. Over this period, expenditure is to be £1,500 million lower than the cost of the programmes which the Government inherited, and it is to grow by a significantly lower rate than the economy itself.
A word on what I regard as the new tyrant of the age. I refer to technology. We are often told that if we do not build, for example, Concorde, give further aid to the computer industry or take over Rolls-Royce, we will be out of the aerospace, aero-engine and computer race. We are told that if we do not give shipbuilding grants, we will be out of the ship building race. These races are never won. The target and the winning post always seem further away. It is like a perpetual egg-and-spoon race with the egg always larger than the spoon-and the biggest humpty-dumpty of all is the right hon. Member for Bristol, South-East (Mr. Benn).
What studies are now being made of the scale of international competition in these various technological spheres? What, for example, is the state of computer technology in the United States and in other parts of the world? What real justification is there that resources can be devoted to these technological industries? Unless we make a thorough survey of what is being done in other parts of the world, we will, I fear, continue to support all these objectives simply because
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we are told that unless we do so we shall be out of their respective race. I would like to run in far fewer races.
This White Paper reflects the Government's determination to get growth and to concentrate resources where they are needed, and it is therefore to be welcomed.
9.23 p.m.
Mr. David Marquand: That speech of total and undeviating loyalty to the Government from the hon. Member for Horsham (Mr. Hordern) was, I suppose, impressive in the circumstances, though I thought that even he allowed a small note of rebellion to creep in towards the end of his remarks.
I shall refer later to some of the subjects to which the hon. Gentleman referred, but I hope that he will forgive me if, at the outset, I return to the argument which was occupying the debate earlier, and that is whether there should be a two-day debate and precisely what the Procedure Committee recommended. I do not want to go over too much sterile procedural ground, but it is important to get clearly on the record the fact that the Procedure Committee specifically stated in paragraph 25:
"Your Committee recommend that the Expenditure White Paper, to be published in November, should be debated by the House for two days. No prior select committee consideration should be necessary if a full narrative in explanation of the figures, which was proposed by the Chief Secretary in evidence … is supplied, expanded on the lines proposed by the Committee."
That was clear and categorical and I trust that there need be no misunderstanding about it.
There have been many criticisms made by my hon. Friends about the form of the White Paper and the fact that in some respects it marks a step backwards from last year's White Paper. I agree with what was said by my hon. and learned Friend the member for Lincoln about the failure to publish a forecast of the receipts side of the exercise, and I will not go over once again the ground which he covered. I do, however, want to underline the complaint he made about the failure of the Government to make an assessment of the prospective growth of the economy, which is a somewhat different, though related, point.
The Chief Secretary clearly failed to understand the argument on this point. I

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am sorry that he is not here at the moment. Can he and the Conservative Party really be saying that, under the Conservative, no medium-term economic assessment is now carried out in the Treasury? Do they pretend that the Treasury itself no longer makes these assessments and that the whole P.E.S.C. exercise is conducted in a vacuum?
In fact, of course, it is not. If one had sufficient research assistance, which few hon. Members have, or additional staff in the Library to carry out the work, it would be possible, I dare say, by reading between the lines of the White Paper, to ferret out a medium-term economic assessment, for many of the predictions about public expenditure in the White Paper cannot possibly be made except on some view about what will happen to the economy as a whole over the five-year period.
I am sure that the Financial Secretary agrees with me there. He knows that that is right. Why not come clean, then, and publish at least as much as the rather inadequate forecasts of the growth of the economy which were published by the previous Government in their White Paper? It is just not good enough. I hope that the new Select Committee on Public Expenditure, many of the members of which are present here tonight, will view as one of its first priorities the task of forcing the Treasury to come clean on this matter. I am sure that, if the Treasury witnesses to the Expenditure Committee are given a thorough and effective grilling, next year's White Paper will be rather more frank than this year's has been in that respect.
There is another weakness in the White Paper. But I do not criticise the present Government alone for it since it was a weakness in the previous Government's White Paper, also. The purpose of this whole exercise—Committee scrutiny, debate in the House and publication of the White Paper itself—is to enable Parliament and the public to play a greater part than before in the debate over priorities between different items within the total of public expenditure. That is the whole purpose of the exercise, and it is a purpose which I passionately believe in and support.
Plainly, one cannot have a sensible debate about the priorities within the public
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expenditure programme unless one has in the background a much more thorough analysis of the needs which the various components of the public expenditure programme are supposed to satisfy than has been put forward either in this or in the previous year's White Paper. How can we say whether more money should be spent on universities than on hospitals, or whether more money should be spent on the capital investment of the electricity industry than on housing, unless we have some idea of the extent and acuteness of the needs which these various items of expenditure are supposed to meet?
It is true that in some of the item-by-item discussion in Part 2 of the White Paper there is a small amount about, for example, the demographic changes which affect expenditure on education so acutely, but there is nothing like enough. I believe that the reason why there is nothing like enough is that the Departments themselves do not know. They have not done this kind of analysis.
I strongly urge, therefore, since this affects the whole mechanism of public expenditure control, that the Treasury should force the spending Departments to carry out that kind of analysis, and here, too, I believe that the Expenditure Committee has an important rôle to play.
We have discussed the strategy which the document implies, and I say "implies" rather than "states" because of the misleading and dishonest fashion in which so many of the figures have been presented and the fact that it has been necessary to carry out a piece of Sherlock Holmes economic detection to find out what it really is saying. But when that is done, as it was in Mr. Godley's articles in The Times and in the speech of my hon. and learned Friend the Member for Lincoln (Mr. Taverne), it is fairly clear what has happened.
What has happened must be a source of some surprise to Conservatives who before the election were clamouring for cuts in public expenditure. I hope that at least one or two of those Conservatives who are present tonight will have the honesty to admit that they are somewhat surprised and that this is not what they meant by the philosophy of Conservatism or by setting the people free from Socialist extravagance. It is clear that the public sector's claim on resources will grow at

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as least as rapid a rate as it did under the previous Government, and, to put it no higher, possibly at a slightly faster rate in the last two years of the five-year period than before.
Mr. Nott: The hon. Gentleman is confusing two things. There is the public sector's claim on resources and, to use his term, setting the people free, which is a commentary on transfer payments. The Government's actions on the transfer of payments, setting the people free, to use the hon. Gentleman's expression, has been radical and far-reaching.
Mr. Marquand: The hon. Member for St. Ives (Mr. Nott), who understands these things, may have interpreted his party's propaganda and rhetoric in that fashion, but I hope that I shall not sound too disrespectful if I say that I do not think the same is entirely true of, for example, the Chief Secretary, to judge by his speech this evening.
This is item one in the strategy, very much the same, or perhaps a slightly faster, rate of growth in the public sector's claim on resources. Item two is a fairly severe cut-back in transfer payments, as the hon. Member for St. Ives said. Why has this come about? Why have the Government, having proclaimed their belief in cutting expenditure, cut it in this odd way? Why have they been obliged by their political position to engage in the sort of statistical subterfuges which my hon. and learned Friend probed so effectively'?
There are two reasons. The first is that, now that they are in power, even the Conservatives have been forced by the facts of life to realise that those items of public expenditure which involve a large claim on resources are, in terms of the needs they cover, at most running hard to stay in the same place. This is because it is clear that the demographic changes currently taking place in our society are imposing heavier and heavier burdens on these parts of the public expenditure programme in particular.
The steady increase in the number of elderly people, both as a proportion of the population and absolutely, and the increase in the number of children who have not yet entered the labour force, in themselves impose heavy and increasing demands on all the social services. It is clear therefore that to reduce the rate of
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expansion in the social services significantly enough to allow major cuts in taxation would result in a catastrophic fall in standards which are already grossly inadequate.
To do it credit, the Conservative Party has so far flinched from this, and I am glad. It knows that the effects on British society, on social cohesion, would be cataclysmic. One of the main reasons for the violence and social strife in the United States is the inadequacy of its public-expenditure-supported social services. A recipe for reproducing the same kind of violence here would be to carry out really swingeing cuts of the sort that would be necessary to cut taxation in the way the Conservative Party thought it would be able to do in those heady days before it came face to face with the realities of power.
But its members made the promises, talked the rhetoric and, alas, convinced themselves that the rhetoric was true. I do not think that they were trying to deceive the electorate, but they deceived themselves. Therefore, when they came to power they found themselves caught between two pincers—one being increasing demand on public expenditure and the other being the promises they had made and the expectations they had aroused among the party faithful. To get out of these pincers they have cut down transfer payments in a way that is bound to be regressive, to increase the gap between the majority of the population and the rich, to increase the gap between the less prosperous parts of the country and the more prosperous parts, and to make it much more difficult than it is already to achieve the satisfactory rate of growth without which all our social objectives cannot possibly be realised.
This is where I take issue with the hon. Member for Horsham. It has become clear over the past few months that the Government have been forced to hold down the economy because of their inability to achieve any kind of incomes policy. It is no longer the balance of payments that is forcing them to hold down the economy. We have a massive balance of payments surplus. If the Chancellor had nothing to consider but the balance of payments I am certain that he would have reflated a considerable time ago. What is worrying the Chancellor is the rate of inflation, and he

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is right to be worried about it. That is why he is holding down the economy. We have entered a completely different phase from the phase before 1969. It is inflation now and not the balance of payments that is holding us back.
If a Government cannot, or will not, embark on an incomes policy, the only way in which they can hope to deal with inflation is by deliberately creating unemployment and holding back the economy. An incomes policy is a precondition of growth in the kind of situation we are now in. But—and this is where the White Paper fits into the whole argument—it is apparent that they cannot hope, and do not deserve, to get an incomes policy as long as they are carrying out deliberately regressive policies over the transfer payments, as in the White Paper.
The problem of how we obtain a satisfactory rate of growth is as important for this period in British history as the problem of mass unemployment was between the wars. It should be a matter or great regret to us all, of whatever party, that neither party has succeeded for the past 20 years in obtaining a satisfactory rate of growth. What I find so deeply depressing about the strategy embodies in the White Paper is that it guarantees that that failure will continue for at least the lifetime of one more Parliament.
9.40 p.m.
Mr. J. Bruce-Gardyne: We always listen to the hon. Member for Ashfield (Mr. Marquand) with considerable interest, partly, perhaps, on this subject. He was one of those hon. Members opposite who consistently, I believe, supported the Labour Government in their curious attempt to achieve an incomes policy over the years. Where most of us on this side would part company with him is in our view that this search was inevitably doomed to failure and that the idea of an incomes policy based party on the concept that the trade union leadership was prepared to forgo the purpose for which it sees itself existing was, in practice, a will o' the wisp and was bound to remain such.
I want to express my thanks to my right hon. Friend the Leader of the House for extending the period of this debate
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following the debate on the Post Office strike. It is what I asked for. I thought that the hon. and learned Member for Lincoln (Mr. Taverne) was a little less than generous in his comments. Whether because of the hour or whatever reason it may be, the Chamber is rather fuller than it was for the two-day debate on last year's White Paper, when one of the leit motifs was to deplore the small attendance.
I think also that we should express our thanks to my right hon. Friend for the establishment of the Select Committee of Expenditure. I have some sympathy with what the hon. and learned Gentleman said on that subject, particularly in relation to the size of the Committee. but I hope that the establishment of the Committee will promote a more open discussion of the scope and impact of the activities of the public sector than we have had to date. In last year's debate, Lord Rhyl, whose contributions we miss so much, suggested that there was a danger that the Committee would find its
"fragrance dissipated on the desert air".
because the records of Select Committees show that they compiled earnest Reports which do not receive very eager attention from the body of the House. I hope that this tradition will not be followed in the case of the Public Expenditure Committee.
There has been much comment on the evidence given to the Wilberforce Committee by the Treasury and on the desirability or otherwise of submitting distinguished civil servants to the sort of cross-examination which the Treasury representatives had before that Committee. I thought that the evidence they gave was par excellence the sort of evidence which should be given in future to the Public Expenditure Committee. Indeed, I feel that perhaps the Public Expenditure Committee would be a more suitable atmosphere to which to subject the Civil Service. Clearly, the detailed cross-examinatiton of Sir Douglas Allen and Sir Donald MacDougall about economic prospects in the coming year should form the kernel of the work of the Public Expenditure Committee. Therefore, I hope that, whatever comments may be made about its experience before the Wilberforce Committee, the Treasury will not allow itself to be deflected from offering to the Public

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Expenditure Committee the sort of assistance it offered to the Wilberforce Committee.
Mr. Dick Douglas: I am not sure that I follow the hon. Member's trend of thought here. Is he envisaging that the Expenditure Committee should pronounce on the national interest in relation to wage settlements?
Mr. Bruce-Gardyne: I am afraid that that does not seem to me a very constructive intervention. The point I was making, as I am sure the hon. Gentleman must realise when he thinks about it, was that these senior Treasury civil servants were revealing, under cross-examination, their own projections or forecasts of economic performance in some detail over a year ahead, and it is that, of course, which I am suggesting would be suitable material for the Public Expenditure Committee.
One other preliminary. I join my hon. Friend the Member for Horsham (Mr. Hordern) in expressing our appreciation of Lord Diamond for his part in launching this series of White Papers. I have always thought that Lord Diamond has a great deal to answer for to his discredit in the last Government, but in this respect I think that his legacy is very much on the plus side.
I should like now to turn for a few moments to one or two points which are raised by this year's White Paper. I am bound to say that, like various others, amongst my hon. Friends and hon. Gentlemen opposite, I am not totally convinced as yet by the explanation which the Chief Secretary gave to us for the decision not to repeat the publication of projections of public sector receipts. Of course, we accept that there is a large element of hypotheticality—dreadful word! I hope it is all right—a large element of uncertainty: let us be safe. But then, as several hon. Members have pointed out, there is an element of uncertainty about all these projections, and I hope that, when the Financial Secretary replies, he will deal with the point brought up by my hon. Friend the Member for St. Ives (Mr. Nott) in his interjection, when he drew attention to the figures published in Annex B of the Defence statistics, which show that the Treasury is operating in anticipation of
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a price inflation of somewhere about 9 per cent. These figures may well be misleading, but I hope that my hon. Friend will deal with that point when he sums up, because it seems to me that if this sort of projection can appear in the Defence White Paper there is perhaps rather less reason why it should not appear in the White Paper we are discussing tonight.
On the other hand I think that an enormous amount of rubbish has been talked by Wynne Godley and the hon. and learned Member for Lincoln about the extent to which the only changes in public sector activities which provide scope for tax reductions are those which involve net reductions in public sector purchases of real resources. I do not think that that argument stands up to any close scrutiny at all. I thought that it was effectively demolished by the Chief Secretary and does not need any comment beyond that.
There are, however, two or three substantial points in relation to some of the detailed Tables in the present White Paper, and about those I hope the Financial Secretary will be able to give us further enlightenment. The first relates to a comparison between Table 1.3 on page 9 and Table 2.7. I say at once that I may have got my figures wrong, but I notice in line 7, at 1970 Survey prices, on trade, industry and employment, that the average annual percentage decrease over the period 1970–71 to 1974–75 is given as 6·9 per cent. and this, it is clearly emphasised, is exclusive of investment grants.
In Table 2.7 we get the details. According to my calculation, this appears to show that the reduction on the same basis, net of investment grants, is from £601 million—that is £1,174 million less £573 million—to £467 million—that is, £532 million less £65 million—Over the five-year period. According to my calculation, this amounts to about 22 per cent. over the five years which is a good deal less than the 6·9 per cent. per annum rate of reduction suggested apparently on the same basis in Table 1.3. There may be a simple explanation for that, but I am not clear what it is.
My second query relates to the full effect of the recent announœment of the establishment of special development

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areas. There seems to have been a certain amount of controversy about the figure which my right hon. Friend the Prime Minister gave last week. Is the latest figure we have been given—the £10 million—the net effect of all the changes in development area status, the special development area extensions, including that in the west of Scotland, and the establishment of additional intermediate areas?
Thirdly, I should like to know whether the figures in Table 2.7 under the heading, "Ministry of Aviation Supply" allow for such policy changes as the Rolls-Royce situation and the escalating costs of Concorde. Are these fully taken into account in the figures in Table 2.7?
I will turn from points of detail to the main theme of the debate. My right hon. Friend the Chief Secretary quoted the first sentence in the White Paper which sets out clearly the Government's whole philosophy towards Government expenditure. I find the attitude of the Opposition on this matter somewhat hard to understand. To them public spending is a virtue per se. The hon. and learned Member for Lincoln said that a civilised society requires a high level of social spending, yet, at the same time, the Labour Party believes, apparently, that public spending is properly treated as ballast which should be jettisoned overboard, in one of those splendid nautical metaphors so beloved of the right hon. Member for Cardiff, South-East (Mr. Callaghan), when we are blown off course. To tackle public expenditure for reasons of strategy and purpose as opposed to dealing with it as a ballast that can be picked up or thrown overboard according to whether the ship is on course or off course, the Labour Party regards as utterly unforgivable. The main assault on my right hon. Friends last August was that they were attempting, when we were not "off course" to reduce public expenditure by choice. This was regarded as unforgivable.
It seems to be regarded as particularly heinous to be in favour of reductions in public expenditure if one comes from north of the Border. My hon. Friend the Member for Uxbridge (Mr. Curran) said many years ago that the Socialist idea of Utopia was a mink-lined soup kitchen. I sometime get the impression
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that to hon. Gentlemen opposite Scotland is nearing this Utopian state; that it is an area where one receives the "gravy train" without ever having to contribute to the contents. This is utter nonsense. In reality, when one examines the consequences of a rising level of public expenditure and the need to finance it in recent years, one can see that Scotland frequently has suffered perhaps more from the consequent increases in taxation than theoretically it has benefited from the consequent increases in aid.
I give three simple examples. One of the ways in which the Labour Administration expanded public sector expenditure was by the establishment of the Highlands and Islands Development Board, but more money was taken out of the Highlands and Islands by the Selective Employment Tax than was put in by that Board. Equally, we had to sustain a doubling of road taxation, which had a disproportionate effect on business in Scotland since, as compared with its English competitors, it is further removed from its markets and sources of supply. This tax increase, too, was needed to finance the steady increase in public sector expenditure. Finally there was the penal taxation of family companies which was needed to promote additional revenue to finance the expansion of public sector expenditure. That penal taxation led time and again to the merger of smaller companies operating in Scotland into larger groups with their headquarters in the south, which have all too often thereafter been deflected from the pursuit of their operations in Scotland.
I have no apologies for being a Scot who, by inclination, is opposed to the endless expansion of public expenditure. That leads me on to my fundamental criticism of the present White Paper. Hon. Gentlemen opposite have been talking as though there have been cuts in public spending. There are, of course, no cuts in public spending. Indeed I go some way with the views of the hon. Member for Ashfield who sought to argue that the rate of growth in public expenditure in regard to its call on real resources would appear to be broadly maintained.
I appreciate the dilemma of any Government in this respect. We have in the past tended to under-estimate it. All

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Governments have tended to underestimate the difficulty of restraining the momentum of public expenditure growth. We should fairly recognise that the biggest single item in the reductions in the call on public sector resources in the 1950s, which must have gone a considerable way towards providing the offset for the impressive reductions in taxation by my right hon. Friends during that period, was the very large reduction in expenditure on defence following the end of the Korea emergency. We must recognise that this time that sort of economy is not available to be made.
If one takes this line, one has some obligation to outline one or two of the areas where substantial cuts and further reductions in the rate of increase in public expenditure could and should be achieved. The first of these is in the sphere of education, which for some reason has become something of a taboo, a sacred subject, on both sides of the House. I am not at all clear that the case for pursuing the raising of the school-leaving age on schedule is made out, not least because of the huge increase in the demand on real resources for the public sector which it is bound to imply.
I also see no good purpose to be served by the pursuit of the vast expenditure on the Concorde programme. When I see the right hon. Member for Bristol, South-East (Mr. Benn) going off like a sort of Aimee Semple McPherson of the technological age, with his band of angels in the form of shop stewards from Bristol, to hold a prayer meeting outside the State Assembly at Albany to ensure that no awful curses are imposed by that body on the Concorde programme, my belief in this matter is somewhat strengthened.
I think that we should take a harder look also at the budget of the Department of Education and Science, particularly in further education. I hope that the Public Expenditure Committee will do this. I have a nasty suspicion that over the years we have allowed ourselves to be somewhat mesmerised by what I would describe as the academics' lobby in this place and outside.
There is another major programme which is growing very fast and in which I believe that substantial economies could be made, not so much perhaps in purchases of resources, but certainly econo-
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mies in what would amount to the establishment of new forms of transfer payments. I refer to the main road programme, and in particular the motorway and trunk road programme. I believe that this should now be financed by tolls as it is throughout the Continent. It is time that we sent some of the civil servants in what used to be called the Ministry of Transport to go and look at road systems on the Continent and see that the problem of numerous entries on to trunk roads is not the obstacle that they make it out to be to the establishment of toll systems in this country.
Those are simply a few of the lines in which we should pursue vigorously the programme on which the Government have said that they have embarked to bring public expenditure under more effective control and to ensure, as we have not yet done, that the rate of growth in total public expenditure in the years ahead decelerates to the point at which we can be quite sure that the public sector's total claims on the national resources reduces and does not continue to increase.
Several Hon. Members rose—
Mr. Speaker: Order. In about two hours 40 minutes, we have managed to get through seven speeches. I still have the names of at least a dozen hon. and right hon. Members who wish to speak. I hope that those who catch my eye will remember that there are others.
10.4 p.m.
Mr. Douglas Jay: Unlike the hon. Member for South Angus (Mr. Bruce-Gardyne), I thought that the Chief Secretary was today singularly unconvincing in attempting to reply to the arguments by Mr. Wynne Godley. The Chief Secretary appeared to say that Mr. Wynne Godley should not have presumed to speculate about facts and figures in 1974–75 because we had no knowledge of them. As I understand the White Paper, it sets out figures for the Government's expenditure intentions up to 1974–75. Presumably, either those figures are meant seriously, in which case it is reasonable to base calculations upon them, or, if they are not made seriously, I do not know why the Government have published them in the White Paper.

