Commons Sitting of 29 June 1972

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

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

1. Performers' Protection Act, 1972.

2. Carriage by Railway Act, 1972.

3. Trade Descriptions Act, 1972.

4. Defective Premises Act, 1972.

5. National Insurance (Amendment) Act, 1972.

6. Salmon and Freshwater Fisheries Act, 1972.

7. Matrimonial Proceedings (Polygamous Marriages) Act, 1972.

8. Police Act, 1972.

9. Overseas Investment and Export Guarantees Act, 1972.

10. Royal Bank of Scotland Limited Widows' and Orphans' Fund Order Confirmation Act, 1972.

11. Mersey Tunnel Act, 1972.

12. Seaham Harbour Dock Act, 1972.

13. United Reformed Church Act, 1972.

PRIVATE BUSINESS

  RAILWAY CLEARING SYSTEM SUPER-ANNUATION FUND BILL [Lords]
  As amended, considered.
  To be read the Third time.

  WEST SUSSEX COUNTY COUNCIL BILL (by Order)
  Order for consideration, as amended, read.
  To be considered upon Tuesday next.

ORAL ANSWERS TO QUESTIONS
  HOME DEPARTMENT

    Quaye Case
    Mr. Moyleasked the Secretary of State for the Home Department whether he will now publish the police report on investigations into the police handling of the Quaye case.
    The Minister of State, Home Office (Mr. Mark Carlisle): No, Sir. I can see no reason for departing from the longstanding principle that such reports are not published.
    Mr. Moyle: Is not the Minister aware that such reports are published and that whenever I have asked the police to conduct an investigation into a case they have always written to me to tell me what their conclusions were? Why cannot that be done this time? Is it not intolerable that the police not only conduct investigations into their own cases but that now, apparently, we are not supposed to find out what has happened to the investigation which was concluded?
    Mr. Carlisle: I think the hon. Member must be wrong. As far as I know the conclusions of this investigation were referred to the Director of Public Prosecutions in the normal way. I know that there is an added complication in that the family concerned, acting on the advice of their solicitors, have refused to be interviewed in the course of the inquiry. I certainly accept that the outcome of the inquiry is normally known and I will look further into the matter, but the Question asked for the report as such to be published.
    Mr. Moyle: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply I beg to give notice I shall raise the matter on the Adjournment.

    Crimes of Violence and Robbery
    Mr. Fowlerasked the Secretary of State for the Home Department what has been the percentage increase in crimes of violence against the person, and robberies, respectively in the five years since 1967; and how this compares

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    with the overall percentage increase for all crimes in that period.
    The Secretary of State for the Home Department (Mr. Reginald Maudling): Indictable offences of violence against the person known to the police in England and Wales increased by 61·9 per cent, between 1967 and 1971. Because of the changes brought about by the Theft Act, 1968, the figures for robbery, and for all indictable offences, for 1969 and subsequent years cannot be compared directly with those for earlier years.
    Mr. Fowler: Would my right hon. Friend the Home Secretary agree that the trend is for the most serious forms of crime—crimes like robbery and offences against the person—to increase by more than the average, and has not the time come to take a new initiative against professional crime in this country, notably by strengthening the CID?
    Mr. Maudling: I agree that the most serious feature of the crime statistics is that violent crime has risen much more rapidly than crime as a whole. The way to deal with this is by strengthening the police forces, which we are doing and shall continue to do, and by giving adequate powers to the courts.
    Mrs. Shirley Williams: Will the Home Secretary give his view of the frequent tendency for courts to give armed robbers, for example, sentences considerably below what Parliament has set as the maximum? Can he say whether, in his view, the system under which the police are enabled to take steps to prevent, for example, the holding of guns in places where they are relatively accessible might not be strengthened?
    Mr. Maudling: I believe there is at present an inquiry into the subject of the second part of the question and I will look into it. On the first point, any Home Secretary must be careful about commenting on the sentences passed by the courts, but I am sure the courts are well aware of what is said in Parliament on these occasions.
    Mr. Biggs-Davison: Many of us were glad of the concern that my right hon. Friend the Home Secretary expressed about violence on the screen. Has he come to any conclusion about whether there is a connection between this and the rise in violent crime?
    Mr. Maudling: He would be a very bold man who said he was satisfied that there was a connection. To my mind it is surprising that the coincidence is so strong. I have been and I shall continue to be in contact with those concerned with this matter.

    Retailing Systems (Shoplifting)
    Mr. Adleyasked the Secretary of State for the Home Department what steps he intends to take to ensure that retailing systems, the introduction of which he believes has led to an increase in shoplifting, are controlled.
    Mr. Carlisle: This is a matter for the retailers themselves, not for control by legislation.
    Mr. Adley: Did my hon. and learned Friend see the Law Society Gazette last week after the Adjournment debate that week? Does he accept that there is a connection between the increase in shoplifting and the increase in the number of supermarkets? Will he now give some assurance to those of us who are concerned about the problem that he is prepared to take the bull by the horns and to consider legislation on the subject?
    Mr. Carlisle: Obviously it is arguable that there could be some connection between the way in which goods are displayed, temptation of the customer and the amount of goods that disappear, but I do not see that it is a matter for Government legislation. Methods of merchandising and the way in which shops conduct their business must surely be a matter for them to decide.
    Mr. Greville Janner: Does the hon. and learned Gentleman agree that retailers who operate self-service stores and supermarkets will not take any action unless the Government force it upon them? Is he aware of the very high rate of acquittals of those who plead not guilty? Is it not time the Government took steps?
    Mr. Carlisle: In reply to the hon. and learned Gentleman's first point, perhaps I should have added that a working party on internal shop security is, as my hon. Friend knows, considering problems of shop-lifting and theft by shop staff. I repeat, however, that the manner of merchandising must be a matter for the shopkeepers, although advice may be given.

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    On the hon. and learned Gentleman's second point, all I can say is that prosecutions are a matter for the relevant authorities, or private prosecutions for the shops themselves if they decide to bring them. There has always been freedom to bring private prosecutions, and I have on various occasions expressed the view that I do not think we should be justified in interfering in that long-standing right.
    Mrs. Kellett-Bowman: Will my hon. and learned Friend accept from one who still practises in magistrates' courts that the statistics of these offences bear no relation to the deep agony and misery caused to many people and their families, often for a lifetime, and will he seriously reconsider his reply?
    Mr. Carlisle: Of course I accept that when anyone is wrongly charged with any offence it is a matter of great distress to him. But I do not think there is any evidence to justify the Home Office in altering what has been the long-standing practice with regard to prosecutions.
    Mrs. Shirley Williams: But does not the hon. and learned Gentleman recognise that as it was the present Government which wound up the Consumer Council, which might well have been able to give advice on supermarket display, a heavy responsibility falls upon the Government to avoid precisely the kind of distress to which his hon. Friend has referred?
    Mr. Carlisle: I do not think the question has anything to do with winding up the Consumer Council. I am sure that Governments of either complexion would feel that we should not legislate to control how shops carry on their business. They must take into account the views of the public and take what they believe to be the appropriate action.
    Mr. Geoffrey Finsberg: Does my hon. and learned Friend agree that it is not always fair to blame the supermarket owners, as some hon. Members are doing, and that there is occasionally a liability on the public to be honest?
    Mr. Carlisle: Exactly. The fact remains that modern methods of merchandising of goods are popular with both shoppers and shopkeepers.
    Mr. Janner: And with thieves.
    Mr. Carlisle: I agree entirely with what my hon. Friend says about the responsibility of the individual.

    Pole Traps
    Mr. Hardyasked the Secretary of State for the Home Department how many convictions have been secured, in the last two years, for the use of pole traps; and if he will consider taking further steps to prevent the use of this illegal device.
    The Under-Secretary of State for the Home Department (Mr. David Lane): I regret that the information asked for in the first part of the Question is not available. The use of these devices is prohibited by Section 5 of the Protection of Birds Act, 1954, and my right hon. Friend has no further legislative proposals in mind.
    Mr. Hardy: Will the hon. Gentleman reconsider this matter? Is he not aware that conviction appears to depend entirely upon an admission of guilt in this situation? Pole trapping is continuing on many estates. Is he aware that in recent months over 100 birds of prey have been poled, including the golden eagle and the merlin, both of which are supposed to be fully protected?
    Mr. Lane: I will look at the matter again and will consider any further information the hon. Gentleman likes to send me. The latest figures available show that in 1969 and 1970 together a total of 17 persons were convicted of killing or taking wild birds by prohibited methods of all kinds.

    Police (Disclosure of Information)
    Mr. Leslie Huckfieldasked the Secretary of State for the Home Department (1) whether he will now consult with the professional bodies and oraginsations about whose members chief constables have been advised that they may forward information under the circulars issued by his Department, with a view to instituting a system whereby the affected individuals are given the same information;
    (2) how many circulars have been issued by his Department advising chief constables to forward information about

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    individuals to professional bodies and public authorities.
    Mr. John Fraserasked the Secretary of State for the Home Department if he will publish all circulars issued by his Department about the supply of information on misdemeanours of individuals to professional bodies.
    Mr. Arthur Davidsonasked the Secretary of State for the Home Department if he will call for reports from chief constables as to the practice of the police in providing information to professional and other bodies about a person's previous conviction; and if he will make a statement.
    Mr. Willeyasked the Secretary of State for the Home Department what advice his Department has given about the disclosure of information to professional bodies by police authorities.
    Mr. Maudling: The organisations to which reports are supplied have responsibility for people who are in positions of trust. These arrangements have been in force for a number of years. But I recognise that there is public concern about these arrangements and I am having them reviewed.
    Mr. Huckfield: While I am grateful to the Home Secretary for that assurance, may I ask what he thinks of organisations which ask for such reports on their members from the police, and what does he think about chief constables who obviously exceed the advice he gives and supply completely irrelevant information, such as whether they feel that people have inferiority complexes? Will he do something to bring above ground this vast underground labyrinth of the peddling of personal profiles?
    Mr. Maudling: I cannot accept the premises behind that supplementary question. The advice we give is that convictions recorded in open court should be made known. For example, where a person convicted of a crime against a child happens to be in charge of children, it is obviously something the employer should know. It is entirely information made known in open court that is supposed to be transmitted under this system.
    Mr. Huckfield: Supposed to be.
    Mr. Fraser: We welcome the fact that the right hon. Gentleman is concerned about the matter. Will he give an assurance that all circulars and advice about these official tale-telling procedures will be made public, and certainly that where a copy of the letter is sent to the professional body a copy will also be sent to the person affected, that it will deal only with relevant convictions and that it will not relate to matters other than convictions—that disclosure will not contain subjective comments?
    Mr. Maudling: Certainly. As I have said, the purpose is to convey to those who should know publicly-recorded convictions. I do not think that could properly be described as tale-telling. I think there is a lot in the hon. Gentleman's second point that people should be told what is being said about them.
    Mr. Willey: I welcome the right hon. Gentleman's initial reply. Will he in particular consider promoting an inquiry into the case of the midwife, because in that case there was apparently no prosecution and some of the information is allegedly false?
    Mr. Maudling: I shall certainly consider that. I am very conscious of the need to avoid untrue information being circulated. Our view is that what should be made available in certain circumstances is details of convictions recorded in open court—nothing more.

    Minicabs (London)
    Mr. O'Halloranasked the Secretary of State for the Home Department what is his estimate of the number of private cars that are now used for minicab purposes in the greater London area.
    Mr. Lane: I have no reliable information on which to base such an estimate.
    Mr. O'Halloran: Can the hon. Gentleman assure us that he will introduce legislation to amend the London Cab Act, 1968, to eliminate the ruthless exploitation of the public by these so-called private operators?
    Mr. Lane: My right hon. Friend is very aware of the feeling in the trade that Section 4 of that Act in particular needs amending and he has already undertaken to consider any proposals that may be made to him.
    Mr. Mudd: Does my hon. Friend accept that in the use of private vehicles there is an additional danger to the public since they are not automatically covered by insurance, and that any pedestrian or other vehicle involved in an accident with these illegal vehicles is similarly not covered by insurance?
    Mr. Lane: Yes, Sir, and I am grateful to my hon. Friend for drawing the attention of the House to that fact, which we shall keep in mind.
    Mr. Bidwell: Does the hon. Gentleman agree that even where insurance arrangements may be in order there appears to be a growing practice of agencies advertising a taxi service, which turns out to be provided by private people of all sorts, sometimes even middle class women making pin money by using their own private vehicles? I ask the hon. Gentleman to look at this very carefully. Taxi cab drivers and owners of taxis operating under the hackney carriage licensing system are right to be gravely anxious about this developing situation.
    Mr. Lane: Nobody is satisfied with the present situation. We shall try to bear all these points, grievances and complaints in mind in reviewing the situation.

    Mr. Errol Folkes
    Mr. Clinton Davisasked the Secretary of State for the Home Department if he will make a statement concerning the case of Mr. Errol Folkes, who was kept in custody from 9th September, 1971, to 7th March, 1972, and subsequently acquitted on a charge of entering a flat as a trespasser with intent to steal, which case was ordered to be reported to his Department by Lord Dunboyne, the trial judge.
    Mr. Carlisle: Despite the several safeguards available, Mr. Folkes was regretably detailed in custody although the court had granted bail subject to a satisfactory surety being found and such a surety was available. My noble Friend the Lord Chancellor and I share the concern that has been expressed about this case and we are reviewing the relevant procedures.
    Mr. Davis: Whilst I thank the hon. and learned Gentleman for that reply.
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    and the customary courtesy and interest he displayed in this case in writing to me at such length about it, may I have an assurance from him that the general inquiries into the case, quite apart from those relating to the administrative difficulties which have arisen, will continue so that this man, who has suffered such appalling injustice, may look to the future with some confidence?
    Mr. Carlisle: As I have said, we will review all the relevant procedures. I realise that things went wrong in the case to which the hon. Gentleman refers, and we will consider it in the inquiry.

    Prison Rules
    Mr. Thomas Coxasked the Secretary of State for the Home Department what discussions he proposes to hold with the Prison Officers' Association on further relaxation of prison rules.
    Mr. Carlisle: Consultation with staff is a continuing process. But while my right hon. Friend keeps prison conditions under close review, he does not at present have in mind any major changes for discussion.
    Mr. Cox: I note that reply. Can the hon. and learned Gentleman say why there was no consultation with the Prison Officers' Association prior to the recent relaxation of prison rules? Is he aware of the severe criticism being made by the association about lack of consultation with it? Will he assure us that before changes are made—and I emphasise "before"—there will be the fullest consultation with the association?
    Mr. Carlisle: I am advised that recent changes in conditions for unconvicted prisoners were the outcome of discussions which involved the governors of establishments dealing with such prisoners, that before their introduction at Brixton they were discussed by the regional director with the Brixton branch of the Prison Officers' Association and that the branch expressed its full support.

    Homeless Persons (Vagrancy)
    Mr. Greville Jannerasked the Secretary of State for the Home Department how many homeless people were prosecuted for vagrancy or for other similar offences in 1961 and 1971.
    Mr. Carlisle: I regret that this information is not available. The number of persons prosecuted for "sleeping rough" under Section 4 of the Vagrancy Act, 1824, was 950 in 1961 and 401 in 1971.
    Mr. Janner: Does the hon. and learned Gentleman agree with the view expressed in The Times today by John Snow, director of the New Horizon Youth Centre, that it is wrong to stigmatise many of the young homeless as mere vagrants, drifters or drop-outs and that they need care and concern and, above all, homes? What do the Government propose to do about it?
    Mr. Carlisle: As the hon. and learned Gentleman probably knows, the law of vagrancy and street offences is under review by the Department. Housing for the homeless is a matter for my right hon. Friends the Secretary of State for the Environment and the Secretary of State for Social Services, to whom questions on it should be addressed.

    Royal Irish Constabulary (Pensions)
    Rev. Ian Paisleyasked the Secretary of State for the Home Department what is the number of members of the former Royal Irish Constabulary living in the Irish Republic in receipt of British Government retirement pensions; what is the amount of each pension according to retirement rank; when these pensions were last reviewed; if he is satisfied that, as £195 per annum is the amount above which, in the Republic, no other pension is payable, these pensions are adequate compensation for the service given to the Crown in Ireland; and if he will make a statement.
    Mr. Carlisle: Four hundred and eighty one. I have no reason to think that the awards, most of which were compensation allowances for loss of office, are inadequate for the purpose for which they were intended. The amounts vary according to length of service and rate of pay. United Kingdom pensions increase legislation applies to them.
    Rev. Ian Paisley: Does the hon. and learned Gentleman agree that these members of the old Royal Irish Constabulary gave signal service in a very difficult period in Irish history? Does he also agree that the value of the £has decreased since these pensions were last
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    reviewed and that it is likely still further to decrease, probably very rapidly? Would he also agree with me that because there are so few of these pensioners it would be a good gesture by Her Majesty's Government to do something for them, especially as there is a very low standard of social services in the Irish Republic?
    Mr. Carlisle: I have no doubt as to the service which these men gave. The position is that these are compensation allowances which were paid at the time of the 1922 Act, that they are all subject to this country's pensions increase Acts and that the purchasing power of the original awards has been maintained. We believe therefore that they are adequate for the purpose for which they were intended. They are dealt with under the same rules as apply to any other retirement pensions in the public sector.

    Royal Commission on the Constitution (Report)
    Mr. Redmondasked the Secretary of State for the Home Department if he will ask the Royal Commission on the Constitution to expedite its report, in view of its relevance to the reform of local government and to the situation in Ulster.
    Mr. Lane: No, Sir. The Commission aims to complete its report by the end of this year.
    Mr. Redmond: Does my hon. Friend recall that the Redcliffe-Maud Commission said that the question of local government finance was one for the Royal Commission on the Constitution? Does he consider that if the Commission is to recommend some form of regional assemblies in this country, that suggestion may help to produce a solution to the problem in Ulster in recommending something to replace the prorogued Stormont?
    Mr. Lane: That is certainly possible. My hon. Friend will no doubt remember that in the White Paper on local government reform last year it was made clear that the former chairman of the Commission had told the Government that there was not likely to be anything in the report which would warrant delay in proceeding with the reform of local government below provincial level.
    Mr. Stratton Mills: Does my hon. Friend appreciate that the report may be

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    extremely relevant to the all-party discussions in Northern Ireland, which are likely, one hopes, to commence fairly soon, and that one would wish to have it available? Will he consider in these special circumstances having the relevant piece extracted and made available?
    Mr. Lane: Certainly it will be relevant but I do not think my hon. Friend's suggestion is practicable. The Commission has a number of important and interrelated subjects to consider. It is working with all possible speed and cannot expedite its report further, but I hope it will be able to keep to the target date of the end of this year for publication.

    Bills of Indictment
    Mr. Ellisasked the Secretary of State for the Home Department whether he will introduce legislation to provide that judges be obliged to take evidence from defence lawyers when asked by police prosecutors for a voluntary bill of indictment to transfer a case from a lower court to a higher court after the lower court has started its hearing.
    Mr. Carlisle: The Government have no immediate plans for amending the relevant rules, but the question will be kept under review.
    Mr. Ellis: Is the hon. and learned Gentleman aware that some people in Wales are coming to feel that bills of indictment are being granted like dog licences on application to one prosecuting lawyer? Does he not think, in view of a recent disturbing case, that the advice of lawyers on both sides of a case, let alone the magistrates concerned, should be sought before a bill of indictment is granted?
    Mr. Carlisle: If that is so, there must be very few dogs in Wales since I understand that the bill of indictment procedure has been used on three occasions. The procedure has always been that application is made by the prosecution and there is no specific provision under the rules for the defence to be heard in an application to a High Court judge. But we will keep the question under review.

    Arrests (Complaints)
    Mr. Dykesasked the Secretary of State for the Home Department how many complaints by members of the public have been brought to his Depart-
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    ment's attention in respect of the manner and style of arrests by the police in the Metropolitan Police area in 1970, 1971 and the first four months of 1972.
    Mr. Maudling: I regret that the information is not readily available.
    Mr. Dykes: I am naturally disappointed by that reply. I do not wish to cast aspersions in general on the excellent work of the police but I am sure that other hon. Members have come across such cases as well. Will my right hon. Friend from time to time have discussions with the Commissioner of the Metropolitan Police about the manner of arrests for very minor offences?
    Mr. Maudling: The position is that the information my hon. Friend seeks is not recorded in the form for which he asks. I know the case about which he is concerned and I have written to him about it. The new Commissioner, Mr. Robert Mark, is paying particular attention to the question of complaints and I entirely support what he is doing.
    Mrs. Shirley Williams: The whole House recognises that almost all policemen do their job very well, but we also recognise, as Mr. Mark recognises, that public confidence in the police is extremely important. In view of this, and of one or two disturbing cases which have been reported in the Press recently, will the right hon. Gentleman once again consider whether there is not a case for some independent element in police inquiries?
    Mr. Maudling: I do not think it is fully understood that wherever any question of a criminal offence is involved it goes to the Director of Public Prosecutions, whose scrutiny is independent. Where a criminal offence is not involved I think the present system is a good one, but I am following with great interest what Mr. Mark is doing.
    Mr. Loveridge: Is my right hon. Friend aware that the complaints which have come to me have been fully and satisfactorily investigated?
    Mr. Maudling: I believe that to be the general experience, although one gets individual complaints that it is not so, as one is bound to do. I must point out, however, that the number of letters of

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    commendation received by the police is far in excess of the number of complaints.
    Mr. Stallard: Is the right hon. Gentleman aware that many of us agree that the police have a very difficult task to perform but there have been a number of protests recently, particularly in North London, about a special patrol group which has been indulging in "blitz" tactics in the streets and making arrests? These tactics have given rise to many complaints among my constituents.
    Mr. Maudling: If the hon. Gentleman will send me details I will have them investigated.

    Police Equipment (Purchase)
    Mr. Woodhouseasked the Secretary of State for the Home Department if he will seek to amend the Police Act, 1964, to give him powers to direct chief constables and police authorities not to use public funds to purchase equipment manufactured abroad when equivalent British products are available.
    Mr. Carlisle: No, Sir: it would not be right to limit the discretion of police authorities in that way.
    Mr. Woodhouse: While I appreciate my hon. and learned Friend's reluctance to assume new powers, may I ask whether he has not at least some informal means of communicating with police authorities such as Thames Valley and advising them on the unwisdom of using public funds to buy foreign motor cars when, in the case of the Thames Valley police, it is on the doorstep of a major section of the British motor industry?
    Mr. Carlisle: I am sure my hon. Friend will realise that the question of whether to buy and what type of vehicle to buy must be left to the discretion of the police authority. I am sure that foreign equipment is bought only in those cases when the police authority concerned considers that it will carry out the purpose for which it is required better than the British equivalent. The vast majority of cars being used by the police are British and I am sure that what my hon. Friend has said will be noted.
    Mr. Leslie Huckfield: Does the hon. and learned Gentleman realise that for
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    those of us representing car manufacturing constituencies it is rather daunting to see the police driving around in Volvos and Volkswagens? If the police want to promote better public understanding and better public relations, surely there are better ways of doing it than this.
    Mr. Carlisle: We must keep this in proportion. The best advice I can be given is that out of 19,000 vehicles being used by the police forces in this country it is believed there may be 100 foreign cars. I am sure that those responsible for purchasing will take note of the comments that have been made.
    Sir Harmar Nicholls: If my hon. and learned Friend were to give advice to the police authorities after 1st January next year, which clause in the Treaty of Rome would be infringed?
    Mr. Carlisle: That is not a matter for me.