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This debate is supposed to be an exercise in priorities, a chance to argue that the balance is wrong between this programme and that. A great deal of official time and skill has been exercised in giving us the material with which to do it. But when we come to the debate one tends to hear a great deal more talk about the system than the relative priorities. Even when individual programmes are mentioned I always notice that there is a tendency to be more willing to say which programme should be increased than to say which should be decreased. I am always more impressed—here I have sympathy with the hon. Member for South Angus—by demands for one or another programme to be increased if they are accompanied by some mention of where the money is to come from. I should like briefly to be unconventional also and to mention one or two programmes on which we are spending too little, and one in particular on which relatively we are spending too much.
The present balance would be greatly improved if we spent a good deal more, particularly capital expenditure, on housing, on development areas, and on mental hospitals, for instance, and financed it by spending rather less for a time on the new road building programme.
Looking at the table on page 8 of the White Paper, for instance, one sees that the roads programme is mounting at a rate, to use the Chief Secretary's words today, which seems to me wildly out of step with other programmes in the document. The roads programme is intended even by this Government, who are supposed to be devoted to public economy, to rise from £700 million in 1969–70 to £1,035 million in 1974–75. That is an annual average increase of 7 per cent., the highest of any of the programmes with one exception, and it compares with an annual average fall of 0·4 per cent. in expenditure on housing over the same years. That is a glaring contrast. I do not see how anybody could deny that bad housing is a much greater social evil than lack of roads and that new housing is a much greater social need. Yet we are now proposing a far more rapid increase
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in the road programme than in housing. That cannot be right.
We must have more road building, especially in development areas, for instance, which urgently need new industry and employment. But we have gone far beyond that point. The present relative allocation for roads is leading in some cases to outright extravagance. In particular, the 75 per cent. Ministry of Transport grant is pressurising local authorities to embark upon urban motorway schemes in some cases against their better judgment. Portsmouth is an example of that. The whole policy of forcing urban motorways into the heart of our cities at enormous cost has never been rationally justified or defended in the House. It ought now to be entirely reconsidered, both for the sake of the threatened cities and for the sake of housing and far more important programmes.
We have reached a point where entirely different criteria are being applied to road building finance than to all other forms of expenditure. For example, according to the White Paper, the Government are to spend £7 million a year on the famous family income supplement, which is supposed to abolish poverty all over the country. The Greater London Council, one local authority, is proposing to spend, over the next twenty years, £1,600 million on primary and secondary roads in London alone. To put it in a picturesque way, the annual cost of the family income supplement is equal to the cost of about 600 yards of one of the proposed four London motorways. I find it very hard to believe that that can be the correct balance.
If I might take another example, we know that our mental hospitals are desperately in need of reconstruction and re-equipment. Admittedly, it is finance which stands in the way. The cost of the G.L.C.s proposed Ringway One alone, which, incidentally, is ardently opposed by a large section of public opinion, is now put at £20 million a mile. The total that the Secretary of State for Social Services proposes to spend additionally on the mentally handicapped all over the country in the coming four years is £40 million, and the right hon. Gentleman is very proud of that

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increase. However, it represents the cost of only two miles of the Ringway I in London, and the total cost of that ring-way at £500 million would be more than enough for what we need to reconstruct and re-equip all our mental hospitals.
To take another and even more extraordinary example of the Government's present relative priorities, the Government decided, purely on the ground of budgetary economy, we understand, not to sustain Rolls-Royce and the RB211 contract, with all the consequences that that decision may have for British industry and exports. So far as one can follow the Government's rather conflicting statements about Rolls-Royce, the net cost of a rescue operation appears to be between £60 and £70 million. That is the cost of about three miles of one of the London ringways. Does anyone really think that this is a correct priority? For the sake of carving these three miles through London residential areas, apparently we are willing on present priorities to sacrifice the British aero engine industry, to risk the aircraft industry and a good deal of the reputation of British industry overseas and, incidentally, some hundreds of millions of pounds of foreign exchange earnings. That is a most extraordinary judgment of the priorities.
The whole of those interests of British industry which have been put at risk could be saved by the sacrifice of only one section of one of the proposed urban motorways. It is an extraordinary policy. But, since we have been told that these decisions have been taken for budgetary reasons, it follows from the budgetary arithmetic that we have in the White Paper that that is what the Government are proposing.
I hope that today's debate will not be a purely academic or statistical exercise a purely academic or statistical experience but will lead to a drastic review of some of these programmes, especially of this inflated road programme. I have some experience of this from the Government machine, and in my view that programme has been extended from one year to another almost automatically without any critical examination of its value or its real priority compared with housing, hospitals and some of the other programmes which, as a result, have been starved quite unjustifiably.
10.14 p.m.
Mr. Kenneth Baker: The hon. and learned Member for Lincoln (Mr. Taverne) and his right hon. and hon. Friends find themselves in something of a dilemma in that there are two arguments which are creditable and credible for right hon. and hon. Gentlemen opposite. One is that the Socialist Government, either by design or probably by accident, found themselves in their last year in control of Government expenditure for the first time in six years; that they laid down the broad lines of public expenditure for the next five years; and that all that we are doing, the hon. and learned Gentleman suggested, is tinkering with it or deliberately misleading by falisifying shortfall and matters of that sort. That is one possible argument. The other argument is that we are hard-hearted villains making substantial cuts of a significant nature motivated by political prejudice. But whichever line of argument the Opposition wish to take, they cannot have both.
I know which argument I shall ride. I think that the Government are to be congratulated on their success—I agree that it is a modest success—in making some cuts in Government expenditure—in particular, in containing the rise in Government expenditure to an average of 2·6 per cent. over the next five years. That compares with the Labour Government's estimate of a rise of 3 per cent. to 3½ per cent. on their costings. I accept the argument on costings. The difference between 2·6 per cent, and 3 per cent. to 3½ per cent. is significant. Comparing the anticipated performance of 2·6 per cent. not with the Labour Government's forecast of 3 per cent. to 3½ per cent.—which is their horoscope, as it were—but with their record—which is their pedigree—and looking at what they achieved in six years, we find that they achieved an increase of 5·9 per cent.
The only way in which the present Government have so far been able to make any significant reduction in expenditure is by making major policy changes—investment allowances, housing subsidies, agricultural support, and abolishing the I.R.C. It will be agreed on both sides that these are significant changes of direction in Government policy. It is only through these significant changes that we

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can expect significant cuts in Government expenditure. There will be a saving of £302 million in the current financial year rolling over to, net of investment grants, of nearly £1,000 million in 1974–75. By making these cuts the Government have given themselves room to manoeuvre and to spend relatively more on certain basic social services.
Paragraph 14 of the White Paper makes it clear that the three categories of social services, transport and community local government welfare services, which constitute 58 per cent. of total Government expenditure this year, will, by 1974–75, constitute 62 per cent, of total Government expenditure.
Of the increased expenditure for social purposes of £110 million, I particularly welcome the hospital spending including hospital building, some of which money the Secretary of State said will be spent on mental hospitals; the extra £44 million for primary schools; and an extra £13 million for Government training centres and additional training over the next our years.
As the White Paper states on page 38, if we look only at the next two years, 1971–72, the increase in our provision for hospital services will be 5·2 per cent., which is very much larger than the 3 per cent. anticipated for that year by the Government on expenditure as a whole. The provision for community health and welfare for 1971–72 will increase by as much as 9·7 per cent. Those figures indicate the priorities of the Conservative Government.
I shall be turning to the articles in The Times. In effect I go along with their conclusions, because they re-emphasise the Government's case that the expenditure upon resources—at items which I have just mentioned—rather than transfer payments is our recognition that we are determined to maintain and to improve the basic fabric of the social services and of our other public services.
I have some misgivings about one aspect of the White Paper. I believe that, generally, it underestimates the tendency of local government expenditure to rise. This is the burgeoning area of Government expenditure. Paragraph 5 states that there is some imprecision in the figures from 1973 onwards of local government expenditure. Even so, in 1970–71 local
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government expenditure will go up by 3 per cent. and in the next year by 4·1 per cent. I suspect that those are likely to be underestimates. Why? Because one problem in the 1970s and 1980s will be the renewal of urban city centres. This problem affects not only my constituency, in the centre of London; it affects the centres of other cities, such as Glasgow and Birmingham; indeed, it affects all capital cities. It is a problem in New York and Tokyo. A vast amount of capital will be required to build new underground lines.
The White Paper mentions the Heathrow link—the extension of the Piccadilly line to the airport. Towards the end of the period covered by the White Paper1974–75—subject to Government approval work will be started by the G.L.C. on the Fleet Line, at a cost of £90 million, and there is a possibility of improving the line to Wimbledon. These projects involve the expenditure of substantial sums of money. The capital programme of the G.L.C.—ringways and inner London motorways apart—is likely to be about £2,000 million during the next 10 years.
This presents a great dilemma, with which the White Paper does not deal—the question how to finance these projects. The dilemma facing the G.L.C. is that the rateable value last year rose only by 1£ per cent., whereas expenses rose by 12 per cent. There has been an underestimate of local government finance.
As to the survey in The Times this morning and last Wednesday, by Messrs. Godley and Taylor, I agree that their methodology can be faulted, but I do not disagree fundamentally with their conclusions. The Chief Secretary was right to point out that their extrapolation into the years 1973, 1974 and 1975 is extending matters a little, and making certain assumptions—which both Mr. Godley and Mr. Taylor admit in the article. Nevertheless, the demand on resources will be higher than 2·6 per cent. As the White Paper says, we expect that in the first few years it will be 3·3 per cent. It is a question of argument whether it will be as high as Messrs. Godley and Taylor says, namely, 4¼ per cent., but if they are right about that the lesson for the Government is that we must redouble our efforts to save on certain resource expenditure.

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I can suggest two areas where the Government could make savings. First, there could be a saving in the general level of manpower in the Civil Service. I am not making a hustings speech; I am talking about an increase in the numbers of civil servants. The hustings are some way away from 1970. Apart from the Land Commission, the one major Department of State that has made a significant reduction in manpower is the Ministry of Agriculture, Fisheries and Food. As I understand it, as a result of various changes announced by my right hon. Friend the Minister of Agriculture just after Christmas, there may be a saving of between 1,000 and 1,500 civil servants.
Each Department of State should look again at its manpower and ask, "What is the function of each part of my Department?". The question is not "Can they do their work better?" but "Should the work be done at all?". Only by reducing the function shall we eventually reduce the numbers.
Nine months ago we took into Government service a considerable number of businessmen. I understand that they were to contribute particularly in terms of procurement and staffing in the Civil Service. I feel that substantial savings could be made here. The Government recognise this in the White Paper. Paragraph 23 of Part 1 says that we expect the administration of local authorities to be more efficient, to the extent of £25 million in 1972–73. I support the Government in that.
The second area in which there could be a reduction of a sort, in terms of the demand on resources, is in capital expenditure by the nationalised industries. This now amounts to about £1,500 million a year. Paragraph 4 of Part 1 of the White Paper states that a review is in hand. Perhaps the Financial Secretary will be able to give us some information about the review.
But to the extent to which that capital expenditure can be met by the private sector, it reduces the demand on the resources of the State and allows the State to spend more money on hospitals, schools, roads and the basic fabric of the community services. One has only to look at the capital expenditure of the Post Office, which is now becoming a
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big spender—£461 million next year, nearly £2 million a day. One must ask whether there are ways of providing some of that money from the private sector. I believe that there are.
First, one must split off the postal side from the telecommunications—[Interruption.] No, the hon. Member must not be quite so crude as that. There are more subtle ways of attracting private capital than nationalising the telephone business of the country—and more effective ways as well. The split must be made and private money should be provided to finance much of that expenditure.
Why, for example, cannot the citizens buy their own telephone instruments, instead of the Post Office buying them from the suppliers at enormous cost—enormous considering the number of instruments—holding them in stock and then renting them out? Why cannot private suppliers provide PBX's down to five lines, instead of the Post Office buying them from suppliers and paying good hard cash, which could be spent on hospitals, roads and schools, taking them out of stock and renting them to customers? These are methods whereby we could save considerable capital expenditure on the resources element.
I also hope that the Government have not lost sight of their function on coming into office of de-scaling the rôle of the State as regards the nationalised industries. When one has to suck in Rolls-Royce, it becomes even more necessary to push more out, because, by 1974–75, there will be more of the productive growth of our country nationalised than there was when we came into office. This necessitates the Government being more determined to find ways, particularly with the two major airlines, of returning them, either in part or in whole, to the private sector.
I believe that the Government must keep up the pressure to reduce expenditure, to try to save money in these ways or in others. There is a great tendency for public expenditure to rise under any Government, particularly at local level. If public expenditure continues to rise at above the rate at which the gross national product rises, the decelerating effect on the growth of the economy is intensified, because public expenditure rising at above the gross national product rise absorbs too much of the nation's

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resources and limits the increase in personal consumption.
This is evident from the last six years of Labour Government. This is exactly what happened—Government expenditure rose by 5·9 per cent. over the whole period, while the growth in the economy averaged about 3 per cent. The net
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result was that personal consumption suffered over their six years. That is one of the major reasons that they were turned out of office.
The Government have got off to a good start, but, however well they have done so far in the area of public expenditure, I believe that the opportunity to do better in future is even greater.
10.30 p.m.
Miss Joan Lestor: I am sorry that the hon. Member for South Angus (Mr. Bruce-Gardyne) has left the Chamber, because I wanted to take up a point which he made. I, too, am interested in the question of allocation of resources, and it always amuses me that, when hon. Members opposite talk about cutting public expenditure by cutting back on education, mainly on further education and the raising of the school-leaving age, they limit their attention to those areas of education in which the disadvantaged and, perhaps, the deprived are likely to benefit, ignoring other sectors in which the advantaged and privileged are having money heaped on them by the taxpayer and ratepayer, a point never mentioned in Tory speeches.
Before turning to the question of education, however, I wish to draw attention to one aspect of the Defence Estimates. It may not be generally known, because one has to dig it out, that the Defence Estimates show that we spend £6·5 million on maintaining military bands. I do not believe that there has been any cut there in the last few years. Whatever sweet music those bands may put forth, a few of us—if the House will pardon the analogy—would like to hear the music of percussion bands in more nursery schools which some of that money could provide.
It is worth noting that we spend more on military bands than has been allocated for the four-year programme of the urban aid project, and the Government have already made clear that they do not intend to build on or add to the urban aid programme. If we should be talking about priorities and the allocation of resources, I can only say that there is something wrong with some of the value judgments expressed in the House tonight.
If hon. Members opposite are really concerned to find money by cutting education expenditure, they can look to the public schools—public only in name—and the independent sector of education. The 1968 Budget changed the rule which enabled tax to be avoided on fees paid to public schools. I think that I am right in saying that, as a result of that new rule governing the aggregation of a child's income with that of its parents, we
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brought about £25 million back into the nation's resources. This affected, in particular, minors whose fees were being paid by grandparents or others who made gifts to them and thus avoided higher rates of taxation.
There are those of us who do not believe that the public or independent sector of education should continue, but, if it is to continue—and we have no reason to think that it will be abolished within the next five years—then, on public expenditure grounds, let us make it truly independent and make it finance itself. If people defend the public and independent sector of education on the ground that parents should have the right to choose and pay for the schools to which they send their children, very well, but let us make them truly independent, and financially independent of the taxpayer. Let those who believe in "one nation" and "standing on our own feet" apply those principles to themselves.
At the end of 1967, out of the 1,500 independent schools in England and Wales recognised as efficient 900 were registered as charities, including, I believe, most, if not all, the public schools. Charitable status confers certain fiscal and other privileges on the body so registered. Charities enjoy exemption from tax on their income other than their business profits. A school which is a charity enjoys the same privileges and has tax exemption in respect of any profits made from the running of the school.
I have tried hard to find out the amount of tax which these schools would have to pay on their income from fees if they were not registered as charities, but no one is able to give me a figure which matches what is calculated as being lost to the public purse.
It is important to know, because there is no public accountability for expenditure in this sector of education, as there is elsewhere. Charities pay half rates to local authorities and some public schools are relieved of between £5,000 and £10,000 a year. A few weeks ago, the Secretary of State for Education and Science made it perfectly clear that there would be no change in the charitable status of public schools. In the last year for which figures are available, rate relief for the public and independent schools amounted to more than £1 million. Half

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of that went to the public schools, an average of £5 per pupil. That is a generous family income supplement for which no one has to prove poverty, for which no forms have to be completed and for which need does not have to be shown. Charities are entitled to the repayment of S.E.T. and the repayment to public schools in the last year for which there are figures amounted to £2·52 million.
If hon. Members are concerned about allocating resources, as they should be, they should look more closely at this sector of education and consider reallocating this money.
Mr. Hordern: I completely accept that public schools would find life a good deal more difficult if they did not have the benefit of being classified as charities and so get rate relief and tax relief on the fees paid by parents, or whoever pays them, but the alternative is that the children would be educated by the State. That would necessarily involve a great increase in public expenditure and I take it that the hon. Lady is not altogether recommending that.
Miss Lestor: If I thought that by doing what I am suggesting, which is to make public and independent schools thoroughly independent, the Government would bring children into the State schools, I should be delighted, because some of the money saved would go towards educating them in the State sector. But that is not the argument. Conservatives are constantly saying that parents have the right to pay for the education of their children and to choose the school to which they want their children to go. I am arguing that they are not now paying for it, that the taxpayer and ratepayer, through public expenditure, are paying. Moreover, in this instance there is not the public accountability and scrutiny of accounts which are undertaken by local authorities and Parliament over education expenditure, because most people are not aware of the relief and other help given to those whose children are educated in the private sector.
Newspapers often carry advertisements by insurance companies and other firms offering facilities through payments in advance for the payment of school fees. For example, endowment policies are
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quoted and the Public Schools Commission Report demonstrates that the payment of £4,200 in respect of a child of five will secure full payment of fees of £4,300 at prep. or public school, together with a cash return after schooling of nearly £4,000. This information was sent to me because I asked for it. The same advertisement says that income tax and surtax relief may as much as double the estimated cash return. I am talking about the allocation of resources to education. The nursery schools for which I have fought and which were promised in the Conservative manifesto and the play groups which have had to bridge the gap do not enjoy such privileges. They go to people who already have the advantage of money and this is building privilege on privilege.
There are all sorts of other examples I could give, such as the way in which local authorities pay £5½ million a year towards fees in public and independent schools, which is not very clear unless one goes into the Estimates.
Let us take the argument of hon. Members opposite at its face value. If the private sector of education offers free choice, let it pay for it. Let it train its own teachers, where the schools have trained teachers—and many have not, and stop pinching teachers whose training has been paid for by taxpayers' and ratepayers' money. All these things contribute to the astronomical amount of money going into this sector of education, money that we could do with in the State sector to help some of the children in deprived areas and children not already receiving the full benefits of education.
Hon. Members will no doubt argue that it is right that the concession should be given because parents of children educated in the private sector are paying twice, because they pay for education through rates and taxes as well as fees. I think that that is what the hon. Member for Horsham (Mr. Hordern) was getting at. But we all pay for services that we do not use. Just because I do not use the public library where I live does not entitle me to subsidised books at the bookshop. I hope that that puts Conservative hon. Members off using that argument.
Parents who are paying for their children to go to pre-school play groups are

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contributing towards the upkeep of the nursery schools to which they cannot send their children because there are not enough such schools.
I believe that I have made out a case, short but I hope full of ammunition, to show that in terms of public expenditure the allocation of resources to the areas that need it most does not in the few years ahead depend entirely on getting growth. What it depends on is values, and the fact that there could be a reallocation with a fairer distribution of resources.
The State sector of education is closely controlled and subject to scrutiny both locally and nationally. This is not so of rate rebates, tax concessions, including S.E.T. concessions, and so on to the public schools. It is an indefensible use of the taxpayers' money when all parts of State education are severely restricted and controlled. I hope that the Government will consider this matter and make new proposals on how the money can be reallocated to the educational priority areas, to the urban aid programmes and those children desperately in need of nursery schools.
10.43 p.m.
Mr. John Pardoe: I do not wish to take up the detailed arguments of the hon. Member for Eton and Slough (Miss Joan Lestor) too closely, but would merely point out that the money about which she is talking is not expenditure but money that has never yet been income. Probably it should be talked about in the context of the other side of the balance sheet. I also remind the hon. Lady that she was a member of the Government that refused to accept an Amendment I moved in the late hours of debates on the selective employment tax to remove the public schools from the charitable concession on that tax. I had no support from her then or from her Government.
I, too, want to deal with the part of the White Paper concerned with education. Perhaps it is useful to discuss education in the context of public expenditure. At any rate, it is an excellent discipline.
A great deal has been made of the suggestions that the White Paper does not reduce the rate of increase of expenditure on education. We can see in it that there will be an increase in the edu-
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cation share of public expenditure from 12·3 per cent. to 13·8 per cent. Whether it is more or less, and whether it is a greater or less proportion, is not my question tonight. I want to ask, is it enough to pay for the education commitments that the present Government have made?
My concern arises from speeches I have made in the House on the matter. In past education debates I have challenged the whole concept of the broad-front approach to education expenditure. I received no thanks for telling the Labour Government that they would not be able to raise the school-leaving age by 1970 as had been intended. The decision not to raise was not made in order to cut public expenditure, although it was disguised as such. It was taken because the previous Government which had made that commitment had not made the correct forecasts as to the cost of increasing the school-leaving age by 1970, and the preparations were very far behind schedule. I warn the Government now that either they must change their education policy or they must allocate more money than they allocate in this White Paper. They cannot pay for the policy and its commitments, into which they have specifically entered, with the money allocated, and to go on pretending that they can is tantamount to fraud.
I am not in the least neutral about the choice which the Government should make. I retain a faith in education as one of the most powerful weapons in developing the human personality and building a compassionate society, in spite of what some people would say was the evidence to the contrary around us. The view I express that the allocation in the White Paper is not sufficient to pay for the Government's education policy is not mine alone. It is backed up strongly by Sir William Alexander, that hard-headed Scot, who heads the local education authorities, writing in Education on 5th February, when he said:
"The plain fact which seems to emerge can be stated in simple terms. The education policies which have been approved and which it is hoped to carry into effect cannot be carried into effect within the limits of the resources which the Government is prepared to make available."
That was his comment on the White Paper.

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What ought we to be spending on education? That is really as difficult to answer as, "How long is a piece of string?" The fact that other countries spend a higher proportion of their gross national product on education may not be absolutely relevant, but if one looks at what we have spent in the past one comes up with an extraordinary situation, Professor West, in the Economic History Review of April, 1970, dealing with the resources allocation and growth of early 19th century British education, showed that, in 1833, we were spending 0·8 per cent. of our net national income on the education of children below the age of eleven. In 1965, we were spending 0·86 per cent. on the education of children under the age of eleven. In other words, in primary education we had not upgraded the priority which we gave out of our total national income between 1833 and 1965.
Of course, if one looks at the figures for children of all ages, the picture is different. But it is not all that different. In 1833, we were spending about one per cent. of our net national income on the education of children of all ages, and in 1965 twice as much—two per cent. That is not a very substantial increase. Then again—and this follows from the remark of the hon. Lady the Member for Eton and Slough—if one compares the present level of expenditure in the State sector with other education expenditure within our own society—particularly, of course, the private sector—one can see some remarkable comparisons. On 12th January, in a Written Reply, we were told that the current cost of educating a primary school child in 1970–71 is esimated at £97. My researches into the cost of private education would certainly reveal a figure of something over £200, and in most day preparatory schools for boys the fee would be approaching £300 a year—in other words, three times as much as we make available in the State sector. In secondary education, in 1970–71, the State is spending £186 per child, and I would think that for day boys in private schools the figure is nearer £400 a year. So by any standards, whether the standards of the past or the standards of our society today, I maintain that we are spending too little on education.
But—and this follows a point made by the hon. Gentleman the Member for South Angus (Mr. Bruce-Gardyne)—even
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if we spend a higher proportion there will still be a need within the total allocation to set priorities and to make choices. I shall come on to develop, very briefly, the theme which the hon. Gentleman set out, when he referred to universities in somewhat disparaging terms, and the allocation which they have within the total. I think he has really put his finger on the problem.
Let us look at the essential commitments which I say the Government cannot pay for out of the money allocated in the White Paper. The Government are committed to giving top priority, as everyone knows, to primary education. The Secretary of State for Education and Science, speaking on 28th October to the annual conference of the Association of Education Committees, went so far as to say:
"I am making no promises"—
a good way to preface any statement on education!—
"but my hope is that over the period of five years from 1972–73 we shall be in sight of the elimination of the primary schools built before the end of the nineteenth century."
The noble lord, Lord Belstead, writing in a letter dated 7th January to me, followed that up by saying:
"This statement does not, of course, constitute a commitment"—
he can say that again—
"but it makes clear the intention to proceed as fast as possible with the improvement of our primary schools."
Of course it did not constitute a commitment, and the plain reason why it did not constitute a commitment, is that the right hon. Lady did not know, when she made that promise on 28th October, how many primary schools were built in the nineteenth century. I can illustrate this point by referring to the County of Cornwall. There are 172 schools which were built before 1903 in the County of Cornwall. Are they really going to be replaced by 1978? Of course they are not. We are going to have two replaced this year and three next year.
Explaining why this was Lord Belstead said:
"We now realise that … a number of education committees have obviously not provided us with a complete list of schools."
They are very short of being complete, and the Government are not even going to begin getting these schools replaced

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by 1978, or even by 1988, if the figures in the White Paper are adhered to.
We move on to the latest allocation for school building. For replacing unsatisfactory primary school buildings there is £38·5 million, but that is only the equivalent of what the right hon. Lady would have needed to provide new schools if there had not been a fall in the primary population. So it is no great shakes. Is primary education to receive top priority or not? The answer is, of course, that it is not.
Some startling figures emerge from the table on page 36, if one does some percentages, and one has to look at percentages rather than total figures in assessing this Government's expenditure policies. If one takes the five-year period from 1970–71 to 1974–75 one can see the current expenditure on primary education is going to increase by 13·5 per cent. as against current expenditure on secondary schools of 30·8 per cent. If one looks at universities one sees that current expenditure on universities in the same period will increase by 38·6 per cent. compared with an increase of 13·5 per cent. on primary education. So where is the priority? If one takes capital and current expenditure together for those years one sees that the total capital and current expenditure in the five-year period on schools is going to increase by 15½ per cent., on universities by 31 per cent., and on further education by some 6·3 per cent. This is why I deny that any real priority is being given within these figures to primary education. Far too great a priority is being given to the development of universities over and above primary education, and over and above the development of other further education, particularly vocational and part-time courses.
Mr. Nicholas Scott: Might not part of the answer be that the primary school population is expected to increase by 3 per cent. in the period, whereas that of secondary schools is expected to increase by 27 per cent.?
Mr. Pardoe: I am not quarrelling too much about the comparison between primary and secondary. As the White Paper says, the major part of these increases is related to the relative increases in the number of pupils. But I quarrel very
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much with the forecast of the increase in expenditure on universities in comparison with primary schools. We can to some extent control the numbers going to university, we can divert them to other forms of further education.
Universities are obstinately middle-class, and the money is largely going to middle-class people and not to the children of manual workers. In 1926 approximately 25 per cent. of undergraduates in universities were children of manual workers. In the Robbins Report the proportion was 25 per cent. What will it be by 1980? Tyrrell Burgess recently estimated in the New Statesman that it will be 25 per cent. We are making no impression on this proportion. The expansion of universities is very nice, we all like it, but, if it is at the expense of other sectors, can we afford it? We should think in terms of cutting the university expansion programme and piling that money into primary schools and further education, particularly vocational and part-time courses. I know the hon. Member for South Angus would like to cut it and hand the money back to the taxpayers, but I am not in that business. I say we must increase the educational opportunities for people in the lower income groups.
What estimate has been made of student grants? What estimate has been made of teachers' salaries? Is it the £225 million that the N.U.T. is claiming, the £152 million the N.A.S. is claiming, the 15 per cent. the N.U.T. has tumbled down to, or the management offer? Nothing is said about this in the White Paper, and I suggest that the expenditure forecast will be made wildly out of date by student grants and teachers' salaries.
Whatever the figures are, it cannot be denied that the money will not pay for these commitments. This is why I challenge the Government to show that these public expenditure forecasts are an honest attempt to provide the cash for the promises which they have made to the country in their manifesto and in many speeches since. I am aware that the Government are committed to cut public expenditure. They seem to be trying to ape the golden years of the noble Lord, Lord Butler, but he had immense defence expenditure to tamper with and get rid of and, in so far as he cut social expenditure, he allowed Dame Florence

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Horsbrugh almost to destroy the education service. As the Brookings Institute pointed out—and this is answer to the hon. Member for South Angus—Florence Horsbrugh's ability to cut education expenditure was largely responsible for the low growth rate which we are still experiencing.
11.0 p.m.
Sir Brandon Rhys Williams: We are talking tonight about a highly important document. It might almost be called "The intelligent back bencher's guide to finance". I wish to congratulate my right hon. and hon. Friends on producing this document so quickly. It contains a great deal of information. It cannot have been easy for them to look as far forward as 1974–75 when they have not yet given us their first Budget.
Though I am full of praise for their industry and enterprise in producing the document, I hope they will not take my remarks in the wrong spirit if I have somewhat critical things to say. Of course it is a guide to expenditure, but it is agreed that it is essential to divide the Government's expenditure into three categories; namely, expenditure on revenue account, expenditure on capital account, and transfer payments. When one tries to analyse these figures under those three headings immediately one begins to lose touch with reality.
It is inevitable of course that there should be a degree of imprecision in the figures, considering the rate of inflation, I am sure that this invention of the relative price effect is an absolute miracle of methodology. I hope that I am never asked to write more than five lines on the subject. When we try to deduce the date of the next election from the paragraphs on law and order, we find that when we come to 1973–74, expenditure on elections disappears to a thin line. In 1974–75 we reach the same conclusion. Something will happen in those years, but we cannot be quite sure what. But the timidity of that judgment has turned up in other much more important aspects of the Paper.
Several hon. Gentlemen have referred to the table detailing forecasts of expenditure on education. To me, it seems very hard to believe that there will be
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a sharp reduction in capital expenditure on education in total in the year 1973–74 when I thought—I may be misinformed—that we were going to raise the schoolleaving age and that there will be a further sharp fall in 1974–75. It seems to me that Great George Street has given the totals and all else is the work of man, or perhaps in this case of woman, who has added up the current account expenditure and has then had to reduce capital expenditure forecasts sharply to bring the totals to match the figures which have been decreed from the other side. I also seem to hear an angelic voice of compelling power rejecting absolutely the concept of a sharp fall in capital expenditure on education in 1973–74. I wish good luck to that voice.
This White Paper is intended to be only a rough guide to the Government's intentions as of now with regard to expenditure. Hon. Members who take it in any other sense would be asking too much. Yet the format leaves too much to be desired. First of all, in regard to the facts of the situation on capital account. Expenditure is split into expenditure on capital account and expenditure on revenue account, but we are not able any longer to deduce from the information published the extent to which the Government are using taxation to provide for the formation of capital. One of the most controversial features of the last Budget was the extent to which the then Chancellor of the Exchequer made use of taxation as a capital-forming device. Some hon. Members, including myself, felt this was a step away from free enterprise capitalism and towards the nationalisation of the capital market, in that it was no longer felt sufficient for the public to make its own decisions about saving, but that the Chancellor should make that decision for them, to the tune of perhaps £1,000 million.
One of the most important things we want to know about the new Government's plans in regard to expenditure is the extent to which the capital side of the account will be financed from the capital market and how much it will be financed from direct taxation. The omission of the taxation forecasts in the Paper is understandable, because they were bound to be inaccurate, but it is nevertheless wrong. We want to know

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the Government's intentions in regard to taxation as a way of creating capital, but we cannot deduce this from the Paper. That is a mistake which ought not to be repeated in next year's edition of the guide.
I would like to deal briefly with the question of transfer payments. Here, I feel that we may be up against deliberate obscurantism. Far be it from me to suggest that too strongly. It may be that the trouble is simply sloppy thinking, but I do not like to suggest that either. I therefore fall back on the feeling that this is simply an early edition of the guide and that in future editions we shall learn much more about transfer payments.
Let us, however, see how far the authors have gone in this respect. On page 39, to start rather unfairly by skipping towards the end, one reads that
"The schemes of social security cash benefits make up the largest of the public expenditure programmes."
That is obviously a matter of tremendous interest for us. If, however, we look back to page 10, we see that
"about one-third"—
I challenge that one-third, but that is what is stated—
"of public expenditure is accounted for by transfer payments. The recipients, not the public spending authority, decide how this money shall be used."
That is very true. We must learn to look at transfer payments, not as taxation, not as expenditure, but instead as, perhaps, a necessary—indeed, possibly highly necessary—form of interference. I do not want that word to be charged with a sense of animosity.
In so far as the State is taking money from people and giving it to others, or, possibly, back to the same people, it is not taxing them or spending public money. It is acting as an impeller in the system. The State is not the only impeller which is acting in this way. There are private forces encouraging people to save, to take out life assurance policies, to put money into buildings, and so on, and there are also forces encouraging people to dis-save. Let us face it, there are forces in the economy encouraging all these movements. The State may be the largest, but in so far as it creating these flows of transfer payments it is not acting in the same way as it is when it is arrogat-
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ing resources to itself, either on revenue or on capital account. I hope, therefore, that the next edition of the guide will deal much more fully with the question of transfer payments.
It is a happy fluke, which I do not think that I am the only hon. Member to have noticed, that year upon year the proceeds of the income tax, surtax and National Insurance contributions are balanced more or less exactly with expenditure on education, health, welfare and social security. It might, therefore, be said that the direct taxation of individuals and the direct return to individuals of spending power, not only in cash, but also in kind, is a virtually self-balancing system. I suppose that this is a fluke.
If people wish to shoot me down and say that I have forgotten about housing and other local authority expenditure, I would say that there, to, if one adds in rates and housing expenditure, one still comes back to a virtual balance between what the State is taking from people and what it is giving back to them in cash or in kind in the form of transfers of resources.
I would therefore like redistribution of spending power to be taken completely out of the Budget and given separate examination. We want to know exactly who is gaining and who is losing by all this. Does the group of national systems of redistribution of spending power have the effect of conveying money simply from the rich to the poor, or does it convey it from male to female, from young to old, or from South-East to North-West? What is happening about the redistribution of income in our society?
I would like to give two or three examples of ways in which considerable changes might be introduced in the pattern of Government interference—or redistribution—which would produce very odd quirks in the guide which could not be interpreted accurately by hon. Members.
For instance, suppose that there were reversion to the policy of cancelling the child allowance in the tax system and making a commensurate increase in family allowances. Since this Paper is confining itself to expenditure it would appear that the increase in family allowances would constitute an enormous increase in Government outgoings, even

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though the cancellation of the child allowances might well correspond to almost the precise total of additional expenditure.
I made some calculations—which may have been wrong—that if the child allowances were cancelled altogether and family allowances of about 24 or 25 shillings a week were introduced free of tax for all children, including the first, the net additional Government expenditure would be about £50 million or perhaps £60 million. But the gross additional Government expenditure would be vast. Equally, one could say that the increased taxation would be crushing and overwhelming. That is one example which I offer to the House of the way in which sloppy thinking can come in and appear as a barrier to a highly desirable reform.
On the question of school meals, it might seem that we could achieve a reduction in expenditure if we reduced the availability of free milk and meals, and so on, in schools. But seen from the point of view of national expenditure, one hopes that there would not be any reduction. If there were a reduction it would be because some children would be going without what they were having before. Or possibly the effect would be that there would be less waste, because undoubtedly there is waste in this respect. We must not prejudge the issue but stick to the economics of the argument.
Whether the Government effect a redistribution of spending power by asking people to meet two bills instead of one, one bill for the taxpayer, is a subject that the House ought to examine. The facts ought to be before the House.
To introduce a somewhat more complex situation, let us suppose that a recommendation which I have made on more than one occasion were accepted and there were to be a compulsory increase in employers' contributions to pension schemes in the graduated pension system. Those schemes contracted "in" would be deemed to be making a large increase in tax contributions because there would be an increase in compulsory levies coming into the Exchequer. Yet that money would still remain the property of the public and eventually they would be able to reclaim it. Thus we have the time element to bring into account. This is left out where ultimate
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commitments of the Government are being built up which do not appear in these tables.
In the case of the contracted "out" schemes, let us suppose that the minimum contribution were raised from the present level of, say, 4½ per cent. over a narrow band of income to, say, 10 per cent. of all income. There would be an enormous access of fresh savings to the private capital market because employers would be obliged to put into the hands of trustees huge sums of fresh money. Would the Government then be able simultaneously to cancel S.E.T. and to reduce corporation tax, because the capital formation going on would enable the Government to finance their expenditure on, say, the nationalised industries, by resorting to the capital market?
These are all recondite speculations, but they arise from a situation which is real. We have no way of making increases in pensions unless we increase contributions. The relationship between expenditure now and in the future and between savings now and in the future, must all be taken into hotch-potch. But it is impossible for the intelligent backbencher to make any calculations of this kind by reference to this interesting document. We know that the House has taken note of the problem and that in its wisdom it has appointed a Select Committee on Expenditure. That is an important step forward, though it seems to me that we are putting the cart before the horse if we study expenditure but do not spend at least as much time on taxation.
I would like to see a Select Committee on taxation. I believe that it is the historical function of the House of Commons to deal with matters of taxation, and only a secondary function to study the way in which the money is spent by Departments after it has been raised. However, if we are not yet to have a Select Committee on taxation, let us hope that the Expenditure Committee will at least set up a subcommittee to examine transfer payments. We shall then be able to look at these contrary movements and decide which are necessary in the national interest, which should be increased, and which should be diminished.
At present, we are going through a crisis in democracy in Western Europe. It is not only in this country that we have

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this tussle between the elected representatives and the officials for control of the economy, of taxation, and of the monetary system. The Werner Report is a well worked-out document. I think that we should take it into account in our thinking, whether or not we go into the Common Market.
Officials will be setting up central institutions to run the European economy, and it may be that it will include our own. After all these centuries, are we to surrender our interest in questions of taxation, are we to pass to Great George Street or Somerset House the power to decide what happens—or, even worse, to the Commission in Brussels? I am an unashamed Gaullist in these matters.
If we are content year by year with documents as sketchy and incomplete as this one, interesting though it is, we shall lose all credibility as legislators, and we shall deserve to lose our authority.
11.17 p.m.
Mr. John P. Mackintosh: It is a privilege to follow such an interesting and sensitive speech as the one that the hon. Member for Kensington, South (Sir B. Rhys Williams) has just made. I will not embarrass him by suggesting that he might be more appropriately situated on these benches in view of some of his attitudes.
Perhaps I might take issue with him on one small point and suggest that, despite his criticisms, this sketchy White Paper is a great step forward won by the work of the Select Committee on Procedure, which extracted it from the Administration and the Civil Service with great difficulty.
There is no doubt that, unless we get a Select Committee on taxation or a sub-committee of the Expenditure Committee, as the hon. Gentleman proposes, then whoever gets the power to decide taxation, it will not reside in any measure in this House either in matters of scrutiny or understanding, apart altogether from matters of actual control.
It seems to me that we have established two major facts about the lack of information that we have been given by the Government on this occasion. They have failed to give us the medium-term economic assessment, and they have failed to give us the estimate of public sector receipts. Why?
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Taking the first case, they have given no adequate reason for failing to publish the medium-term economic assessment. My hon. Friend the Member for Ashfield (Mr. Marquand) demonstrated with great clarity that it exists. We know that it exists. It underlies the whole White Paper. It is there in the boxes of the Treasury Ministers. We are entitled to ask why they have not published it, and I fear that their continued silence on the matter gives me only one feeling. It is that they would have published it if there was a single note of cheer in it for their Government and their prospects.
The Government have not had the guts to publish the medium-term economic assessment that they have in their possession. As my hon. Friend has said, no doubt we could work out the main points if we had the staff to work on the statistics. But I suspect that the reason it has not been published is that it forecasts in the coming years no growth, roaring inflation, an incipient recession, and possibly even a deterioration in our balance of payments. It will be interesting to see whether the Financial Secretary is prepared to deny that that is what is in the medium-term assessment. Certainly it is what is in the assessments being made by private organisations, and what is in the London and Cambridge Economic Bulletin, which is the latest serious assessment to be issued by the private statistical organisations concerned with these matters. However gloomy this assessment would have been, it would have been better to have published it than to have left us with the even gloomier doubts which we now entertain.
Why have the Government not published the estimates for public sector receipts? We were given an explanation. We were told by the Chief Secretary, who opened the debate, albeit in a somewhat faltering and unconvincing fashion, that it was because there was an element of uncertainty in the calculations of public sector receipts. If so, that is the joke of all time when we look at the uncertainties which have already been published in the White Paper.
The hon. Member for Kensington, South pointed out some of the uncertainties with regard to transfer payments.

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Running quickly through the document, there is a listed saving on agriculture of £150 million without any explanation of the levies, the estimated future world prices, or the egotiations which will be necessary with foreign countries before we can determine whether any or none of this money will be saved. There is no estimate of the cost of E.E.C,. entry, though assumptions of this kind could have been put into the calculations. Again there is no estimate of the possible increase in social security benefits. We have not wrapped round the necks of the hon. Gentlemen opposite what it would be like if the wealth of this country grew at 2½ per cent. a year for five years and yet at the end of that time people in receipt of social security benefits in real income terms were left where they were at the beginning of the period. We have assumed that there will be some increase, as in past years, but again there is no estimate.
Then there is this peculiar method of calculating a decrease in the financial cost of the public debt because of an assumed rate of inflation. This has been put in as a figure which it is reasonable to estimate; yet it is impossible to give an estimate of what public sector receipts are. We are given a guess at a saving on public expenditure in housing, although the bill and the arrangements by which it is to he made have not yet been revealed or explained.
There is, as some hon. Members opposite have said, a guess that the expenditure of local authorities can he held at 3½ per cent. current and capital. At best it is a guess and no more. Yet we are invited, after these six stupendous guesses at the level of public expenditure, to believe that public receipts are subject to even more hazy guesswork, that they cross some peculiar divide between credibility and incredibility, and we therefore cannot be told.
I believe, in fact, that we are not told public sector receipts, because, if they were published, it would become dreadfully clear that there is no further room for cutting taxation in the present situation. These are the reasons why the Financial Secretary cannot come clean on both these factors.
Now the House has equipped itself with an adequate weapon with which to
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combat the hon. Gentleman. This House has now got a Select Committee on Expenditure. The great virtue of a Select Committee is that it can summon before it officials and Ministers and extract information. I judge that the first task of this Committee is to get out of the Financial Secretary the medium term economic assessement and public sector receipts because they obviously contain matters of the greatest importance to this House and to the nation. If not, they would have been published
I move to the major issues of public expenditure and priorities. We clearly have two points to consider. The first is the total claim on resources by the Government. The second is the priorities within this total.
I should like to take the second point first: the priorities within Government expenditure at the moment. Again, I am disappointed that the White Paper does not set out more precisely what the priorities mean and involve in terms of education, housing. roads and so on. Again it cannot be suggested that the detailed background to these expenditure totals is not known.
We were told that the expenditure cuts were the product of what I believe the Chancellor of the Exchequer called "the most searching review of public expenditure yet undertaken." This must be a pretty tough exercise, because every Government seems to undertake the most searching investigation of public expenditure that has ever taken place roughly every two years.
If it is not known by now exactly what it means to cut a departmental budget by a certain percentage, the Government must be groping pretty badly in the dark. After this exercise had been done I should have thought that the House could have been told precisely what it means in each case. If that had been spelt out for each departmental budget, the benches on both sides of the House would have been full, because hon. Members would have realised the precise impact these changes would have on their constituents and on the political fortunes of the party making the cuts.
I have one word of comfort for hon. Members opposite. I accept one of their major priorities —the scaling down of Government aid to industry. I repeat the point made by the hon. Member

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for South Angus (Mr. Bruce-Gardyne) in that I also am not clear where the Government expenditure on the Concorde programme is listed. Looking at the expenditure on trade and industry I do not see under which head it is listed, and I should be grateful for elucidation on that point. I should like to see that among the programmes in which cuts are to be made.
Aid to industry has been scaled down. The claim on resources in respect of the social services is to be held steady, or slightly increased. The areas that come low in the Government's order of priorities are the poorer sectors of the community, the regions and the housing programme. On these sectors, there is a diminution of expenditure. In terms of development areas and housing, Scotland is hit particularly hardly, and I draw the attention of the Minister to that fact. I want to ask a few questions on the point.
On the simple facts in the White Paper I am a little confused about the housing figures. On page 10 it states
"The proposed reform of housing finance will prevent expenditure on subsidies for housing increasing rapidly as it would otherwise have done."
It is claimed that an increase will be prevented, whereas in the list of figures in table 1–2 there is a decrease of 0·4 per cent. per annum over the five-year period. I should be interested to know what in fact is the figure for housing.
It is difficult to calculate the total expenditure in Scotland because, as my right hon. Friend the Member for Birkenhead (Mr. Dell) said in an impressive speech, it is difficult to work out how far the differential in favour of the development areas has been diminished. I take the point that it has not been increased but diminished. It is very difficult to work out how much the reduction in Government aid to industry is diffused over the whole country and how much it applies specifically to the development areas.
But I have worked out from the White Paper the increase in public expenditure for all services under the control of the Secretary of State for Scotland. There the increase is 2·15 per cent. per annum, compared with an overall increase of 2·6 per cent. for the United Kingdom. The White Paper shows that the Scottish
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share of public expenditure is a diminishing one over the five-year period. What bothers me is that the 2·6 per cent. for the nation includes defence which is diminishing. If expenditure on education, housing, health and the other services for which the Secretary of State for Scotland is responsible is compared with expenditure for the equivalent services for the whole of the United Kingdom, the gap will be between 2·15 per cent. and more than 2·6 per cent. so that now public expenditure in Scotland is seriously declining relative to public expenditure in the nation as a whole.
This is a pattern that one would expect. I consider that Scotland has more need of public expenditure in terms of regional development, housing, industrial dereliction and road mileage to be developed. It is one more example of the way in which, under this Government, not only in overall terms but in terms of individuals and areas, the priorities are tilted against the relatively under-privileged.
I do not accept the argument put forward by the hon. Member for South Angus, whose majority is astronomical, and has to be, with his views on Scotland, that Scotland is peculiarly lucky to have lost the regional employment premium, and is now relatively worse off in the loss of its differential advantages in attracting industry and is yet still paying out selective employment tax. I am, in a small way, particularly disappoined that forecasted expenditure on tourism and the Highlands and Islands Development Board is to come down.
These are some points about priorities within the total. I turn now to the total itself and to the public expenditure claim on total resources. What bothers me is that, if one takes as creditable the point made by Conservative Members, that, on the whole, this Government have maintained public expenditure, and if one takes Wynne Godley's estimate that, if anything, public expenditure will increase in the last two years of the five year period, and accepts that the growth rate is the same as or no higher than, this increase, there is very little room left for other factors to expand.
What is particularly hard to take is the Conservative Government's claim that, when they alter transfer payments, they can then decrease taxation by an equivalent amount, because if they

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decrease taxation, having only altered transfer payments, the claim on real resources is virtually the same. If there is any reduction in the claim on real resources, by virtue of abolishing school milk or by putting up rents and food prices, that is only a reduction in the claim on resources if people eat less or consume less housing. Assuming that they do not do this significantly, if there is then a cut in taxation, any consequent direct increase in the total demand on resources is therefore directly inflationary.
What worries me about this is that it is inflation now which is the main constraint on growth. We will not break out of this tight circle of reduced or static level of consumption, a flagging level of investment and a relatively steady level of public expenditure unless we can get increased growth. The problem which we have now is how to break out of these constraints. The Conservative Government, like the previous Government, are enmeshed in this difficulty and the only answer is some form of incomes policy.
People who criticise and attack this idea, either from the Treasury Bench or the right hon. Member for Wolverhampton, South-West (Mr. Powell), have nothing to offer in exchange except the money supply argument, which is a dignified way of saying unemployment, bankruptcies and continued constraint on the economy. It is not a way out of the problem of constrained growth but a recipe for retaining it until goodness knows what will happen or some method is discovered of getting out of it which has never been explained.
So we are left with this problem, that if we retain public expenditure at the level which the Conservative Government has forecast unless growth can be increased, at the end of five years we will have a static or possibly even a decreased share of private consumption, we will not have had a decrease of taxation as hon. Gentlemen promised the public, and we will not have increased investment.
It will not be bad merely for the Conservative Party if this happens. If, at the end of another five years, another total set of promises is falsified, if as a country we have stagnated in this way, it will not be merely hon. Gentlemen who
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suffer. The whole credit of politicians and political parties will get into difficulties if we cannot break out of these economic constraints.
I therefore hope that these rigid and doctrinaire views and policies of hon. Gentlemen opposite, who are preventing them from taking the only way forward in this matter, which is a voluntary, or compulsory, agreement on an incomes policy will seen be dumped, with so many of the other things which they put up before the Election.
11.35 p.m.
Mr. Nicholas Scott: It is with some diffidence that I speak in a debate with so many battle-scarred veterans of Finance Bill debates over the years and last year's debate on public expenditure. As the Expenditure Committee develops its work, under the chairmanship of my right hon. Friend the Member for Taunton (Mr. du Cann), the gap between gentlemen and players in this annual debate will get rather larger and perhaps we shall feel, those of us on the outside, rather more anxious about joining in. But even with that caveat, I am convinced that if we are to have a proper discussion this and many other topics in the House, the development of the committee system is essential. The sheer rate of increase of knowledge in the world has that implication built into it.
There has been much talk about receipts and whether projections of receipts ought to be included in the White Paper. With all the authority of one who has never spoken on this subject before, I say that I find it easier to cope with one side of the picture—public expenditure—at a time and would rather deal with receipts or taxation in a completely separate debate on a completely separate White Paper or Select Committee Report.
When the Plowden Committee in 1959 set us on the path we have taken to the discussion of this Report, they said,
"Public expenditure decisions … should never be taken without consideration of (a) what the country can afford over a period of years having regard to prospective resources"
—the rate at which we expect the economy to grow—
"and (b) the relative importance of one kind of expenditure against another."