    Television Advertising (Use of Animals)
    Mr. William Priceasked the Secretary of State for the Home Department whether he will seek powers to ban the use of animals in television advertising.
    Mr. Lane: No, Sir.
    Mr. Price: How would the Minister like to be one of the Brooke-Bond television monkeys?
    Mrs. Doris Fisher: He is.
    Mr. Price: How would he like to be dressed in a strange uniform, made to rehearse for weeks on end and then stuck in a colour television studio for long periods and made to perform unnatural acts? How—
    Mr. Speaker: Order. The hon. Member has gone quite far enough. The Minister has enough to answer.
    Mr. Lane: I know the hon. Member's great concern about animal welfare, and if he would like to meet me to discuss this I will be pleased to do so. Meantime I have no evidence that existing legislation is inadequate to prevent possible abuse in situations like this. The hon. Gentleman is proposing a total ban and I do not think we want to use a sledgehammer to crack a nut.
    Mr. Mudd: Would my hon. Friend accept that many of us who derive a great deal of pleasure, amusement and enjoyment from these advertisements welcome that reply as it will do nothing to dispel the delightful day when the lugubrious Henry will desert his bowl of meat and begin to devour Mr. Clement Freud?
    Mr. Lane: It is very good to have the other side of the argument put so well.

    Police (Special Inspections)
    Mr. Jeffrey Archerasked the Secretary of State for the Home Department whether he will ensure that in future special inspections of a police force, similar to the recent Leeds investigation, the report of the inspectors will be published in full.
    Mr. Maudling: No, Sir.
    Mr. Archer: Would my right hon. Friend reconsider this decision on the ground that it would produce greater public confidence? If there was nothing to fear in the reports it would show the strength of the police, and if there was something it would show the confidence we had in telling the public of the problems.
    Mr. Maudling: The inspectors' reports have always been confidential and I am sure that this is right. They are very thorough and they ought to remain confidential. If there is a need for an inquiry of a public character there could be a local inquiry under Section 32 of the Police Act, 1964.
    Mr. Heffer: Has the right hon. Gentleman given further consideration to the idea floated many times on both sides of the House that there should be independent inquiries into the conduct of the police so that the public and the police may have a fair hearing?
    Mr. Maudling: I do not think I can add anything to what I have said in the past in reply to similar questions, including the one I answered a few months ago.

    Industrial Dispute, Manchester (Trespass)
    Mr. Wintertonasked the Secretary of State for the Home Department by what authority he has given instructions to the police in Manchester not to inter-
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    vene in a case of illegal trespass in an industrial dispute in a factory in that area, the name of which has been sent to him.
    Mr. Maudling: I have no authority to give such instructions and have given none.
    Mr. Winterton: While thanking my right hon. Friend for that reply may I ask whether he is aware that in the incident in question the three persons who entered the factory were members of the International Socialists, a body with an alien philosophy, and that they apparently entered that factory at the invitation of a factory convener, a self-confessed Communist? Would my right hon. Friend agree that any restrictions placed on the police acting in instances of this sort cannot help either responsible trade unionists or responsible management to achieve harmonious industrial relations?
    Mr. Maudling: I must make it clear that no restrictions are placed or can be placed on the police in enforcing the law.
    Mr. Kaufman: Is the right hon. Gentleman aware that in the Manchester area there is at the moment great bitterness among the workers which is being manifested, for example, by sit-ins? Is he aware that if the police were in any way to become involved in this situation it would exacerbate that bitterness because of the strong feeling in our area about Government policies which are bringing this situation about?
    Mr. Maudling: I will not enter into the question of Government policies. What I should say is that in problems of this kind the police have to act with very great discretion and I think they handle these problems with extraordinary tact and skill. They should be allowed to get on with their job as they do it by and large pretty well.
    Mr. Rose: Would the right hon. Gentleman agree that the Question, by prejudging and stating that a criminal offence has been committed where none has been charged, is far from helpful and can only make the situation a great deal worse?
    Mr. Maudling: I am not sure whether the word "illegal" necessarily means criminal. It might mean a civil offence, which could well be involved.

    Fairgrounds (Safety)
    Mr. Jayasked the Secretary of State for the Home Department whether he is satisfied with measures now being taken by public authorities to ensure safety in public fairgrounds; and if he will make a statement.
    Mr. Lane: After the tragic fairground accident in the right hon. Member's constituency, of which I learned with deep regret, local authorities were asked to take all practicable steps within their existing powers to ensure the safety of members of the public visiting fairgrounds. My right hon. Friend is also arranging urgent discussions with the local authority associations and the Greater London Council about the possible need to strengthen the law.
    Mr. Jay: Would the hon. Gentleman agree that this accident has disclosed gaps in the responsibility for safety in fairgrounds and will he take energetic steps with local authorities to see that these are closed?
    Mr. Lane: Certainly. We sent a circular to all local authorities early this month. I should like to repeat what I said in the debate on Monday night. I hope that local authorities will urgently take action now to improve the safety of fairs in their areas during the holiday season when millions of people will be using them.
    Mr. John Fraser: Is the hon. Gentleman satisfied that there is not a similar problem with things such as fire precautions and other safety precautions? Is he satisfied that there are the staff available to do this work?
    Mr. Lane: Yes. I do not think there should be any difficulty on that account. What concerns me is that I understand that only 53 local authorities in all have so far made bye-laws under either the Public Health Act or local Acts. This is an aspect at which I hope local authorities will be looking urgently.

    Imitation Firearms (Use in Crime)
    Mr. Loveridgeasked the Secretary of State for the Home Department if he will give figures covering each of the last five years to show how often imitations of real firearms have been used in connec-
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    tion with crimes committed, and whether that use is increasing.
    Mr. Carlisle: In the four years 1967 to 1970, the numbers of indictable offences known to the police in England and Wales in which imitation firearms were used were 62, 78, 72 and 84. Figures for 1971 are not yet available.
    Mr. Loveridge: Is my hon. and learned Friend aware that there are a number of advertisements offering for sale very realistic imitations of revolvers for about £14 each? Is he further aware that these are not intended for use as toys by children? Will he consider taking steps to control their sale?
    Mr. Carlisle: I am aware of that. I should point out, in case it is not realised, that it is an offence under the Firearms Act to carry a firearm whether it be real or imitation if it is carried with intent to commit an indictable offence. I am sure my hon. Friend will agree that there are very real difficulties in trying to impose any control on the sale of replicas.

    European Economic Community
    Mr. Arthur Lewisasked the Secretary of State for the Home Department whether he will publish in the Official Report a detailed list of the Secondary Legislation of the Rules, Regulations and Decisions of the European Economic Community which will affect his Department and its ministerial responsibilities; in what way each such piece of legislation will affect his departmental activities; and to what extent he has met, or intends to meet, persons concerned to discuss the effects of such legislation on matters falling within his ministerial responsibilities.
    Mr. Lane: The Home Office has a primary interest in the instruments on free movement of persons in parts 9 and 10 of the Community Secondary Legislation and a general interest in a number of others. They will not have a major effect on my right hon. Friend's responsibilities. Consultation will be undertaken where necessary.
    Mr. Lewis: I thank the hon. Gentleman for his reply on the first part of the Question. Can he give more detailed information on the other parts? We are concerned about the question of free

    1655
    movement, particularly if it might adversely affect British Commonwealth citizens. Perhaps the hon. Gentleman would give us details about how his Department will be affected by this legislation.
    Mr. Lane: There are a number of regulations, directives and decisions which I was looking at again this morning. I shall send the hon. Gentleman a list of them, and if he wants further information I hope he will get in touch with me.
    Mr. Lewis: I am obliged.

    Disasters (Crowds)
    Mr. Kilfedderasked the Secretary of State for the Home Department if he will introduce legislation making it an offence for persons to congregate or loiter in an area where a disaster has taken place and an emergency situation exists.
    Mr. Maudling: I doubt whether that would be the right way of tackling the problem, but I shall consider the suggestion when I have the reports which I have asked the Commissioner of Police of the Metropolis to prepare on the recent accidents at Eltham and Staines.
    Mr. Kilfedder: I am grateful to my right hon. Friend for that reply. Does he agree that the two recent disasters—one a railway crash and the other the BEA aircraft crash at Heathrow—brought forth a horrifying situation in which people who can only be regarded as ghouls came to the scene of the tragedy and got in the way of the emergency services? Should not something be done to ensure that the police and ambulance men are not prevented from bringing succour and aid to the injured and to people in grave danger of death?
    Mr. Maudling: I very much agree with my hon. Friend. It is deplorable when large crowds of sightseers make it difficult for ambulances and the fire services to get through. We are urgently examining with the Commissioner the question of what can be done. I do not think my hon. Friend's suggestion would help because the police already have power to proceed against people for obstructing the highway. To create an additional offence of congregating would not help.
    Mrs. Shirley Williams: We appreciate the difficulties about legislation on this issue but there is grave public concern. I wonder whether the right hon. Gentleman has considered asking the authorities in charge of the BBC and independent television whether, when there is a serious accident in an urban area, they would consider delaying news flashes for half an hour to enable the police to ring the area so that rescue services can get to it? Will he bring to their attention the undesirability of showing on the television screen pictures of people who are gravely ill or dying?
    Mr. Maudling: I have already written to the chairmen on the first point, which is very valuable, and I shall certainly add the second.

    Irish Republican Army
    Mr. McMasterasked the Secretary of State for the Home Department if he will now take steps to prepare legislation to make it an offence either to belong to the Irish Republican Army while resident in, or on a temporary visit to, Great Britan or for anyone in Great Britain to take any active steps to encourage or further the aims of the Irish Republican Army either directly or indirectly; and if he will make a statement.
    Mr. Maudling: Such legislation would involve considerable difficulties of definition and enforcement. I do not think it would be justified in present circumstances and I do not have any step of this kind in contemplation at the present time.
    Mr. McMaster: Is my right hon. Friend aware that members of the IRA have boasted publicly on BBC television that they are responsible for the deaths of up to 400 civilians in the United Kingdom in the last four years? Is he further aware that the television programme "Panorama" interviewed a leading member of the Provisional IRA, a man called David O'Connell, earlier this week on television? What steps is my right hon. Friend taking to ensure that those responsible for this interview and for paying fees to a member of the Provisional IRA who murdered a staff sergeant in my constituency at three minutes to 12 on Sunday night are brought to justice in a proper manner in this country?
    Mr. Maudling: My hon. Friend will know what I have said in the past when I was responsible for Northern Ireland affairs. I yield to no one in my hatred of the wicked activities of the terrorists in Northern Ireland. But to implement my hon. Friend's proposal for legislation would be difficult. It would be extraordinarily difficult to define the organisations involved for proscribing and even more difficult to prove membership of such an organisation.
    Mr. McMaster: In view of the totally unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.

    Ports (Immigration Control)
    Mr. Sorefasked the Secretary of State for the Home Department what plans he has to improve immigration control at Immingham and other ports.
    Mr. Lane: The arrangements for immigration control at the ports are kept under review, and changes are introduced as necessary.
    Mr. Soref: I thank my hon. Friend for that reply. Would he concede that the events which took place at Immingham when the "ink woman" managed to enter this country after three abortive attempts—and it was only because of the Press publicity and Press conference that she was held—show the lack of security at ports and particularly at Immingham?
    Mr. Lane: No. I repudiate what my hon. Friend has said. The inquiries which we have made throw a good deal of light on what happened when Miss Kwiatkowski got into this country, but obviously it is not in the public interest that I should give details about it, or about the precautions which we take and will continue to take. She entered the United Kingdom without being granted leave to land and was removed under Articles 8 and 9 of the Aliens Order.

  PRIME MINISTER (SPEECH)
  Mr. Duffyasked the Prime Minister if he will place in the Library a copy of his public speech on prices and wages at the annual luncheon in London on 14th June, 1972, of members of the Press Association.
  Mr. John D. Grantasked the Prime Minister if he will place in the Library a copy of his public speech in London on 14th June to the Press Association annual luncheon, dealing with inflation.
  Mr. Meacherasked the Prime Minister if he will place in the Library a copy of his public speech on 14th June to the Press Association on prices and incomes policy.
  Mr. John Smithasked the Prime Minister if he will place in the Library a copy of his public speech to the Press Association on Wednesday, 14th June, 1972, about Government policies.
  Mr. Atkinsonasked the Prime Minister if he will place in the Library a copy of his public speech to the Press Association about industrial relations on Wednesday, 14th June, 1972.
  Mr. Redmondasked the Prime Minister if he will place in the Library a copy of his public speech to the Press Association on 14th June on the subject of future wage demands.
  Mr William Hamiltonasked the Prime Minister if he will place in the Library a copy of the public speech he made on 14th June to the Press Association on the need for an incomes policy.
  Mr. Skinnerasked the Prime Minister if he will place in the Library a copy of his public speech made at the Press Association lunch on 14th June on incomes of low-paid workers.
  Mr. Clinton Davisasked the Prime Minister if he will place in the Library a copy of the public speech delivered by him to the Press Association in London on 14th June, 1972, on the subject of prices and incomes.
  Mr. James Lamondasked the Prime Minister if he will place in the Library a copy of his public speech to the Press Association on Government policies in London on 14th June.
  Mr. Ashtonasked the Prime Minister whether he will place in the Library a copy of his public speech to the Press Association on 14th June on Government policies.
  The Prime Minister (Mr. Edward Heath): I did so on 15th June, Sir.
  Mr. Duffy: Does not the right hon. Gentleman think that it was his failure on that occasion to say anything new or convincing about inflation which finally broke international confidence in sterling? If demonstrably legal control and free-for-all will not work for him, what does he propose to do to stop the continued descent of sterling, and what new can he say to the TUC representatives when he meets them on Tuesday which would have a chance of winning their consent and support for a national economic policy?
  The Prime Minister: It would not be appropriate for me to discuss the contents of the talks which I am to have with the TUC on Tuesday.
  Mr. Grant: Has the Prime Minister had time to look at the statistics released this morning which show that the average family budget last year rose by more than average earnings, which means that as a result of his policies there has been a cut in living standards for very many people? Will the right hon. Gentleman stop blaming the wage earners for all the ills of inflation? Will he accept and shoulder his own share of the responsibility, and will he respond to Mr. Vic Feather's words about the inflationary effects of the Industrial Relations Act? Will he shelve it?
  The Prime Minister: I cannot accept the last point. In the last 12 months the rise in prices slowed to about 6 per cent. and earnings rose by over 11 per cent.
  Mr. Redmond: In view of the tremendous interest shown by hon. Members on the Opposition side in my right hon. Friend's speech, may I ask him whether he has any evidence that any of them went to the Library to read it? If they did, did they notice that my right hon. Friend said in his speech that a real increase in wages can come from an increase in production? Is not that the best form of incomes policy?
  The Prime Minister: I agree with what my hon. Friend has said; it is what I said in my speech. One of the things which should not be overlooked is that last year we had an increase of 5 per cent. or more in productivity.
  Mr. Meacher: Since as a result of the Government's fiscal and welfare measures people with incomes of over £5,000 have each gained on average 51 times more than skilled wage earners on average, and since as a result of the Stock Exchange rise in the last 16 months they have each had on average a capital gain of a further £30,000 gross, how can the right hon. Gentleman seriously expect the trade unions to accept an incomes policy status quo built on that record of criminal unfairness?
  The Prime Minister: I have learnt from long experience to have all the hon. Gentleman's figures checked before I comment on them. On the last part of his supplementary question, he should not perhaps overlook the immense interest of the trade union movement in the investment of its own funds.
  Mr. Smith: As the Government's policy to contain inflation seems to consist principally of exhortation, will the right hon. Gentleman tell the House what he will do if in the next six months or so inflation continues to rise at its present rate and what changes in Government policy he will make to meet it? Secondly, what is he prepared to do by changing Government policy to gain a mood of co-operation from the trade union movement?
  The Prime Minister: The first part of the hon. Gentleman's supplementary question is completely at variance with what his own Front Bench has said. If we have indulged only in exhortation, why have we been so bitterly attacked by the Opposition Front Bench for the effect of the action we have taken to slow down the increase in prices?
  Sir Harmar Nicholls: To stop the Order Paper being continually cluttered up with repetitive and pointless Questions, will my right hon. Friend put a copy of all his speeches in the Library, notify the Table Office that he has so done and make hon. Gentlemen opposite find another ploy?
  The Prime Minister: It is the regular practice to put copies of all my speeches in the Library directly they have been made, and I intend to do so in the future. Every speech I make will be placed in the Library for the benefit of hon. Members.
  Mr. Atkinson: We may have to raise a point of order on the comment that the Prime Minister has just made. To revert to his speech, is the Prime Minister aware that in the 150,000 shop stewards throughout the country there is an unpaid leadership in the trade union movement to whom he must direct attention in creating a spirit of co-operation in the trade union movement if he has serious ideas about setting up alternative conciliation services? To enable the discussions he is to have shortly to be meaningful, will the Prime Minister give the House an undertaking that a possible conciliation service about which he has spoken recently would be an alternative to the Industrial Relations Act? Will he say that he is fairly flexible in his approach and that he is not sticking to the idea that he will make no amendment at all to the Industrial Relations Act? If he can say this, there is a chance that he will influence trade union leadership.
  The Prime Minister: I agree entirely with the hon. Gentleman about the importance of the relationship of shop stewards to their unions and the part they must play in their present position in any question of conciliation or arbitration. Surely he would be the first to acknowledge that to the extent to which conciliation is successful—and it is still widely used by the Department of Employment—or can be successful under any arrangement to be devised by the TUC and CBI jointly, this will make unnecessary the use of certain Sections of the Industrial Relations Act.
  Mr. Hamilton: Does not the speech, coupled with the action taken by the Chancellor of the Exchequer last week, confirm that the Government's economic policy is in one hell of a mess and that nothing the Prime Minister puts in the Library or anywhere else will prevent the calamity that is facing the nation? Is he aware that the more blocking answers he gives to Questions in the House the more visits he will be asked to make to every village in Britain, until he blocks that and says that he intends to sit on his backside in 10 Downing Street?
  The Prime Minister: The matter of Questions is for the House. If the House wishes to put down repetitive Questions to the extent it does, that is a matter for
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  the House, and I answer them. On economic policy the Government have played their part in many ways, most of them ways for which the TUC asked, the CBI has carried out its own policy of limiting price increases to 5 per cent. and the country is now entitled to expect that wage claims also will be reasonable.
  Mr. Norman Lamont: Will my right hon. Friend give to the Leader of the Opposition a presentation copy of the latest report of the National Institute, and will he underline in pencil the article which suggests that, for every 1 per cent. the trade unions increase the going rate of inflation, employment opportunities diminish by 300,000 jobs? Does not this back up what my right hon. Friend has always said: that when hon. Gentlemen opposite urge inflationary wage settlements they are urging increased unemployment?
  The Prime Minister: There are two reasons why it is unnecessary for me to present a copy of the Institute's article to the Leader of the Opposition. First, I have no doubt he has it already and, second, when he was Prime Minister he made on so many occasions the precise point in the Institute's article to which my hon. Friend has drawn attention.
  Mr. Skinner: In view of the mess that the Government have created, may I encourage the Prime Minister to think of more pleasurable moments? Does he remember the halcyon days of last summer on the yacht when he was contemplating what he would do with the trade unions when he was armed with his Industrial Relations Act? Why does he not take another trip, preferably a long one, and have a word in the Queen's ear before he goes?
  The Prime Minister: Why does not the hon. Gentleman give his trade union colleagues some sensible advice to the effect that if they want to improve the standard of living of and retain employment for their members they should pursue a reasonable wage policy?
  Mr. Davis: Does the right hon. Gentleman consider that part of the justifiable suspicion which the trade unions have exhibited about the Government arises from the way in which they have conducted litigation against the

  1663
  trade unions? Would not one way of rectifying the position be to start by repudiating the Secretary of State for Employment, who gave the most doubtful testimony in the recent ASLEF case that he considered he had grounds for believing that the men were not behind their leaders?
  The Prime Minister: No, Sir, the Government have not conducted litigation against trade unions. [HON. MEMBERS: "Oh."] In asking for a cooling-off period the Government were acting in the interests of the community and not against the trade unions. One of the most important cases which has come before the National Industrial Relations Court has been that brought by members of a union against other members of the same union. The Government cannot be held responsible for that. If hon. Gentlemen opposite believe that individual trade unionists should be forced out of their jobs by members of the same union, let them stand up honestly and say so. Nobody in this country will believe that that is fair.
  Mr. Tapsell: Is it not a sad reflection on the present state of the Labour Party that none of its members seems sufficiently concerned at the plight of those who live on fixed incomes or with the national interest generally to appeal for wage restraint?
  The Prime Minister: Since the Labour Party has been in Opposition its members have done nothing but inspire higher wage claims and support every wage demand that has been made.
  Mr. Lamond: Does the Prime Minister recall that in his speech on 14th June he mentioned that there had been one or two changes since he was Leader of the Opposition? Does he agree that among those changes are included raging inflation, catastrophic unemployment, chaotic industrial relations and now a dreadful financial crisis? Will the Prime Minister tell us which of those changes gives him most pleasure and pride?
  The Prime Minister: That is an example of the grotesque exaggeration by which hon. Gentlemen opposite seek to damage their own country on every possible occasion.
  Mr. Edward Taylor: Has my right hon. Friend found that his discussions
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  with the Trades Union Congress have been made more difficult because of the recent memory of the previous Government introducing statutory measures to stop wage agreements which were voluntarily concluded between trade unions and employers?
  The Prime Minister: Yes, my hon. Friend is entirely correct, as every hon. Member who is connected with a trade union knows. A great deal of the bitterness of the trade unions was due first to the compulsory freeze and then to the statutory policy imposed on them much against their will which, as many moderate leaders know, led only to extremists being elected to union office.
  Mr. Ashton: In his speech to the journalists at the Savoy the Prime Minister congratulated them on their high standards of reporting but said he would welcome a higher level of abuse. Will he tell us why the level of abuse he is getting now is not good enough?
  The Prime Minister: Because most of it comes from the party opposite.