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They did not envisage that we should be discussing public expenditure programmes within the context of any projection, however vague, about the receipts which we might have from a given set of taxes.
I start from the proposition that public expenditure for much of the period of the Labour Government was virtually out of control, that this led to a level of taxation which was a positive disincentive to the creation of new wealth, that this growth in public expenditure had to be controlled and that taxation has to be lowered. That is not to say that we shall not be able to expand the expenditure of money on the socially desirable objectives which are welcomed on both sides of the House, and that is not to say that I accept the proposition of the hon. and learned Member for Lincoln (Mr. Taverne) that we have to have a rapidly rising level of public expenditure to ensure a civilised society. A civilised society is not to be equated with a wasteful society.
It seems to me that we ought to be talking about priorities. In the first paragraph of the White Paper the Government have made it clear that one of the priorities is
"to concentrate the activities of public bodies on the tasks which they alone can perform".
On page 12 they spell out another:
"This largely reflects the Government's policy of maintaining and strengthening the basic fabric of the social and other essential public services, which are large users of manpower and require substantial continuing capital expenditure, whilst reducing the direct financial support to industry."
I agree wholeheartedly with both of those premises.
I agree with my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) when he says that the extent to which the capital demands of the nationalised industries bulk in our public expenditure programmes is considerable. We ought to be looking at ways in which these needs can be met by the private sector, both at home and overseas, reducing the demand which they make upon Government expenditure.
I also hope that we shall look very closely—I understand that in the White Paper the Government say that they have a review in hand—at the work of the various research councils to see to what
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extent each of the councils is essential and to what extent it is essential that they are maintained out of public expenditure —and to what extent can provide services on a fee-paying basis to industry or there is some other way by which industry can finance the work of the research councils rather than they should be totally financed out of public expenditure. If we can control public expenditure, if we can reduce on inessentials, we can find the resources for the expansion of the services which I regard as essential.
The hon. Member for Ashfield (Mr. Marquand) criticised the Government's policy so far as regressive. It is nonsense to criticise this Government for divisive policies. The introduction of the family income supplement, the shift in housing subsidy policy to achieve a switch in resources from the better housed areas into the areas of our inner cities which need those resources, the provision of pensions for the over-80s, about which I have a strong personal view since my own Private Member's Bill on the subject was talked out by hon. Members opposite when they were on the Government side—all these are the very oposite of divisive policies.
It is from that angle that I look at the White Paper. I was sorry that the hon. Lady the Member for Eton and Slough (Miss Lestor) devoted so much time in her references to education to lambasting the private sector, for I think that there can be a real debate about the way in which we allocate resources within the State sector of education. In view of the differential increase in population as between primary and secondary schools, I maintain that the Government have rightly shifted the priority towards the primary school level.
I take issue with my hon. Friend the Member for South Angus (Mr. BruceGardyne) in his apparent strictures on the increase in further education expenditure. It may be that there is some scope, perhaps, either for reducing expenditure or for increasing charges for non-vocational further education, but, if reductions in expenditure on further education were in any way to hit at the second chance element, the second chance for people to come back into education in order to improve their prospects and widen their horizons, I could not go along with that.

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One of the most heartening features to me in the Government's approach to education has been that the first announcement by the Department of Education and Science about expenditure on polytechnics, showed that that expenditure had gone up by no less than 50 per cent. in one jump. I regard that as the right sort of priority in further education.
There has not been a reference so far in the debate to the loan-grant element in student support. I do not consider that a switch could be justified at present for first degrees, but I do not close my mind to the possibility that for post-graduate work and second degrees there might be a case for switching from grants to loans.
I am slightly disappointed, since it was my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) who last year attacked the presentation in the White Paper for the way it split some items of expenditure between different parts of the White Paper, to find that Government training centre expenditure is split between expenditure on training and expenditure on common services, that is, the actual provision of the buildings. It is difficult to ascertain exactly how much we are to spend on the expansion of Government training in future years.
I know that the Department of Employment is conducting a review of our whole training programme, but I think it important that the Government training centres should be responsive to and in touch with the needs of industry. I feel that it would be worth considering whether we could do this either by getting some of the money for running the Government training centres through the machinery of the industrial training boards or by enabling them to charge industry direct for some of the training which they do.
On the social services, I wish to contrast two statements in the White Paper, one on page 7 and one on page 39. In paragraph 1 on page 39—my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) referred to this—it is said:
"The schemes of social security cash benefits make up the largest of the public expenditure programmes."
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On page 7, it is said:
"… the social security programme … is simply a projection of the cash outlay assuming the present levels of benefits".
We know that the present level of benefit is not to be maintained, for the Government have made various pledges that they will improve the level of benefits. We know that the largest element in the present level of expenditure is the level of benefit. How realistic, therefore, is the overall projection of public expenditure? Ought we not to build into our projections of social security benefits some sort of improvement factor?
I hope that before long we shall have a green paper from the Treasury about the possibility of having a full-scale negative income tax system. This has tremendous advantages in concentrating the money available on those who really need help, and it is automatic or largely automatic in its application. I believe that it could achieve substantial savings in the administration of benefits, and I should like to think that we will have a green paper on the subject from the Treasury in the not too distant future.
No hon. Member who represents a constituency in the centre of one of our cities could be easy about the balance between roads and housing in the White Paper, as the right hon. Member for Battersea, North (Mr. Jay) said. Although I welcome the switch in housing subsidies, the new housing subsidy arrangements which have been announced, I have to enter a query as to whether the projected overall saving in subsidies is realistic.
I believe that the Government have underestimated the demand that there will be for subsidy from private tenants in our city centres, and certainly I query the impact of their policy if they are determined to exclude furnished lettings from any sort of subsidy arrangements. Is there not some way in which, if they want to make an impact on housing in city centres, while they cannot subsidise furnished rents in the same way as unfurnished rents, there could be some basis whereby the subsidy was paid to those living in furnished accommodation up to a certain rateable value?
I hope that the Government will pay great attention to the value for money which they can get if they are prepared

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to use, even to a greater extent than now envisaged, the voluntary housing movement in our city centres. I do not believe that one can regard the projected ·4 per cent. reduction in housing expenditure as satisfactory when one looks at the housing conditions in my constituency and the surrounding areas.
Continuing at this breathless pace, I come to methodology. It was my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) who said that the White Paper ought to be understood not only here, but in the country. I am still not sure about the way in which the relative price effect has been calculated. Last year's White Paper made fairly clear the way in which this factor had been built in on top of everything at the end.
Have the changes, which I have done my best to understand, affected the sums in any way? Or has it simply been a split between individual programmes rather than being applied in a lump at the end? Has the factor of 1½ to 2 per cent. which was applied last year been applied this year? I ask as an amateur groping my way. The rate of inflation which we have been experiencing for the last 12 months appears likely to go on for at least a month or two more. Will the factor be affected by that rate of inflation?
I hope that the professionals will forgive me for my brief and rather hectic intervention.
11.50 p.m.
Dr. M. S. Miller: This debate is an opportunity for both sides of the House to put forward their views on the question of public expenditure. It was a very great privilege therefore to listen to the undogmatic and non-doctrinaire views of the hon. Member for Kensington, South (Sir B. Rhys Williams). Perhaps in the view of his own party they were somewhat bizarre. I noticed his Front Bench wincing at some of the things he said.
The whole Government philosophy on public expenditure is amply shown in the very first paragraph of the White Paper.
I must rush my contribution to the debate because of the lateness of the hour, and I want to concentrate on points on parts of the White Paper which require a little ventilation.
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Only a Tory Government could claim that in this country we dispose of a disproportionate amount of gross national income on public expenditure when it is obvious that we are low down in the league in comparison with the countries of the Common Market. In fact, for national expenditure on welfare and social security and family allowances we are at the bottom. I have no time to give all the figures, which in any case most hon. Members are probably fully aware of.
I share the view of several of my hon. Friends who have spoken that an incomes policy is essential, but it must be an incomes policy and not merely a wages policy, which is something that we on this side set our minds entirely against.
The Government's proposals for old-age pensions are extremely disappointing, to say the least. They are totally inadequate at a time when prices are rising faster than most people have ever experienced. An immediate increase in pensions is needed just to keep up with the cost of living. The question of old-age pensions does not seem to give anyone in this Government, nor, I must admit, any member of our Government when we were in power, sleepless nights.
Mr. Arthur Lewis: That is not true.
Dr. Miller: I doubt whether my hon. Friend could consider himself a member of the Government.
Mr. Lewis: I agree. I said that that was not true because the Government have been persistently trying, week after week after week, to get one man a £1,000-a-year increase in pension, so they are really concerned.
Dr. Miller: I do not think that the matter has given them sleepless nights. In any case, I am concerned about a whole range of pensioners—
Mr. Lewis: So am I.
Dr. Miller: —who do not belong to the elite section of the public to which my hon. Friend refers.
On page 25 of last year's Annual Report of the Department of Health and

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Social Security there is the bald statement that:
"Local health and welfare authorities were reminded of the recurring risk which hypothermia presents to the very young and to the elderly."
This is the point:
"They were advised that appropriate staff should be equipped with low-reading thermometers and should be aware of the principles of preventive action which offer the main hope of success in combating the dangers of hypothermia."
But it is not low-reading thermometers they want to be equipped with but food, clothing and fuel for the elderly to keep them going, particularly during the winter months.
The present pension is totally inadequate and it is time that the Government —and we have to be satisfied with the only Government we have—turned their minds to a realistic scheme. The pension by any standard should be at least £8 per week, and I shudder to think how far we are away from that level judging by the attitude of hon. Members opposite tonight. A Fabian tract in September, 1899, said:
"For many years attempts have been made by politicians and social reformers in England to devise a practicable system of Old Age Pensions. Controversy has raged so destructively around every scheme proposed that there is some danger of the public coming to regard the subject with the indifference of despair."
There is little difference in the situation today. The tract went on:
"But while England has been talking, New Zealand has been doing."
New Zealand at that time passed an Act giving every man and woman, married or single, over the age of 65 a pension of almost 1s. a day—and 1s. a day in 1899 was worth perhaps 20s. a day in modern terms.
I turn now to the National Health Service aspects of the White Paper. This is an area where the backwoodsmen opposite are dying to have a go. An article in the Daily Telegraph of 18th January, headed "Why not a Tory health service?" said:
The philosophy of Selsdon Man provides … a concept: both individuals and companies must take more responsibility for their own actions—that is the essence of the Tory creed."
That is echoed by some of the reactionary members of my own profession.
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The National Health Service needs more money, Forty-five per cent. of our hospitals were built before 1891 and 25 per cent. before 1861. We could, for example, make better use, I believe, of our family practitioner service. I believe there could be greater cost effectiveness here. The family doctor should be doing the work for which he is trained, leaving other duties to those who have different although important qualifications.
I want to conclude with two suggestions whereby money could be transferred from one section of the National Health Service to another. The drug bill at the moment is running at about £180 million to £185 million a year. In looking at the cost of prescribing and the vast number of proprietary medicines which are prescribed, I believe that I could produce a scheme to save at least £50 million a year on prescriptions. This could well be used for the erection of more hospitals for the sick and mentally sick. One of my hon. Friends mentioned this evening the tragedy of the inadequate housing for the treatment of the mentally sick.
Another step which would save a considerable amount of money in the Health Service relates to the £400 million paid out in sickness benefit. Here I accuse members of my own profession. I do not think medical practitioners are playing the game over medical certification. The Government could save anything up to £100 million per year, if they would agree to certification being taken out of the hands of medical practitioners after, say, a week and being passed over to an independent panel.
There are many other aspects of the White Paper I would have liked to have alluded to had there been time. One I must briefly mention—housing. We are used to hearing promises by hon. and right hon. Gentlemen on the other side—and this White Paper is no exception—on the necessity to demolish the slums. That is to talk about the obvious. In my constituency, and in the city of Glasgow in general, we are not eager to anticipate the kind of changes which the hon. Member for Paddington, South (Mr. Scott) spoke of as being beneficial; we do not anticipate them with any eagerness at all. I do not think there will be any improvement on the present system. The demolition of slums and the construction of dwellings is a national problem which

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is worth more than a mere mention in the White Paper. All we have had from the Secretary of State for Scotland so far is the sale of municipal houses. It does not add a single house to the pool.
The people of Scotland have already shown and continue to show what they think of Tory policies. I suggest that it will not be very long before the rest of the United Kingdom will follow suit.
12.2 a.m.
Mr. Joel Barnett: We have had today a much fuller and better debate than we have had on many occasions on the Budget. I hope I shall be forgiven if I say that some of the contributions from this side of the House have been much better than those from the other side, starting with the very first one. There was an exception, namely, the hon. Member for Kensington, South (Sir B. Rhys Williams), whose speech was a most remarkable one. In all sincerity, I thought it was an excellent speech, which I hope to refer to again in a moment.
Plowden has been mentioned as being the father and mother of these debates, and I quote an extract from that Committee's Report:
"The best system and the most up-to-date techniques of planning public expenditure will succeed only if public opinion is actively stimulated and enabled to take a balanced view of the alternative uses of national resources that are posed."
The publication of last year's White Paper and this year's, with the debates and the setting up of the Select Committee on Expenditure, are certainly great steps forward, and I congratulate the Government on making a move in this direction together with the firm promise by the Leader of the House that we shall have two full days' debate in the future. But we really do delude ourselves if we imagine that public opinion is actively stimulated. The contrast with public interest in the Budget is very marked indeed, and I can only hope that there will come a time when these debates will provide as much interest among the public as do Budget debates. But we must not delude ourselves: we have not as yet got to that situation. It will help when we have longer debates and when they are based on first-class reports from sub-committees of the Public Expenditure Committee.
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We shall need much more honest White Papers than the one we are debating. In their obsession to show that they are cutting public expenditure, the Government have fiddled the figures and deliberately confused the picture by fictitious savings. As the hon. Member for South Angus (Mr. Bruce-Gardyne) pointed out, there are no real cuts at all.
The Government have adopted five methods. First, as Godley and Taylor in their article in The Times of 17th February said, the Government are talking about public expenditure growing at the rate of about 2½ per cent., when the real resources of public expenditure are growing at about 4 per cent. plus. Secondly, by transferring payments, they are counting as cuts the maintenance of the same or higher public expenditure. The third method is the use of pure bookkeeping entries. The fourth method is incorporating dubious assumptions and deliberately hiding other assumptions.
Mr. John Roper: Does not my hon. Friend also agree that the change in Table A.6 of the relative price effect from 0·6 to 0·8 has made an additional £80 million apparent saving?
Mr. Barnett: I am obliged to my hon. Friend. I was coming to the relative price changes referred to in the White Paper. The fifth method, the major omission of receipts and growth projection, has been referred to by many hon. Members.
Taking, first, resources, the authors of The Times article does not show how their calculation has been made, but it is about 4 per cent. plus. The Chief Secretary tried to answer this argument, but even his best friend would have difficulty in accepting that he had done so. The Chief Secretary appeared to be saying that after 1972–73 the White Paper figures are meaningless. As my right hon. Friend the Member for Battersea, North (Mr. Jay) pointed out, if the Government do not believe their own figures after 1972–73 it might be as well not to publish them.
If resources are growing at 4 per cent. plus, I do not object, because to safeguard the future we need to spend an ever-increasing proportion of real resources on roads, slums, education, police, prisons, research and investment in the

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basic industries. The only cut in public expenditure to be suggested by hon. Gentlemen on the Government benches was a cut in education. I doubt if many hon. Members on either side of the House would agree with the hon. Member for South Angus on that. There was also a suggestion that the number of civil servants should be cut.
If we wish to safeguard the living standard of the old-age pensioners, who will grow in number to about 8 million, and the millions of less well off, more money will be needed for social security. If we genuinely want more open discussion, the public must be made aware of the allocation of real resources. The Government owe it to the House to say more clearly than the Chief Secretary did whether or not they agree with The Times article, which contained a serious analysis, and the Government cannot shrug it off in the way the Chief Secretary did.
Secondly, I come to the question of the cuts or so called transfer payments referred to so eloquently by the hon. Member for Kensington, South—or, as he called it, Government interference. I thought the hon. Gentleman put it extremely well. He seemed almost to be taking the place of that well-loved hon. Friend of his who used to speak frequently late at night, John Smith, who amused us no end in many a financial debate. I look forward with great interest to hearing the hon. Gentleman again.
The hon. Gentleman emphasised very clearly the question of cuts transfer payments, in relation to family allowances and pensions. It is important that we should expose the first part of the White Paper which refers to allowing individuals to keep more of what they earn for the nonsense that it is. It would only be true if, as was said by my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), the transfer from agricultural subsidies results in people eating less. It is possible that some people might benefit from eating less—I am sure the Chancellor does not need that form of diet, though there are others who might benefit from it. But if this is what the Government is saying, then they ought clearly to say so. It
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would only be true if the transfer by way of a cut in subsidy were to result in less housing, overcrowding and people having to live in slums.
It would only be true if the transfer of a tiny part of Health Service costs from the taxpayer to the point of sickness were to result in a real saving of money spent on drugs, spectacles and teeth. It may be that a little would be saved, but any saving is most likely to result in a detrimental effect on health. It will prove a further economic burden as well in terms of number of days lost through sickness, as well as in the number of extra days people need to spend in hospital through delaying a visit to the doctor.
It would only be true if transfer of payment for school meals and milk from tax to parents results in less being eaten and drunk. It may be our children eat too well, but if that is what the Government believe then they should say so. I have never heard them say it. Again, it would only be true if the transfer from investment grants to tax reductions results in a drop in industrial investment. Tragically, it looks as though that is happening. In 1971 the Government's own figures show a decline in industrial investment of some 2 per cent. Is this what the Government want?
I have said—and the Chief Secretary was kind enough to quote me—that there is a case for looking at grants; but the hon. Gentleman should have gone on to quote me at rather greater length. He would have found that what I was saying was that we should be more discriminatory in the matter of grants. I was not suggesting that we should revert to what the present Government are suggesting.
I hope that the Financial Secretary intends to reply to the point made by my right hon. Friend for Birkenhead (Mr. Dell) about the development areas. Which Minister will he repudiate this evening? Are the Government to spend more or less in those areas?
The hon. Members for Paddington, South (Mr. Scott) and St. Marylebone (Mr. Kenneth Baker) referred to capital expenditure in nationalised industries, and the need for a transfer of expenditure from the public sector to the private sector. Even if this were to happen, this would not be a cut in the real resources of the nation unless there were less spent. It is

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confusing and misleading to suggest that there is a real cut in national resources it the payments for basic industries are made by the private sector as opposed to the public sector. It does not affect anything, unless it is being argued that the financial discipline of the market—and after Rolls-Royce, I would have thought that we would perhaps hear a little less about the financial discipline of the market—
Mr. Kenneth Baker: I think that the hon. Member has misunderstood the case put by myself and my hon. Friend the Member for Paddington, South (Mr. Scott). It is simply that if the capital requirements of nationalised industries, or some of the capital requirements of some of them, are to be gathered from the private sector, there is a choice in the private sector as to whether the investor should invest in more telecommunications, more aeroplanes or whatever it might be. This choice is at present missing. I agree entirely with the hon. Member that one does not increase the total amount of investment, but one subjects the investment in the public sector to more rigorous scrutiny because one asks the investor to get out his cheque book and write out a cheque for it.
Mr. Barnett: I do not wish to delay the House, because what the hon. Member has said is precisely what I was saying: one makes no real cut in resources unless one cuts either the capital expenditure in the nationalised industry that is taken over or some other public expenditure. That was the point that I was making, and the hon. Member has confirmed it.
Thirdly, I come to the bookkeeping element to which my hon. and learned Friend the Member for Lincoln (Mr. Taverne) referred, the question of the shortfall. It is ludicrous to say that one has, for example, in 1971–72, £100 million that might not be spent and, therefore, this is a cut and part of the £1,500 million cut in public expenditure.
Mr. Kenneth Baker: This is in the White Paper produced by the hon. Gentleman's Government.
Mr. Barnett: We are talking about the present one. To suggest that that bookkeeping item, which is highly speculative in nature at the least in view of the various Supplementary Estimates that we
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get from time to time, should be incorporated in a cut—
Mr. Kenneth Baker rose
Mr. Barnett: I cannot give way again; I must get on.
There is another bookkeeping item on debt interest. From a quick glance at debt interest, one would imagine that the total interest is intended to fall. This is again a cut or saving. Of course, there is no such cut. The only way in which there would be a cut would be if inflation grew at an even faster pace. In the White Paper, the amount of debt interest as a proportion is shown to be falling. The only way that it would fall even faster would be if inflation grew even faster.
Then, one has the relative price adjustments to which my hon. and learned Friend referred. Clearly, this is a useful thing to have so that one can make comparisons. If, however, one looks at paragraphs 4 to 8 on page 69 on methodology, one sees that, to say the least, it would be pure luck if it turned out to be without substantial error at the end of four or five years. Having incorporated these figures, to say at the end of the day that in five years' time one has particular cuts or savings is, again, purely bookkeeping.
I come, therefore, to my fourth point concerning the assumptions. One of the biggest is the Contingency Reserve. In 1971–72 this is taken at £125 million. In about three weeks, since publication of the White Paper to today, we already know of some considerable commitments that are likely to fall on the Contingency Reserve for this year, let alone for 1971–72 and later years.
We know, for example, that the Treasury was very kind to the Minister of Aviation Supply and allowed him a Bill on Rolls-Royce purchase of quite unprecedented nature whereby the Minister is empowered to spend literally anything. Indeed, as the Under-Secretary said in replying to the debate on Rolls-Royce, if, for example, an American company decides to make a bid, the Minister will simply top it. People in the Treasury must, therefore, be very worried. I should be very surprised if they were not.
We have also heard, again during the last two or three weeks, that the Govern-

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ment are giving a further £4 million to Yarrow. I do not complain. I am merely pointing out other items that would come on the Contingency Reserve. I.T.V. is being given a £10 million cut in its levy. There will be a very considerable increase in the fuel bill, as we see from the new negotiated settlement of the petroleum companies. We shall be giving an extra £25 million to the development areas —if it ever gets there.
Hon. Members: £10 million.
Mr. Barnett: I missed that. It has been reduced from £25 million to £10 million in a couple of days. Possibly it will be increased in another couple of days.
In less than three weeks since the publication of the White Paper it is almost out of date before the ink is dry. That is within less than three weeks, so what on earth we can expect in four or five years one shudders to think, especially if ministers concerned with aviation supply have anything to do with it.
I should like to refer to other assumptions in the White Paper. First, redundancy payments and unemployment benefits are estimated to reduce after 1971–72, and they are broadly the same for 1971–72 as for 1970–71. That is very interesting. It is estimated that there will be no increase in redundancy payments and unemployment benefits in 1971–72 despite the fact that we now have 721,000 unemployed and very responsible people making assessments that, tragically, we could reach one million unemployed by the end of the year. Yet it is estimated in the Government's White Paper that there will be no increase in redundancy payments and unemployment benefits. Is the Financial Secretary proposing to reduce them or how will he meet this target in the White Paper?
If it is suggested, as it is at paragraph 10 on page 24, that there will be "increased industrial activity" after 1971–72, with this level of unemployment why is he waiting until after 1971–72? Why is he deliberately leaving this level of unemployment in 1971–72? Perhaps he will tell us exactly what he proposes to do, or will he sit and leave that level of unemployment to rise consistently throughout this year?
I was extremely disappointed about retirement pensions and social security
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benefits. These are taken on existing benefit levels. At paragraph 6 on page 40 of the White Paper the Government are committed to "maintain at least their purchasing power". If that "at least" means anything at all and is not a cynical abuse of the words, it means that the Government hope to improve on existing benefit levels at some time during the next four or five years. If the increase comes, presumably there would be a further charge on the Contingency Fund. I would have no objection to that, but I would be interested to know the Government's intentions about this subject.
Incidentally, it is interesting to note that on the family income supplement, of which the Government made so much, the total expenditure catered for here is £7 million, out of a total expenditure of £4,200 million. In debates on the family income supplement we were told that there would be a much greater take-up of this benefit, but in the White Paper it is left consistently at the same £7 million.
On the subject of health and welfare, this expenditure, and other expenditure not directly under Government control, must be suspect. The hon. Member for St. Marylebone said that it is imprecise. The Government's policy of reducing financial assistance to local government must seriously affect what councils will be prepared to spend when they are under great pressure. They will try very hard to avoid some of the consequences of Government action. Yet 1972–73, shows a £110 million increase over 1971–72. I ask the Financial Secretary to confirm that this is based on plans before the recent Government statement, or is he assuming that, with new councils to be elected in 1974, the old ones will use all the reserves and leave the kitty bare for the new councils taking over?
On pay, will the hon. Gentleman confirm that he is assuming that there are to be no real increases on existing levels for low-paid workers in the Health Service, local government, police, prisons, teachers and so on, and no change in differentials in the whole of the next five years? One is aware of the difficulties here, of course, but could it be that it is intended to change these through the tax system? The only changes through the tax system that the Government are proposing would hurt those very people more than any others.