  SCOTTISH COUNCIL (DEVELOPMENT AND INDUSTRY)
  Mr. Douglasasked the Prime Minister when he next intends to meet the Scottish Council (Development and Industry).
  The Prime Minister: I have no plans at present for a further meeting with the Scottish Council.
  Mr. Douglas: That is an unfortunate reply. Will the Prime Minister concede that he should immediately get in touch with the Scottish Council (Development and Industry) and give Sir William McEwan Younger an assurance that he will review the provisions of the Continental Shelf Act, 1964, and give urgent consideration to ensure that the Scottish steel industry continues to have a capacity to make crude steel
  The Prime Minister: The Scottish Council has not asked for a further meeting. On the first part of the Supplementary question, I would point out that these matters were considered by both Governments at the relevant time. On the

  1665
  second part of the question, I have had a letter in the last 48 hours or so from the chairman of the Scottish Council saying that he has now had a full discussion with the deputy chairman of the British Steel Corporation and gone over the whole ground with him, and thanking me for the efforts I made following our discussion in Edinburgh.

  QUESTIONS TO PRIME MINISTER
  Mr. Atkinson: On a point of order, Mr. Speaker.
  Mr. Speaker: Is it a matter arising out of Questions?
  Mr. Atkinson: Yes, Mr. Speaker. I am rising on a point of order in connection with the remark made by the Prime Minister that he now intends to prevent himself being questioned on economic affairs. Do you intend to allow a situation in which the Prime Minister is able to refuse any Question which relates to speeches made outside the House, particularly when it relates to important economic statements touching the wellbeing of the country?
  Mr. Speaker: This is not a matter for the Chair.

BUSINESS OF THE HOUSE
Mr. Harold Wilson: Will the Leader of the House please state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Robert Carr): Yes, Sir. The business for next week will be as follows:
Monday, 3rd July—Supply (25th allotted day): There will be a debate on industrial relations, which will arise on an Opposition Motion.
Motion on the Electricity Supply (Northern Ireland) Order.
Tuesday, 4th July, and Wednesday, 5th July—Completion of the Committee stage of the European Communities Bill.
Thursday, 6th July—Further progress on the Report stage of the Local Government Bill.
Friday, 7th July—Remaining stages of the Field Monuments Bill [Lords], the British Library Bill [Lords] and the Children Bill [Lords].
Second Reading of the Sri Lanka Republic Bill [Lords].
Monday, 10th July—Supply (26th allotted day): Debate on a topic to be announced.
Mr. Wilson: Since in previous weeks in discussing business questions we have pressed the right hon. Gentleman to provide early facilities to discuss the sub judice rule, is he aware that his efforts are much appreciated? He will be aware that the Motion was rather narrower than some hon. Members wished and that we shall want to make representations to him. However, this means that we can debate the Industrial Relations matter on Monday without the complications of the sub judice rule.
On another matter which has been put to him repeatedly, has the right hon. Gentleman now had a chance to examine the facilities provided by the Government, particularly during the guillotine period, for debating delegated legislation, whether involving affirmative or negative procedures, since this has meant a bigger pile-up now than for a long time past? Will he say what he intends to do about the situation?
Thirdly, in view of the point raised by my hon. Friend the Member for Tottenham (Mr. Atkinson) about an answer given by the Prime Minister, will the Leader of the House confirm that, while the Prime Minister was right to say that it has long been the practice for speeches to be placed in the Library, it has also long been the practice for the Prime Minister to be answerable for speeches that he has made? Will he further confirm that the remarks made by the Prime Minister this afternoon are not to be taken as guidance to the Table Office to preclude the tabling of further questions on these matters?
Mr. Carr: I am grateful for the right hon. Gentleman's comments about the early debate on the sub judice rule. I took note of what was said last night by the Opposition Front Bench, and I have noted what the right hon. Gentleman has just said. I will consider this matter. As we made clear last night,

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there is still an outstanding overall major recommendation of the Committee which we shall consider following the Phillimore Report. Perhaps in the course of that consideration we can discuss this subject with the right hon. Gentleman, but I cannot give any undertaking.
The right hon. Gentleman asked about Prayers. I have examined this matter, and I must say quite honestly that my examination has not thrown much hopeful light on what I can do about the situation in the near future. This is a very real problem. If we can move into a period when it is possible to have more Prayers, I shall be delighted. I assure the right hon. Gentleman and the House that when we have the report of the Brooke Committee, which is studying the problems of delegated legislation, the Government will consider with urgency what they will do about the matter because we realise that the present situation is undesirable to the House.
On the last point raised by the right hon. Gentleman, I am sure that my right hon. Friend the Prime Minister did not in any way wish to indicate any unwillingness on his part in future to answer questions on major matters of economic policy, and so forth.
Mr. Wilson: Is the right hon. Gentleman aware, on the question of delegated legislation, that it is not enough to say the matter has been looked into in reference to procedure in future Sessions, since it is in this Session that the Opposition and the House as a whole have been denied rights which have been traditional over many years? Is he aware—I make no particular complaint here—that we have to debate a situation which has arisen from certain events connected with the operation of an Act on which Parliament was gagged, so that that Act was not properly considered? Is he further aware that his difficulties over the timetable—and he can have our understanding over that matter, if not our sympathy—arises from the fact that a major Act which seeks to remove parliamentary rights which have existed for centuries is going through the House under the guillotine and that it is at this very moment he is insisting, or is being forced to insist, that we cannot exercise our traditional rights on delegated legislation?
Mr. Carr: I do not want to open old controversies, but when the right hon. Gentleman talks about discussion on legislation being gagged, it is a strange definition of "gagging" when one considers the amount of time allocated not only in total but to various parts of that legislation.
I admit that there is a difficulty over Prayers, and I have already said that I cannot at the moment see much light. However, I would point out to the right hon. Gentleman that there have been two or three occasions in the last few weeks, one as recently as last week, when the Opposition had an opportunity for a Prayer and decided for their own good reasons—I do not complain about it—not to take advantage of it. I am not suggesting that the opportunities they have had and turned down were enough to deal with the whole problem, but it is right to say there have been some opportunities of which advantage has not been taken.
Sir D. Renton: Is my right hon. Friend aware that it is many weeks since we had a marshalled list of the many Amendments to the Local Government Bill, despite the fact that I have made many requests to the Table Office for such a list? Will he do his best to ensure that we have a marshalled list ready tomorrow morning so that hon. Members can do some homework on this Bill over the weekend?
Mr. Carr: I am sorry to confess that I was not fully aware of the situation, but I appreciate the point made by my right hon. and learned Friend. I will have the matter investigated urgently and will see what can be done.
Mr. Faulds: Following publication of the report of the working party, when may we expect a statement of Government intentions on public lending right?
Mr. Carr: I take note of what the hon. Gentleman has said. I do not think it will be next week, but I shall draw his request to the attention of my right hon. Friend the Secretary of State for Education and Science.
Mr. Hugh Fraser: Will my right hon. Friend arrange for the Minister concerned to make an urgent statement to the House about the situation in which the National Liberation Movement for Palestine has

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been permitted to set up an office in London, bearing in mind that this organisation claims to be one of the main aircraft-hijacking organisations in the world and has already admitted to the destruction of four aircraft on the ground and the hijacking of a number of others? This makes nonsense of any reports that the Government are making efforts to stop hijacking.
Mr. Carr: I will most certainly put my right hon. Friend's point to my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and see that it is attended to.
Sir G. de Freitas: When the Leader of the House is not overwhelmed by the avalanche of Government legislation, will he consider providing Government time for a debate on the pollution problem, in view of the statements by the Secretary of State in Stockholm and the Report of the Royal Commission last year?
Mr. Carr: I cannot give the right hon. Gentleman any specific assurance. However, this is a matter of great and, I am glad to say, growing general interest. When we can find the time for a debate, it will be a good thing.
Dame Joan Vickers: With regard to Thursday's business, when we are to discuss the Local Government Bill, as it is an extremely important Bill which affects the life of every individual in the country, quite apart from local democracy, will my right hon. Friend promise that it will not be an all-night sitting and that the proceedings will end at 10 or 11 o'clock in the evening?
Mr. Carr: I can assure my hon. Friend that I do not like all-night sittings any more than she or any other hon. Member does. But I cannot give any promise. To some extent, it depends on how many speeches hon. Members make and how long they are.
Mr. Hooson: Can the right hon. Gentleman say whether the Government intend to provide time this Session for the House to debate the recently published Report of the Criminal Law Revision Committee on changes in the law of evidence? If he cannot, can he assure us that there will be sufficient time between any debate on that report and
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the presentation of any Bill arising out of the report?
Mr. Carr: I am not sure about the timing. This very important report has only just been published. I know that my right hon. Friend the Home Secretary has said already that he needs time to consider it. I shall discuss it with him. We all realise how important the report is and how carefully it will need to be considered.
Mr. Jennings: In order to allow hon. Members to make necessary plans, will my right hon. Friend announce next week the dates of the Summer Recess?
Mr. Carr: Again, it would give me great pleasure to be able to. I can only say that all hon. Members who want a nice summer holiday should use as much self-denying ordinance as they can.
Mrs. Shirley Williams: May I pursue the matter raised by the hon. and learned Member for Montgomery (Mr. Hooson)? Can the right hon. Gentleman assure us that the Home Office will not consider any legislation until it has had an opportunity to hear the views of the House, since the Report of Lord Justice Davies' Committee makes some very far-reaching and disturbing suggestions for changes in the law of evidence?
Mr. Carr: I have not had an opportunity to discuss this matter with my right hon. Friend the Home Secretary. I do not want to go any further than I should. Clearly, this is an important matter, and I take serious note of what the hon. Lady has said.
Rev. Ian Paisley: Will the Leader of the House confirm that sufficient time will be available on Monday night for a full discussion of the Electricity Supply (Northern Ireland) Order? When will he be able to make an announcement about the way that Northern Ireland legislation is to be brought before this House? I remind him again that this is not the first occasion on which I have pressed him to make an announcement concerning a matter which affects the people of Northern Ireland.
Mr. Carr: The time for debate on Monday will be the usual 1½ hours allowed for an affirmative Resolution of this kind. As for my hon. Friend's second point, as every Thursday comes along

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I am more and more conscious of the question that he will ask me. I am anxious to answer it as quickly as I can. It is a complicated matter to decide what form the Committee should take, its powers and its composition. I will make an announcement as soon as possible, and I repeat my assurance about having consultations before I do so.
Mr. Eadie: Is the right hon. Gentleman aware that during the Committee stage of the European Communities Bill only two hours were available for hon. Members to discuss the subject of energy and the associated implications of entering the Common Market? He will be aware that there are problems in relation to all the sources of energy—nuclear power, gas, oil and coal. However, we have not yet had an energy debate in this Parliament. Will the right hon. Gentleman rectify that omission before this House goes into recess?
Mr. Carr: At the moment I cannot talk about when we shall go into recess and what we can do before then. The problems of energy are very important, and I know that they engage a lot of the time of my right hon. and hon. Friends. But I cannot promise a debate at the moment.
Sir Gilbert Longden: Reverting to the point raised by my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers), surely the length of Thursday's sitting does not depend only on how many hon. Members wish to speak on this very important Measure. Does it not also depend on the time allowed by my right hon. Friend for the Report stage in this House, and would it not be better to say now that we shall rise at the end of August?
Mr. Carr: I cannot believe that it would be better to say that, and I cannot think that the majority of right hon. and hon. Members would feel that it was. Of course, it does not depend only on the number of speeches and how long they are. I realise that that is not the only factor which will determine how long we sit on Thursday. However it is fair to point out that already we have spent longer on Report on this Bill than on all but one or two Bills in the last 25 years.
Mr. Healey: When will the Government publish their Green Paper on proposals for a tax credit system?
Mr. Carr: I am afraid that I cannot yet give the right hon. Gentleman the date. It is a matter that we have undertaken to publish, but I cannot yet say when.
Mr. McMaster: Is my right hon. Friend aware of the great arrears in Northern Ireland business, and will he see to it that more than 1½ hours in the small hours of the morning is allocated occasionally to this business in view of the events in Northern Ireland and the fact that the majority of the population are taking action outside the parliamentary process through the UDA because of their dissatisfaction about the ability of this Government to restore law and order and peace and security throughout Northern Ireland?
Mr. Carr: My right hon. Friend the Secretary of State for Northern Ireland will be making a statement shortly, and no doubt he will deal with the main substance of my hon. Friend's question. But, even now, I must say to my hon. Friend that I should have hoped that we might have worked and tried to consolidate on the ceasefire which has occurred this week. I think that everyone in this House and outside it, in this country and in Northern Ireland, should bear in mind that overriding need.
As to the time for debate, of course I have sympathy with the point made by my hon. Friend and his colleagues. However, my hon. Friend exaggerates the position when he insists on using the phrase "in the early hours of the morning." The other week we began at 7 p.m., so that most of the hours were not the early hours of the morning. On Monday next the order will be discussed between 10 and 11.30 p.m., which again is not the early hours of the morning.
Mr. Raphael Tuck: Can we be given any idea when we are likely to have positive action with regard to industrial training? Is the right hon. Gentleman aware that, with the exception of a debate on the consultative document, this matter has been hanging fire since the Queen's Speech of 1970? It is causing great concern to industrial training

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boards, especially the Engineering Training Board, the headquarters of which is in my constituency and which accounts for 50 per cent. of the money at risk. The inaction is holding up the development of forward planning in industrial training.
Mr. Carr: I think that "hanging fire" is about the most extraordinary phrase it is possible to use about this subject. A most important document about future plans was produced for consultation in January. A period until the end of May was given for consultation, which I think was enough but not excessive. That period for consultation is over, and I am sure that my right hon. Friend is considering the results.
Mrs. Castle: Further to the point raised by my right hon. Friend the Member for Leeds, East (Mr. Healey) about the Green Paper on the tax credit scheme, is the right hon. Gentleman aware that those of us who serve on the Standing Committee which is considering the National Insurance Bill are getting a little tired of having our Amendments turned down on the basis of some mystical and as yet unknown tax credit scheme which we are told will solve all the difficulties? Can we be given by next Thursday some idea of when we are likely to see the Green Paper and whether it is hoped to set up a Select Committee before the recess?
Mr. Carr: I shall speak to my right hon. Friend about what the right hon. Lady has said. My right hon. Friend has promised that the Green Paper will be published before the end of the year. I expect that we shall beat that target easily, but I am not sure by how many weeks or months at the moment.

GRAHAM YOUNG
3.50 p.m.
The Secretary of State for the Home Department (Mr. Reginald Maudling): I will, with permission, make a statement about the case of Graham Young, who was today convicted of murder and other grave offences committed while he was a patient conditionally discharged from Broadmoor Hospital. I wish at the outset to express the deep concern which my right hon. Friend the Secretary of State for Social Services and I have felt
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about the case and our deep sympathy with the surviving victims and the relatives of those who have suffered.
Young was sent to Broadmoor in 1962 on his conviction, as a boy of 14, of offences of administering poison to three persons, all of whom recovered. The court ordered that he should not be discharged without the consent of the Home Secretary for 15 years. He was conditionally discharged in February, 1971, on medical advice that he had responded well to treatment and was no longer a danger to others. His discharge was on the conditions that he should reside at a stated address, be supervised by a probation officer and attend a psychiatric out-patient clinic.
It is now tragically clear that Young's morbid interest in poisons had not abated and that he had been able successfully to conceal this through a prolonged period of careful observation by a most experienced doctor and other staff.
My right hon. Friend and I, immediately we learned of this case, instituted a searching examination of the arrangements for discharging and supervising restricted patients. This is an area raising issues of profound difficulty. We have as a result already introduced a number of changes aimed at strengthening still further the safeguards for the protection of the public. Now that the trial has finished, we are at once seeking totally independent advice on whether there are any further changes within the existing law that should be made. This review will be carried out by Sir Carl Aarvold, the Recorder of London, Sir Denis Hill, Professor of Psychiatry at the Institute of Psychiatry, and Mr. G. P. Newton, Director of Social Services for Wiltshire.
The present case has confirmed my right hon. Friend and myself in the view that the time has come for a fundamental review of the provisions of the criminal law relating to mentally abnormal offenders, and the facilities for the treatment of such persons. We are taking steps to appoint an independent and authoritative committeee for this purpose. I am glad to inform the House that Lord Butler of Saffron Walden has agreed to be the chairman.
I will, with permission, circulate in the Official Report a detailed statement about Young's case and the action which is being taken.
Mrs. Shirley Williams: May I associate myself with the sympathy expressed by the right hon. Gentleman to the relatives of the victims of Graham Young and also the relatives of those who survived and the survivors themselves?
We fully recognise, as anyone who has ever served at the Home Office must do, the great problems which arise in administering any system of release and the fact that it is almost impossible to be certain that there are never going to be any mistakes.
Having said that, I must tell the right hon. Gentleman that this case gives rise to a number of concerns. One concern is that the first charge made against Young was dated one month after his release, although he was arrested about eight months afterwards. Secondly, information which has been sent to me indicates that the nursing staff did not wholly agree with the medical advice which the right hon. Gentleman received.
I welcome the right hon. Gentleman's decision to set up a committee of inquiry under Judge Aarvold. Will the committee be able to make inquiries into the circumstances of the release of Graham Young, and will it be able to call evidence for that purpose? Will it be able to discover whether there were any disagreements about Young's release? Will the committee be able to study the previous arrangements that were made for Young in view of the fact that, as the right hon. Gentleman said, he was placed in the care of a probation officer but there was, clearly, a failure to recognise that he was returning to his earlier habits for a period of eight months before he was arrested?
I welcome, too, the right hon. Gentleman's decision to set up a long-term inquiry under Lord Butler, but may I ask him to inquire of his right hon. Friend whether immediate steps can be taken, before the results of that long-term inquiry are known, to strengthen the medical staff at Broadmoor, who I believe are understaffed, and also to strengthen the nursing staff, who I believe are also under establishment?
May I ask whether the long-term inquiry might consider the possibility of establishing Broadmoor as a teaching hospital and greatly strengthening the staff
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and the supervision which is now available, which I again understand is understaffed, for the after-care of Broadmoor inmates?
Mr. Maudling: I am grateful to the hon. Lady for the way in which she has dealt with this tragic case. On the first, point, the verdict is so recent that I am not clear on which counts Young was convicted and on which he was acquited.
Questions about Broadmoor are normally for my right hon. Friend the Secretary of State for Social Services, but he has given me information on this matter and I understand that the release of Young was made after discussion with the consultants and senior nursing staff at Broadmoor. On the third point, all the information of any kind about this case that is asked for will be provided to Sir Carl Aarvold and his colleagues.
On the fourth point about strengthening the staff at Broadmoor, my right hon. Friend has done what he thinks right in this matter, but, again, we shall have the independent view of Sir Carl Aarvold, Professor Hill and Mr. Newton. On the final point about whether the long-term inquiry can make recommendations about fundamental changes in the nature of Broadmoor, certainly we want the committee to examine every possibility absolutely fundamentally.
Mr. Powell: Will my right hon. Friend consult his hon. Friend with a view to limiting the setback which this event might produce upon the wonderful and devoted work which is done at Broadmoor Hospital and endeavour, rather, to make it the means of improving and increasing the morale of both the medical and the nursing staff?
Can my right hon. Friend say when last, if at all, in the more than 100 years of existence of Broadmoor Hospital there has been an instance of a patient released—not escaped—who has committed again an act of the kind for which he was committed to that hospital?
Mr. Maudling: I am most grateful to my right hon. Friend for what he has said about Broadmoor, and I wholly share his view. It is the urgent desire of my right hon. Friend the Secretary of State for Social Services to do what my right hon. Friend has said about the matter. There have been a large number of

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releases from Broadmoor. Over the last 12 years well over 300 people have been released. This is the only case of someone committing another homicide during his period of supervision.
Mr. David Steel: The House will be glad to have heard a description of the isolated circumstances of this incident. Can the right hon. Gentleman tell the House a little more about the advice which is given before a patient is released from Broadmoor? Is it wholly medical advice, or is there any other kind of advice? Can the right hon. Gentleman say whether in this instance there was any conflict within the advice about the advisibility of releasing this person?
How was it that if Young was being supervised by a probation officer he was able to take up employment as a storekeeper at a chemical factory—employment which, in view of his history, was surely highly inappropriate?
Mr. Maudling: I should make it clear that Young did not get the poisons through his employment.
On the first point, the advice is of a medical character. I should make it quite clear that the offences for which he was committed when he was 14 would not, if he had been a sane person, have carried a sentence of more than seven or eight year. He was therefore being held in Broadmoor solely so long as he was judged to be mentally abnormal, and when the medical advice was to the effect that he was no longer mentally abnormal it was difficult to do other than release him.
Mr. Deedes: I share the view expressed by my right hon. Friend the Member for Wolver Hampton, South-West (Mr. Powell). Can the Home Secretary, as a measure of public reassurance, give some indication of how many people are now on conditional discharge from Broadmoor and like institutions, and whether any special action is being taken in this regard?
Mr. Maudling: I ask my right hon. Friend to look at the longer statement which I am circulating about the measures that we have taken. In the case of people on conditional release, we are reviewing each individual case.
Mr. Elystan Morgan: Having had the unenviable task of dealing with Broadmoor releases while at the Home Office, I have the fullest sympathy with those concerned. Will the right hon. Gentleman confirm that in this case the usual practice was followed of acting only on the unanimous advice of the Broadmoor advisers? Can the right hon. Gentleman say whether the opinion of Dr. Fysh, given at the trial in 1962, that Young was a continuing risk was brought to his attention? Has not the time come for psychopathy to be treated as a matter that is out of the ordinary run of mental diseases and disorders, and will this be brought to the attention of the committee of inquiry?
Mr. Maudling: I think that the hon. Gentleman's second point is exactly the sort of thing with which, I hope, Lord Butler's inquiry will deal. This matter needs dealing with at length and in depth.
On the first point, I believe I am right in saying that the statements of Dr. Fysh refer to 1962, when Young was committed as a boy of 14. At that time all the doctors would have agreed that he was a very dangerous person. But the advice we received was that over the nine years in Broadmoor between the age of 14 and the age of 23 there had been a total change in his personality. In the last few years he appeared to have abandoned his morbid interest in poison and violence, and he was at that stage regarded by all the staff, so far as I am aware, as being safe for release.
Mr. Maxwell-Hyslop: What persuades my right hon. Friend that the best way of having a detached chairman for the new inquiry is to ask someone, however eminent, to undertake that task who has himself been Home Secretary and who will, to some extent, be reviewing his own handiwork? Will my right hon. Friend bear in mind that this is in no sense an aspersion on the integrity of Lord Butler but merely on the advisability of asking someone who cannot appear to be totally detached to be chairman of the new inquiry?
Mr. Maudling: Apart from the depth of his experience in these matters at the Home Office, which I think is not without value, Lord Butler is President of the National Association for Mental Health

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and Chairman of the Trustees of the Mental Health Trust.
Mr. C. Pannell: May I, first, associate myself with what was said by the hon. Member for Tiverton (Mr. Maxwell-Hyslop)? I should have thought an ex-Home Secretary a most unsuitable person to conduct this inquiry.
May I ask the Home Secretary, first, before he has this broad look at all the general background, to have a specific inquiry into this case? One can imagine the degree of public alarm that will be present in the next few days and which needs to be allayed. I do not think that it is enough to express sympathy for those killed. The right hon. Gentleman should move with some alacrity to find out exactly what happened in this case. That will illuminate the wider inquiry that the right hon. Gentleman has later and over which he will have had plenty of time to think.
Mr. Maudling: I am afraid that the right hon. Gentleman has not heard correctly what I said. I stated that we have made a profound investigation into what happened and have already taken a number of measures. We have asked Sir Carl Aarvold and his colleagues to advise us urgently on whether anything more should be done. This is quite independent of the long-term inquiry and is precisely designed to meet the point the right hon. Gentleman has in mind.
Mr. Fowler: Will my right hon. Friend accept that these inquiries he has set up will be widely welcomed by the public and that the fact that Lord Butler is chairing one will create increased confidence in them? Will he also accept and agree that public security must be the first priority in decisions on release of this kind, and will he examine whether the parole board procedure, which is working very well with life sentence prisoners, could be adapted to this kind of case?
Mr. Maudling: Yes, Sir. But I think that we must recognise that this is a case of a young man who in 1977 would have been totally free of any restrictions whatever anyway. He was being kept in Broadmoor not as a punishment but because he was believed to be still a
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danger to other people. That was a medical judgment, not a judgment suitable to laymen. I do not see how one can have other than medical advice about whether or not a man is still psychopathic. The only way—this is the great dilemma—of assuring absolute safety is to say that a young man who was incarcerated at the age of 14 will remain in Broadmoor for the rest of his life even though doctors say he is safe. I do not think that that alternative is possible; but it is the only way of getting total safety. But I entirely agree that, within that the safety of the public should be the overriding consideration.
Sir Elwyn Jones: Will the right hon. Gentleman reconsider his answer to my right hon. Friend the Member for Leeds, West (Mr. C. Pannell)? There is no doubt that there will be very grave public concern about the facts which have been disclosed by the Home Secretary and about the facts which are likely to be disclosed by the Press. There have been a number of disturbing indications of the kind of information which is likely to be reported.
In those circumstances, would it not be desirable to have a specific inquiry, perhaps within the ambit of that to be presided over by Sir Carl Aarvold, into the actual circumstances of the release? It is quite true that the right hon. Gentleman has said that the Home Office has made such an inquiry. I understand that it is not intended that the full details of the outcome of that inquiry are to be made public. It may well be that something on those lines might at any rate be of some assistance. But I am afraid that the public reaction will be that the full details of how this man came to be released should be disclosed. Reassurance of the public in this way—while I agree with the whole basic approach of the Home Secretary—is very important. In considering the need for such an inquiry, would the Home Secretary make sure that it would have all the necessary powers to summon the necessary witnesses and make the necessary information available?
Mr. Maudling: I will consider any suggestions put forward on this matter. But I quite agree that the whole circumstances of this matter should be made public, and they will be made public. We have nothing to conceal; there is

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nothing that we want to conceal. At the same time, it should not be assumed that some of the statements that may circulate in the Press are necessarily based on fact. We have made an exhaustive inquiry into what happened and should be delighted to make known all the information we have.
Mr. Allason: On behalf of my bereaved constituents, may I thank my right hon. Friend for the very prompt way in which he has acted and for setting up an inquiry which it appears will take care of the very real fears being felt now in my constituency.
Mr. Harold Wilson: Is the right hon. Gentleman quite sure about his last answer? Would he think about certain points that have been made, although not necessarily answer them this afternoon? My hon. Friend the Member for Hitchin (Mrs. Shirley Williams), who raised the question, suggested that the nursing staff, at least, who were perhaps in a better position to know the man's recent behaviour day to day, were very much opposed to the release, and that it may have been agreed evidence but that was not the agreed view of everyone concerned.
The fact that the Home Office is to have an inquiry is reassuring, but is it not possible that a more detailed inquiry should be made and that Sir Carl Aarvold should be provided with power to require evidence to be produced and power to sit in public in this case? Recalling that on a very recent matter which affected insurance policies for motor cars, a 1921 Act tribunal was set up so that everyone could be satisfied about those responsible, is there not at least a case for considering whether in the circumstances—not the future; not the Butler inquiry or part of the Aarvold inquiry—this could not be in the hands of a court of inquiry which could require evidence to be produced and could decide to sit in public if the public need that reassurance? As the right hon. Gentleman said, very fairly and movingly—and we all agree—there have been deaths in this case, and it is an even worse matter, one would have thought, than the loss of insurance policies.
Mr. Maudling: Certainly what one has to consider is the best way to operate in future to ensure that no such tragedy can
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occur again. But my right hon. Friend and I are absolutely open to every possible suggestion and will certainly consider them. The facts in this case are known entirely to the two Departments and will be placed unreservedly at the disposal of Sir Carl Aarvold.
Mr. Mayhew: Though in the event a tragic mistake was made, the six consultant psychiatrists at Broadmoor, with 50 years' experience between them of assessing cases with extraordinary backgrounds, are agreed not only that this case is unique in their experience but that they know of no parallel anywhere else in the world. Secondly, on the question of supervision, would the right hon. Gentleman say whether this man saw, after his release, the particular consultant who had treated him in Broadmoor? On the subject of supervision, is the right hon. Gentleman aware that of the more than 300 patients released from Broadmoor, as he said, since 1960, the two cases of homicide which have been committed were both committed after the patients had left active expert supervision?
Mr. Maudling: I am grateful to the hon. Gentleman. What he says is absolutely right on the facts, and Young was in contact with the man who had treated him in Broadmoor.
Following is the statement:
My right hon. Friend the Secretary of State for Social Services and I learned with deep concern of the case of Graham Young who was convicted today at St. Albans Crown Court. His offences were committed while he was a patient conditionally discharged from Broadmoor hospital.
Young was convicted at the Central Criminal Court in July, 1962, on three counts of causing grievous bodily harm, by administering poison, to his sister, his father and a schoolfellow (who all recovered). He was then a boy of 14. The court found him to be suffering from psychopathic disorder, and made orders under the Mental Health Act, 1959, for his detention in Broadmoor hospital and for restriction on his discharge without the Home Secretary's consent for a period of 15 years.
Young remained at Broadmoor until February, 1971, when he was 23. His initial response to treatment was slow. But in June, 1970, the responsible medical officer reported that, during the previous three or four years, profound changes had taken place in the patient; that he was no longer obsessed with thoughts of poisons, violence and mischief; and that he was no longer a danger to others.
Consequently, Young's conditional discharge from Broadmoor was agreed by my authority.

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The conditions were that Young should (i) reside at a stated address; (ii) be subject to supervision by a probation officer; and (iii) attend at a psychiatric outpatient clinic as directed by the responsible medical officer at Broadmoor. As a conditionally discharged patient, Young remained liable to recall to Broadmoor until the expiry of the restriction order in 1977. After that date, he would have been free without any restriction.
Young went on discharge to the Government Training Centre at Slough, and subsequently was employed by a firm at Hemel Hempstead. It is clear that the morbid interest in poisons which he had successfully concealed through a long period of prolonged and careful observation in hospital by a most experienced doctor and other staff was resumed almost immediately upon discharge. Young complied carefully with the condition that he should submit to supervision. He did nothing to arouse the suspicions of his supervising officers or psychiatrist about his activities; and his employers at first had no reason to connect the illnesses among their staff with him. Poisoning is a unique crime. If violent offenders on release return to violent ways this is apparent at once. But the use of poison can escape detection for a long time—and in this case the nature and effects of the poisons used made it especially difficult to recognise that the resulting symptoms were not due to innocent causes.
The discharge of restricted patients who have committed serious offences raises issues of profound difficulty. The safety of the public must be the paramount consideration, and no patient is discharged unless it is considered safe to do so. But a judgment must be made, and although the utmost care is taken, it cannot be infallible. Fortunately, errors of judgment are extremely rare; substantial numbers of restricted patients are discharged each year and successfully take their place in the community. In this case, as explained, the restriction order would have expired anyway in 1977; and complete insurance against misjudgment could be assured only by ignoring the opinion of doctors and detaining for the rest of their lives people who have committed offences that might not have made them liable to a life sentence if committed by a mentally normal adult (as was indeed the position in respect of the offences of which Young was convicted in 1962).
Nevertheless, it is plain that all possible steps must be taken to reduce the possibility of misjudgment in the individual case and to strengthen the effectiveness of supervision. Under the present arrangements, as already stated, great care is taken, and considerable numbers of patients have been successfully reabsorbed into society without harm to others. But my right hon. Friend and I examined the existing arrangements in detail as soon as the facts of this case came to our notice, and our Chief Medical Officer has fully discussed the issues with the consultant psychiatrists at Broadmoor. As a result, we have already introduced changes designed to tighten up the safeguards still further. In particular, first, no patient is now discharged from the special hospitals until the responsible medical officer who has supervised the patient's treatment has obtained a concur-
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ring recommendation from another consultant psychiatrist experienced in this particular work. Secondly, the arrangements for supervision, including psychiatric supervision, have been strengthened; and arrangements have been made to ensure that, where necessary, the supervising officer is in touch with the employer and the employer is sufficiently informed about the case to be in a position to tell the supervisor of any incident giving rise to anxiety.
My right hon. Friend and I were in no doubt that these changes should be made without delay, and without waiting until the Young case had been disposed of by the courts. Now that the case in the Crown Court has been concluded, we are forthwith seeking independent advice on whether the procedures, as now improved, are satisfactory or whether there are further changes that should be made within the existing law. We have invited Sir Carl Aarvold, Recorder of the City of London; Professor Sir Denis Hill of the Institute of Psychiatry; and Mr. George Newton, Director of Social Services in Wiltshire, to review the procedures as quickly as possible. These advisers will have access to full information about the Young case and any other individual cases they may wish to examine.
This is immediate action within the existing law. There is also a need for a more profound review of the legal provisions in this general area. My right hon. Friend and I have for some time been coming to the conclusion that there should be a wide-ranging inquiry into the whole question of the application of the criminal law to mentally abnormal offenders, and have discussed this proposition with the Chairmen of the Law Commission and the Criminal Law Revision Committee. This view has been reinforced by the present case. We are now jointly taking steps to appoint an independent and authoritative Committee, including legal, medical and lay members, which will be asked to examine to what extent, and on what criteria, the law should recognise mental disorder or abnormality as a factor affecting the liability to trial or conviction of a person accused of a criminal offence, and his subsequent disposal. The Committee will also be asked to consider whether changes are desirable in the powers, procedure and facilities for enabling appropriate treatment—including treatment in the community and supervision after discharge—to be given to such offenders. Lord Butler of Saffron Walden has agreed to be Chairman of this Committee. Lord Butler, who was of course Home Secretary from 1957 to 1962, is President of the National Association for Mental Health, and Chairman of the Trustees of the Mental Health Trust and Research Fund. The names of the other members of the Committee will be announced as soon as possible.
The present case is one giving rise to great anxiety. My right hon. Friend and I thought that it was clearly right at once to review the procedures and make immediate improvements, and we shall now be receiving independent advice on whether anything additional should be done within the existing law. Whether further and more fundamental

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changes should be made raises issues which are complex and difficult, and these will be fully investigated by the authoritative body which is now to be appointed.

NORTHERN IRELAND
The Secretary of State for Northern Ireland (Mr. William Whitelaw): I will, with permission, make a statement on developments in Northern Ireland.
It is clear that the ceasefire by the Provisional IRA since midnight on Monday has been effective, with no significant incidence of violence since then. During the last two days I have sensed a widespread feeling of relief among people in Northern Ireland that they may now hope to move freely about on their lawful occasions.
Yesterday I met representatives of the Ulster Defence Association. I told them that I believed that the ceasefire created new opportunities for the restoration of lasting peace and confidence under the law, and that I was indeed actively pursuing these opportunities at the present time. I explained that further steps were being taken against rate and rent strikers and that there was no question of remitting arrears of payments. I added that it was Her Majesty's Government's intention to invite Parliament to institute a plebiscite on the Border as soon as possible, but which could not be before September. I urged them not to take any major and precipitate action which could destroy the opportunity created by the ceasefire. I made my position perfectly clear to the UDA representatives, but they have since made it known that it is now their intention to erect their own barricades throughout Northern Ireland this weekend.
The danger, as the House is aware, of any precipitate action of this kind is that it will provoke a renewal of intersect Arian conflict just at the time when there was good reason to hope it had ended. I trust that those who contemplate such action may be influenced by that reflection and that good sense will prevail.
The ceasefire has brought a peace that is fragile. I feel sure that the message of the House is: let those who seek to break it reflect upon their responsibilities, and their duty to maintain the Queen's peace.
Mr. Merlyn Rees: Is the right hon. Gentleman aware that, although in our
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view his statement of last week about the developments leading to the truce was important, it was not the end of the story of Northern Ireland—indeed, in many senses it was only a beginning—that the killings of the three days before the truce showed another aspect of it, and that the reaction of the Ulster Defence Association, given the views of the working class Protestants, was, not unexpectedly, another?
Is the Secretary of State aware that we do not support the feeling expressed today in parts of the Press that this part at least of Government policy is now running into the sands?
May I make our view clear about the Protestant no-go areas? It is that the right hon. Gentleman should react in the same low profile way to the seas he has over the weeks to those in the Bogside and the Creggan, bearing in mind that there the concept of a no-go area is not clear-cut and that they vary in different parts of the Province?
Although—properly—the House has responsibilities for the majority and the minority in Northern Ireland, is the right hon. Gentleman aware that we also have a responsibility for the Army in the new situation? It is on my mind, perhaps, that the last soldier to be killed was from the city of Leeds. What is the general rôle of the Army in these post-truce days? It is as well to be absolutely clear about it.
Is the right hon. Gentleman aware that we support the steps he is taking towards free elections in December? Is he aware, however, that we have doubts about the worth of a plebiscite which will tell us what we already know and, indeed, respect? We see that it is meant to reassure the Protestants. We shall need to know more about the mechanics of it, the register on which it will be done, and what will be the question or questions to be asked. Is the right hon. Gentleman aware that, in our view, to be meaningful the results would need to be broken down into districts? Has the right hon. Gentleman discussed this with his Advisory Council, which represents a wide variety of view in the Province?
Finally, is the right hon. Gentleman aware that the best sort of election to aim for is for a Northern Ireland type Greater London Council in which a wide variety of views can be represented, aiding reconciliation and not polarisation? Will the

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right hon. Gentleman note that our aim must be to ensure that all views will freely be able to be expressed before either a plebiscite or, indeed, elections?
Mr. Whitelaw: No one could possibly wish to deplore more than I do the killings which took place immediately before the midnight truce. Indeed, I think that the killing which took place three minutes before midnight was one of the most distressing experiences that I have heard about for a long time.
Equally, no one on the other side appreciates more keenly than I do, or has had over the last few weeks more opportunities of appreciating, the intense feelings of frustration and anger amongst the majority community. I therefore note what the hon. Gentleman says about any proposals to put up barricades. I shall go to Northern Ireland this weekend, and I shall take great care to take note of the points the hon. Gentleman made about how barricades should be handled, because I appreciate the feelings, although I am bound to say, as is the whole House, that there are other ways of expressing those feelings.
The hon. Gentleman is perfectly right on the question of a plebiscite. The plebiscite was promised in the first instance in my right hon. Friend's statement when the new situation was created. I believe that it is needed at an early date as a reassurance to the majority community. Assurances given by this Government, and indeed by both parties in the House, have proved in many cases to be not enough. I beg those who still have doubts to believe that the clear offer of an early plebiscite must add to those assurances which have been constantly given by me, by the hon. Gentleman, and by right hon. and hon. Members in all parts of the House, and which are very important to the majority community.
On the question of the plebiscite and of areas, the assurance given by the House to the people of Northern Ireland is that the majority of the people in Northern Ireland will not be put into Southern Ireland against their will. That is the constitutional position of the North as it stands. So there are great problems about the course the hon. Gentleman has suggested. The details of the plebiscite will naturally be discussed in the House before that time.
Mr. Stratton Mills: I strongly join in the appeal for the speedy removal of all barricades in Northern Ireland, and I stress the very great dangers which they can cause over the coming weeks. I welcome what my right hon. Friend has said about the referendum and hope that it will be pressed on with speedily, as it will give an opportunity for legitimate political expression, which is vitally important.
Will my right hon. Friend also make it clear that the events of the four days prior to the truce coming into effect at midnight on Monday cast a very heavy shadow as to the future intentions of the Irish Republican Army and that the bulk of the people of Northern Ireland are particularly apprehensive about this point?
Finally, may I direct my right hon. Friend's attention to the events in Duncairn Gardens late on Monday night, when gunmen shot seven of my constituents, one of whom subsequently died, and to the heavy level of attacks that have been taking place on the people in this area and in the area of Old park and the Crumlin Road.
Mr. Whitelaw: I am grateful to my hon. Friend for the remarks he made about the barricades and for the helpful way he put the matter. I fully support what he said. I am determined to play my part on one set of barricades and very determined to succeed in doing so. I therefore hope that others will not go up
It should be remembered that after the plebiscite there will be the local government elections. I believe that they present an important opportunity for electoral expression as well.
Of course I understand that the events of the four days before the truce cast doubts and apprehensions. Nevertheless, I still maintain, as I believe that the House maintains, that any opportunity for peace, however fragile, should be taken and should be given every possible chance to succeed. I am well aware of the events which took place in Duncairn Gardens, in my hon. Friend's constituency. I saw one of the local councillors for this area at the City Hall when I was seeing the Lord Mayor only yesterday.
This gives me an opportunity to answer another point raised by my hon. Friend. I certainly pay great tribute to the resolution, courage and skill of the security forces. I have done so before and wish

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to do so again. Their task in these circumstances, above everything else, is to keep the peace and prevent the sort of intersect Arian conflict which I fear was what happened in Duncairn Gardens.
Dr. David Owen: While not wishing in any way to disturb the fragile peace which exists, and congratulating the right hon. Gentleman on the measure of bipartisanship which he has been able to secure, may I urge him to go steadily on the question of a plebiscite and to consider having the local elections before any plebiscite? Many hon. Members on both sides of the House are anxious about the plebiscite and do not wish any steps to be taken which would prejudice a long-term solution of this difficult problem.
Mr. Whitelaw: I note what the hon. Gentleman says. There will be an opportunity to discuss the plebiscite and its details in the House. The majority of the community in Northern Ireland have had a great deal of suffering in the last three years. Their fears that they were to be sold into a united Ireland and about the moves which were taken by the House may be understandable, but were absolutely without foundation. They need positive reassurance, and this is one of the ways in which we can give it. My word, and the word of every hon. Member, has been and will be given to them over and over again. I will go on giving it. They need positive reassurance, and I understand that, although I find it difficult to accept that when one's word is not believed. However, I believe that further reassurance is necessary.
Mr. Deedes: We are well aware how intentionally provocative were certain events before the truce. Does my right hon. Friend agree how tragically ironic it would be for the people of Northern Ireland if in the week of the truce the restraint which has been so long shown under the provocation of shooting and bombing were to break down?
Mr. Whitelaw: I am bound to agree with my right hon. Friend that the restraint that has been shown in very difficult circumstances has been remarkable. I understand that as the hon. Member for Belfast, West (Mr. Fitt) said, people still have doubts. But at least there is a chance and after three years a chance is something which I do not believe there
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was any sign of until recent times. Such a chance now should not be thrown away.
Miss Devlin: Is the right hon. Gentleman aware, when he talks about repayment of rents, that the majority of the people who have not been paying rents or rates are law-abiding people in the best circumstances, but they felt, of necessity, that it was the only peaceful gesture they could make against the internment policy? Is he further aware that the amount of money outstanding, according to his own Department, is less than £2 million—[Interruption.]—and £2 million is very little to a Tory. When the internees hopefully are released, the civil disobedience campaign could quickly be brought to an end if some form of amnesty were to be granted to rent strikers. I have already raised this matter with the right hon. Gentleman. But when he says that debts must be paid, debts must be paid on both sides. Many people interned without trial and subsequently released have the problem of no stamps having been paid for the period they were in prison, no wages, lapsed insurance policies, and loss of position on salary scales, particularly for teachers. If debts are to be paid, is the Minister aware that they must be paid on both sides?
Mr. Whitelaw: In answer to the hon. Lady, I shall deal specifically with the rents and rates strike. The amount of money outstanding is about £1¾ million. In some areas of Belfast gas and electricity payments are being withheld. In Londonderry gas and electricity payments are being paid normally. As to the reasons why I believe that this money must be repaid, the hon. Lady and the House should appreciate that in any community services have to be provided. If services are provided they have to be paid for. It would not be fair on law-abiding citizens in Northern Ireland if they were to find they had been paying all the time and other people were getting services for which they had not paid. That would not be a fair position. I should add that any arrangements for repaying the amounts owing will be most carefully and sympathetically treated, bearing in mind any question of hardship which might arise. Every care will be taken on that score. When I took over from the Stormont Government I found

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that under the arrangements which had been made payments were being made only by the poorest members of the community. I did not think that was a fair situation. That is why I have decided that in future deductions will also be made from salaries and fees paid from public funds. For example, these deductions will be made from the salaries of any teachers and doctors who have been withholding rents and rates. That is a fairer way of doing it.
Rev. Ian Paisley: Is the Minister aware that the people of Northern Ireland will welcome both his condemnation and that of the Labour Party spokesman of the fiendish way the IRA carried out atrocities up to the truce? Is he aware that one man in the Shankill Road area was so brutally mutilated before being murdered that his own brother-in-law was unable to recognise him, and the photograph of his injuries was so sickening that no newspaper was prepared to print it? Does the right hon. Gentleman accept that the people of Northern Ireland welcome the condemnation which has been given on both sides to the atrocities that took place before the truce?
Will the right hon. Gentleman also note and mark that the vast majority of people in Northern Ireland will welcome the fact that those who engaged in the rents and rates strike will have to pay back what they owe?
Will the Minister give an assurance at the Dispatch Box today that traditional parades will go on as before, because a campaign is starting now to try and cry down these parades as acts of provocation? Will he also assure the House that the assurance given by his right hon. Friend the Prime Minister will be fulfilled, and that this plebiscite will be taken of all the people of Northern Ireland? Doe she agree that the people of Northern Ireland now have a right to say that their future should be within, if they want to say it is within, which I believe they will say in overwhelming multitudes, or without the United Kingdom? Surely the time has come for the people of Northern Ireland, after all the bloodshed and the damage to their Province, to have their voice heard, and be allowed to be heard, by this House?
Mr. Whitelaw: I have said enough about the events immediately before the truce. I want to see that the ceasefire holds for the future and that peace lasts, but I note what the hon. Gentleman has said. A rents and rates strike is an almost inevitable fact in any democracy. I decided in a difficult situation that the traditional parades were felt on all sides as being traditional in Northern Ireland. Therefore, I decided to lift the ban which had been put on them by the previous Government. I believe I must trust people to carry out their traditional parades sensibly. Therefore, I am determined that the parades will go on. I also trust that those who take part in them will do so in a careful way—I am sure they will—that their stewardship will be very good, and that where any changes in route are required by the security authorities those changes will be adhered to. On that basis I am keen to see that what is a part of Northern Ireland's life should be able to go on. I have already made the position on the plebiscite clear.
Mr. Russell Johnston: The right hon. Gentleman has mentioned his meeting with the representatives of the UDA. Does he intend to get in touch with other leaders of the Protestant community during the course of this week with a view to seeking their co-operation to press for restraint? As a number of hon. Members have rightly said, it is surely a question now of being able to say to them that, having shown immense forbearance, patience and restraint throughout the violence, if there is to be hope, that patience and restraint must continue on into the fragile peace?
Mr. Whitelaw: I am grateful to the hon. Gentleman. I have had such conversations with a wide variety of people and have urged such restraint on them all. I know that hon. Members will exercise their influence in that regard as well. The leaders of the UDA who came to see me yesterday understood the position, and I understand their feelings as well.
Mr. McNamara: Is the right hon. Gentleman aware that—I say this with great regret—on Tuesday a sergeant of the Gordon Highlanders was buried in my constituency, one of the last casualties in this terrible conflict? As with many casualties from his constituency, and,