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Then, in housing and agriculture, there are savings of £150 million each, it is said. Is it assumed that there will be nothing for increased social security? From where will they get this £300 million, if they do not intend to increase social security contributions to those worst affected?
In defence, to talk about a £132 million saving by 1974–75 and, especially after listening to the Chief Secretary, to claim that we shall have this saving in four to five years is tempting providence, to say the least. Is it pretended that we shall be saving this money on defence while increasing our commitments in the Far East, which, in effect, is either to risk our troops without adequate reserves, or to insult the intelligence of the nation?
I come finally to growth and receipts, the biggest omission of all. The Government must give us a very much better explanation than anything that we have had so far. As my hon. Friend the Member for Ashfield (Mr. Marquand) said, the Treasury must have these figures. They must have made a projection. Why are they being so coy? Why do not they give it to the House? It is a far from adequate reason to suggest, as the Chief Secretary seemed to suggest, that the reason why he is not giving us the figures is that they might be wrong. Because that is the only conclusion to which we can come. He is not giving them to us because they might not be right or because they are uncertain. The figures of expenditure are somewhat uncertain, and, according to the Chief Secretary, for 1973–74 and 1974–75 they are not only uncertain but positively meaningless. Or is it, as my hon. Friend the Member for Berwick and East Lothian said, that there is implied in the figures or lack of them a need for tax increases in the next four Budgets, and that the position is so gloomy that the Government are not prepared to let us see them?
If that is not the reason, we need better reasons than we have had so far. Without the figures, it is impossible to have a proper public debate about the priorities, about the proportion of the gross national product which will be allocated between public expenditure, private expenditure and industrial investment. Is it that the Government intend industrial investment to continue falling so as to allow private consumption to
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grow and public expenditure to run at the level forecast in the White Paper? The fall in industrial investment is once again laying the foundation for many years ahead for the lowest possible growth that we could have ever had. If that is not what the Government are doing, are they planning a low level of personal consumption? There is a strong case for it, but that is hardly the aim that the Government are said to be pursuing.
I come back to Plowden in the end, and the need to enable public opinion to take a balanced view. Not only is this not being done in the White Paper. The picture is being deliberately distorted. In the interests of genuine public debate and the more open style of Government about which we have heard so much, I hope that future White Papers will be very much more forthcoming.
12.30 a.m.
The Financial Secretary to the Treasury (Mr. Patrick Jenkin): The hon. Member for Heywood and Royton (Mr. Barnett) and I debated last year's White Paper, and I am sure that the hon. Gentleman remarked, as I have, not only similarities, but the differences.
One similarity which I have noted, having heard the hon. Gentleman's speech, is that he has managed on both occasions to deliver himself of some very stringent criticisms of the White Paper and of the Government. Governments may come and go; White Papers may come from Governments of either party; but the hon. Gentleman is constant. Indeed, he makes a virtue of his consistency by making plain his dislike of both Governments and White Papers.
On this occasion I think that the hon. Gentleman was a little less than fair. After all, as my hon. Friend the Chief Secretary pointed out, we have now done two or three of the things which the hon. Gentleman criticised so fiercely in last year's White Paper—notably in relation to R.E.P. and investment grants.
One difference which I am sure everyone has noticed is that last year our predecessors had not decided what to do about the recommendation of the Procedure Committee for a Select Committee on Expenditure. As a result, the debate was described by the late Iain

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Macleod as "a trifle unreal", and he said:
"… this bridge for the moment leads nowhere."—[OFFICIAL REPORT, 21st January, 1970; Vol. 794, c. 537.]
This debate has been conducted, as many hon. Members have recognised, in the context of the existence of a very strong Select Committee which is already at work. I should like to add my congratulations to my right hon. Friend the Member for Taunton (Mr. du Cann). As the Procedure Committee envisaged, and as the Government and the House intend, debates on future White Papers will be illuminated by what I have no doubt will be the trenchant and informative reports of the Select Committee on Expenditure. I argued in favour of this idea last year mainly on the ground that if the House of Commons is to influence the development of public expenditure, there must be the opportunity to probe and to challenge the assumptions and the details more effectively than can be done in a debate such as we have had this evening or at Question Time. I am no less sure of that this year.
It is no criticism of hon. Members or of the exceptionally able team of officials who advise us in these matters that neither the Treasury the House of Commons, nor the Government, has the monopoly of wisdom in these matters. Ministers certainly cannot claim that they have nothing to learn from the House. I believe that by coming down in favour of the Select Committee we are embarking on a reform which will do more to redress the balance between the Government and the House of Commons than anything which has happened for many years.
I turn now to answer some of the points which have been raised in the debate. They fall broadly under two heads. There have been comments and criticisms of the methodology of the presentation of the White Paper—I shall have a certain amount to say about that —and a number of arguments about the substances of the decisions embodied in its tables and paragraphs. I shall deal with them in that order.
I think it is right to avoid being drawn into arguments about the choice of priorities. This seems essentially a matter which should go to the Select
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Committee. I could defend the Government's choice of priorities and give details, but I think that would be a misuse of the limited time left. Therefore, I hope that the hon. Member for Cornwall, North (Mr. Pardoe), my hon. Friend for South Angus (Mr. Bruce-Gardyne), the right hon. Member for Battersea, North (Mr. Jay), and the hon. Member for Glasgow, Kelvingrove (Dr. Miller) will forgive me if I do not follow them on the priorites which they argued.
A number of hon. Gentlemen opposite have used some strong language about the presentation of this White Paper. The hon. and learned Member for Lincoln (Mr. Taverne) called it phoney; the hon. Member for Ashfield (Mr. Marquand) described it as deceitful and engaging in statistical subterfuges; and the hon. Member for Heywood and Roytion referred to it as dishonest and embodying dubious assumptions.
I refer hon. Gentlemen to the first sentence of a leading article which appeared in a paper not normally friendly to the Government—namely, The Guardian—in which the editor said:
"The main thing to be said in favour of the new White Paper on Public Spending is that is it scrupulously honest and detailed."
I believe that, coming from that source, it is an argument to which hon. Members opposite should pay some attention, instead of flinging these accusations of ill-faith—
Mr. Barnett: A selective quotation.
Mr. Jenkin: The hon. Member says that it is selective. It is the very first sentence in the leading article. I am entitled to select it.
I now come to some of the detailed criticisms made by hon. Members. My hon. Friend the Member for South Angus asked about Concorde. I can assure him that provision for the expenditure appears as the note in paragraph 7, on page 24 of the White Paper. It is included under the heading of Ministry of Aviation Supply.
Mr. Roper: In the period 1974–75 the expenditure on aircraft supply falls surprisingly to £33 million. What is happening to Concorde then?
Mr. Jenkin: That is exactly the sort of point that should be properly probed

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in the Select Committee. All the expenditure for which the Government are now making provision is in the White Paper. There is nothing else outside it.
The hon. Member for Berwick and East Lothian (Mr. Mackintosh) made a point about the share of Scottish expenditure as shown in the White Paper. He drew drastically the wrong conclusion. The table on Scottish expenditure includes nothing either for the relative price effect or the contingency reserve. If the proper adjustments were made to that table—and they do not appear in any other table in Part 2—it would be shown that, far from expenditure on Scotland growing more slowly, it is growing considerably more rapidly than expenditure for the country as a whole. I am informed that it is growing nearly twice as fast. I hope that the hon. Member will accept that.
Mr. Douglas: The figures for Scottish housing show a remarkable stability, which is indicative of a cut-back in capital expenditure by Scottish local authorities.
Mr. Jenkin: The figures for housing throughout the country show a remarkable stability. The figure of 0·4 per cent. was quoted. This is a classic example of a case where we have had an indiscriminate subsidy. Both my right hon. Friend the Secretary of State for the Environment and my right hon. Friend the Secretary of State for Scotland have made it clear that we propose major changes in this field.
My hon. Friend the Member for Paddington, South (Mr. Scott) asked a number of questions about the relative price effect. I hope that he will forgive me if I do not explain at this hour an immensely complex and sophisticated statistical device. I refer him to Note (l), on page 66 of the White Paper, which shows that the variation is about one-tenth of 1 per cent. as between the successive White Papers that we had last year—Cmnd. 4234, Cmnd. 4515, and this one, Cmnd. 4578.
The hon. Member for Heywood and Royton asked about pay increases in local government. That is exactly the sort of thing that is taken account of in both the constant price adjustment and the relative price effect. The relative
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price effect is not automatically proportionately divided between the various heads; it is divided relative to demand on expenditure that is rising faster than the general price level under the different heads of expenditure.
Like other hon. Members, I greatly enjoyed the agreeable speech of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams). Even if the case for his reform of our social security system gains little in persuasiveness with repetition, he always manages to be engaging and provocative. On the treatment of transfer payments generally in the White Paper, I understand the intellectual case that he makes, but I see great difficulties in divorcing transfer payments—especially of the sort that are benefits in kind—from parliamentary scrutiny.
The right hon. Member for Birkenhead (Mr. Dell) asked a number of detailed questions which I shall try to deal with as briefly as possible. I want to concentrate on some of the major issues raised by the White Paper. I would ask him to believe that, whereas it is not possible to give estimates of the amount of total assistance which will go to the development areas, it is possible—this is what the Government have consistently done—to give the relative value of the assistance as differentiated from the rest of the country. This is why we have consistently given figures in that form.
On the question about the Local Employment Acts, the increase between now and 1974–75, £29 million, is identical with the increase in the previous five years from 1964–65 to 1969–70, and this latest increase is on top of the increases in the earlier period.
As to whether the £10 million announced by the Chancellor on Thursday raises the special development areas to have the same relative advantages as the development areas did before 27th October, this is exactly as my first answer said; one cannot state this because it depends entirely on the nature of the take-up by industry in these areas and the division of their expenditure between, say, buildings and plant and operational expenses—
Mr. Dell: If one cannot state it, why did the Prime Minister state it on Thursday and why did he repeat it today?
Mr. Jenkin: I was not here today and did not hear what my right hon. Friend said, but I was present on Thursday and heard what he said then, and that is what I said to the right hon. Gentleman a moment ago. It is possible to give the relative value of the various incentives which are available to measure the differential in attractiveness between investment in special development areas and the rest of the country.
On the question of methodology, I come immediately to the major point of complaint, namely, the absence of projections of revenue. I welcome the greeting which has been given to the improvements and advances which have been made in this White Paper, in particular the allocation of the relative price effect among the individual programmes, and also the greater detail for the last two years compared with what was in the White Paper last year. The Government believe that this greater detail will assist the process of scrutiny and discussion in the Select Committee. But with regard to the criticism as to why we have dropped the projections of revenue, hon. Members opposite were unfair to my right hon. Friend. I can assure the House that we have left these out not from any desire to conceal anything but simply in order to avoid misleading.
I have gained the impression from some of the speeches of hon. Members opposite that they believe that any figures are better than no figures. I believe this to be profoundly mistaken. Figures which mislead are worse than useless because they are positively mischievous and if that would be the result of including some estimate on some assumptions here, I think that it is better for the sake of us all that the figures do not appear.
I would justify not repeating last year's experiment this year on two broad grounds—one based on the practicality of it and the other on the relevance of the Government's whole approach.
In the present circumstances it must be doubtful whether these projections are practicable in the sense that they would convey useful information. Any such estimates must be based on assumptions about the growth of incomes, level of profits, trends in world trade, the rates of saving and investment and so on, and there is always a very wide range of possibilities. It must be very much wider
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when one is facing a period, as at present, of very rapid inflation, much more rapid than for many years past—and certainly much more rapid now than when last year's White Paper was prepared.
Further, in order to interpret these projections, the House would need to know the assumptions upon which they were based. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) last year did not publish the assumptions upon which his projections of revenue were based, no doubt for the same very good reasons which would inhibit my right hon. Friend from publishing the assumptions this year. The White Paper is not an economic assessment. As the right hon. Gentleman said in last year's debate, estimates of revenue in the absence of any such projections have little meaning. Certainly, taking up the point made by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), any assumptions which he made last year have been wholly falsified in the event. It is extremely difficult even to compare what has happened with what was then projected. It is impossible to disentangle the consequences of the 1970 Budget from the effects of inflation, the wages explosion, the movement of savings and so on. The Government have therefore concluded that in the circumstances, when economic forecasting is surrounded with so much greater uncertainty than usual. any projection would be much more likely to mislead than to inform.
The second reason makes it rather less relevant than it was last year to include a revenue projection. It arises from the basic difference in approach of the Government compared with that of their predecessors. The Labour Government's White Paper—I quote the right hon. Member for Stechford—related
"the growth of public expenditure broadly to the expected growth of the nation's resources".
He described that as
"the central message of the White Paper". —[OFFICIAL REPORT, 21st January, 1970; Vol. 794. c. 526.]
Of course, in those circumstances it was essential that the right hon. Gentleman should produce a view of the growth of the G.N.P. and that he should demonstrate that public expenditure would not pre-empt an ever-increasing share of the G.N.P., as had happened so disastrously in the earlier Callaghan years. Therefore, the projections of revenue served a

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vital purpose to his whole central message. It is, however, noteworthy that in the course of the whole of the two days of that debate only one hon. or right hon. Gentleman referred to Table 1.2 in last year's White Paper, and that was the right hon. Member for Stechford himself. No one else so much as mentioned it.
Mr. Barnett: Does the hon. Gentleman intend to let us know the ratio of public expenditure to growth that the Government are considering or will he leave that entirely on one side?
Mr. Jenkin: The hon. Member has anticipated the very next point that I intended to make.
Our approach is quite different. Instead of pre-empting for public expenditure as big a slice of the national product as we think we can get away with, we start at the other end; we aim to do in the public sector only those things which can appropriately or conveniently be done in the public sector. We have embarked on a major and continuing review of public expenditure programmes as part of a general policy of making room for tax cuts and creating incentives for higher growth. We have not tried to set precise growth targets, but we have drawn up programmes for public expenditure which will grow overall significantly more slowly than the underlying growth, the rate of growth, of productive potential.
Mr. Taverne: The hon. Member says that we first start with certain public expenditure and then see what growth we can achieve. Does that mean that if growth is extremely disappointing, well below the growth of public expenditure, the balance will be unchanged?
Mr. Jenkin: The hon. and learned Gentleman is not entitled to make any such assumption. Looking at the programmes of public expenditure which we inherited, it was clearly right to reduce them to a level substantially below what they were before, in accordance with the general philosophy which I have just outlined. In those circumstances, revenue projections, though maybe of interest, have much less importance, and given, as I said, that they are bound to be based on arbitrary and uncertain assumptions, on balance we have thought it better to omit them.
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I must come to the major points which have been raised in the debate and I will try to deal with them as swiftly as I can. They arise out of the two fascinating articles by Godley and Taylor, who put forward—and these have been repeated on a number of occasions in the debate—five broad propositions.
The first is that, comparing the growth of public expediture on selected programmes for the last five years with the forecast growth for the next five years, they conclude that the differences are not significant.
Second, dealing with that part of public expenditure represented by the direct purchase of resources, they estimate the growth up to 1974–75 at over 4 per cent. compared, they say, with 3½ per cent. over the last five years.
Third, again on the direct purchase of resources, they claim that the growth in our White Paper is "very similar" to the growth in the previous White Paper.
Fourth, they say that it accounts for a rising share between now and 1974–75.
Fifth—this is their second article—they say that the net burden of taxation will have to move upwards rather than downwards, taking the period as a whole.
I draw straight away a clear distinction between the first four propositions and the last. [Laughter.] Yes, the first four derive from a study of the White Paper, with other projections of their own for later years for which the figures are not given, but the last proposition the prospects for taxation, as one would expect from an economist of the reputation of Mr. Godley, is based, as it must be, on a whole series of forecasts going far wider than anything contained in the White Paper, including growth, balance of payments, private investment, savings, and so on.
It is right to point this out since some commentators have sought to draw the same conclusion purely from the first four propositions. Anyone who knows anything about this highly technical and difficult subject knows that that is nonsense. Such a proposition simply does not stand up to scrutiny, and I am glad to have the assent of the hon. Member for Farnworth (Mr. Roper) in that.
In last year's debate, the right hon. Gentleman the Member for Stechford made abundantly clear that it is not within the scope of the White Paper on

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Public Expenditure to deal with such things. Therefore, although this is an interesting and sophisticated analysis, its conclusions are based upon a number of speculative assumptions, each subject to wide margins of error, and they must themselves be open to considerable doubt. I am sure that the House would not expect a Treasury Minister to go further than that, especially at this time of the year.
I shall deal briefly with the first four propositions. I challenge the implications for the most part, although I do not wholly dispute the figures. The last five years include two post-devaluation years when the Labour Government stringently restrained public expenditure and tried to make up for the appalling ravages of the Callaghan years. Whatever we do, we must make sure that public expenditure grows more evenly; it is ridiculous to have 9 per cent. one year and nil two years later.
Second, under the Labour Government public expenditure was aimed to grow in relation to a National Plan which in the event never materialised, and it was, therefore, accompanied by soaring taxation.
Third, as Mr. Godley himself would be the first to admit, those programmes which he did not examine in his comparison of the two periods, such as agriculture and housing, are those in which the Government's policies will involve significant changes in the rate of growth for the future compared with those in the past five years.
Next, on the question of direct purchase of resources, about which Mr. Godley says that growth would be faster over the next five years than in the last five years, this is simply not a conclusion which can be drawn from our White Paper. In the first place, his estimate of growth over the last five years was understated: in fact, it was much nearer 3¾ per cent. than 3½. Second, the figures on which to base the last two years simply do not appear in the White Paper. Our estimates are not in a form which allows him to judge what the direct purchase of resources will be in those years.
Mr. Roper: Will the hon. Gentleman give way?
Mr. Jenkin: No, I have very little time.
On the third point, that it is the same as in last year's White Paper, again Mr. Godley has not got the information to make that assumption. All I would point out is that, compared with the programmes we inherited, we have cut out over £300 million of direct purchase of resources in 1973–74 and £400 million in 1974–75.
On the fourth point, that growth of direct purchase of resources will be going faster than expenditure generally—my hon. Friend the Member for Horsham (Mr. Hordern) pointed this out—I do not dispute that for a moment. This is entirely consistent with the Government's whole approach to public expenditure. We want to cut down on indiscriminate hand-outs of benefits in favour of more specific and selective help to those in need and increased expenditure on the basic structure of the social services.
What I find surprising is not that anybody should wonder that this is what is happening, because it is exactly what we promised would happen, but that hon. Members cannot bring themselves to acknowledge the common sense and social justice of this approach. It involves, of course, a shift from transfer payments to direct purchase of resources, but this is something which we always recognised would happen.
I therefore say that the Godley paper is making a number of assumptions—I do not say in the least improperly—perfectly properly, but based on information that simply could not have been derived from this White Paper.
Mr. Roper rose—
Mr. Jenkin: No, I am not giving way.
Similar assumptions were made by Chapman Pincher in this morning's Daily Express, and I must mention them for they were referred to by my hon. Friend the Member for St. Ives (Mr. Nott). I must refute a thoroughly misleading article by Mr. Pincher. Mr. Pincher tells us that Treasury officials have told the Government that living costs will rise by 9 per cent. in the coming year and that in consequence growth will be less than 2 per cent. He said that all this came from the Defence White Paper.

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I can tell the House that the article is rubbish. It is founded on fallacious arguments based upon a total misunderstanding of the figures in the defence White Paper. The 9 per cent. figure is, of course, not a projection of increased costs but merely an assumption taken from the increase of costs of the previous year. A figure of 5½ per cent. of the national product is mentioned; but the Defence White Paper specifically said that it was "of the order of" and we put it in because we believed that it would be helpful to hon. Members. However, I am bound to say that if journalists make this sort of use of the figures the Government will have to be more careful about what they publish in this White Paper.
My hon. Friends have mentioned the problem of the future search for savings. I can assure them that we have this very much in mind both in the nationalised industries' sector and in public activities as a whole. As my hon. Friend the Chief Secretary said, in the programme analysis review we are making advances which will give us very much better weapons of control.
The House last year gave a warm welcome if not to the contents at least to the form of the White Paper which the right hon. Member for Birmingham, Stechford, introduced. In the first six months of 1970 expenditure intentions increased substantially and inflation got a fierce grip. The new Government therefore inherited spending programmes rising significantly faster in real terms than those approved by the House last January, and did so at a time when costs were rising faster than for 20 years. In October my right hon. Friend the Chancellor of the Exchequer announced changes which not only reduced the programmes from the levels which we inherited but reduced them below the levels of last year's White Paper. The White Paper which we have debated today fills in the details of the programmes as they now stand.
The Select Committee on Expenditure can be confidently expected to subject the White Paper to a searching and rigorous scrutiny which will be of value to the Government and the House. The Government themselves will maintain a restless search not only for greater cost effectiveness in the public sector but for
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further reductions in the size of the public sector. This is what we promised the country last June, and this is what we are going to carry out.
Question put:—
The House proceeded to a Division.
Mr. More and Mr. Hawkins were appointed Tellers for the Ayes but, no Member being willing to act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.
Resolved,
That this House takes note of the White Paper on Public Expenditure 1969–70 to 1974–75 (Command Paper No. 4578).