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even more persons serving in Northern Ireland, I, perhaps more than most hon. Members, am concerned that peace should be created and should endure.
Is the Secretary of State aware that the rent and rate strike is tied up with the question of the internees and the fact that they have been denied what we would expect them to receive under normal English standards of justice? Many people on this side of the House and in the country feel that it is most important to have local government elections before a plebiscite so that a normal state of affairs can be reached quickly rather than permit attitudes about the Border, which many of us believe would recreate the previous situation, to polarise again.
Can the right hon. Gentleman make a statement not only about traditional parades in general but, above all, about the traditional parade on 12th August in Derry?
Mr. Whitelaw: On the first point about the sergeant in the Gordon Highlanders who was buried in the hon. Member's constituency, and, indeed, all the soldiers who have lost their lives in this tragic situation, the question enables me to say that I and the House have been deeply distressed also at the killing of the RUC constable in Newry on that last night. Had it not been for my duties to this House I would have gone to the funeral, but I had to come to the House and I therefore sent a representative to the funeral.
On the rates strike and its impact on internment, I must accept what the hon. Gentleman says. I simply say that I note it. I note also what he says about the importance of the local government elections and the plebiscite. From my experience as Leader of the House I know that mounting the local government elections at the right time will need considerable co-operation in all the circumstances in which we are placed in the House.
Mr. Haselhust: Can my right hon. Friend the Secretary of State say whether the existence of the barricades in the Catholic areas is the sole sticking point for the UDA, and does my right hon. Friend have any further proposals which might help to promote an atmosphere in
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which Catholic barricades might come down.
Mr. Whitelaw: The original requests from the UDA were, first, that violence must be ended, second, that it did not want an amnesty on the rent and rates strike and, third, that it wanted a plebiscite on the Border. The fourth was quite properly concerned about no-go areas in the Bogside and the Creggan. On three of the points which they previously raised I was at least able to say that there was a ceasefire which I believed created a new opportunity and a new situation. I said that I would take advantage of that in relation to the barricades in the Catholic areas. I was unable to tell them exactly how and exactly when, and I think that was perhaps the sticking point in our discussions.
Mr. Orme: It seems extraordinary, as the right hon. Gentleman has gone out of his way to meet the main points of the UDA, that the UDA should then threaten to create no-go areas this weekend. How representative does the Secretary of State believe the organisation to be of the Protestant community as a whole? Some of us met the Ulster Unionist Women's Association in the House of Commons earlier this week. They have extremely strong views which they expressed very forcefully. Nevertheless, we were able to discuss the future with them and not dwell on the past. In these circumstances does the Secretary of State not feel that the UDA proposals are extremely destructive at this time in the ceasefire? Has he met other representatives of the Protestant community to try to get their support?
Mr. Whitelaw: From my wide discussions with many people throughout the Protestant community I can assure the hon. Member that despite their doubts about the ceasefire, to which the hon. Member for Belfast, West referred, and despite their feelings of frustration, the overwhelming majority deeply hope that nothing will be done to disturb the very fragile peace at this stage. There are people of very extreme views with whom I have had meetings. I have to take what comes in that respect. But I understand their feelings. Nevertheless, the vast majority of people in Northern Ireland desperately do not wish to see this opportunity thrown away.

QUESTIONS TO PRIME MINISTER
Mr. Strauss: On a point of order, Mr. Speaker. I wish to raise a matter arising from an answer given by the Prime Minister in the course of one of his replies. He said that he intended to put all his public speeches in future in the Library. I submit that according to the rules which govern Questions that ministerial declaration will bar any Member from asking the Prime Minister in future if he will put a public speech of his in the Library. We all know that this is the device and the only device available to us, by which we can question the Prime Minister about statements he has made outside the House. It would be very serious if our traditional and valuable custom of questioning the Prime Minister on policy matters which he has taken outside the House were to disappear as a result of this off-the-cuff answer by the Prime Minister during Questions.
It is probable, in view of that statement, that such Questions about putting his speeches in the Library will be banned, and I hope that you will look into this matter very carefully, Mr. Speaker, and maybe report to the House tomorrow or at the earliest opportunity.
Mr. Speaker: Those who advise me on these matters were able, I believe, with their customary ingenuity, diligence and imagination to anticipate what the right hon. Gentleman's point of order might be and to furnish me with a ruling. The words used by the Prime Minister will be carefully studied in Hansard, as are all ministerial answers, to see whether they constitute a refusal to answer further questions. If any doubt as to particular Questions then arises and the matter is referred to me I shall give a considered ruling in the usual way.
Mr. McNamara: Further to that point of order, Mr. Speaker. A few weeks ago I sought to raise a Question asking whether the Prime Minister would appoint a Minister responsible for gazumping. I was told by the Table Office, and I had no reason to contradict what it said, that the Prime Minister had said he would inform the House in future when he intended to make any further ministerial changes. In a similar manner to that to
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which my right hon. Friend the Member for Vauxhall (Mr. Strauss) has referred, we were prevented from asking the Prime Minister Questions on matters of importance happening from day to day. I should be grateful if you will consider that matter, Mr. Speaker.
Mr. Speaker: I shall certainly consider that matter.
Mr. Kaufman: Further to the point of order, Mr. Speaker. Can you make a statement on this next week so that we do not have individual discussions with the Table Office which are inevitably frustrating? In that statement will you take account of this question that even if what the Prime Minister said today, which I do not believe was off-the-cuff, blocks Questions asking him if he will put speeches in the Library, which I do not think will be the case, it will not rule out Questions asking him on what date he put them in the Library?
Mr. Speaker: I will also consider that interesting possibility.

COMPLAINT OF PRIVILEGE
Miss Devlin: Mr. Speaker, I should like to raise as a matter of privilege a statement made by the Minister of State for Defence in the House last Thursday. I apologise first to the Minister for the short notice I gave him in asking him to come to the House, but, like the majority of Members, I did not see anything amiss when the statement was made.
The statement referred to negotiations taking place over claims received for compensation of the relatives of those killed on Bloody Sunday in Derry. The Minister stated quite clearly in the House—and his statement was reported in the Irish newspapers—that negotiations were taking place. That statement was made on the afternoon of 22nd June. On the afternoon of 25th June, I received a telephone call from Mr. Christopher Napier, the legal representative for all 13 families concerned. Mr. Napier was understandably upset, and he asked me what steps he could take about the Minister's statement. I therefore asked him to furnish me with evidence in support of his claim that the Minister had made a statement that was not true, either in an attempt to mislead the House or because he was

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ignorant of the facts. I received on the afternoon of 28th June the necessary documents, and therefore came before the House with the evidence as soon as I could do so.
I ask the House to bear with me while I briefly go through the facts. On 15th February, 1972, Mr. Napier on behalf of each individual family wrote a separate letter to the Defence Department Claims Commission in Windsor Park, Belfast. I will read the relevant paragraph from one of the letters in which he said:
"I am instructed that in the afternoon of January 30 1972 Patrick Doherty was shot dead by a British soldier near the Rossville Street flats in Derry. I am further instructed that the soldier in question was acting as a servant or agent of the Ministry of Defence at all material times.
I would be grateful if you could confirm that the soldier was so acting, or, if not, please confirm in writing that he was acting outside the scope of his employment and agency so that I may correspond with him about the matter."
That letter was formally acknowledged on 16th February by the Area Claims Officer, who wrote:
"We acknowledge receipt of your letter of 15th February, which is receiving our attention."
There was no further communication from the Department, and on 26th May Mr. Napier was forced to write again, stating that since he had not had any communication since 15th February it was necessary to write again. He wrote:
"Your lack of communication in this regard can only lead me to the conclusion that you are not prepared to honour the commitment which was made on your behalf by the Prime Minister in the House of Commons and accordingly unless I hear from you with an assurance that this commitment will be honoured I propose to institute proceedings against you on behalf of Mrs. Eileen Theresa Doherty the personal representative of the above deceased without further notice to you."
That letter was acknowledged on 5th June in a reply on behalf of the President of the Claims Commission, which said:
"You will appreciate…that there is a great deal of evidence to be reviewed and the issues involved are complex. We assure you that a decision will be reached as soon as possible."
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Mr. Napier wrote back making a number of relevant points, including the fact that the Department could not negotiate and could not come to any decision unless it asked the relevant questions of the only person who had the information, the legal representative of the families. Since the Department was represented at all times at the Widgery hearing, there were only two points on which it could yet come to a decision—the question of liability or the question of quantum. The Department refused to furnish any more details to Mr. Napier, and as a result on 5th June proceedings were instituted by Mr. Napier against the Department, naming the Department, the Minister of Home Affairs, the Attorney-General and the Secretary of State for Northern Ireland. Those proceedings were instituted not for failure to negotiate. On 22nd June an appearance was entered for the Department. Evidently, the Crown Solicitor was instructed by someone in the Department to accept the issue of proceedings.
An appearance was entered on or before the day the Minister made his statement, and therefore when he said in the House on 22nd June that negotiations were taking place on the matter he was aware, or should have been aware, that proceedings had been issued against his Department and had been accepted on the basis of breakdown or non-existence of negotiation.
Therefore, Mr. Speaker, I submit, and ask you so to rule, that either he was misleading the House or he was acting out of culpable ignorance not in keeping with his position. He is either a fool or a liar.
Mr. Speaker: Will the hon. Lady bring to the Table any letters or other documents she relies on to support her point?
Copies of letters and documents handed in.
Mr. Speaker: I am grateful to the hon. Lady for having given notice that she intended to raise this matter. In accordance with the practice I will rule tomorrow.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's Sitting, Proceedings on the Essex River Authority Bill, set down for consideration at Seven o'clock by direction of the Chairman of Ways and Means, shall, instead of being considered at that hour, be considered at the conclusion of Proceedings on the Business of Supply and paragraph (1) of Standing Order No. 3 (Exempted Business) shall apply to the proceedings on the Consideration of the Bill for a period of three hours from the conclusion of Proceedings on the Business of Supply or, if those Proceedings are concluded before Ten o'clock, for a period equal to the time elapsing between Seven o'clock and the completion of those Proceedings.—[The Prime Minister.]

ORDERS OF THE DAY
  SUPPLY
  [24th Allotted Day],—considered.

  POUND STERLING
  Mr. Speaker: I have selected the Amendment in the name of the right hon. Gentleman, the Leader of the Opposition.
  Before I call upon the Chancellor of the Exchequer, may I point out to the House that it is already a quarter to 5 o'clock, I have a very long list of Members who would like to speak. Many will be disappointed, but the shorter the speeches, the fewer will be disappointed.
  4.46 p.m.
  The Chancellor of the Exchequer (Mr. Anthony Barber): I beg to move,
  That this House approves the decision of Her Majesty's Government temporarily to float the pound.
  I think it would be convenient to the House if I dealt first more or less chronologically with the events of recent months leading up to the massive movement of short-term capital last week and to the decision to allow the £ to float. I shall then come to the reasons for the decision and the consequences that flow from that action.
  On 17th and 18th December last year in Washington the Finance Ministers of the leading industrialised countries of the free world sat round a table in the Smithsonian Institute and agreed on a new realignment of currencies. Looking back on that agreement and all that led up to it, I believe it was significant for four reasons. First, it brought to an end the period of acute uncertainty in currency matters which followed President Nixon's announcement of 15th August. Secondly, as part of that agreement—and a matter of great significance for the United Kingdom, as for the rest of the world—the United States import surcharge was removed. Thirdly, that agreement was a manifestation of the ability of the leading industrialised countries of the world to work together and to reach solutions to problems which are not only immensely complex in themselves but which involve important questions of national interest. Finally, the agreement was meant to give

  1701
  time for progress to be made towards the reform of the international monetary system.
  There were some in this country at the time of that agreement who contended that despite the relief afforded to us by the ending of the United States surcharge, in the context of the overall realignment of currencies the fixing of the exchange rate of the £ in terms of the dollar at 2·60 compared with its earlier parity of 2·40 was probably too high. I did not take that view, for the reasons which I then gave. I was also satisfied that we were making a proper contribution to an agreed solution of a world problem. But neither I nor any of my colleagues assembled in the Smithsonian conceived of that agreement as setting a pattern for all time. That would obviously have been absurd.
  After the Smithsonian realignment, it was generally expected that some of the ample inflow of funds which had come into this country since President Nixon's announcement of 15th August would be reversed, but that did not happen. There were several factors at work but among other things it had been too readily assumed in some quarters that the devaluation of the dollar would have an immediate instead of a gradual effect on the United States balance of payments. In fact, the continuing deficit tended to put more rather than fewer dollars into the hands of other countries, and certainly the funds which had moved into sterling during the period leading to the measures of 15th August and between then and the realignment in December largely remained in our reserves until the events of recent days.
  Throughout the earlier months of this year, there was much discussion within the European Economic Community about a scheme of narrowing the margin of fluctuations between Community currencies, and I turn to this aspect. It is important to bear in mind because, I think, there is some misunderstanding on this point, that the special arrangements for maintaining a narrower margin of fluctuations between Community currencies did not affect the right of any country in the enlarged Community to alter its parity, and there is another point about the scheme of which I should remind the House. The scheme for a narrower margin within the Community
  1702
  was conceived as an experimental one and was subject to review after six months. Some aspects of the arrangements were entirely new—for example, the use of Community currencies as opposed to dollars for exchange market interventions.
  Mr. Dennis Healey: Could the right hon. Gentleman clear up one point? Is it the case, as it is claimed in many newspapers, that the agreement on the so-called "snake in the tunnel", while it does not prevent adherents from changing their parities does prevent them from floating beyond the very narrow limits set in the agreement?
  Mr. Barber: I thought it was self-evident that an arrangement for narrowing the margin of fluctuations between Community currencies obviously could not include a member whose currency was floating. Obviously, they are inconsistent. Surely that is self-evident.
  At the same time, the scheme had as one of its aims the development of co-operation among Community central banks which will become increasingly necessary as progress is made towards economic and monetary integration. Whatever may be said about the merits of the Community scheme, one thing is beyond challenge—that the scheme in its present form was never meant to deal with an exceptional situation like the one we faced last week, and could not have been expected to do so.
  I come now to the immediate cost of the outflow of funds which began a week ago last Friday, on 16th June. I shall have something to say later on about the balance of payments, so all I will say now is that, considering the current account as a whole, together with the level of our reserves, there was nothing in the objective facts of our present trade and payments position to have triggered off this sudden movement of funds. But the undoubted fact is that there is overseas, as there is at home—I shall have more to say about it—an underlying concern at the rate of inflation in Britain.
  There had, of course, been a great deal of news about industrial unrest. Nevertheless, it is right that I should tell the House that throughout the many weeks prior to Friday, 16th June, the

  1703
  foreign exchange market had been calm. There was a comparatively small flurry in the market on Thursday, 15th June. That in itself was nothing to be particularly concerned about. But on the following day, 16th June, the outflow was substantial. Maybe it was sparked off by the threat of a national dock strike. As the House will remember, however, over the weekend it became clear that that would not take place, and, not surprisingly, on Monday, 19th June, the outflow had fallen to a figure of little significance and it seemed that the trouble was dying down. However, that was not to be.
  On Tuesday, 20th June, there was another substantial outflow and, as so often happens, the movement, once well launched, fed on itself. The House knows that it is not customary to reveal details of transactions on the exchange equalisation account, but this is an unprecedented situation, and in this unprecedented situation it is right that I should tell the House that intervention to defend the rate was not only large but that it was accelerating when the decision was taken last Thursday.
  The total over the period in dollar terms was of the order of 2,500 million dollars. It was clearly unacceptable to go on with losses on this scale. But we acted in time to safeguard our reserves. In accordance with the terms of the Community scheme, the intervention will in the normal course fall to be settled at the end of July. It will therefore affect the reserves in July and not in June. But if we were settling now we could cover the amount from the reserves and from funds swapped forward, and we would still have, without any borrowing at all, reserves of over 5½ billion dollars. That is about double what we had in June, 1970, and at that time our short-and medium-term official debt amounted to about 3½ billion dollars. In addition, there is the reserve position in the International Monetary Fund of 760 million dollars, which many countries count as part of their reserves. Therefore, our reserves are still ample.
  The decision which was taken last Thursday evening was not an easy one. I was very conscious of the full implications of the advice which I gave to my right hon. Friend the Prime Minister
  1704
  that as a temporary measure sterling should be allowed to float. But equally, he and I both realised full well the consequences of failure to act that evening. If this action had not been taken, and taken promptly, we might well have found that our reserves would have been diminished to a wholly unacceptable extent in response to pressure on sterling. We were determined that we would not revert to that situation and we were equally determined that we would not allow ourselves to slide into a situation where we would have to borrow substantial sums, with all that that would involve. So, whatever differences of opinion there may be about events leading up to the decision last Thursday evening, I think it is not without significance that in the circumstances the action we took has been endorsed on both sides of the House and by both sides of industry.
  One of the inevitable consequences of the decision to float the £ temporarily was the necessity at the same time to extend exchange control to transactions between United Kingdom residents and the sterling area, except for the Republic of Ireland. The basic reason why this was necessary is that many important sterling area countries no longer link their currencies to sterling, so that while we are floating, they are not. It follows that, with a floating £, and in the absence of exchange control, there could be a speculative outflow from the United Kingdom to these countries. It was necessary to make the change general, except for the Irish Republic, because, although many sterling area countries maintain a form of exchange control in respect of transactions with other sterling area countries, this is by no means general, nor is the control uniform. So if any channels had been left open, speculative funds would have been likely to flow through them.
  There are a number of points concerning the extension of exchange control which I should make here. First, there is no restriction on current payments; secondly, there is no restriction on outward direct investment in sterling area countries; thirdly, there is no restriction on sterling borrowing by companies controlled by sterling area residents for direct investment in the United Kingdom. The House will therefore see that these

  1705
  arrangements reflect the long-standing links between the United Kingdom and sterling area countries, and in particular that trade and direct investment will not be restricted in any way.
  The main changes concern personal capital transfers and portfolio investment which are obvious channels for short-term movements. For the reasons I have given the House will agree that once it was decided to float the £ it was essential to take the action I have described. As I said in my statement to the House on Friday:
  "Pending consultation with the Governments concerned, we have taken immediate temporary measures applying exchange control to transactions with the sterling area."—[OFFICIAL REPORT, 23rd June, 1972; Vol. 839, c. 878.]
  Mr. Harold Wilson: I think it is implied in what the right hon. Gentleman has said, but will he confirm that this means no access by the sterling area to the London capital market or that it can only have access as agreed by the authorities in London?
  Mr. Barber: What it means is that there is no restriction on sterling borrowing by companies controlled by sterling area residents for direct investment in the United Kingdom. I am somewhat hesitant, for reasons which I know the right hon. Gentleman will understand, to answer off-the-cuff questions about details, important though they may be, concerning the exchange control regulations. [Interruption.] I do not want either the House or the country to be misled by this, because important consequences can flow from it. I will ensure that the right hon. Gentleman receives a reply in the wind-up this evening or, if he wishes it, I will make sure that he gets one before the wind-up.
  Mr. Harold Lever: Will the right hon. Gentleman clear up one point? Did he really say a moment ago that direct investment into the sterling area will not be affected by these exchange controls? Could he tell us whether this is so?
  Mr. Barber: What I said was that there is no restriction on outward direct investment in sterling area countries. That is the position. I was referring to what I said to the House on Friday. The fact is that the present situation is a temporary one and the exchange control measures
  1706
  we have taken are specifically designed to deal with that temporary situation. In the light of what happened last week and in particular the magnitude of the short-term capital movements involved, I must say to the House that this matter of massive short-term capital movements is one of the most serious world monetary problems which the discussions on reform must tackle.
  Hon. and right hon. Members in all parts of the House will agree from the cumulative figure I have given that the importance of this problem was demonstrated last week in a spectacular fashion. It is an immensely difficult matter and I certainly cannot make any prophecy of what will come out of these discussions. They could well lead to a consensus that some use of exchange control could for many countries be part, I am sure it could only be part, of the solution of this international problem. This is why I cannot say what kind of arrangements will be appropriate for the future. What is now needed is to have the consultations with the sterling area Governments to which I have referred. There will also be the wider discussion of international monetary reform for which I have been working and for which the way is now clear.
  The IMF Board will, I am sure, understand the reasons for our action. After all, sterling is not the first currency to be allowed to float as a temporary measure. For the IMF the important point is that I have made it clear that we intend to return to a fixed parity as soon as possible, when conditions permit. I recognise that there are some in this House who favour the permanent floating of the £. I would only add that I have spelled out my own views at some length on previous occasions. Whether I am right or wrong the reality of the present situation has to be faced, and that reality is that the overwhelming majority of Finance Ministers throughout the world agree that the best system is a system of fixed, but adjustable, parities.
  Mr. John Hall: Would my right hon. Friend confirm that this temporary floating rate would have to come to an end by 1st January next in any case?
  Mr. Barber: I do not think that one can give any time-scale, but I hope it

  1707
  will come to an end by 1st January next and I have already said that in public.
  On Monday I went to Luxembourg to discuss with the Finance Ministers of the 10 countries of the enlarged Community the problem which had arisen for the United Kingdom and the consequences of the action which we had taken. All the Finance Ministers of the enlarged Community at that meeting appreciated the problem with which we were faced and understood the necessity for the action we had taken. I reaffirmed our intention to return to a fixed parity as soon as possible and I told the Finance Ministers that our hope was, despite our difficulties, that the general realignment reached at the Smithsonian would be maintained.
  I also assured that meeting that the British Government remained convinced that in the interests of the United Kingdom, no less than the enlarged Community, the movement towards economic and monetary integration in the enlarged Community must goon. The British Government take the view that this is of great political as well as economic significance.
  Since then my right hon. Friend the Prime Minister has spoken of this aspect in relation to the forthcoming summit in October. In just over a fortnight, on 17th July, the Finance Ministers of the 10 countries of the enlarged Community will be coming to London at my invitation to consult together about our common objectives for the reform of the international monetary system. I made the point in Luxembourg, and I think this is now generally accepted, that recent events have made it all the more urgent to reach agreement on a world-wide solution and I am sure that the forthcoming meeting in London will help to prepare the way.
  The question of the reform of the international monetary system is not just an esoteric, technical matter but a matter of immense importance in world trade, and so for the economic well-being of the developing world as well as for the industrialised countries. During the past two years since I became Chancellor it has become more and more apparent that the developing world, to which the reform of the system is also
  1708
  of great significance, means to play a full part in all this. It is absolutely right that this should have been reflected in the new Group of Twenty, on which agreement was reached earlier this week.
  Many people have been asking during the past week why it is that over a period of only a few days there can develop quite suddenly such massive flows of short-term capital. In modern circumstances there is a huge volume of funds which can move very quickly from country to country and the size of the potential movement has grown rapidly in recent years. These movements take several forms of which one of the most important for a country heavily dependent on international trade like the United Kingdom is "leading and lagging" in payments and receipts. The volume of world trade has grown rapidly in recent years, partly because the volume of overseas trade as a proportion of national product has grown in nearly all countries and partly because prices have been rising. The potential effect of leading and lagging has therefore been greatly increased.
  Short-term funds can also be more rapidly deployed about the world as a result of the development of the international banking system and of the international business corporations whose quick communications network fosters their opportunities to protect the funds for which they are responsible by moving them out of currencies whose value is expected to decline into currencies whose value is expected to rise. Movements of this kind tend to be self-reinforcing because sentiment is catching.
  Mr. R. B. Cant: Before the right hon. Gentleman continues, will he say whether he really believes that leads and lags made any contribution to this two-day crisis and could he give us a breakdown of the 2,500 million dollars attributable to the multi-national company treasurer on the one hand and the pure speculator on the other?
  Mr. Barber: I do not believe for one moment that that would be possible. I should like to add that those who are entrusted with the management of large funds naturally avail themselves of the existing opportunities for protecting those funds from loss.

  1709
  It is not an easy matter to reduce the movements of funds which have unwelcome consequences without interfering with capital movements which are essential to the free exchange of goods and, indeed, to the beneficial development of the world's resources in the interests of all its peoples. The aim in seeking to reduce the damage caused by short-term flows must be to nullify what is bad without dispensing with what is good, and this most certainly must be an important part of the joint international studies about reform.
  As the House knows, in the first five months of this year, we had a small surplus on current account, the deficit on our visible trade being more than offset by a continued surplus on invisible account. Imports are likely to go on risingas economic activity continues to pick up, but export volume should do better with the expected recovery in world trade. The visible trade balance will probably remain in deficit, but last year's visible trade surplus was quite exceptional. The normal pattern is for the United Kingdom to finance our trade deficit and our net overseas investment through the surplus from services and income on overseas investment. I explained in my statement last Friday that there is still room in the economy for considerable further development without straining either capacity or the labour force, and it is not therefore necessary, or indeed desirable, to accompany the decision to allow sterling to float with measures to restrict demand.
  Having said that, there are two points of particular importance which I must make. The first concerns monetary policy. At the time of the Budget, I set out the principles which should govern this policy. It would be quite wrong to restrict the rate of growth of the money supply in a way which would hinder the rate of economic growth at which we are aiming and which we are determined to achieve. On the other hand, there is no doubt that an excessive rate of growth of the money supply can add to inflation. A week ago today I concluded that it was right to raise the Bank Rate by 1 per cent. That decision was taken in part for considerations of monetary policy. The most recent published figures for money supply and
  1710
  credit showed that they had been growing faster than appropriate to support the growing economic activity.
  Last week's adjustment of Bank Rate in no way represented a change in monetary policy or in our more general aim of creating expansion while curbing inflation. On the contrary, the purpose was to keep the growth of money supply at a rate adequate to finance the 5 per cent. expansion of output at which I aimed in the Budget and which I believe we are at present achieving.
  The House will be aware of the arrangements which were announced yesterday by the Bank of England to assist the banks to maintain their reserve asset ratio which has fallen as a result of the currency outflow. This action is consistent with our intention to keep money supply under control. It will not in fact fully offset the contractionary effect on the reserve base of the banks. It is a special, temporary measure of assistance to meet the unprecedented circumstances arising from the outflow.
  Certain banks have today announced an increase of 1 per cent. in their base rates. The House should know that if the special relief had not been made available there is no doubt that much sharper increases in rates would have arisen in the markets.
  Mr. Roy Jenkins: Can the right hon. Gentleman tell us what rate of growth of money supply he is now aiming at as opposed to the 20 per cent, at which it has recently been running?
  Mr. Barber: In recent months it has been running at an annual rate of about 23 per cent. But I explained during the Budget debate—I think that it was in the Budget Statement—why I do not believe it is right to name a target. [HON. MEMBERS: "Oh."] The right hon. Gentleman himself did this with the best will in the world, but, as he knows, with the benefit of hindsight, it turned out at the end of the year to have been very different from the figure he set. I do not believe that this is the right way to deal with monetary policy. The correct way is to deal with it in the flexible manner we are adopting and to take action when it is necessary. I turn to the matter of prices and incomes. Whatever differences of opinion there may be

  1711
  on this matter, it is a fact that we have made massive cuts—indeed record cuts—in indirect taxation, both purchase tax and SET. Those reductions in taxation have had a direct effect in restraining the rise in prices.
  Mr. Charles Loughlin: Absolute rubbish.
  Mr. Barber: The cuts in purchase tax and the effect on prices are no more rubbish than the effect on prices when the Labour Government increased purchase tax year after year.
  It is also a fact that, despite the implications for the finances of the nationalised industries, the Government and the nationalised industries agreed to participate fully in the CBI price restraint initiative. That, too, has had amarked effect on the rate of price increases.
  The result of the Government's determination has been that over the past year the rate of increase of retail prices has been almost halved. It is right that those overseas, as well as this House, should know the facts, and I will give them.
  Over the past year the retail price index has increased by just over 6 per cent. compared with almost 10 per cent. a year ago. Over the past year the increase in wholesale prices of home sales of manufactured goods has been 4½ per cent. compared with 8½ per cent. a year ago. Over the past year food prices have risen by 6½ per cent. compared with nearly 11 per cent. a year ago.
  I do not believe that there is anyone in this House who underestimates the hardship for certain sections of our society caused by the evil of inflation. But it should not be forgotten that over the past year average earnings have increased 5 per cent. more than the rise in the cost of living.
  Again, if one is considering the purchasing power of the pay packet, it is relevant to recall that, as a result of the reductions in income tax in the last Budget, a few weeks ago more than 2 million people who would otherwise have been paying income tax have been relieved altogether and all therest—more than 20 million of them—now have a pound a week less income tax to pay.
  In these circumstances, it is wholly reasonable for the Government to stress
  1712
  two facts. The first is that an increase in real wages—which is what matters—can be achieved without the ridiculously high increases in money wages which figure in some claims. The second is that a continuing increase in real wages in this country will be possible only if we maintain our competitive position and achieve moderation in money wage settlements. This past year has seen a significant fall in the average level of pay settlements. But we are seen abroad to have suffered a major setback in two recent highly publicised instances—in the settlements granted to the miners and to the railway men. The fear that these will tend to become the general run for the future was a major cause of the confidence movement of last week. But it also threatens us with a return to the dangerous situation which we faced a couple of years ago.
  Let there be no misunderstanding about one particular aspect of the situation with which we are now faced. It is a delusion—and a dangerous delusion—to think that in some way floating the £ minimises the dangers of inflation. Indeed, what the present situation calls for is a redoubling of the efforts of all of us—the two sides of industry as well as the Government.
  Last March the Prime Minister started a series of discussions with the TUC and the CBI. One outcome of those meetings has been the bilateral talks which are now taking place between the TUC and the CBI. The Prime Minister, together with some of his colleagues will be seeing the full General Council of the TUC, at its request, again next Tuesday.
  Mr. R. T. Paget: Does the right hon. Gentleman realise that the rewards of ownership, whether of land equities or vacant office buildings, have been increasing at about three times the rate at which the rewards for labour have been increasing? While that situation continues, is it not difficult to plead for wage restraint?
  Mr. Barber: I have already said that I, and I think my right hon. Friends, find some of the profits made in land dealings offensive, but there is a real difficulty. If action were taken to impose an additional form of taxation on those profits the consequence inevitably would

  1713
  be that the amount of land available for building would tend to be less than it otherwise would. The only answer to the problem to which the hon. and learned Gentleman has referred is to do what my right hon. Friend the Secretary of State for the Environment is doing, and that is to ensure that more land is available for housing.
  I was saying that my right hon. Friend the Prime Minister will be meeting the General Council of the TUC next Tuesday. I believe that those members of the TUC, no less than my right hon. Friends and I, and no less than the CBI, know full well that if our country does not succeed in the battle against inflation we shall inevitably drift back again on to the same old dreary restrictive treadmill which we experienced a few years ago.
  Before next Tuesdays meeting with the TUC, it is right to say this. Whatever may be the views of the TUC or of the CBI on any particular matter, this much can be said. The Government were asked to go for a faster rate of economic growth. We are doubling it. The Government were asked to provide a new and more effective regional policy. We have provided it. The Government were asked to cut purchase tax in order to slow down the rising cost of living. We made those cuts—twice. We backed the CBI price initiative with action on nationalised industry prices. The Government were asked to raise the threshhold of income tax. This spring we did just that—by a bigger amount than ever before.
  In the Budget we set our nation on the course of a 5 per cent. rate of economic growth—twice the rate of growth that we have achieved over the past decade. Some doubts on our hope of reaching this target were recently cast by the National Institute of Economic and Social Research. It is therefore worth noting that unemployment, seasonally adjusted, is already down to the upper end of the range that the National Institute forecast for next winter.
  During the past two months, unemployment has fallen sharply. Vacancies have been increasing and redundancies have been fewer. Indeed, in the past two months the actual number of people out of work has come down by 171,000. The massive action which we have taken is
  1714
  now producing the jobs. For the future the rising number of vacancies is a hopeful sign for a further reduction in unemployment.
  So, with sharply falling unemployment, more vacancies, rising production, rising retail sales and car registrations, we are clearly set for a rapid rate of expansion. Our economy is strong. We are not encumbered with debt. The standard of living of the British people is rising far faster than in the past.
  True, we still have a long way to go both in the fight against inflation and in the modernisation of our industry. But there will be no going back on the path on which we have set out. We mean to succeed, and we shall.
  5.24 p.m.
  Mr. Denis Healey: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  'regrets that owing to the failure of Her Majesty's Government to control the cost of living, it has devalued the pound only two years after inheriting a record balance of payments surplus; and calls on Her Majesty's Government to lay the basis for an effective attack on inflation by reversing its policies on food prices, council rents, the value-added tax and industrial relations'.
  The Chancellor of the Exchequer's lamentable apologia for the circumstances which lead to the act he took last Friday was extraordinary in two respects. He started with a long chronology of events leading up to the decision to float the £, but he did not at any point refer to the well known factors which are responsible for the general collapse of foreign confidence in the future of our economy which made it possible for those holders of large amounts of money to whom he referred to act in the way they did on 16th June, with the consequences we all know.
  Secondly—and this disappointed his hon. Friends as much as it disappointed us—in dealing with the Government's plans for the future, he had absolutely nothing new to offer the House. He simply repeated the worn out platitudes which he has served up to the House for the last two years. Although he recognised the great increase in inflationary pressures to which the whole economy would be subjected by his decision to float, he made not one single suggestion for any change in a Government policy

  1715
  which has already, within two years, produced a devaluation of the £ sterling. Indeed, the speech, like the Motion, was one of stupefying complacency.
  The act which the Chancellor of the Exchequer in his Motion asks us to approve represents the collapse of all the policies upon which the Government won the last election. It also represents the devaluation of the £. I do not think that the Chancellor was pretending this afternoon—
  Mr. Peter Rost rose—
  Mr. Healey:—that the decision to float is not a decision to devalue.
  Mr. Rost rose—
  Mr. Deputy Speaker: Order. The right hon. Gentleman is not giving way, so the hon. Member must resume his seat.
  Mr. Healey: It is devaluation—
  Mr. Rost rose—
  Mr. Healey: We have all read the reports of what has been happening in the first three days since the foreign exchange market opened—
  Mr. Rost rose—
  Mr. Healey: I propose to give way on occasion during my speech, but I think I have the right to the same degree of freedom from interruption as we accorded to the right hon. Gentleman the Chancellor of the Exchequer.
  In the first three days in which the real strength of the £ was tested in the markets, the value has fallen against the dollar by 5 per cent. and, according to some newspapers—the Chancellor could no doubt tell us the facts—against the stronger European currencies it fell a good deal more. The Chancellor on Friday, and some of the Press following Friday, attempted to present his decision to float as a victory. The £ was floating free—
  Mr. Rost rose—
  Mr. Deputy Speaker: Order. The hon. Gentleman has plenty of opportunity to
  1716
  learn that the right hon. Gentleman is not giving way to him.
  Mr. Rost: On a point of order. May I have your protection, Mr. Deputy Speaker? My right hon. Friend the Chancellor of the Exchequer gave way on a number of occasions. Is there any way in which back benchers can be protected so that we also may make an intervention?
  Mr. Deputy Speaker: That is not a point of order for the Chair. The hon. Member must know that he is cheating in making that point of order.
  Mr. Healey: I cannot do better than read from the leading article in the Daily Telegraph on Monday of this week:
  "It is not a victory: it is a defeat. Mr. Barber…decided to devalue the pound, in fact if not in name. And he acted in response to pressure on sterling which was a direct result of the inability of the Government—in which Mr. Barber is the chief economic Minister—to control inflation. If inflation is allowed to continue at its present rate, then the pound will continue to come under pressure in the foreign exchange markets. In other words, the floating pound will become the sinking pound."
  That is a view put forward by a newspaper which, over the last two years, has given more loyal support to the present Government than has any other newspaper in the country.
  It is extraordinary that, even after the events of recent weeks, the Chancellor of the Exchequer should have demonstrated such complacency about the situation as he did this afternoon, particularly if we recall the words of the present Prime Minister three days before the General Election in 1970. He then said, and I ask the Chancellor to remember his words:
  "The danger in complacency now is therefore that it will mean a further four years of austerity which in all probability will lead…to a further devaluation."
  The right hon. Member for Bexley (Mr. Heath) was speaking at a time when no doubt he expected the Labour Party to win the General Election. He was over-optimistic. In fact, we have had a devaluation within two years. And the main reason for it is the total failure by the Conservative Administration to carry out any of the major economic policies on which they fought and, in the end, won the General Election.

  1717
  We all recall what the Prime Minister said in the same statement from which I quoted, namely, that he would
  "…break into the price/wage spiral by acting directly to reduce prices."
  He went on:
  "This would, at a stroke, reduce the rise in prices, increase production and reduce unemployment. It would have an immediate effect of moderating the wage/price spiral which would far outweigh any effect from a higher pressure of demand for labour."
  The Prime Minister then said:
  "The wage explosion is the way in which, when all else fails, those who are able to do so protect their living standards."
  Those were wise words on analysis, and I shall return to them later, but they held out a dazzling prospect which in the event has far from been fulfilled.
  What has been the reality in the first two years of the present Government's tour of office? I must refer to these matters, because they fill out the skeleton of the chronology presented by the Chancellor to the House. He appeared to believe, and perhaps does believe, that the pressure against sterling a fortnight ago came out of a blue sky and with no excuse for it whatever—in other words, that it was just an accident.
  Mr. Rost: Will the right hon. Gentleman give way?
  Mr. Healey: What are the realities? We have the highest unemployment since the 1930s, and unemployment after rising continuously for nearly two years has only just begun to show a welcome fall. Production, which the right hon. Member for Bexley said would increase, in the first three months of this year was 5 per cent. lower than in the first three months of the previous year. Investment, on which depends not only our standard of living but our competitive ability, was to have been one of the Government's main achievements. Indeed, for the sake of investment they provided massive giveaways of tax to the rich, new incentives to management and, they thought, to investors.
  What in fact has happened? According to the Government's own statistics, manufacturing investment last year was 8 per cent. lower than in 1970, in the first three months of this year it was 3 per cent. lower than last year and half the firms consulted by the Department of
  1718
  Trade and Industry expected a further fall in investment in the remaining months of this year. We have faced an investors' strike, but there has been no Industrial Relations Bill to deal with that. What we have had is an Industrial Relations Bill to solve the problems of industrial relations; its result has been to produce four times as many days lost in strikes than occurred in the average year when the Labour Government were in power. Moreover, we have had a wage explosion—an inevitable wage explosion because, as the Prime Minister then explained, that is the only way, when all else fails, for those who are able to do so to protect their standards.
  All these facts to which I have referred were visible to the world six months ago.
  Mr. Rost: The right hon. Gentleman has missed out one fact.
  Mr. Healey: I am coming to that other fact. They were hidden by £1,000 million surplus on balance of payments. That surplus was most misleading because the bulk of it was due to the stagnation of our economy. That enormous surplus was the one reward we got for the terrifying and tragic increase in unemployment during 1970. It was also in large part the result of an extraordinary improvement in the terms of trade for Britain which was reflected in the fact that our export prices last year rose by30 per cent., whereas our import prices rose by only 19 per cent. Indeed, probably £700 million of that £1,000 million surplus can be attributed to the change in the terms of trade alone.
  Because these facts underlay that surplus on balance of payments, the Bank of England and the Treasury begged the Chancellor last December to devalue under cover of the general change in parities and to stick to 2·40 dollars when all the other European countries rates were going up. The Treasury was very wise to make this suggestion, not only because of the trends in our economy, but because the Treasury knew what is now generally accepted—namely, that the impact of entry into the Community in January, 1973, is beginning to inflict a new and insupportable burden on our balance of payments, unless by then we change the rate.
  Mr. Barber: I wish to say quite simply that what the right hon. Gentleman has

  1719
  said about the Treasury and the Bank of England is wholly untrue.
  Mr. Healey: If the Chancellor says that, I must accept what he says. I must also remind him that the Financial Times, the Observer, the Sunday Times, the Daily Telegraph and The Guardian in their City columns have all reported to the contrary. If the Chancellor is right in what he says, my respect for his official advisers is a good deal less than it has been until now.
  Mr. Peter Hordern: If the Treasury and Bank of England advisers were right at that time in advising my right hon. Friend to keep the exchange rate of 2·40 dollars, why is the right hon. Gentleman criticising the Chancellor and the Government for devaluing the £, which is now worth 2·47 dollars?
  Mr. Healey: I have come to know the hon. Member for Horsham (Mr. Hordern) very well in recent weeks in the Finance Bill proceedings upstairs. I am greatly surprised by the hon. Gentleman's comment, for he knows very well that I regard the decision taken by the Chancellor last Friday as right in the circumstances. I wish he had taken it sooner, but it was necessary and right only because of the total failure of Government policy over the last two years and the new foreign exchange burdens which the Government had deliberately chosen to inflict on themselves by entering the European Community on the terms which they negotiated.
  The fact is, as we all know, that the Chancellor surrendered to pressure from the French and United States Governments last December and gave in again to the French Government on 1st May—gratuitously, with no obligation whatever, by deciding to accept the narrow band of fluctuation set by the Community for Britain, though there was still nine months to go before Britain joined the Community as a full member. What is more, the right hon. Gentleman admitted in that extraordinary apologia for this action that in this case the guns happened to be facing the wrong way, and that this protection against flotation and against devaluation was totally inappropriate for meeting any serious threat. But it was more than inappropriate, because, as the Chancellor of the Exchequer
  1720
  made clear in his opening remarks, by accepting the obligation to stay within this very narrow band he was forced to lose reserves on a scale which staggered the House when he gave it to us in a way which would not have been necessary if he had been free to act even within the limits set by the Smithsonian agreement and the IMF.
  That is what he did in terms of foreign exchange. Domestically what he did was much more serious. This year the Government have not been able to do anything right. The right hon. Gentleman provoked a gladiatorial combat with the miners and the railway men in order to dramatise his defeat. He complained today about the publicity given to those settlements. But who was responsible for the publicity? Who made these bombastic weekend speeches showing how to crush the workers It is all very well Ajax defying the lighning as long as he is fireproof. But if he is the present Chancellor of the Exchequer he is reduced to a heap of cinders. That is what happened in this case. By incurring and encouraging a demonstrative defeat on these two occasions, as he admitted today, he added a great deal to the lack of confidence in his Government's ability to control the economic situation.
  Meanwhile the balance of payments was worsening dramatically partly because the right hon. Gentleman had stimulated demand for consumer durables without making sure that the capacity existed in Britain to supply that demand. The result is that over recent months we have seen a very much greater rise in imports of consumer durables from foreign countries than the rise in our exports of those durables to those countries, especially of cars. If the right hon. Gentleman consults Lord Stokes on this matter or even reminds himself of the advice that he received from Lord Stokes on earlier occasions, he will realise to what I am referring.
  The extraordinary fact is that the right hon. Gentleman chose the very moment when the balance of payments was seen to be deteriorating to make this statement during the Budget debate in March indicating that he would abandon parity rather than sacrifice growth. We on this side of the House applauded those sentiments thoroughly but it was and has proved to be a disaster to express them