ORDERS OF THE DAY

  MR. SPEAKER KING'S RETIREMENT BILL
  Order for Second Reading read.
  1.3 a.m.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): I beg to move, That the Bill be now read a Second time.
  At this hour of the night I must be extremely brief in commending the Bill to the House. I shall be happy to answer any points hon. Members may put if I catch your eye at the end of the debate, Mr. Speaker.
  As I told the House last week when we debated the Financial Resolution, the main object of the Bill is to provide a pension of £5,000 a year to our former Speaker, Dr. King. The figure of £5,000 represents the compromise decided upon by the last Government following upon the publication of the Lawrence Committee's Report. That Committee recommended that the Speaker's pension should be increased from the £4,000 a year at which it had stood ever since 1832 to a figure of £6,000. However, the Government decided that for Ministers' salaries and other comparable payments only half the increase recommended by Lawrence should be paid, and that this should be applied to Mr. Speaker's salary. On the death of Sir Harry Hylton-Foster, his widow was paid a pension based upon a Speaker's pension of £5,000. That is halfway between the £4,000 and £6,000, and the Bill follows that precedent.
  Mr. Speaker King retired on 11 th January and, accordingly, his pension is stated in the Bill to start from 12th January.
  I should perhaps draw attention to the proviso to Clause 1(1), which is in the usual form. It provides that if and so long as Mr. Speaker King holds any Government post with a salary in excess of the pension of £5,000 he loses for that period half his pension. There are various forms of the provision which apply to most public offices, but, curiously enough, that relative to Mr. Speaker is one of the oldest of them all. It is obviously desirable in principle to avoid paying both full pension and full
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  pay simultaneously out of the public purse, and I think that the House will wish to support the provision.
  I have an apology to make to the House in that I inadvertently misled the House on the previous occasion when referring to Mrs. King's position. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) had suggested that the widow's provision, instead of being the one-third that is provided for in the Bill, should be one-half of the husband's pension. The hon. Member for Nottingham, West (Mr. English) supported him and asked whether it would be possible to discuss this matter in Committee. I am afraid that I did not have my wits about me—it was about 10.30 a.m. after an all-night sitting—and I erroneously assured him that we would be able to discuss it in Committee. I ask the House's forgiveness because unless a revised Money Resolution is tabled an Amendment to achieve this purpose would not be in order. However, the Government took careful note of the views expressed, coming as they did from both sides of the House, and we are considering whether it would be right to amend the Bill in this form. If this course seems appropriate—and there are ramifications which we have to consider—then the necessary Money Resolution will be tabled in good time before the Committee stage.
  The proviso to Clause 1 (2) extends to Mrs. King's pension the same conditions as, broadly, already apply to the pensions of widows of Prime Ministers and Lord Chancellors. Subsection (3) charges the pensions on the Consolidated Fund.
  The Bill is a short one but it embodies an expression of gratitude, respect and affection for a man who served this House well and nobly in the most demanding of all rôles, that of Mr. Speaker, and I commend it to the House.
  1.7 a.m.
  Mr. Arthur Lewis: Earlier, I objected to the rule being suspended for this Bill, and still object, because it has meant that we are considering the Second Reading at so late an hour—or, rather, so early an hour in the morning. From the beginning of this matter, the Government have persistently

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  and consistently tried to slip the Bill through at the latest possible time—or, to be more strictly correct, at the earliest possible time after an all-night sitting.
  Indeed, the Financial Secretary now admits that he inadvertently misled the House on a previous occasion because it was after an all-night sitting. This is one of the reasons why I voice my protest against both the Bill and the method the Government have been adopting. The hon. Gentleman wrongly advised the House when the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) wanted, in effect, to increase the amount of money involved. Yet those of us who have been in the House long enough knew that, the Money Resolution having been passed, it was not possible for the Government to increase the amount. If the Government had not—as they have been doing for the last five weeks—been trying to slip the Bill through at an hour designed to avoid free and reasonable discussion, no doubt the right hon. Gentleman, who is conspicuous by his absence, might have been able to get, at a reasonable hour, the Amendment he had in mind.
  Mr. Patrick Jenkin: My right hon. Friend, as one would expect from someone with his background, expressed his apologies to me for his absence tonight, which is due to circumstances beyond his control.
  Mr. Lewis: I am not complaining. I did not ask the right hon. Gentleman to be here. He probably wants to be in bed, as I would have wished to be on so many occasions in the last five weeks. He is not here because he wants to be in another place, and I make no objection. But he could not get his Admendment in during the last debate because the Government had put the matter down for the end of an all-night sitting, just as they have again put it down for debate after a long debate tonight. All I am saying is that the right hon. Gentleman could, as other hon. Members could, have taken part had the debate been earlier, and then, perhaps, he would not have wrongly, and, no doubt, unwittingly, but, nevertheless, deliberately, misquoted me, as he did on the previous occassion, as indeed, did the Minister.
  The Minister said on the previous occasion that I had said that this arose
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  from the Lawrence Committee Report. He told me to check with HANSARD. I checked with HANSARD. I made no reference to its having followed from the Lawrence Report. The Minister has himself this evening, or this morning, said that this derives from the Lawrence Report. In fact, it does not. He went on, having said that it derives from the Lawrence Report, to explain at length that it does not.
  What happened? The hon. Gentleman explained that the Lawrence Committee recommended a £6,000 pension. The Bill says £5,000. I think there is a difference between £5,000 and £6,000. The Minister is right. The Government of that day, with the loyal and active support of the then Opposition, the present Government, supported the Leader of the House and the Prime Minister at that time in reducing the £6,000 to £5,000. The then Opposition, now this Government, supported that Government in saying that the £6,000 should be reduced to £5,000. Why did the then Government suggest that Ministers' salaries and the Speaker's salary and the Speaker's recommended pension, deriving from the original Lawrence Report, should be reduced, the salaries by half, and the pension from £6,000 to £5,000? The answer may be surprising, but the reason was that there was inflation, that prices were rising too high, and it was said that we could not then give such large increases to the Ministers at that time and they would have to wait a bit. It was also said that we could not give the Speaker his £6,000 pension because the time was not opportune: there was inflation.
  I ask the Minister: is he going to tell me that from 1964 to 1971 there was not inflation? If so, that is rather different from what the present Prime Minister and Government say here almost every day of the week. In the previous debate tonight we had an argument whether or not the official estimate in the Defence White Paper of a 9 per cent. inflation in the next year is right. I am not going to argue now whether it is right or not. What I know is that we have had a higher degree of inflation during the past six months than at any time in the history of this country, and this I say from official figures which I have had from the Government themselves. There has been

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  a higher degree of inflation since June of last year through January this year than I or any hon. Member can remember; and it is getting worse, as we know from the Government.
  So we had the original Lawrence recommendation of £6,000 reduced to £5,000 with the active and loyal support of both Government and Opposition, and I am not concerned with the order in which we put them, because it could be either the present Opposition, the former Government, or the present Government, the former Opposition. So both sides quite definitely confirmed that the pension should not have been increased in 1964 because the time was not then opportune and because prices were rising and because of inflation.
  If the Minister is going to tell me now, in 1971, that £4,000 could go up by 25 per cent. to £5,000 because there is no inflation, I will accept that, but let him say the same to the postmen, the power workers and the police, whose increases have been held up because it has been said that to give them increases above the Government's suggested 19 per cent. would be catastrophic and ruinous to the nation.
  Mr. Patrick Jenkin: I want to try to understand the argument, and I will do the hon. Gentleman the credit of assuming that he is putting it forward seriously. He has devoted about five minutes to explaining, perfectly properly, how the £6,000 recommendation of the Lawrence Committee was reduced to £5,000.
  Mr. Lewis: To £4,000.
  Mr. Jenkin: It was reduced to £5,000. It was originally £4,000, Lawrence recommended £6,000 and the Government compromised at £5,000. The hon. Gentleman says that we are proposing to put up the £4,000 to £5,000 and that we should do the same for policemen, postmen and the rest. Obviously, the hon. Gentleman has misquoted himself. Perhaps he would like to put it right.
  Mr. Lewis: I thank the hon. Gentleman for the correction. Dr. King's predecessor received £4,000 and former Prime Ministers and Lord Chancellors are also on a £4,000 pension. The former Prime Ministers Mr. Harold
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  Macmillan and Lord Avon draw pensions of £4,000 a year. I mistakenly said that the Lawrence Committee recommended £6,000 and it was reduced to £4,000. It has been £4,000 and it is now proposed to increase the £4,000 to £5,000. Previous Prime Ministers are entitled to claim £4,000 a year, although my right hon. Friend the Member for Huyton (Mr. Harold Wilson) cannot claim a pension while drawing a salary as Leader of the Opposition.
  Mr. Jenkin: I am now speaking subject to correction, but I believe I am right in saying that when the Government's decision was taken in 1965 to raise the pension of people in this category from £4,000 to £5,000, although that was only half-way to the Lawrence recommendation, it raised the ceiling of previous holders of office. Pensions Increase Acts passed since that date allowed the pensions of former holders of office in receipt of a pension to be increased to £5,000. There is nothing new in the £5,000 figure embodied in the Bill. It is based on exactly the same precedent as the Bill for Lady Hylton-Foster which was introduced by the previous Government in 1965. I hope the hon. Gentleman will accept that.
  Mr. Lewis: The Minister says that he is open to correction. I hope he is, because I was not contradicted when I previously made this point. In answer to Questions I have asked about the pensions of former Prime Ministers and Lord Chancellors I have been told by Treasury spokesmen that they draw £4,000 per annum, and that the Leader of the Opposition cannot draw a pension while receiving a salary.
  I am not concerned with whether or not the Government accepted the whole or part of the recommendations. I am saying that at a time when the Government are saying to hard-working Post Office workers that they cannot have £20 a week for getting up early in the morning six days in the week, they are saying that a man who was in the House and who now is on retirement is to receive £100 a week. That does not seem fair, and, therefore, I am protesting against it.
  The Government are operating with double standards. They are denying £20 a week to those workers, yet are giving

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  £100 a week to a man who was getting the equivalent of £20,000 a year after having been employed for 5½ years.
  Mr. Jenkin: It was a hard stint.
  Mr. Lewis: Yes, it is a hard stint, and there are other right hon. and hon. Members who have done a hard stint for much longer than 5½ years. What does that great noble Lord, Lord Shinwell, who has done 48 years' hard work and endeavour as a Parliamentarian, get by way of pension? Does he get £5,000, £4,000, £3,000 or even £2,000 a year? No. He gets £900 a year, less tax—that is to say, £600 by the time he receives it.
  Dr. King, by being paid £5,000 a year, on the basis of service in the House for 5½ years, is getting the equivalent of £900 per year of service. On the basis of £900 per year for 48 years, for Manny Shinwell the figure would work out at about £47,000 a year in pension. I am sure he would settle for half, if not for a quarter. The Government obviously work on a different system. Assuming they work on a percentage of the last year's earnings, let us say 65 per cent. of salary, the noble Lord, Lord Shinwell, should get 65 per cent. of £3,250, which is about £1,900 a year.
  When we discussed this matter on the last occasion there was no mention of the detailed comparison of Lawrence, and I am glad that it has now been mentioned. Lawrence was an independent review body that was set up to consider salaries and conditions of service of Ministers and Members of Parliament. Included in that review was the Speaker of the House. The Leader of the House has announced that another review body is to be set up to look into the salaries and conditions of service of Members of Parliament, but he has not done much about setting up that review body. He is still talking about it. I have heard whispers that he is to put it off until the autumn. Within a few days of Dr. King's retirement on 11th January the Government got cracking on this matter and were setting the pace, but they are not setting the pace with regard to the others included in that review. As yet, no such announcement has been made.
  If they are trying to invoke Lawrence as a good reason for this, the Govern-
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  ment, to be fair, should recognise that the Lawrence Committee reviewed the salaries of all those people, including Mr. Speaker, and say that they will now have another review body—which they can call Lawrence II or whatever they like—which they will ask to investigate the question again because, when it was considered before, Lawrence investigated not only the salaries of Members of Parliament, Ministers and Mr. Speaker, but their pensions as well. I cannot see why they are waiting.
  Why, therefore, do not the Government say that they now accept part of the Lawrence recommendations which the former Government rejected and ask the House to accept the increase which Lawrence recommended, but which the previous Government accepted only in part, for Ministerial salaries? That would be logical.
  The Government might go further and decide to do something with regard to Members' wives. We have heard how marvellous it is to do something for the next of kin of what I term the pillars of the Establishment, but when it comes to people like the noble Lord, Lord Shin-well, we do not see the same desire to be expeditious in giving the same type of pension to the widows of former Members who have had 48 years' service.
  Sir John Langford-Holt: The hon. Member appears to be arguing that Lawrence was a fair judgment of what Members of Parliament, Ministers and Mr. Speaker should receive. Am I not right in supposing that the hon. Member, like me, receives the salary which was proposed by Lawrence and that all we are being asked to support tonight is a proposal that Mr. Speaker be paid £1,000 a year less than Lawrence proposed?
  Mr. Lewis: The hon. Member has, perhaps, misunderstood the point and I must, therefore, repeat it.
  The Lawrence Committee made recommendations on a number of points. The Government of the day, supported by the Opposition—their positions are now reversed—refused to accept Lawrence in toto and accepted only parts of the recommendations. It is true that one part, which both sides accepted, was the increase in Members' salaries. It was agreed that other parts should be let off

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  because the time was not then opportune, there was inflation and the cost of living was rising. It was suggested that they should be left until later.
  If that was the reason in 1964, it is my belief that there has been a little more inflation since then, and there is more inflation now. The Government have said forcibly—indeed, the Chancellor of the Exchequer said only on Thursday and Friday—how terrible it was. I had brought in aid the question of the postmen, the power workers and others working at the bench, but that was only an introductory remark. I was then going into more detail.
  One of the reasons why, at that time, both sides were not too anxious to do much was that there was a clamour for increases in old-age pensions, which some pensioners eventually got. My hon. Friend the Member for Bolsover (Mr. Skinner), whom I am pleased to see present, has been very active, together with other hon. Members on this side, and the hon. Member for Kensington, South (Sir B. Rhys Williams) and myself, in trying to get increases for old-age pensioners.
  About a fortnight ago this Government, not the previous Government, refused to give old-age pensioners any increase, and said that they could not have any increase in February, March, April, May, June, July, August or September, but that possibly in October, in the autumn, it would be reviewed. Knowing that the cost of living has risen more rapidly during the last six months than at any time in our history, knowing that now the rate of inflation is running at 9 per cent., and knowing that old-age pensioners have suffered and are suffering much more than Mr. Speaker King, and much more than any Minister or any hon. Member, the Government do not say, "We must hurry up and slip a Bill through on the nod." Believe me, Mr. Deputy Speaker, I would not then oppose it. I would not oppose the suspension. I would be here, as I have been for the last four or five weeks to take part in this debate. I would be the first to give it a cheer. I assure the Minister that I would not oppose it. If he wanted it to go through on the nod, provided that the amount was the same, I would let it go through. Most of my hon. Friends would do the same.
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  But the Government have done the reverse of that. They have said, "We will do it for one man but not for the rest of the pensioners." That is not fair play.
  I have accepted the fact that it is wrong and has been wrong to do it. That is why I have opposed it in the past. I opposed all the Speakers pension increases for exactly the same reason. Even on that salary, it is wrong for the Government—I am not the Government, unfortunately—to say that I, as a Member of Parliament, should have the increase, and the Ministers and Mr. Speaker King should have the increase, but not the old-age pensioners. Hence I am saying that they try to slip it through at one, two or three o'clock in the morning, when they hope that there will be no discussion and, as would be the case, that the Press would not get it, and that it will go through and everyone will let it go, and the dear old-age pensioner will know nothing about it.
  Mr. Dennis Skinner: On the subject of old-age pensioners, my hon. Friend ought to point out the fact that the very first time that the Bill was presented to the House was on the same day as we debated old-age pensions, which was Thursday a fortnight ago. Along with my hon. Friend, I objected at that time. An additional point which ought to be made is that since pensions were increased in November, 1969, the purchasing power of that £5 pension for a single person is now down almost to £4—a reduction of more than the amount of the increase at that time.
  Mr. Lewis: I am much obliged to my hon. Friend. I am pleased that he is here. I hope that he can make a speech, because we are unlimited on time for this debate.
  Mr. Skinner: Are we?
  Mr. Lewis: Yes, we can continue as long as we like, as the Government desire it to go on. Who knows? We might be able to keep it going so that when the Minister replies at nine o'clock in the morning he might say again that he has made a mistake because he has made a slip and did not mean to say what he subsequently will say. Let us keep the debate going, until such time as the representatives of some of the morning

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  papers are here to report the facts and figures which the Government seem loth to have reported. By then, it may be that my hon. Friend the Member for Bolsover will catch Mr. Speaker's eye and will be able to cross some of the i's, and dot some of the t's and enlarge upon some of the points that I have not made in sufficient detail.
  The hon. Member for Shrewsbury (Sir J. Langford-Holt) has acused me of making objections. I am not ashamed to say that I have done so consistently. I am pleased in that respect to follow in the footsteps of those whom I regard as being some of the better types of members of the Labour Party. I have in mind, for example, the first Labour Member of Parliament, James Keir Hardie. My hon. Friend will be glad that I mention Keir Hardie, because he was a great miners' leader. It was he who first suggested a reduction in the pension of a former Speaker and opposed the Government's proposal. Keir Hardie sat in this House as the hon Member for West Ham, South, so he and I have a certain affinity.
  Another Labour Member to take a similar line was the official leader of the party, the right hon. J. R. Clynes, and there have been other notable examples. When I am attacked in this House by those who say how wicked I am to be opposed to those whom I term "pillars of the establishment", I say that I am pleased to do it. I prefer to follow in the footsteps of Keir Hardie and J. R. Clynes than those of some others whose names I cannot remember.
  I am not ashamed to say that I intend to debate this proposal thoroughly and put forward logical reasons for not giving this Bill, small though it may be, an unopposed Second Reading.
  Mr. Skinner: My hon. Friend has referred to the possibility of dividing the House on this matter, and he has pointed out that there have been several occasions when that has been done. Perhaps I might refresh his memory. I have reason to believe that there has been an occasion since the war when no fewer than 155 hon. Members on this side of the House have voted against a similar proposal.
  Mr. Lewis: There again, I hope that my hon. Friend will be able to contribute to the debate. Obviously, he has done more research than I have and is in pos-
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  session of a great many facts and figures which will be of interest to the House. I was not aware of that fact, but I am more than willing to accept my hon. Friend's word if he says that as many as 150 hon. Members on this side of the House voted on that occasion. If we can keep the debate going until 9 o'clock, it may be that some of my hon. Friends who, like the right hon. Member for Kingston-upon-Thames preferred their beds will be here to take part and give us their support when we call a Division.
  Mr. Skinner: We shall be in difficulty if our Front Bench does not provide Tellers.
  Mr. Lewis: In any event, we have some supporters coming in later.
  I regret that I was not able to inform the right hon. Member for Kingston-upon-Thames that I intended to refer to him. I spent most of the evening looking for him. I thought that he would have been here. The previous debate was concerned with an important matter. He contributed to the discussion when he debated the matter on an earlier occasion, and I was hoping to see him present tonight. I should like to correct the right hon. Gentleman, because he also said that during the debate I made certain statements. If the right hon. Gentleman refers to HANSARD he will find that he was completely incorrect.
  Turning to the Bill, I should like to ask the Minister a question about Clause 1, which states:
  "Provided that one half of the annuity shall abate and be suspended during any period that the said Right Honourable Horace Maybray King hereafter holds any place, office or employment under Her Majesty of equal or greater amount in salary, profits or emolument than the amount of the annuity."
  I understand that if the Bill goes through Dr. King will get a pension of £5,000 a year. For the benefit of my hon. Friend the Member for Bolsover, that is £100 per week. When my hon. Friend hears arguments about the miners being overpaid at £30 or £40 a week, if they get that much, he might remind people that there is quite a bit of difference between that and a pension of £100 per week after five and a half years. My hon. Friend may have to point out the difference.
  I understand that Dr. King will get £5,000 a year. He could then have a

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  sinecure. Who knows, he might be appointed chairman of the Post Office tribunal. I assume that, provided that he draws £4,500—indeed, £4,900—he can draw that amount plus his £5,000, making £9,900 a year. As my Post Office friends would say, "Not bad if you can get it." That means that Dr. Horace King would then be drawing about £1,000 a year more than he was getting as Speaker.
  This seems a crazy way of looking at economics. I am not an economist. I do not understand economics. However, it seems strange that as Speaker of the House of Commons for five and a half years getting a salary of £8,500 a year, on retirement he should get £5,000 a year pension and a sinecure under the Government at £4,900, making £9,900 a year, all out of the Exchequer, and no one can say a word against him.
  Mr. Skinner: Surely my hon. Friend is not suggesting that ex-Speaker King would ever think of accepting a job as chairman of the Post Office tribunal in view of what happened to its last pay referee?
  Mr. Lewis: My hon. Friend has a very astute mind. I have not given thought to this point, but I can see the working of my hon. Friend's mind. Dr. King obviously would wonder whether he might get the order of the boot before he took on the job. It is a good point, so I must choose another sinecure.
  Instead of that job, Dr. King might take a job as High Commissioner for, say, Australia. My hon. Friend smiles. I hope that he does not think that this is an impossibility. This actually happened. My hon. Friend was not here at the time, but I was. I do not think that the Minister was here at the time either. I am not sure that the Minister is right when he says that this abatement always happens. When the former Speaker Shakespeare Morrison retired and was appointed High Commissioner for Australia, he drew his salary as High Commissioner and his pension. It was only after a scream went up in this House, when there were loud protestations led by my right hon. Friend the Member for Leeds, West (Mr. C. Pannell) that he voluntarily relinquished half his pension. But he still drew the £10,000, and with the other £2,000 he was not too greatly underpaid.
  Mr. Skinner: In reference to the question of ex-Speaker Morrison's salary, I have reason to believe that this was one of the occasions when there was an uproar in the House, but when there was also a vote. Is it not true that as a result the salary was cut to £2,000?
  Mr. Lewis: I am obliged to my hon. Friend. He has refreshed my memody. I have not the photographic memory which some hon. Members have, but I now remember the facts. I have inadvertently misled the House. I told a lie unintentionally. I said that I had never opposed, but I did; I was one of the 150 hon. Members who went into the Division Lobby on that occasion to appose the suggestion that the £4,000 should be pro tanto reduced to £2,000 to allow "Shakespeare" Morrison, as we called him, to have the £10,000 plus the £2,000. But there again, he was receiving about £5,000 a year more after retirement than he had been getting as Speaker.
  I would also point out that this provision is very loose. It provides, in effect, that Speaker King can draw up to—I would say £4,999. He can draw any sum less than £5,000. He can therefore draw £4,999, in addition to his £5,000. A number of sinecures could be offered to him.
  I do not know how this will affect the question of outside earnings. The Clause refers to "employment under Her Majesty". I would have preferred the phrase "State employment". That leads me to mention a case which you, Mr. Deputy Speaker, will remember. I think that you and I are the only two hon. Members in the House who were here at the time. We had a Lord Chancellor who had been called Sir David Maxwell Fyfe when he was in this House.
  For the benefit of my hon. Friend the Member for Bolsover, I should point out that tied up with this the the question of a former Lord Chancellor, who also get a pension of £4,000. The only difference is that if the Lord Chancellor held office for only one day—if he sat on the Woolsack for only one day—and then retired, he would get a pension of £4,000 per year for life. His wife would also receive a part-annuity.
  Reference has been made to the hard work done by these people and the need

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  not to allow them to suffer any hardship. But what happened in the case of Sir David Maxwell Fyfe—Lord Kilmuir as he became when he went to the other place? He left the office of Lord Chancellor and within a few weeks took the chairmanship of Plessey. In fact, I am not sure that he even left, or drew his first pension. From Plessey he received £10,000 or £12,000 a year.
  Again, there was an uproar in the House. People said, "This is a bit much. We have allowed this to go through on the nod. We have listened to the Treasury Bench". It was not the present Treasury Bench, but it was the same Treasury. The same Treasury advisers, with the same sort of Ministers, tried again, to get him his pension. When he took up the chairmanship of Plessey, he voluntarily agreed to give up his pension.
  The Bill says that the pension will be pro tanto reduced below £5,000 in certain circumstances, and I assume that he will be able to draw £4,999 on top of the £5,000 if working for the Government in some State appointment. But this does not preclude any employment which is not State employment. He might be appointed chairman of Plessey, the salary for which has risen to £20,000. I assume that he would still be entitled to his pension.
  Mr. Skinner: Would my hon. Friend consider the possibility that ex-Speaker King might become chairman of the National Coal Board, especially since, from July onwards, we shall be without one? He spoke of £4,999, which would be commensurate with the smaller Coal Board after hiving-off—
  Mr. Jenkin: On a point of order, Mr. Deputy Speaker. It is extremely distasteful, but is it in order that hon. Members should cast these disparaging aspersions on a former holder of the office of Speaker—indeed, the first holder of that office to have come from the Labour Party?
  Mr. Lewis: Further to that point of order. I resent that remark, because Mr. Speaker is not a member of any party. He is an impartial person. Also, I referred to a former Mr. Speaker, not the present one. I would not cast any aspersion on the present holder of that high office.
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): I am afraid that I have to rule that, so far, there is nothing out of order.
  Mr. Lewis: I am obliged. The Minister is getting a little touchy about this. This is not a question of what they might do but of what they have done, and not once but several times. The noble Lord, Lord Robens, for instance, may or may not still be a member of the Labour Party. I am not concerned with what party they belong to but with the principle. I opposed previous Ministers—I wish the Minister would listen—
  Mr. Patrick Jenkin: I am listening to every single word—
  Mr. Deputy Speaker: Order. That is an offensive remark, and I think that the hon. Gentleman should apologise to the Minister forthwith.
  Mr. Lewis: I apologise immediately. I meant not that he should listen but that I wished he would understand. I explained that I was not opposing simply Mr. Speaker King. I opposed Clifton Brown, Shakespeare Morrison and Harry Hylton-Foster. But my opposition was not to any of them personally; it was to the principle.
  I want the Minister to understand that I am not attacking them personally. Keir Hardie and J. R. Clynes opposed Speaker Peel and Speaker Onslow. I was not born then. But my objection today is on the same principle as that which they supported in those days. I hope that the Minister—to whom I apologise —will understand that my remarks are not personal to any occupant of the Chair at the moment or in the past. Unfortunately, I must use names because of the nature of the Bill.
  But Dr. King has always been a good friend of mine—and I hope that he will continue to be a good friend. The Minister gives a cynical chuckle. Ultimately Dr. King will get this money from 12th January. In the early days, when Horace King was first in the House, he supported me, or I supported him, in saying that large sums should not be paid in high pensions until the old-age pensioners had higher pensions. Horace King and two or three others said that they