  1721
  in that way and at that time, as my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) pointed out in that Budget debate. The result was that even before the May trade figures were published just over a fortnight ago everyone concerned in a direct way with the British economy was talking about devaluation.
  It is important that the House and the country should realise how widespread the expectation of devaluation had become by that time and why it was that Mr. Graham Hutton was able to write in this morning's Daily Telegraph:
  "Every qualified observer was awaiting last week's financial crisis"—
  everyone, it appears, except the Chancellor of the Exchequer.
  The June number of Vision, a leading European management magazine, reported a poll of 200 leading European bankers, economists, finance directors and journalists which had been made in mid-April. It showed 52 per cent. believing that the present parity of the £ sterling was not realistic and 56 per cent. believing that the £ would be devalued by the end of the year. That was on the basis of a poll in which the questionnaires were sent out in April, and it was published at the beginning of June.
  What was being written in this country was very similar. I begin with the trendiest Cassandra of them all, the Economist. In its report of 10th June it said:
  "No one should jump to conclusions, but a run out of sterling in the late summer or early autumn cannot be ruled out."
  The Times wrote a long leading article recommending devaluation to 2·40 dollars this summer. It was followed a week later by the Spectator.
  Then we got the trade figures on 13th June which showed that the average deficit over the first five months of this year was £42 million—
  The Chief Secretary to the Treasury (Mr. Patrick Jenkin): Visible trade.
  Mr. Healey: The visible trade deficit, certainly. I shall come to the other point later. The Sunday Times pointed out that on visible trade our deficit was running at an annual rate similar to that before devaluation in 1967. As the Chief Secretary says, probably it is true that we have been getting some £50 million
  1722
  a month on our invisibles, though we do not know that for certain. So the overall gap on our balance of payments was running at a surplus of £100 million a year.
  However this was before the long expected recovery in the economy began. This lamentable record on the balance of payments was at a time when we still had a million unemployed and before there had been any real shift in the trend of our economy. But in the last two months we have had a welcome change in the unemployment picture. It looks as though the various measures taken by the Chancellor of the Exchequer are beginning to bear fruit at last. But that is the very reason that all observers who were watching what was happening were expecting a deterioration in the trade figures to follow in future months.
  On 16th June, as the Chancellor of the Exchequer pointed out, we had "Black Friday" with a tremendous run on the £ promoted by the expectation of a national docks strike because Sir John Donaldson had interpreted that appalling Act to mean that he was obligated to order the arrest of three dockers. It was that decision taken in all sincerity by Sir John, even though an appeal court later ruled that it was a mistaken decision, which sparked off the run on sterling. Who can blame Sir John for misinterpreting an Act of this nature?
  We had tremendous losses on the Friday. They were reported in the newspapers on the Saturday and the Sunday. On Monday we had the Daily Telegraph coming out with the statement:
  "Where there is no room for argument is in the European conviction that sterling is heading for another devaluation."
  We had Mr. Anthony Harris writing in The Guardian that same Monday morning:
  "The foreign exchange market, by now, is nervous because it takes a devaluation, sooner or later for granted. 'Of course you will devalue—and more than once,' a German banker told me recently. The only question is timing; and if Mr. Heath wants to anticipate a crisis with what the French call a 'cold' devaluation, he has only a limited time left."
  That same Monday afternoon the leading French newspaper Le Monde published an article reporting opinion in the City of London, saying:
  "For many bankers in the City, it is no longer a question of knowing 'if' the pound

  1723
  sterling will be devalued again in the near future, but 'when' this will happen."
  I cannot understand how the Chancellor of the Exchequer, who has had City opinion not only in Britain but in every financial city in the world available to him day by day and even hour by hour over the weeks and months, can pretend as he did today that the crisis blew out of nowhere for no reason, simply because of the expectation, later frustrated, of a national docks strike.
  That was the situation in which the Standing Committee considering the Finance Bill met later that Monday afternoon for a debate on the economic situation. That was when I said:
  "The fact that the Chancellor has given warning that he will devalue rather than deflate when he thinks he will be in trouble means that all foreigners will want to pre-empt a devaluation, and he may be compelled to devalue much earlier than would otherwise have been the case. I say this without pleasure and without great confidence, because what the Chancellor actually does, as against what he says he will do, are two different things. If he acts as he said he would in the Budget debate, I do not see a devaluation being delayed beyond the summer of this year. This is the expectation of a large number of foreign bankers."—[OFFICIAL REPORT, Standing Committee E; 19th June, 1972, c. 1080.]
  I know that there has been controversy about whether I should have uttered those remarks. There would be no controversy if everybody accepted the view expressed last night by the Leader of the House—and I am glad that he is to wind up the debate—that
  "Parliament should not be more inhibited than the news media in discussing matters of national importance".
  I agree with the right hon. Gentleman. Perhaps I was wrong to say what all qualified observers had been saying for many weeks, but to claim that my statement produced the problem is like blaming one weather forecaster for the appalling summer that we have been having in recent weeks.
  Mr. Peter Tapsell: Now that the right hon. Gentleman has completed his long personal apologia for the unfortunate remarks that he made on that occasion, will he address himself to the problems facing the country and give some indication of how the Labour Party feels they should be dealt with?
  Mr. Healey: I recognise that the hon. Gentleman is deeply disappointed at the
  1724
  Chancellor's failure to say anything about the future. I promise to offer what the Chancellor failed to offer, and I am coming to that now. As the Chancellor and so many of his hon. Friends regard his action last Friday as a great victory, I should have thought that they would have struck a victory medal for me. If I am responsible for bringing forward action which had been necessary for months, I am undoubtedly a public benefactor.
  But I am neither the villian nor the hero of this piece. Praise or blame for what happened must fall on one man alone, and that is the Chancellor of the Exchequer, and if he will not take it from me let him take it from the Editor of the Financial Times, Sir Gordon Newton, who said on "The World this Weekend" last Sunday when he was asked why the British economy had got itself into this state:
  "You've got to go back to the Budget Speech of Mr. Barber. He stated quite specifically there…that economic expansion would not be jeopardised in any way by an attempt to hold an unrealistic exchange rate. Now, shortly after that our trade returns started to deteriorate. Well, the world saw that, they saw the heavy settlement with the miners, they saw the railway settlement, they didn't like that. They saw our prices rising at the rate of about 6 to 7 per cent., they didn't like that. They remembered the Chancellor's statement, and what would have been I suppose a normal run on sterling turned…because of the Chancellor's statement…into a major crisis."
  If blame rather than praise should be attached to the Chancellor's action last Friday, there is no question whatever but that it lies with the Chancellor himself, and with nobody else.
  I now come to the float itself and its consequences. It was smartly done even if it violated pledges made by the Chancellor to the IMF, guarantees made to the EEC only six weeks earlier, and a whole row of speeches against floating made by the right hon. Gentleman over the months and years, to which he referred this afternoon. To believe, in a situation like this, that all that is needed is to congratulate the Government on their tactical skill in manœuvre is like seeing the captain of an ocean liner run his ship on the rocks in a calm sea, with perfect visibility, and then giving him a medal simply because he launched the lifeboats quickly.
  Of course the Chancellor was right to abandon the 2·60 rate, but he could have done it months earlier. He should never

  1725
  have accepted it last December. I believe that the right hon. Gentleman was also right to float rather than to peg sterling at a new rate because in this situation floating means less risk of competitive devaluation by others, it makes it somewhat easier, provided the float lasts long enough, to determine what the new rate should ultimately be when the right hon. Gentleman decides to peg sterling and also—and this is important—it is better to drift slowly down to the new rate than to jump suddenly.
  But floating of itself solves nothing; it only puts off the evil day, and it will compound all our troubles unless two conditions are met. First, the Chancellor must stand up to foreign pressure for a premature pegging of the rate, and I hope that he meant what he implied in answer to a question at his Press conference in Luxembourg when he said that he hoped that he would be able to peg the rate before entry into the Community, but so far as I understand it he has given no commitment so to do.
  I hope that I am right in interpreting the Chancellor's words this afternoon as meaning that. I hope, too, that the right hon. Gentleman will correct me if I am wrong in my understanding, because it is important that we should know the position. It is important to know whether the Chancellor has given a private commitment to peg the £ before we enter the Common Market. I shall readily give way to the right hon. Gentleman if he wants to intervene and settle the matter. It appears that the Chancellor does not intend to respond to my request. My right hon. Friend will undoubtedly return to this issue later. All I can say is that I am filled with the utmost misgiving if the Chancellor has privately given such a commitment, particularly if he is not prepared to say publicly whether he has or has not done so.
  Mr. Harold Lever: The Chancellor could not have given any commitment consistent with the candour of any words that he has spoken. He said that he hoped to return to a fixed rate as soon as possible. I have the same hope. The right hon. Gentleman said that that may or may not be after 1st January.
  Mr. Healey: I think that for once my right hon. Friend has misunderstood what
  1726
  I am saying. I am not asking the Chancellor to give a commitment.
  Mr. Lever: He has not given one.
  Mr. Healey: I am asking the Chancellor to assure the House that he has given no commitment that he will return to a fixed rate before January next year.
  Mr. Lever: That is the point to which I was addressing my remarks.
  Mr. Healey: This is a matter of legitimate public concern, and I am asking the right hon. Gentleman, not to give a commitment, but to assure us that he has not given one.
  The other condition without which this float will prove to be as much of a disaster as everything else the Government have done over the last two years is that the Chancellor must halt inflation, and be seen to be halting it, because if he does not do so the £ will sink right down to the ocean bed and Britain will become the Brazil of Europe. What disappointed us and will have disappointed the country most about the right hon. Gentleman's speech was that he gave no hint that he has any ideas whatever for solving the problem.
  Mr. Hugh Dykes: I wonder whether the right hon. Gentleman would tell us what he would do to halt inflation?
  Mr. Healey: That is precisely what I am coming to. I want to spend a few moments on the international implications of the float and then come to the domestic issues and action to deal with inflation.
  In the sterling area there has been an extraordinary reversal of the Government's position. In the Budget only three months ago the Chancellor ended voluntary restraint of capital movements to the sterling area, a restraint which had been wisely maintained until then. Now, apparently, he has imposed total control over all movements whatever, and officially. He did not explain why that was, if the situation is as rosy as he said. After all, the £ did float for four months last year, from August to December, and he did not impose those restrictions then. But he has imposed them now. Many people believe—perhaps we shall get some clue to this from the Leader of the House—that the reason was that he wanted to slough off the sterling area for good

  1727
  before entering the Common Market, and it was a clever and quick way to do it.
  But I must ask some questions about this. First, what will be the effect of this decision on our sterling balances? The Chancellor will have seen that the Malaysian Finance Minister was quoted as saying that the United Kingdom has unilaterally dismantled the sterling area. I was rather encouraged when the Chancellor implied this afternoon that this was a temporary measure and that he would restore freedom of capital movement whenever we pegged the rate. But, again, he was rather obscure in what he said about that, and no doubt the Leader of the House will clear up this matter.
  Is the Chancellor envisaging any incentives to members of the sterling area to keep their balances in London? It would be possible, for example, to offer to guarantee the value of their balances at existing rates in dollars when we return to fixed parity. Is the Chancellor planning to do anything like that? If not, what measures does he propose to discourage the very rapid withdrawal of sterling balances?
  Finally, I think that the House was shocked to find that the Chancellor was quite incapable of answering a question from my right hon. Friend, because the House is very well aware that many countries in the Commonwealth, particularly some of the poorer ones like Jamaica, depend on access to the London capital market for the whole of their development planning. It was quite unfair to the House. After the Chancellor's speech and after his refusal to answer that question about whether this freedom of access is being maintained, I leave it to the House and the sterling area to judge the Chancellor's competence from his inability to answer the question. But we must insist that the Leader of the House, when he replies to the debate, gives us a clear and unequivocal answer.
  Mr. Edward du Cann: On a point of order, Mr. Speaker. I apologise for interrupting the debate, but I hope that the House will think that this is a reasonable suggestion to make. It has just struck six o'clock and, as you, Mr. Speaker, pointed out, it is no one's fault that we did not begin the debate until a quarter to five. Would it be possible for the usual channels to consider, perhaps,
  1728
  an extension of this most significant and important debate by an additional hour?
  Mr. Speaker: That is not a matter for the Chair.
  Mr. Healey: I come to the Common Market. One would need a heart of stone not to feel some sympathy for the Prime Minister in his predicament, because he has now broken the first major agreement with the Common Market six weeks after it came into force. Not all of us will share the Prime Minister's feelings on this matter, because the certainty, or at least the very strong probability, of devaluation faced the present Government the moment they decided to accept entry on the existing terms. The speed with which they have had to devalue was caused very largely by too narrow a margin of fluctuation accepted in accordance with the Common Market agreement by the right hon. Gentleman.
  As the right hon. Gentleman made very clear this afternoon, the support which this country got from the continental central banks was a very mixed blessing, because it delayed the devaluation and we have to pay it all back within a matter of weeks. I confess that though what the Chancellor had to say about the size of our remaining reserves was welcome news, nevertheless, if one faces the possibility of outflows on the scale he referred to this afternoon, even these reserves would not carry us very far.
  I hope that the Government have, at least, learned two lessons from their experience of the Market. The first is that however much lip service they pay to the hopelessly unrealistic plans for an economic and monetary union, for God's sake they must not do anything about it. I hope that the Chancellor will recognise that it was a disastrous error to make that agreement six weeks ago and that he will not be seduced by the Foreign Office or attractions from any other direction into making the same mistake again.
  Secondly, the Chancellor must accept a point that even The Times newspaper, with all its enthusiasm for entry, made a few days ago, that it is quite impossible for sterling and for Britain to survive inside the Common Market without radical changes in the common agricultural policy. Unless we can persuade

  1729
  the other countries to move over to some form of income support rather than the existing form of price support, it will not only make any sort of movement towards closer economic co-operation in the enlarged community impossible, but it will also carry the gravest dangers for sterling and, indeed, for any other currency which has a differential rate of inflation from the other members of the community.
  I know that we have debated this interminably in the last few months, but the Government must have learned from their experience in the last month that we cannot subordinate our national and international interests to an institutional machinery the sole purpose of which is to compel foreigners to pay the cost of supporting French and Dutch agriculture.
  Finally, a point which needs making about the Common Market is that we cannot survive inside it if in addition to the grossly unfair burdens imposed on us by the common agricultural policy and the budgetary contribution, we are also expected to continue to spend 50 per cent. more of our gross national product on defence than countries in the Market which are far richer than we are and at least as directly concerned with whatever problems may be responsible for defence expenditure.
  As the Chancellor has raised the matter, I should like to refer briefly to the effects of our decision on the United States and Japan and on the world currency situation generally. All over the world now, the Smithsonian agreement is seen as simply a stop-gap; that we need a new approach to all the problems that affect economic relations between the wealthier countries; not just currency, to which the Chancellor referred, but to trade as well, and trade not only in industrial goods but also in agricultural goods; and not only currency and trade but also aid to the poorer countries, and defence.
  As the Chancellor knows, I regard it as a tragedy that so much time has been lost this year through the American election and European pre-occupations with the problems of the Common Market. But I hope that the British Government at least will now take this problem more seriously. I hope that the Chancellor's remarks today indicated that he will, as Britain's bargaining position in this new situation is very much stronger because
  1730
  we can have a realistic parity. But he will have to accept that on many issues our interests in these matters are closer to those of the United States than to those of the Common Market. Above all, he must recognise that our influence in negotiations on these major international monetary and trading maters will depend above all on controlling inflation at home.
  I come to the point raised by the hon. Member for Harrow, East (Mr. Dykes). In some respects devaluation will help us. It will stimulate our exports. It will discourage some imports while encouraging others. It will help to reduce unemployment and to encourage investment. But the trouble is that all of these good effects take time to show themselves. Our experience, and that of the United States, is that it is about 18 months after a change in the parity before the good effects begin to show. Unfortunately, the bad effects begin showing immediately—not only on the balance of payments but also on inflation at home. The worst effect is the inflationary effect, to which the Chancellor, in passing but with only one phrase, referred. Floating down or devaluing raises prices through dearer imports. The price of food will go up immediately by about half the amount of the drop in the parity. On 1st January, if we join the Community, it will go up immediaely by the whole of the amount of the drop in parity, because we shall have to charge the new prices for our own food as well as for imported food. Prices generally are likely to increase by about one-fifth of the final amount of the parity change.
  Also—I thought that the Chancellor passed this off rather lightly—the additional stimulus to exports and investments will mean a great increase in demand on top of the stimulus he has already given in his budgetary measures. It is not impossible that we could find a demand inflation on top of the cost inflation by the end of the year, particularly if we continue the present size of deficit on public expenditure. I hope that the Chancellor is keeping an eye on this problem.
  The one certain thing is that devaluation or floating will produce inflationary pressures which immediately affect the whole range of economic and industrial activities in Britain, unless some dramatic and rapid action is taken to contain

  1731
  them; and unless it is taken the £ will never stop floating down.
  Prices are the key. On this at least I agree with what the Prime Minister said in the speech from which I quoted at the beginning of my remarks. [An HON. MEMBER: "A long time ago."] It was a long time ago and, if the Prime Minister had done what he said he would do in 1970, we would not be facing the problem we are facing today.
  The House must accept this. Only if the Government are seen to be acting effectively on prices is there any chance of co-operation in the demand for wage increases. The Government must face the fact that ordinary people, as well as Members of Parliament and city editors, can see that some of the most damaging price increases in the last two years have had nothing whatever to do with wage increases. Instances are the increase in food prices, and the increase in the cost of housing. Food and housing are the top two components in the average family budget. Both these increases have been—in the case of housing almost entirely, in the case of food to some extent—a direct result of deliberate Government policy, or lack of it—cuts in subsidies, and permission for gross profiteering in land and housing.
  We were told yesterday that the price of houses had been increasing by £10 a week since the Government came to power. There has already been an increase of nearly 30 per cent. in the cost of houses since the Government were elected. Nobody can claim that this is produced by enormous wage increases fought for successfully by the building workers. Indeed, I noticed the other day that a cowshed was sold for £7,600. The workers who built it got no wage increase, because they died 200 years ago.
  The fact is that it is not only profiteering and cutting subsidies. It is also the fact that profits have been rising in the last two years 50 per cent. faster than earnings. This is true not only in the home market but also in exports. A most important and interesting article from the London and Cambridge Economic Bulletin, which was published in one of our newspapers recently, pointed out that the wage component in our export prices had not risen faster than
  1732
  that of most of our competitors but that, whereas they had trimmed their profit margins to keep their export prices down, our exporters had taken the opportunity of increasing their profit margins so that the export price had increased by exactly as much as wages had increased, although, as we all know, wages are only a small component, though sometimes a larger component, of the final cost.
  If we recognise, as we do, and as the Prime Minister used to, that the key to income restraint is price control, I suggest, first, that the Government should drop those of their policies which are designed to raise the cost of living. That means dropping the Housing Finance Bill, renegotiating immediately the common agricultural policy, and dropping the appalling proposal for the value added tax.
  The Government have the power to do these things at a stroke. The Leader of the House could tell us tonight that the Cabinet had met and had decided to do these things, and the whole country would know it in the morning.
  The Government can also do something about the scandal of land and house prices. This would be at least a start. It would give people in the country and abroad confidence that the Government were taking the problem of inflation seriously.
  Second—in any conceivable circumstances the Government will have to do this—they must re-establish the machinery of price control which they took care to abolish after coming into office. They must set up some body with the same sort of function as the National Board for Prices and Incomes had in this field. The Government must insist on an early warning system. They must give that body the power to permit or to refuse price increases. [Interruption.]
  It is all very well the right hon. Gentleman saying, "Back to Methuselah", but when Methuselah, if the Chief Secretary is referring to my right hon. Friends and I, were in power the rate of inflation was only half what it is today. It would be serious progress if we could get it back to that level.
  The Government must consider establishing some special control over key prices—over the prices of those commodities which bear particularly heavily

  1733
  on the cost of living; and it may be necessary in some cases to subsidise firms or enterprises to make this type of control compatible with their continued operation. The Government are doing it with the nationalised industries now. They agreed to do it when they forced the nationalised industries to accept the 5 per cent. price freeze. There is no good reason why they should not do it in any other relevant field.
  I come now to incomes. I agree with what the Prime Minister said in 1970. If we can do something, and be seen to be doing something, effective about prices, this will have an immediate impact on wage claims. I believe that there is the need for some sort of incomes policy, but I have some sympathy with the Prime Minister when he complainingly asks, as he did the other day, "Why do people always ask me to introduce an incomes policy but never tell me what an incomes policy is or how it works?"
  We know from our own experience and from the experience of other countries which have operated incomes policies that this is very difficult to operate for long with success. We on this side of the House learned very many lessons, and some of them very painfully, from our own experiments in incomes policies when we were last in power.
  To those who recommend a freeze on wages and prices, as some hon. Members opposite do, though the Chancellor and the Prime Minister have repeatedly said in the past few days that they will not introduce one, I simply point out that there is no point in a freeze unless the time it gains is used to produce an effective voluntary policy. If it is possible to get an effective voluntary policy, it is better to do it without a freeze, because a freeze produces conditions in which it is more difficult to get the co-operation of the unions and the employers in a voluntary policy.
  I believe that it is possible to learn some lessons from our own experience and that of others. The first is that there is a very strong case for some device by which wage increases can follow automatically increases in the cost of living—some form of indexation, as I believe it is called. Second, we must be very wary of percentage norms, because with percentage norms we cannot
  1734
  do justice to the low paid workers without inflationary effects on the higher paid workers and we cannot change the relativities between industries.
  Third, I do not think that we can sensibly establish a general criterion by which increases are tied to productivity in specific industries and factories, because there are too many industries, particularly the service industries, where increases in productivity are either meaningless or incapable of being measured.
  Whatever view we take on the details of an incomes policy, the real lesson of international experience in this sphere is that no incomes policy will work unless confidence is established and maintained between working people, employers and the Government. Where that confidence exists one does not need complex machinery or numerical norms. Where it does not exist, no policy will work.
  The problem is not, as so often described, the problem of relations between the TUC General Council, the CBI and the Government. It is far wider than that. It is the problem of relations between working people, employers and politicians of all parties whether in Government or not. We can learn from the shambles of the Industrial Relations Act that trade union leaders, whether at national level or on the shop floor, are not power-hungry maniacs anxious to wreck the economy. Equally they are not generals commanding their armies. They are what they say they are, the elected representatives of ordinary people. They can act only as ordinary people want them to act. I hope that the Government have learnt that at least from their searing experience of the railway men's ballot and the judgments made by the Appeal Court in the case of the container strike.
  Like all politicians in the House, I spend time, and I like spending time, in my constituency and other constituencies talking to people. I have not met anybody who wants a situation in which he has to ask for a 20 per cent. increase to have a chance of getting a 10 per cent. increase, and to find that 10 per cent. has shrivelled away to nothing in a few weeks either through inflation or the loss of means-tested benefits. Equally, no one will sit still under inflation.