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  would not accept an increase in Members' salaries until old-age pensioners were given an increase. Afterwards he changed his mind and I believe that he accepted the increase. But I believe that if he were on the back benches tonight, he would be sitting where my hon. Friend the Member for Bolsover is sitting and would be supporting my views.
  Lord Robens was a member of the Labour Party and may still be a member. I single him out not as a member of the Labour Party but as chairman—I think he still is—of a nationalised industry. I want to know whether the Bill will have an unfortunate effect on the Government's policy, explained earlier by the Financial Secretary, to cut public expenditure. Lord Robens is to retire from the Coal Board, and to take up two part-time jobs each of £10,000 a year. But he has given notice that he wants a pension from the Coal Board. If the Bill is passed. Dr. King will get, in round figures, £1,000 a year for each year of service. Will my old friend Lord Alf Robens be able to say, "I have done 10 years' service at £20,000 a year and, therefore, I want a pension of £10,000 a year"? Will the Minister give an assurance that this will not be used as an argument for giving a £10,000-a-year pension to Lord Robens?
  The same argument could be used in regard to the former chairman of the Post Office Corporation. He might call the Bill in aid and say, "I have been promised a £76,000 'golden handshake'. It has not come yet. You have now agreed to a £5,000-a-year pension for the former Speaker. I claim my right to a pension of £5,000".
  If the Government's argument stands up at all, it can be used to justify other claims on the same basis. But this is a Government which have been battling against the lower-paid, picking out, in the main, the poorer people in the lower working grades in our nationalised industries. When these workers see that others have had an increase, and they ask for fair and equivalent treatment, the Government refuse to accept any relationship between, say, the power workers and the Post Office workers. "Although someone else has had X shillings", they say, "you cannot classify yourself on the same basis."
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  I have referred to Lord Robens and Lord Hall. Lord Melchett, I understand, is to be the next. I see that my hon. Friend pulls a face at that. He does not know that Lord Melchett is for the high jump.
  Mr. Skinner: I knew that Lord Melchett was very much in dispute with certain aspects of Government policy, especially with regard to the hiving-off of the special steels division, but I was not aware that it had got that far and that Lord Melchett was on the point of retiring or being thrown out.
  Mr. Lewis: My hon. Friend should keep his ears open, and probably to the ground. I heard a leak—
  Mr. Deputy Speaker: Order. This will not quite do. We are going into too much detail on matters not directly related to the Bill. I must ask the hon. Gentleman to come back to the Bill.
  Mr. Lewis: I am explaining that there is good reason to oppose the Bill on Second Reading, Mr. Deputy Speaker, and I am showing how it could be used, and almost certainly will be used, in a leap-frogging effort—to use the Government's phrase—to give to others the right to make a similar claim for a pro rota pension. I pointed out that Lord Robens has resigned and he will be asking for a pension. Lord Melchett is in process of being kicked out, and, no doubt, he will be asking for a pension.
  Will the Minister give an assurance that there will be no attempt by the Government to allow these higher-paid people to use the Second Reading of this Bill as an argument for claiming a pension based in the same way?
  Mr. Deputy Speaker: I have to warn the hon. Member that there is getting to be rather too much repetition of the same argument using different names. That is what made me apprehensive when the hon. Member began to talk in detail, and encourage his hon. Friend the Member for Bolsover (Mr. Skinner) to join him, about Lord Melchett. One cannot use the same arguments continually even though substituting different names.
  Mr. Lewis: I am much obliged, Mr. Deputy Speaker. That was the last resignation, or order of the boot, of

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  which I have heard to date and I will not proceed with it further now, but by the time the Bill gets to Committee there may be others, and I shall be able to refer to them in Committee.
  I was explaining that Dr. King would be able to have a State job paying up to £4,999 a year and still maintain his pension. In the past, Speakers were able to occupy sinecures or other State appointments, but, because of the uproar about that in the House, instead of them being left to reduce their pensions pro tanto, provision for that is made in the Bill.
  But certainly local government officers and, I believe, civil servants—the Financial Secretary will be able to confirm or deny this—are not able to draw a pension and maintain a job similar to that for which they draw a pension; they have to choose. If my local National Insurance officer retires, at 60 and after 30 or 40 years' service, not on £5,000 a year, he cannot take on a job as a Labour Exchange manager, even though there is a great demand for such people because of all the unemployment which the Government are creating, now 750,000 and going up to 1 million. He cannot take a job with another Ministry unless he sacrifices his whole pension. But Mr Speaker King will be allowed to retain half his salary. I should like this rule to be applied to all State and semi-State employees who are paid by Treasury money out of the Consolidated Fund. I want to see fair play for all. If that is the position I would not object to this being done.
  Clause 1(2) says that the right to the annuity of Mrs. King
  "shall be subject to such limitations and conditions as appear to the Minister for the Civil Service to be appropriate and to correspond to those applicable to widows' pensions under Part II of the Ministerial Salaries and Members' Pensions Act 1965."
  So we return to the point I made originally when discussing the pension or annuity for Dr. King, that it is rather strange that in one respect the Government want to stick to the basis of Members' and Ministerial salaries, where it suits them, but not where they do not want to. Here again they have returned to the ruling dealing with Ministerial salaries and Members' pensions which arose directly from the Lawrence Committee.
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  I am sorry, but I must keep pointing out in fairness that I am not against Mrs. King's getting 50 per cent. I wish that the Minister had told the Leader of the House to put the first Motion down at a reasonable hour, and then we should not have had to rush it through. But are the wives of all Members to be treated on the same basis? The best example is the noble Lord, Lord Shinwell, a very great man. I was going to say "old man", but that would be an insult. Let me say that he is not so young as he was, but he is certainly not an old man. I think that he is approaching 84 or 85. God forbid that it should happen, but he might be called to higher places. I should like to be assured that his widow would receive at least the same sort of pension for his 48 years' service as Mrs. King will get for Horace King's 5½ years' service. I do not think that that is putting it too highly. She might well argue that after that period of service she should be entitled to six, seven or eight times as much, but I should be happy if the Minister could say that she will get exactly the same.
  The Minister objected earlier because I was personalising. I am speaking in a rather limited way and hurriedly, without going into too much detail. It is very difficult for me to speak on a Bill which is personalised by its title and in such a short time to deal with all the points I have in mind without personalising.
  As the hon. Gentleman seems upset when I mention personalities, I will pick myself out. For my sins or otherwise, I have been in the House for just on 26 years. If I were to retire tomorrow, what do you think my pension would be, Mr. Deputy Speaker? It does not take long to tell you. It would not even be one new half penny. I would not even get one half penny after 26 years if I retired tomorrow. If I died tomorrow—I would not like to, of course, but at least my troubles would be over—what would my wife get? [Interruption.] The hon. Gentleman says it would solve a lot of problems. He said it sotto voce. Perhaps I can say it out loud. I agree that many people would like that to happen. But I take it in the sense in which he said it.
  Mr. Patrick Jenkin: Despite all the difficulties the hon. Gentleman causes, I would not wish that upon him. I was

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  only pointing out that it would relieve us of some of our difficulties.
  Mr. Lewis: The hon. Gentleman is an old friend of mine, although not politically. I take his remark as he meant it—jocularly. I know he did not really mean it.
  If I dropped dead tomorrow—it would be a relief to many people, although not, I know, to the hon. Gentleman—I would not get a penny. Of course, I would not have to worry. But I have a wife and she would get less than one half penny. She would get sweet—but I must not use an unparliamentary expression. My hon. Friend, who comes from the mining industry, will know what I mean. My wife would get nothing. I do not think that fair. I am personalising it through my own case but dozens of hon. Members are in the same position. It is very unfair, not on me but on my wife and daughter.
  I want to digress for a moment, although it is still relevant to the Bill, because these things need to be discussed for a number of reasons, some of which I have put and many more of which I have yet to put. The only paper which has supported me is the Sunday Express —and I hate to have to confess that to the House. But the deputy editor, Mr. John Gordon, was not correct when he said that politicians in the House do themselves very well. I hate to disabuse him, but politicians in the House do not do themselves well at all. Two-thirds of hon. Members, if anything happened to them tomorrow, would get no pension at all. Neither would their wives.
  Mr. Patrick Jenkin: No.
  Mr. Lewis: The hon. Gentleman says, "No". I will prove it to him. I have proved it in my own case. I had the happiest and most wonderful birthday of my life last Sunday. On Sunday, 21st of this month, 150,000 people were out on the streets of London celebrating my birthday, and I am glad to say that, like me, they were all good trade unionists. I shall remember that birthday as long as I live. I was 54. I must wait till I am 65—or 60? No, I am sure it is 65—before I can be entitled to claim any pension, and so I shall have had to have done 37 years' service before I can draw any pension.
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  Two-thirds of the hon. Members on this side of the House—at least two-thirds—are well under 65 and will have to serve many years before they can qualify for pension. I do not say hon. Members opposite will have to wait so long, because they are old fogeys over there. I say that in the nicest spirit, and not in a derogatory sense. But so many of them are older than hon. Members on this side.
  The Financial Secretary may have at the back of his mind what he terms financial aid, but that is not material to this pension business, and it is on a means test basis, and I could only draw that aid, or my wife could draw it, only if we were in abject poverty and after a means test. I emphasise again that I am not objecting to Mrs. King getting this pension if it is allied to Ministers' and Members' payments. By no means am I objecting. All I am wondering is, why are the Government acting with such wonderful expedition and working so quickly on behalf of two individuals, when they cannot act with the same expedition for the Members of the House. If it is fair and right and proper to bring in a £5,000 a year pension for one former Member of this House, I hope the Minister can bring in an amended Ways and Means Resolution to make this 50 per cent. grant for Mrs. King, and I do not understand why it cannot be done—indeed, I go further: why it should not be done—for every hon. Member.
  Now comes the crunch, and this is the point I want to make. The Government say, "Ah, we are going to review Members' salaries and pensions one day; we are going to appoint a review body one day." Not tomorrow. Why? "Because the time is not opportune. It is a bit difficult. We do not want it thrown against us that we are attacking the Post Office workers, the power workers, while at the same time seeing that we pay this money to M.P.s."
  The Minister used the last time, on the Money Resolution, the same argument he used on this Bill, namely, the arrears of time. Surely that can be applied to hon. Members, because hon. Members are the only body of people I know of in this country who for seven years have not had their salaries or pensions altered in any shape or form.

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  The pension is the vital part of this Bill. I was going to say I exonerate the Minister, but I will not exonerate him; I will only castigate the Minister by half, and by half the former occupant of his office, now in another place, and so, members of both Governments. For two years attempts have been made to improve the pensions of hon. Members, not for me, because I shall not get one, but for others who have given a lifetime's service to the House, including one right hon. Gentleman who has given 48 years' service. The Government are basing the Bill partly on the Ministerial Salaries and Members's Pensions Act, 1965, but although the Government are giving one or two individuals great improvements, which I do not object to, they will not review those other hon. Members and their wives, hon. Members who have given as much as 48 years' service, for which they will receive—
  Mr. Deputy Speaker: Order. We have come to the stage where I have to give the hon. Member a serious warning about tedious repetition of argument. I am listening most attentively to what he is saying. I do not know whether he quite realises himself that he is going over and over again the same arguments. I give him this warning: that I shall not tolerate it indefinitely, and that unless he can produce fresh arguments I shall have to ask him to resume his seat.
  Mr. Lewis: I am disappointed in that, Sir. In the last few moments I have been dealing with Mrs. King's pension. During the whole of my address I have not said a word about Mrs. King's pension—
  Mr. Deputy Speaker: Order. That is why I am worried about whether the hon. Gentleman realises what he is saying. He has over and over again mentioned Mrs. King and her pension.
  Mr. Lewis: I am sorry, Sir. I dealt first with Dr. King's pension, and only now am I referring to Mrs. King and relating it to Clause 2(2). I agree that I have dealt with Dr. King and with former Members, but I have not compared the difference in treatment between Members and their wives. Many hon. Members who have given a lifetime of service to the House have passed away under tragic circumstances. I am not now speaking about Mrs. King, I am
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  asking the Minister why he has quoted in aid the Ministerial Salaries and Members' Pensions Act when he has done and is doing nothing to assist Members' wives who are entitled to the same consideration as is being meted out to one individual whose name I will not mention.
  Living near to me is a greatly respected lady, Mrs. Iain Macleod, and I know that she is having a very tough time indeed. I would ask the Minister to tell me what pension Mrs. Macleod is to get out of this Ministerial Salaries and Members' Pensions Act. I would like his advice on this matter. Will he give me an assurance that Mrs. Macleod will get as fair treatment as is being given by this Bill. There is also the case of Mr. George Jeger, who was the Member for Goole, who recently died. Will the widow receive equal treatment?
  I do not see why we should give a Second Reading to a Bill which singles out two persons. As much as I respect and admire Horace King and all the excellent work he did during his time in office, I cannot in all conscience say that this treatment is fair, right and proper, unless I can be given assurances that these other anomalies are to be dealt with. Tied in with this will be the treatment afforded by the Treasury to hon. Members who have retired and to their widows.
  I believe I am right in saying that the Treasury have been holding up a suggestion put up two years ago that Members of Parliament on retirement should get a 20 per cent. increase in pension and something extra for their widows. If that idea has been held up, I blame the Treasury. How can the Minister now come along and say "Let us hurry up this Bill, which we may get through on the nod", and yet at the same time not seek to do anything about these other thoroughly deserving Members of this House?
  I turn to deal with a different point that is relevant here. I confess that I feel sorry at having to keep up the officials of the House over the last few weeks. [Interruption.] The Government Whip, the hon. Member for Norfolk, South-West (Mr. Hawkins) appears to be making some remark. He should bear in mind that it is his Government that are responsible for bringing on this matter so late at night. I feel sorry for the officials

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  of the House. I would like to know whether those officials will be as fairly treated, and as well-treated, with regard to their pension rights. Unless the Minister can promise me that the messengers, the Library staff and the officials in this House—and their widows—will be treated as fairly, I must have second thoughts about giving support to this Bill.
  There is another point tied up with this. I have paid tribute to the great demonstration in favour of my birthday on Sunday—
  Mr. Deputy Speaker: Order. That is just what the hon. Gentleman ought to stop doing at once. He must get on to fresh arguments and not these parallels that we are getting. I am serious when I say to the hon. Gentleman that I shall ask him to resume his seat unless I am satisfied from now onwards. That is what I shall do under the powers that vest in me.
  Mr. Lewis: I mentioned this only as an aside, Mr. Deputy Speaker; I did not develop it. I mentioned in an aside that at that demonstration were the police, and the police are in the Palace of Westminster, where they give loyal service. To my way of thinking, the Government prevent their getting adequate salaries. By refusing to give the police adequate salaries, the Government are thereby preventing the police getting adequate pensions, because police pensions are based on a percentage of their contributions based on earnings over their last period of service.
  If I agree to give the Bill a Second Reading, can the Minister assure me that he will ensure that those officials of the House, including the police, will receive at least equal treatment in their pension rights?
  One of the points put forward by the Minister in introducing the Bill, and I accept it, was that Dr. King gave long, useful and hard service to the House of Commons. No one can dispute that. I certainly do not. He also said that Dr. King gave five and a half years' good service as Mr. Speaker. That I also support. If, however, the Minister asks me, among others—although it appears that only my hon. Friend the Member for Bolsover and myself, other than the
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  Minister, are much interested—to give a Second Reading to the Bill on the ground, and rightly so, that Dr. King has given good service to the House and, therefore, he and his widow are entitled to this treatment, the same arguments that the hon. Gentleman is adducing for the Bill, if they can be brought forward and supported, must be used in favour of other persons in the House.
  I am now going on to the officers and servants of the House who give good, loyal service. Therefore, the Treasury has an interest in this. I want to be able to say to my friends who are here that although I may have kept them here a little longer than I expected—through no fault of mine, but through the fault of the Government—at least I was able to have a say on their behalf, whether they be the police, the Serjeant's attendants, the Library staff or whoever they might be, all those who work hard, day in, day out, night in, night out. I have tried to speak on their behalf to see that they get an adequate pension.
  I therefore ask the Minister whether he can give me an idea of what happens to other servants of the House. How do their pensions compare? Take some of the messengers. We have a wonderful service. We all know that the Serjeant at Arms' staff is excellent. I am glad to see that my hon. Friend the Member for Bolsover is nodding. The messenger staff have done an enormous job, especially during the postal strike caused by the Government, which caused us hardship, but the messenger staff helped us. I ask the Financial Secretary what kind of pension do these sort of people get. May I be assured that when I see these chappies outside I could chat with them and say, "This pension Bill will now go through, once it has passed through the Committee stage, but do not worry because the Financial Secretary will assure us that your pension will be based upon the same criteria; namely, if you have given long and faithful service, you will receive the equivalent of 65 per cent. of your salary for your last year or, on the basis of the Bill, a £900 a year pension on the last five and half years of your service"?
  If the Minister could assure me that these people will get the same treatment —my hon. Friend nods—I should immediately give Second Reading support to

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  the Bill, because that would be fair and would show fair play.
  Mr. Skinner: I am very interested in my hon. Friend's remarks regarding getting satisfactory treatment for the people who work in and around the precincts of the House. He mentioned that he would be prepared to give a Second Reading to the Bill on the basis that he had the kind of assurance contained in the Bill. I would remind him. I am afraid—
  Mr. Deputy Speaker: Order. The hon. Member for Bolsover must realise that he, too, must not repeat the same arguments as are being made by the hon. Member for West Ham, North (Mr. Arthur Lewis). When he comes to speak, as I suspect he will when the hon. Member for West Ham, North sits down, he will have to introduce new arguments which have not been heard before, otherwise he will be out of order. The hon. Gentleman should not now, in an interjection, repeat what the hon. Member for West Ham, North has been saying.
  Mr. Lewis: I am rather surprised, Mr. Deputy Speaker. This really surprises me. Am I to take it that, if my hon. Friend were to follow me and were to make his own speech, the fact that he happens to repeat points which I may or may not have dealt with at length would be tedious repetition? I would point out to you, Mr. Deputy Speaker, that almost every day of the week on every debate hon. Members opposite repeat and argue at length ad nauseam the same arguments, with different emphasis and different points on both sides, going backwards and forwards.
  Mr. Deputy Speaker: May I put the hon. Gentleman's mind at rest? The Standing Orders exactly direct me to do this. I am to prevent hon. Members from repeating the same arguments which others have used—Standing Order No. 22.
  Mr. Lewis: Yes, Sir, the same arguments. I did not suggest the argument. I said that if my hon. Friend wanted to put points with different emphasis—emphasis meaning argument—different argument, different emphasis, the same points with different examples and explanations, surely my hon. Friend would be in order in arguing these points. Anyhow, the point does not arise, be
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  cause my hon. Friend is not trying to catch your eye at the moment. My hon. Friend wanted to interject. I did not hear his interjection. With respect, I do not know whether he was or was not at that stage even putting a point which I had or had not dealt with. Who knows? My hon. Friend may have a point to make which has not occurred to me. I think that I should give way to him to see whether he has a new point.
  Mr. Skinner: It is a new point. It relates to my hon. Friend's remarks about the people who work in and around this building. My hon. Friend has said that, if he can get an assurance from the Financial Secretary—
  Mr. Deputy Speaker: Order. That is not a new point. That is a point which has been made by the hon. Member for West Ham, North. The hon. Member for Bolsover said that he was raising a new point. What is his new point?
  Mr. Skinner: My new point is that, if my hon. Friend gets the assurance that he seeks from the Financial Secretary about the people who work in and around this building, after what he said in his initial remarks about 1½ hours ago, can he tell us that he is not concerned about our 7½ million old-age pensioners? Certainly I am.
  Mr. Deputy Speaker: All that has been said ad nauseam in the debate. The hon. Member for West Ham, North would be out of order if he attempted to reply to that interjection.
  Mr. Lewis: I shall not attempt to reply to it, because there is an important point which I have not yet mentioned and with which I want to deal now. I hope my hon. Friend will forgive me if I do not pursue his point. Perhaps I might discuss it with him on another occasion.
  I have been waiting some weeks for this debate, and today I have been waiting some hours for it to begin, and I have not yet been able to deal with all the points detailed in my notes. Among other matters, I have to tell hon. Members that, while I waited for the debate to begin, I decided to have a little refreshment. Unfontunately, however, those members of the restaurant staff who normally serve in the cafeteria were not

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  available. I make no complaint about that, though I could have raised the point that refreshments should be available. But, obviously, those who staff the cafeteria are entitled to a little time off, and I suppose that I picked on the period when they were having their refreshment. In any event, the cafeteria was closed. However, the point is relevant, because among those who give us loyal service are the members of the staff of the Refreshment Department, whom I have not mentioned.
  Mr. Deputy Speaker: Order. This will not do, either. These are the parallels of which I spoke earlier. The hon. Gentleman has advanced the argument about the servants of the House and the various other people who work here. He has put it to the Financial Secretary that all those who work in the House should be entitled to pensions which bear some resemblance to those proposed for Dr. and Mrs. King. We cannot have these parallels. This is almost the last time that I shall remind the hon. Gentleman that unless he raises new matters I shall have to ask him to resume his sat.
  Mr. Lewis: With respect, they are not parallels. Every case that I have mentioned is absolutely different. Each one comes under different control and is subject to a different pension scheme—or lack of one. Hence, I am asking the Financial Secretary, where he is responsible, to compare the pension rights of Clerks of the House with those of the Library staff and those of the police, and I was going on to make the point that members of the staff of the Catering Department, as I understand it, do not come under the direct control of the Treasury. Hence, I was going on to develop the fact that we have a marvellous catering staff who, I believe, come under the control of the Services Committee. Therefore, I should have wished the Leader of the House to be present, because he is the Minister who should reply. The Financial Secretary laughs. It was the Leader of the House who was responsible for bringing this Measure on at this unearthly hour. Hence, the right hon. Gentleman should have been here, if only to keep me company.
  Perhaps the Financial Secretary can answer this question. Is it or is it not the
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  case that the catering staff come under a different classification altogether and are employed by the Services Committee and, through the Services Committee, by the—
  Mr. Deputy Speaker: Order. This will not do at all. I shall now have to ask the hon. Gentleman to resume his seat. I cannot hear him any longer.
  Mr. Lewis: But—
  Mr. Deputy Speaker: Order.
  Mr. Lewis rose—
  Mr. Deputy Speaker: Order. There is nothing more to be said.
  Mr. Lewis: But why—
  Mr. Deputy Speaker: Order. The hon. Gentleman must resume his seat while I am on my feet. Let it be clear in the record that I have ordered the hon. Gentleman to resume his seat for long and tedious repetition. If the hon. Gentleman seeks to get up now he will be out of order.
  Mr. Lewis: I shall do that, Sir Robert, because I want to raise a point of order. May I ask why, when I have not mentioned a completely new fact—it is a fact—about the Catering Department, which I believe is under subsidy from the Treasury? I want to raise the question whether the Treasury is going to give an extra subsidy for the pensions of catering staff. This point has not been mentioned. I want to develop the necessity of raising this matter. Surely I am in order in saying that I have doubts about supporting the Second Reading of the Bill until such time as I receive an assurance from the Minister that the catering staff will be adequately dealt with concerning their pension rights.
  Mr. Deputy Speaker: Order. I think that the hon. Gentleman has made all those points and has put enough questions for the Minister to answer. I am satisfied that the hon. Gentleman is not going to take properly to heart my direction that he should not repeat himself. I do not blame the hon. Gentleman altogether for that. His efforts have been somewhat herculean tonight in speaking for two hours on what is, after all, a very small Bill indeed. No one can but admire the tenacity with which he has done it.

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  But is a fact that his arguments have become repetitious, and I feel bound to exercise my right and duty to ask him to resume his seat.
  Mr. Lewis: In deference to your Ruling, Sir Robert, I shall resume my seat. However, I should like to discuss this matter with you at some more convenient and appropriate time.
  2.53 a.m.
  Sir Brandon Rhys Williams: I hope that I can make my points in as many minutes as the hon. Members for West Ham, North (Mr. Arthur Lewis) has taken hours.
  First, I think that a little anecdote ought to be in the record. When I had the good fortune to enter the House I won the ballot for Private Members' Motions. I was, therefore, able to make my maiden speech on a subject of my own choice—transferability of pension rights. As I knew when my speech would come on and what it would be about, I thought it proper to call on Mr. Speaker, Dr. King, and he told me an anecdote about himself which he said I was not to attribute to him but could mention in my speech, which I did. Dr. King told me that he entered the House within a year or two of securing his pension under the scheme appropriate to his previous profession. He had served 28 years in that profession, but, the General Election coming when it did, he lost the whole of his rights. I think the House should know this.
  Secondly, I should like to support the criticism of my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) about the level of pension proposed in the Bill for Mrs. King should she survive Dr. King. It would be contrary to modern practice for a widow to be expected to accept a fall in her income to only a third of what her late husband's pension had been. I would have thought that two-thirds was more acceptable in the 1970s. However, if the Government feel that an Amendment to provide half-pay is an appropriate one to make at the Committtee stage I would not cavil at that.
  Mr. Arthur Lewis: On a point of order. You called me to order, Sir Robert. In a Second Reading debate one cannot ask for an increase—
  Mr. Deputy Speaker: Order. I cannot take a point of order on something upon which I have already adjudicated. If the hon. Member wishes to raise a new point of order, which has nothing to do the with his speech, that is a different matter.
  Mr. Lewis: Surely you must hear me, Sir Robert, before you jump up and try to prevent my speaking. I resent your trying to stop me from speaking before you have heard me. I seek to raise a point of order concerning the remarks of the hon. Member for Kensington, South (Sir B. Rhys Williams), and unless you hear me you cannot say whether I am out of order. The hon. Member was asking for an increase in the pension of Mrs. King. He suggested making it two-thirds. I suggest that that is out of order, because the Money Resolution precludes his suggesting a pension of two-thirds, or one half—much as I should like to see it. It is impossible to have an increase in the Money Resolution.
  Mr. Deputy Speaker: The hon. Member for Kensington, South (Sir B. Rhys Williams) is in order to the extent that he can argue that the pension is not enough, but he cannot suggest an Amendment to increase it.
  Sir B. Rhys Williams: I conclude by telling my hon. Friend that I believe that the great majority of hon. Members on both sides of the House would agree with me on this point. I hope that the Government will take the matter seriously, and make the necessary change in the Money Resolution.
  2.57 a.m.
  Mr. Patrick Jenkin: I ought briefly to answer one or two of the relevant points raised by the hon. Member for West Ham, North (Mr. Arthur Lewis). He asked why, if the abatement provision for Dr. King's pension is of long standing, the problem arose with "Shakes" Morrison, later Lord Dunrossil, in 1959. The reason is that the post of Governor-General of Australia was not one that fell within the corresponding provisions of Mr. Speaker Morrison's Pension Act, and it was as a voluntary abnegation of part of his pension rights, and in response to the feeling expressed in the House—to which the hon. Member referred—that Lord Dunrossil surrendered part of his pension.

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  Lord Kilmuir's post was not a post under the Crown, which meant that the abatement provisions did not apply to him, as they would not apply to the vast majority of public servants on retirement.
  The hon. Member asked me about a number of other noble Lords, and whether they would use the Bill as an excuse. I cannot give any assurance in that respect. As for civil servants and local government officers, they, too, have abatement provisions which differ among themselves and also differ from those in the Bill. I am sure that the hon. Member will not wish me to give him details at this time of night.
  On the question of Mrs. King's pension, the hon. Member asked whether the wives of Members of Parliament were subject to the same conditions and limitations. The answer is "Yes, under the same Act", although in respect of the wives the Act provides that the pension should be half that of the former Member.
  The hon. Member asked why we were bringing this Bill forward with such expedition compared with other categories that he mentioned. I would point out that at present Dr. King has no pension at all. I was interested to hear the comments of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) in this context, in reference to Dr. King's teacher's pension. This was a factor private to himself and of which I was unaware. Dr. King has no pension at all, and until this Bill becomes an Act he will not have one.
  As for Dr. King's age—as The Times House of Commons reference book will show, he will be rising 70 next May and is, therefore, by any standards entitled to draw a pension.
  The hon. Member mentioned Mrs. Macleod. That is a matter on which I cannot comment. He asked whether the Treasury was holding up an increase in Members' pensions. Under the pensions increase legislation and analogous legislation, it is not considered appropriate to increase the pension of any retired public servant above the level of the pension currently enjoyed by those who retire now. Since hon. Members' pensions have not been raised, any pension
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  increase to former Members has not been able to be made. The question of pension increases to Members is one which will be referred to the pensions bodies, as promised by the Leader of the House on 4th December.
  The hon. Gentleman asked whether attendants, police officers, refreshment staff, Library staff and officials can be assured that their pensions provisions are no less favourable than those in the Bill. I cannot give that assurance, for all those who are entitled to, and who so wish, are no doubt members of the appropriate schemes, statutory or otherwise, and will become entitled to pensions and to other benefits as appropriate when they retire.
  With that explanation, perhaps the hon. Gentleman will now see fit to allow the Bill to have a Second Reading.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Hawkins.]
  Committee this day.

BUS FARES (MIDLANDS)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]
3.2 a.m.
Mr. Leslie Huckfield: I am glad to be able to raise this subject, which is of great importance to my constituents, although I sympathise with the Minister because this is the third Adjournment debate in a week which he has had to answer on the question of bus services and they have all, unfortunately, come at this time of the morning. However, I will try not to bore him by repeating the points raised in the last week, because some of mine are new.
In the four years that I have been a Member, complaints about the Midland Red Bus Company have outpaced complaints about any other subject in my constituency. I should like to give some background to the appeals which the Department has been receiving since this Government came to office and before. It was a recent Nuneaton Technical College rag magazine which had the little joke, "What is big and red and lies in the ditch?—a Midland Red bus." This

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is the kind of loss of regard in which Midland Red is held in my constituency.
The Minister will know from the appeals which his Department has been receiving that the death-knell for public transport is already being sounded in the West Midlands, and certainly in Nuneaton and Bedworth. We have now reached the stage, despite the appeals, and the decisions of the Minister for Transport Industries, at which many of my constituents are spending sometimes £2.50 and almost £3 to get to work using the kind of services which I propose to discuss tonight.
We have also reached the rather sad stage, despite these appeals and decisions, that many old-age pensioners, particularly those in Nuneaton, who do not enjoy concessionary fares, can hardly afford to travel at all. So it is a deplorable state of affairs that I want to refer to the Minister.
Since 1951 this bus company has applied for fares increases almost annually. There has been some four appeals since 1951. From the figures which I shall give, I would say that the whole conduct of this company, in its almost constant annual appeals to the traffic commissioners for fares increases, to me reeks of very bad planning and considerable inefficiency on the part of management.
Perhaps the Minister recalls the background to the last appeal which his right hon. Friend received. There were fares increase applications on 26th June, 1965; 3rd March, 1967; 27th September, 1968; 24th October 1969; 8th May, 1970; and 18th December, 1970. It is to the last two fares decisions of the West Midlands Traffic Commissioners that I want particularly to refer.
If the Under-Secretary of State takes the 1970 fares increase, which became effective on 1st July, 1970, he will recall that this was a fares decision by the traffic commissioners that allowed this company to increase its fares of up to 1s. by 25 per cent., and by 20 per cent. if the fares were previously over 1s. He does not need me to remind him that, as a result of the increase being granted, the number of passengers declined from 1st July last year by 12 per cent. This culminated, I am glad to say, in an appeal by several local authorities—or at least originally by several local authorities—to the Minister for Transport Industries. In fact, in the end only the
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Shrewsbury Borough Council was left in the running, and they appealed in writing —to save time—to the Minister for Transport Industries, who replied on 29th January that he thought that the fares increase just granted was "not unreasonable".
I suppose that the kernel of my case tonight can be summed up by my saying that if two sheets of teleprinted paper represent the only consideration that the Minister for Transport Industries has given to this very serious issue in the West Midlands, then the Minister for Transport Industries did not give this last appeal by Shrewsbury Council half enough attention. The only serious point which the Minister for Transport Industries made on the appeal—and I quote from page 2 of the document, which had to go by teleprinter because of the post strike—was that the Commissioners should take note of Shrewsbury's dissatisfaction in exchanges with the company with the repositioning of bus stages.
I wonder how many more local authorities had similar difficulties with Midland Red and how many more details the traffic commissioners ought to consider? Despite that, and despite many more serious issues raised in this last appeal by Shrewsbury Borough Council, two sheets of teleprinted paper were all the consideration that the Minister for Transport Industries gave.
May I take this further by saying that many local authorities in the Midlands have put to me a very serious technical point on which I hope that the Under-Secretary of State will be able to provide some illumination. The Minister for Transport Industries is under a duty to act as the appeal body under Section 134 of the Road Traffic Act, 1960, in considering whether these fare increases are reasonable; but, at the same time, under the Transport Act, 1968, he has an obligation to fix the profits target or surplus target of the National Bus Companies. How on earth can the Minister for Transport Industries act as an appeal body against himself? I hope that the Under-Secretary of State will cast some light on the point. Many local authorities, and even the traffic commissioners, seem to be puzzled, in the recent fares decisions, about how the Minister can act in the two capacities,

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which I would have thought were mutually exclusive.
Let me come to the background to the appeals which we had in the past year. I want to know whether the Minister's examination of the companies' applications goes far enough. For instance, in 1970 we were told that the company expected to make a surplus of £572,000. In fact, it made a loss of £669,000. The Minister himself gave the House the figures recently. That represents a shortfall of over £1¼ million or about 10 per cent. of the company's annual turnover. We were told that even with the last increase, which started yesterday, 22nd February, of one new penny in the peak period and a decrease of one new penny in the off-peak period, the company still claim that it will lose £27,000 this year. The company referred to a cost increase of, again, about £1¼ million, but it actually said to the Traffic Commissioners that it would save on maintenance and operating costs something like £896,000.
What staff has either the Department or the Traffic Commissioners to check figures of that kind? From what I know of the hon. Gentleman's Department—I do not mean to insult him personally—and from what I know of the Traffic Commissioners, I do not believe that either has the staff to check these figures when the bus company give them. In other words, his Department and the commissioners have very much to take them on trust. Thus, these appeals are considered by the Traffic Commissioners and by the Minister without any comparisons being made with other parts of the National Bus Company, simply taking the figures which the company gives.
Here are some other factors which the hon. Gentleman's right hon. Friend ought to have considered. Why was Midland Red able to claim at the recent hearing by the Traffic Commissioners that it had a surplus of drivers which cost it £10,000? In my constituency, until very recently, we had a staff shortage, and last summer we were almost 50 per cent. short of the target in Nuneaton. Can there really be such quick staff changes? Is it not the sort of thing which the Minister should investigate?
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Why is it that, despite the fact that the drop in passenger mileage is only 4 per cent. annually for the whole industry, Midland Red had a 12 per cent. drop since last July?
As regards productivity, why is that in 1968 15 per cent, of Midland Red's operations were one-man operation and the estimated 1969 figure was 20 per cent., but in the Potteries Motor Traction Company, which is contiguous with Midland Red, there was an increase from 3 per cent. one-man operation in 1968 to an estimated 20 per cent. in 1969? The very poor showing in productivity by Midland Red ought to have been considered by the Minister.
Perhaps the most important point is that 45 per cent. of the Midland Red's garages are in the area of the West Midlands Passenger Transport Authority, and, as the hon. Gentleman knows from his recent visit, Midland Red provides just over 25 per cent. of the P.T.A. area services. Yet he knows also that the P.T.A. and the National Bus Company have to come to some kind of agreement over the fare levels to be operated within the P.T.A. area. It is proposed that, ultimately, the P.T.A. itself will be the Traffic Commissioners within the P.T.A. area. But how can the Minister satisfy himself, or the National Bus Company satisfy itself, that the P.T.A. will agree to fares increases or figures which will enable Midland Red and the N.B.C. to support rural services outside the P.T.A. area?
One of the serious points which the hon. Gentleman's right hon. Friend ought to have considered is the whole relationship of the West Midlands P.T.A. and Midland Red, when Midland Red has been set a target of £900,000 in the past as its contribution to the National Bus Company's overall surplus of £8 million.
I do not believe that the Minister for Transport Industries can give any kind of decision on these recent appeals without considering the whole relationship of the National Bus Company and the West Midlands Passenger Transport Authority. Unfortunately, the right hon. Gentleman did not think that it was worth doing that, so we had only the two pages of teleprinted paper to which I have referred.

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I could say a lot more about the conduct of the local authorities in relation to Midland Red's rural services, and a lot more about the slow conduct of Midland Red and local authorities on the question of concessionary fare schemes, except for the excellent progress made in my constituency by Bedworth Urban District Council. I could mention, also, the attitude of some of the drivers and conductors, for whom I have nothing but praise tonight. I know that, particularly at the Leamington garage, they have done their best to explain to the public the deficiencies of Midland Red and have done their best to cultivate a climate of public opinion which could lead to improvement.
The whole of the Midlands this morning is waiting for the hon. Gentleman's reply. I know that in reply to my hon. Friend the Member for Dudley (Dr. Gilbert) last Friday morning he said that it was all inflation and all wage costs. I cannot accept that. I hope that he will give me serious answers to some of the technical points which I have raised.
I end as I began, by saying that my constituents are fed up with the Midland Red. In fact, the so-called friendly Midland Red has become one of the sickest jokes in the West Midlands. I send full sympathy from the House tonight to the platform staff, to the drivers and conductors who have to bear the brunt of the public's complaints about the bad management of this company. I cannot understand why a company has to keep going to the Traffic Commissioners persistently for fares increases. I cannot understand why a company such as this cannot plan ahead. Above all, I cannot understand why the Minister did not take account of some of these serious technical points which he should have considered in the appeals which have been made to him recently. I put these points before him. I believe that he owes it to my constituents in Nuneaton and Bedworth and the whole of the West Midlands to give serious consideration to these points in his reply, and I hope that he will.
3.16 a.m.
The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): I am sure that the hon. Member for Nuneaton (Mr. Leslie Huckfield) will be the the first to appreciate the limitations of
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this Adjournment topic. He will know that the Traffic Commissioners' powers are laid down in Statutes to secure that the fares on licensed bus services "shall not be unreasonable". The Commissioners are statutory independent authorities. Their decisions are final, unless an objecting local authority or operator appeals against them to the Secretary of State, and if there is an appeal, he has to decide it judicially. So I cannot comment on the merits of any appeal, either at present or likely to come before my right hon. Friend.
There have been two appeals against fares decisions of the West Midlands and East Midlands Commissioners in the last five years. The first concerned Birmingham Corporation fares and was dismissed by the Minister of Transport of the day. I do not recall the hon. Member objecting to that, which is perhaps not surprising as the Minister in question was a Labour Minister. The second appeal was the more recent one by Shrewsbury Borough Council on the Midland Red fares increase of last summer which the hon. Member has been discussing.
My right hon. Friend gave this appeal careful consideration and when it was dismissed full reasons were given by the Secretary of State. His decision letter is a public document, and I hope that it will be considered by the public on its merits. The Commissioners gave a fully reasoned and fully documented decision which is available for all to see when granting the fares increase to Midland Red, which was effective from yesterday. The time limit for an appeal has still to run and so I must not enter into any discussion that might be held to prejudice the Secretary of State's appellate position, and the hon. Member will understand this.
If there is any feeling about the present case, it arises very largely because this is the third in a row. The first was in January, 1970, when Midland Red was granted a fares increase of 14 per cent.; no one appealed against that. Then in July, 1970, the company had to apply for a further increase of 16½ per cent. One local authority of the 29 in the event objected and put in its appeal. Now Midland Red has applied yet again after only another six months for a further 15 per cent. increase.

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The hon. Member does not need to remind me of the concern that such increases cause, especially to a Government devoted, as the Government are, to getting on top of inflation. The sad fact is that this state of affairs of rising fares and diminishing services is not peculiar to Midland Red or traffic areas in the Midlands. It is repeated throughout the country, to the anxiety and even distress of bus passengers on the one hand and the bus industry on the other. The Government are deeply conscious of this concern and we are doing what we can to help by way of fuel grants, bus purchase grants and the generous approach of my Department's share of Section 34 grants and so on. But in fairness to the House and the bus industry the hon. Gentleman should have explained the reasons for the problem that he has highlighted eloquently tonight. He should know all about this problem, because the present financial crisis in the bus industry stems very largely from the burdens imposed upon it by his own party in Government
The Labour Government took over a large slice of private shareholding and management in the bus industry and then set up the National Bus Company to manage it. Then, as if determined to strangle their own child in its cradle, they proceeded to pile upon this new undertaking a series of quite unbearable burdens. They expected the N.B.C. to operate alongside the municipal bus companies and alongside the passenger transport authorities, which were also the Labour Government's creations, without the recourse to rate subsidy that is available to all these other bus undertakings. They also expected the National Bus Company and its affiliates to compete with these other undertakings in the labour market, but still to operate on a viable break-even basis, without subsidy. [Interruption.] I do not know how the hon. Gentleman would describe this, but I believe it to have been grossly unfair to the N.B.C. companies.
Adding to these problems, the previous Government piled on to the buses the restrictive drivers' hours legislation, which we expect to relax, corporation tax and the Road Transport Industrial Training Board levy. Every one of those forced up costs and, therefore, fares, but did
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the hon. Gentleman protest? On the contrary, he voted for them.
The worst of the previous Government's body blows to the bus industry was wage inflation—
Mr. Leslie Huckfield rose—
Mr. Griffiths: The N.B.C. has had to face wage increases of 5 per cent. in September, 1969, 9 per cent. in March, 1970, and a further 10 per cent. to come in March this year. Did the hon. Gentleman on behalf of his constituents oppose those large increases? Of course he did not, and he must, therefore, accept his share of the responsibility for the cost increases that inevitably follow.
Mr. Huckfield: On a point of order, Mr. Deputy Speaker. The Minister is not answering any of the points I raised, despite the fact that I put very serious and very technical matters to him about the operation of the company. Surely, he owes it to me to give some explanation of some of the points I raised instead of trying to shift the whole of the blame, which I and my constituents cannot accept?
Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. That is not a point of order. I am sure that the hon. Gentleman will understand that that is a matter for the Minister himself.
Mr. Griffiths: All of these impediments placed upon the National Bus Company would have been bad enough if the company and its various affiliates had been operating on a rising market, but the facts are precisely the opposite. The private car is making inroads into the bus's revenues. On Midland Red's routes I understand that the number of stage passenger journeys fell by 65 million in the five years from 1966 to 1970. All across the country, too, particularly in urban areas, the buses suffer from traffic congestion, so that their services in many places have become irregular and unreliable. The National Bus Company has had to face severe staff problems, and last autumn there were bans on overtime, bans on rest day working, bans on standing passengers and bans on one-man operation. Did the hon. Gentleman condemn this expensive industrial action, which again forces up costs and fares? Of course he did not, which is

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why I say again that he must face the consequences of his and his party's approach to the bus industry.
Mr. Huckfield: Will the hon. Gentleman answer my points?
Mr. Griffiths: It is because of all these factors that the industry's financial position has deteriorated so rapidly. The N.B.C. has, therefore, had to face a stark choice not of its own making, not of this Government's making, but of the making of the hon. Gentleman's Government. The choice before it was to raise fares and cut some of its losses or, in plain words, to go bust.
I do not know which alternative the hon. Member prefers—raising fares and cutting losses or suffering financial collapse. It is no use his calling for subsidies. His Government laid a duty on the company to run its business without loss. It also placed a statutory limit on what the company could borrow. This limit has been reached and my right hon. Friend has found it necessary to advance another £6 million of the taxpayers' money on loan.
I turn now to the hon. Gentleman's strictures on the Traffic Commissioners and on my own officials.
Mr. Huckfield: I am grateful.
Mr. Griffiths: The hon. Gentleman does not like this but he has been going round the Midlands making all kinds of undocumented charges which I propose to answer. One can easily get the impression from what he says that the Commissioners are either incapable of performing their duties properly or wilfully disregarding them. I reject both suggestions out of hand.
If the hon. Member will trouble to read the Commissioners' recent decision in the Midland Red case—a public document—he will be left in no doubt about the thoroughness with which they consider cases before reaching their decisions, however hard or complex those decisions may turn out to be. I will not comment on the merits of this case. I will state the facts as the Commissioners found them.
First, in 1970 Midland Red's actual revenue fell by £502,000 and expenditure rose by nearly £750,000 against the esti-
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mate made at the time the last fares increase was applied for. An estimated operating surplus of £572,000 for 1970 became an actual loss of £669,000. The basic causes of this were declining passenger travel and rising costs. Passenger travel went down by 12 per cent. between July and the end of the year. The Commissioners expect there to be further increases of costs in 1971, amounting in a full year to £1·2 million, of which £875,000 represents increased wages.
As a result of the foregoing and after allowing for economies, the Midland Red estimated an operating loss of £837,000 in 1971 if fares continued at the present level. As part of their decision, the Commissioners published a table comparing the company's operating expenses in 1969 with its forecast for a full year. It shows an overall increase of operating costs of £2·8 million, of which £2·1 million is attributable to increased salaries and wages, these representing 71 per cent. of the operating expenses. The Commissioners took note in their report of the measures which the company is taking to ease the situation and it was against this background of escalating costs, reductions in services, suggestions for a Section 34 subsidy and substantial operating economies, that the Commissioners reached their conclusion.
The essence of this is contained in the following words:
"The impact of this decision on the travelling public has not been ignored but the Commissioners could not close their eyes to the gravity of the financial situation of the Midland Red and the importance of keeping its transport facilities available to the public to the maximum extent possible."
That, I emphasise, is the Commissioners' conclusion. It is not for me to express an opinion about it. But I have been prompted to explain at some length the exceptional care which they take to consider and decide impartially because of certain Press reports.
For example, Commercial Motor published an article on 29th January under the title:
"M.P. plans Midland Red 'filibuster'".
The article quoted the hon. Gentleman as saying:
"I shall be attending the hearing and intend to use procedural tactics to try to get it adjourned."

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We have put up with a lot of procedural tactics in the House during recent weeks and I note with interest that the hon. Gentleman has been playing the same sort of game outside. But he has had rather shorter shrift outside the House than he would get inside it. On 5th February Motor Transport said that the Chairman of the West Midland Traffic Commissioners, after hearing the hon. Gentleman at some length, had said to him:
"We afford respect to an M.P. but the Commissioners are not going to allow you to filibuster with a view to delaying this hearing."
I leave the House—
Mr. Huckfield: Will the Minister give way?
Mr. Griffiths: I will not—to form its own conclusions whether the hon. Member's activity there or here can be seen as a genuinely useful attempt to assist the Traffic Commissioners, to assist the bus companies, or their passengers, or anyone else.
Mr. Huckfield: The Minister has not answered my points.
Mr. Griffiths: At the outset of his speech the hon. Member referred to Midland Red as being big, red and in the ditch. I say to him that his own Government pushed it in the ditch and he is doing nothing to retrieve it. I would advise him, if he wishes to assist his constituents, that he would have done a little better in previous years to have resisted the imposts placed upon the bus company, and, indeed, others throughout the country, by that on petrol, by taxation of all kinds, and by drivers' hours. He should have done his best to resist the rampant wage inflation which his Government started and which is now damaging his constituents' interests, and which he has the temerity to come here and complain of.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes to Four o'clock a.m.