  1735
  The real failure of the Government, which lies behind everything we have been discussing this afternoon, is the total failure of the Ministers of the Government to understand how ordinary people think and feel. With respect to the Prime Minister, it was absurd to believe that one can unite the nation if one starts with abolishing school milk and meals, and taxing school clothes. It was absurd to believe that he could command understanding, confidence or consent if at the same time as he did these things he was giving away hundreds of millions of pounds to the rich. The Chancellor boasted three months ago that he had given away £300 million exclusively to people with incomes of over £5,000 a year or those living on unearned incomes.
  The Prime Minister yesterday had the neck to talk about the overwhelming importance of differentials and the need to compress differentials. Of course, he was right about that. But how can one ask the trade union movement to agree to compress differentials when everything the Government are doing is openly intended to widen differentials? They cut surtax on the rich and at the same time impose surtax on the very poor through means-tested benefits. Only the other day in Committee we were discussing a Government plan for stock options which will give millions of pounds to a handful of the richest salary earners in the country. That is the background against which the Government are asking the trade unions to agree to compress differentials.
  Then we had the classic case of lack of comprehension. Last Friday the Government announce, defeated by inflation in their first two years of office, a necessary measure which will add to the inflationary pressures. But on the very same day they announce 18 per cent. increases to the best paid people in public service. The only justification there can be for giving those increases is to maintain existing differentials.
  I ask the House to use some imagination. What does a railway man with a wife and young family think, who has just obtained an increase, which brings his weekly wage to £20, and then sees 75 per cent. of that increase taken away by the withdrawal of benefits, when the Government, which told the Board Chair-
  1736
  man to fight that increase and asked the Industrial Relations Court to take legal action against his union, gives £2,500 to the Board Chairman and a fat increase to Sir John Donaldson? It beggars belief that a Government can behave in this way if they genuinely wish to get the co-operation of ordinary working people in the battle against inflation.
  I appeal to the Government to think seriously about what Mr. Vic Feather is saying today, and to reflect on the fact that Mr. Campbell Adamson is now saying exactly the same things. If the Government are prepared to make a generous admission of error, that could work wonders. Mr. Ronald Butt expressed the view in a newspaper this morning that the Government could get through the present trouble by what he called "Playing it cool." What may appear to Mr. Butt as "playing it cool" appears to a million of our fellow citizens as the Government being frozen stiff in a posture of dogmatic inhumanity. The Government can win the confidence of the nation only by a radical reversal of their social and economic policies. If they will not make that reversal they must make way for those who will.
  6.28 p.m.
  Mr. Peter Hordern: I had thought that this was a censure debate, but I cannot possibly follow the remarks of the right hon. Member for Leeds, East (Mr. Healey) without incurring, Mr. Speaker, your deep displeasure and, I am sure, the displeasure of a great many of my hon. Friends and hon. Members opposite.
  The right hon. Gentleman covered a great deal of ground in his speech with copious extracts from the Daily Telegraph, The Guardian, the Economist and the Spectator. Even the cowshed was brought into it. There was little ground which he did not cover. All I wish to say about the right hon. Gentleman's speech is that it was as if we had been bombarded by a thousand powder puffs. I am not quite clear of the point of the censure Motion which my right hon. Friend the Chancellor of the Exchequer and his colleagues are expected to answer.
  By any standards the floating of the £ last week was a major event in our economic history. I confess to being

  1737
  somewhat surprised by the immediate reaction to the floating, which seemed to be somewhat euphoric, and especially that it could be a cure to many of our problems. I have never felt that floating was anything more than a realistic recognition of our position and, therefore, a most sensible step in all the circumstances. For that reason I see no point in getting worked up about what the right hon. Gentleman said about devaluation in Committee upstairs. He is entirely responsible for his own words and he can say what he likes about the prospects. I think that he made an exceedingly bad speech in Committee on the economy, but that is quite another matter. He showed a lamentable ignorance of the whole of our economic position, but he is perfectly entitled to make his own predictions, however unreasonable they may be.
  The conclusion I draw is that if large sums of money are moved out of the United Kingdom for something the right hon. Gentleman said, then the sooner we float the better. If the rate reflects what the right hon. Gentleman says in future, we shall have a very exciting movement—it will be going up and down like a yo-yo.
  What floating shows is not only the precariousness of the whole Smithsonian agreement, but, even more, the difficulty created by the "snake in the tunnel" concept. To say that sterling should be confined within a range of 2¼ per cent. altogether with other European currencies and that they should be similarly confined seems to me to be asking for trouble. When one European currency moves sharply against another it is not supported by the dollar, which every country has in great measure, but by the other European currencies which they are not so anxious to use in support of one which may be falling.
  The fact that we have broken away, which we were always entitled to do, seems likely to provide a powerful precedent for other European countries in future and is likely to be used again and again. For that reason, I do not think that the European agreement will prove lasting. Though it may be inconvenient, and very much so, for the European agricultural policy, I think it is that policy, as well as the whole "snake in the tun-
  1738
  nel" concept, which will find itself under increasing strain as time passes.
  I hope that at the meeting of European Finance Ministers, who are coming here next month at my right hon. Friend's invitation, we shall not find a number of new restrictions imposed on the free movement of capital both within the European Communities and between the Communities and the rest of the world. To do so would be to restrict the growth of trade and further to elevate fixed exchange rates to a set pattern which cannot in the long run be sustained.
  Fixed exchange rates are certainly appropriate where the value of currencies does not change materially from one year to another, but surely they are less appropriate when inflation is becoming more of an international and world-wide phenomenen. No country will be able to beat inflation or even to reduce it by pretending that it does not exist and by keping a system of fixed exchange rates. Indeed, if anything, a fixed exchange rate, if accompanied by high interest rates, is likely to attract inflation by attracting funds from abroad. This is what dermonstrably happened in 1971 when the money stock increased by £2,200 million due largely to the plight of the dollar.
  It is true that some people lay greater or lesser stress upon the importance of the money stock, but by any standards the increase during the whole of 1971 right up to the present, when it has been rising by 23 per cent., has surely far exceeded any possible increase in production or normal demand. Indeed, a good deal has not gone to normal demand. A lot of it has found its way into the building societies whose advances are almost double what they were three or four years ago. These advances, acting on a period of long stagnation in the building industry, have had an acutely damaging effect on house prices, particularly for young couples trying to buy houses for the first time. As others of my hon. Friends who represent constituencies in the South-East know, this is a particularly acute problem. It is a real example of the effect of the extravagant increase in the money supply acting on an acute shortage of houses. I hope, therefore, that the rate of increase of the money stock will now slow down materially.

  1739
  This may already be happening if the banks' low liquidity ratio and the action of the Bank of England itself is any guide. It is almost certain—in fact, my right hon. Friend said so today—that, but for the recourse that the Bank of England has given and the extra availability of finance that it has given to the clearing banks, the clearing banks would have been well below their reserve ratios and real difficulties would have followed. Certainly one consequence would have been a very sharp increase in interest rates. With the £ floating, the authorities should now be able to control their monetary policy more easily than in the past.
  Mr. Bruce-Gardyne: Will my hon. Friend give way?
  Mr. Hordern: If my hon. Friend will forgive me, I must get on, as so many hon. Members wish to speak.
  We tend to be influenced by spectacular movements in some prices and earnings awards and to regard them as normal. I have already referred to house prices, and I think there are special influences there. But I do not think it is possible to draw an entirely pessimistic conclusion, as so many people do, about what has been happening to both prices and earnings over the last year.
  As my right hon. Friend pointed out, in the public sector over half the settlements since the miners' dispute have been contracted at less than 8per cent. The level of average earnings is also less than it was in 1970, though it is still very high.
  Perhaps more significant is the marked slowing down in the rate of increase of wages and salaries per unit of output, rising by 8 per cent. now against12 per cent. a year ago. Of course, as the right hon. Member for Leeds, East said, prices are still rising very quickly, but they are rising at about half the rate of a year ago.
  Nobody can predict with any certainty what will happen in the coming months, but I observe that those who have been most free with their predictions, both now and in the past, are the same people who got it so wrong a year ago. They did not forecast then that the rate of price increases would halve. At that time they were all—certainly many of the critics in the Press—for letting the money sup-
  1740
  ply rip. Now they are all unanimous in inviting us to impose a freeze. It seems to me that there are better ways of slowing down a train than by blowing it up. I hope my right hon. Friend will take as much notice of those people now as he did a year ago.
  The Government have an incomes policy for the public sector for which they must be responsible which has, on the whole, been pretty successful. There have been two major upsets, although I think there will be fewer miners and railway men employed than there would otherwise have been but for the strike. However, that is for union leaders themselves to answer.
  I cannot help wondering whether, when it comes to a direct confrontation, the Government are wise to enter the ring like Jack Bodell on a difficult night with both hands tied behind his back.
  My right hon. Friend the Secretary of State for Social Services, replying to my hon. Friend the Member for Norfolk, North (Mr. Ralph Howell) on 13th June, gave some very interesting international comparisons. In Germany, Sweden, Holland and Belgium, strikers do not turn to the State for relief; they rely on union funds. There are virtually no union funds in France or Italy, but no provision for public relief in Italy is provided and only minimal relief in France. In the United States it is the unions that pay up.
  Why should union funds in this country be totally exempt when their members are engaged in strike action? It is surely an extraordinary state of affairs that strikers can rely entirely on taxpayers to foot the bill throughout the period of a strike without having to turn to their own funds in any way.
  Everybody knows that a difficult time lies ahead and that inflation is our most serious problem. But so it is in every country in the world. It was reported today that the retail price index in France is rising just as fast as ours. In the United States the wholesale price index rose by more than 10 per cent. in the last quarter. Anybody can point to the two major reverses that the Government have suffered in the public sector, but the real hard evidence suggests that the rate of increase in prices has been slackening. It also suggests that the

  1741
  economy is now growing at 5 per cent.—twice as fast as the average in recent years—and that unemployment is coming down. Anybody would think that we were running a serious balance of payments deficit instead of a comfortable surplus with record reserves.
  I hope, therefore, that my right hon. Friend will look carefully now at his monetary policy and at the Government's total borrowing requirement. It seems to me that a higher level of interest rates is quite appropriate in these conditions, but, whatever my right hon. Friend does, I hope he will not jam on all the brakes in a total freeze. I think that would be disastrous for all concerned and would be an action of complete despair.
  I have no idea how the trade returns will move in future months, and I make no predictions. If other people abroad want to back their opinions with their money, let them do so, but with a floating £. I am sure that my right hon. Friend was right to act as he did.
  6.40 p.m.
  Mr. Roy Jenkins: It is now almost exactly eight years since I last had the opportunity of addressing the House, as opposed to asking a Question, from such an elevated position as this. I find it a little strange. I suppose that I am not entitled to ask for the indulgence of the House, though I must say in passing that I notice certain differences, one of which is how very much longer Front Bench speeches sound when one has to listen to them instead of making them oneself.
  I hope that we can clear away one point at the outset, and I trust that the Chancellor—I am sorry that he has just left, but he has had a long time on the bench—is not querying it today, that what we have had is a devaluation. Last Friday, the right hon. Gentleman tried to pretend otherwise though he was silent upon the point today.
  Let there be no doubt about it. We have had a devaluation, though not a devaluation to a new fixed point, which, I think, was almost certainly correct, if only because, if we carried on with the policies which we have been pursuing for the last two years, it would be almost impossible to choose a new fixed point which would be acceptable now and could be held for any appreciable time in the
  1742
  future. That is the only difference between a straightforward devaluation and this, that we have not at the moment a new fixed point. What has happened to us is in no way comparable, for example, to what happened to the German Mark on two previous occasions. It is a float downwards, and it was, in my view, somewhat disingenuous of the Chancellor last Friday morning, and again, I thought, at Question time on Tuesday afternoon, to pretend otherwise and almost to suggest that we might equally well float up above 2·60 as down below 2·60. I hope that we shall hear no more of that from him. If we do, I suspect that he will encounter a pretty sour response from British tourists and British importers.
  Nor is it valid to say, as has been said from the Conservative benches in recent days, "At least we are still at 2·46 dollars"—or 2·47, whatever the market closed at this evening—"which is quite a bit better than the 2·40 with which we started". It is not, and I hope and trust that the House fully realises that.
  It is an important basic fact of the international monetary system—I shall return to this later—that we are living at the moment in the twilight of dollar hegemony. As a result, while the dollar remains the intervention currency in relation to most dealings, and while it is the dollar rate which we instinctively use, it is no longer a valid continuing measurement of the world value of any individual currency.
  In world terms now, 2·47 today is not the same as it was a year ago. At the time of the Smithsonian agreement, we were told—I think that the Government were anxious to reassure us that it was not much—that on a weighted average basis we had gone up by about 1 per cent, as a result of the Smithsonian agreement. This afternoon, as I understand it—I do not predict the future—we are down by 5·3 per cent. from the post-Smithsonian position. So let there be no doubt; we are lower against the world as a whole than we were last autumn. We are lower, it is a devaluation, and there is no point in denying it.
  The Government would, therefore, be fully open to the sort of hyperbolic reproaches which the Prime Minister, as Leader of the Opposition, saw fit to heap

  1743
  upon us in November, 1967. I shall not try to repeat them. I thought that they were sententious nonsense at the time, and I think that it would be sententious nonsense today. I do not believe in trying to erect questions of parity into moral imperatives. But I hope that, in present circumstances, the Prime Minister feels a little ashamed of the nonsense which he talked 4½ years ago. I am prepared to leave it at that, and provided that we have no more hypocrisy from the Government benches about this not being a devaluation, we shall spare them in return the self-righteousness which they inflicted upon us.
  In my view—I think it right to say so—last Friday morning's operation was technically well carried out. But that is very different from saying that, because it was technically well carried out, it was a victory. Indeed, I was somewhat amused in the House last Friday morning to see the Chancellor performing a delicate balancing act and being unable at times, apparently, to decide whether to accept the plaudits of some of his own back benchers for his brilliant success or to complain that it was all the fault of my right hon. Friend the Member for Leeds, East (Mr. Healey) that he had had to carry it out. It was a slightly difficult combination of propositions to advance.
  I say in passing that I regard it as highly fanciful to suggest that my right hon. Friend's speech was in any way a major cause of what happened last week. The slight suggestion in the Chancellor's speech that the sequence of events—Friday a bad day, Monday a quiet day, and Tuesday, a worse day—supported the notion that the speech made on Monday evening was influential is just not valid. When one has periods of severe pressure—I have some experience of such periods—it is normal to have a bad Friday and to have a quiet Monday before things begin again. I have no doubt that the Chancellor's own policies and hints in combination were incomparably more significant than anything which my right hon. Friend said.
  Nor does the fact that it was, as I believe it was, a good technical operation in a difficult position mean that everything is remotely going well. My right hon. Friend the Member for Leeds,
  1744
  East used a rather striking nautical metaphor. When I became Chancellor in November, 1967, I decided that one of the restrictions which I would impose upon myself was never to use a nautical metaphor in relation to the development of the economy. It is an extremely difficult inhibition to stick to; they come popping into one's mind the whole time, and one has to push them firmly away and resort to other less attractive and sometimes less convincing metaphors.
  On this occasion, I shall use a driving metaphor. Good driving skill means that if one gets into a bad skid it is better so to control it as to end up on the grass verge than to run into a telegraph pole, but that does not mean that it is comfortable for one's passengers or that one makes good progress along one's planned route in so doing. It is also rather dangerous for others on the road.
  I cannot at this moment feel any complacency about the state or prospect of the international monetary system, and I think that we may be a little inclined in this debate to devote somewhat too much attention to our own affairs, important though they are, and not enough regard to the effect upon our own affairs of events resulting from what we have done which may repercuss back upon us.
  We have had too many international monetary crises. We had a bad run between 1967 and 1969. They were not necessarily £ crises; some were, some were not. They were crises affecting the international monetary system. We then had a pause for nearly two years, until the summer of 1971. But, from then onwards, we have been back in the thick of a series of very difficult crises.
  There is a certain danger in getting used to crises and believing that, because we have had so many, the next one will always sort itself out more or less all right. I think that we may find, if we are not careful, that we are in a position somewhat analogous to that of the pre-1914 diplomatic crises. We have had Algeciras. We have had Bosnia and Hersegovina. Perhaps we have had Agadir. I am not sure whether we have had the first or the second Balkan war, or both. But there is a danger that, as we go through these serious crises, we may find that the one which arrives next becomes August, 1914, and does so rather unexpectedly.

  1745
  I do not therefore share the views of those who think that any outcome which shows that Britain is acting independently is necessarily satisfactory. It is terribly tempting to say, "Good. We have behaved rather like Secretary Connally last August. Good. We have shown the French where to get off." That is a tempting thing to do and it might even be right within a limited context. But no one should underestimate the risks which can be involved.
  It is easy to assume that we could behave in a liberated way and that the rest of the world will go on as we want it to go on, not reacting in a particular way. Four times out of five this might be right. But we may be approaching the point at which the fifth chance will come up, not necessarily because of anything to do with action on our part in connection with the £ but because of some sparking-off action in a new international crisis. The fifth chance will come up, the system will crack and we shall move back into a world far more difficult from the monetary and, therefore, trading point of view than anything we have known over the whole generation since Bretton Woods. Let no one be in any doubt that if that occurs we in this country necessarily and inevitably will be one of the worse sufferers.
  It is also easy, particularly in recent circumstances, to mock at the perhaps over schematic, perhaps premature attempts at European monetary union. They have certainly received a setback. In my view a tight monetary framework will never hold unless it is based upon and marches alongside a high degree of economic integration. Otherwise it will always crack under strain.
  I do not think that agreement to subscribe, if that is the word, to the "snake in the tunnel" has had much to do with the events of the last week. We would in any event have needed to get outside not merely the tunnel but the Smithsonian support points. But it appears to me that the danger is not that Europe in the future will imprison us too tightly but that we shall jointly accomplish too little. I cannot believe that independent policies for this country have much future in a world where vast sums of money, sums utterly undreamt of 10 or even five years ago, are subject to national control and
  1746
  are extremely difficult to subject to any national control, and held and moved mostly not by so-called speculators but by rather harassed corporation treasurers in big multi-national companies, sweeping across from country to country with an enormous wash behind them and, as we have seen, having devastating effects on all of us.
  It is a world, too, in which the dollar for the first time in the living experience of almost any of us here, certainly in our adult experience, is both too weak and too self-absorbed to play its traditional rôle of monetary captaincy throughout the world. It is a new world from this point of view, and that latter aspect is a new factor, whether we like it or not, and a factor we have to take into account. I do not believe that it is a world in which we should fight shy of co-operative action in Europe and elsewhere. It is a world in which, with these new changes and these new circumstances, we need it more strongly than ever.
  The restrictions on the international situation are somewhat longer-term considerations. The immediate issue today is how the Government can set right some of the errors of the past two years. When the time comes to peg again, and it should come in due course, but I hope it will not come too soon, the Government must fix a rate which our competitive position will allow us to hold. One of the major errors of the past two years has been postponing reflation until the balance of payments was deteriorating seriously. I do not see how that course, at any rate with the benefit of hindsight, can now possibly be justified. The argument put forward by the Chancellor and other economic spokesmen in late 1970 and 1971 was that inflation must first be got under control before there could be expansion. I believe then it was a mistaken approach.
  Mr. Bruce-Gardyne: The right hon. Gentleman did not say so.
  Mr. Jenkins: I did say so. I said it absolutely ad nauseam. If the hon. Gentleman cares to read my speeches he will see that I was boringly repetitive in almost every economic debate we had. It appears now, but too late, to be accepted by the Government. If they do not accept it, what are they reflating

  1747
  about? Inflation is certainly not under control today, but the Government now see great virtue in expansion. On Tuesday the Financial Secretary was pointing out that if production rose fast enough this might help to bring costs down. Why on earth was this not the case in 1971? Or is it possible that the Government see the validity of the argument on this occasion which they did not see before—or are they exercising their ingenuity for turning into a new direction?
  It would clearly have been far better to have got expansion on the way while the balance of payments was still strong. We should have accepted as part of the price something substantially less than the massive £1,000 million surplus which we had in 1971 and avoided as I think we might then have done, a sudden and drastic deterioration such as we have had in the last five months. The danger to currencies is a sudden change of trend. We would have been a great deal better off not merely from the point of view of the production we would not have wasted but from the jobs we would have kept going to have had expansion in 1971. It would have been better to have had stable employment and a somewhat smaller balance of payments surplus so that we did not jerk into expansion with the balance of payments surplus slipping away almost overnight, creating the sudden effect such a change is bound to have.
  Mr. Dennis Skinner: My right hon. Friend could have spent it.
  Mr. Jenkins: Yes I could, and with perfect foresight I would have expanded the economy faster in 1970. But that was very shortly after the time when, following many difficult years—my hon. Friend the Member for Bolsover (Mr. Skinner) was not here then but he will remember it—
  Mr. Skinner: I can read.
  Mr. Jenkins: Perhaps my hon. Friend will listen as well as read. After a great number of very difficult years the ballance of payments at last turned right and I was cautious in being anxious to see that this was not a flash in the pan but was a firm improvement of trend. By the time the present Government took over, by the time they had their autumn budget, and still more their Budget of
  1748
  1971, they had the experience of 18 months of a solid balance of payments position to see and to build upon. It was a different position. But I give my hon. Friend his point, that with perfect foresight, knowing how the future would develop and knowing that the trend had changed, of course I would have been right to expand earlier.
  The other major error has been for the Government to allow the steady decline in our competitive position that was still—I hope the Government will notice this—wholly intact in mid-1970. It has all gone since. Following the 1967 devaluation our export prices stood at an index number of 94·5 as against a base of 100 for all the OECD countries. By mid-1970 their export prices were at an average of 109·3 and we were at 103·6, almost exactly the same differential as in early 1968. But it then steadily and rapidly slipped away. By the third quarter of 1971 we went ahead into a worse export price position for the first time, 117·3 against 116·8. In the last quarter of 1971 the gap was 4 per cent. against us. In the first quarter of this year we had gone up another 6·4 points. That happened between one quarter and the other. The figures for the OECD countries are not available to me for that year, but I have no doubt that the gap has become still wider during that period. There must have been a still bigger disadvantage.
  I am not saying, of course, that none of this deterioration was in the pipe line in June, 1970. Clearly some of it was, although I am always amazed by the extent to which Conservative Members apparently regard the repayment of the remaining debt as something which was not in the pipe line in mid-June, 1970, but regard anything remotely disagreeable as having been not merely in the pipe line but absolutely outside their control. The fact is that the deterioration in our competitive position has all occurred in the past two years. Until two years ago we held the post-1967 devaluation competitive advantage, and they had over 18 months before they finally slipped behind, before the 1967 advantage was all gone. They had over 18 months to hold it, to prevent it slipping. They failed. They made it worse, and they are still doing so.
  One of the most unimpressive features of government I have ever seen is the

  1749
  constant attempt by the present Administration to shuffle off responsibility for inflation on to everybody but themselves. God knows, it is not an easy problem, but it does happen to be the central problem of politics, of governing the country today, and if one is not prepared to accept responsibility for dealing with the central problem of politics, one is not fit to be a Government. The Government were not elected because they convinced people that they would do more than any Government had ever done before to get rid of the blame for inflation. They were elected perhaps more than anything else because they pretended that they would deal with the problem itself.
  British export prices are rising faster than those of any of our competitors; wage costs per unit of output faster than anywhere but Italy; consumer prices, I believe, faster than anywhere else; and retail prices faster still than consumer prices, especially, be it noted, in the Government-controlled sectors of the economy. Unless they can be slowed down, we shall slide as long as we float, and we shall find it very difficult to hold a rate at which we peg. That is the crux of the problem facing the Government, and facing the country, too.
  I do not think anyone can claim to have a complete, guaranteed, readymade solution to this central problem. What I think can be guaranteed is that the present mixture of policies which the Government are pursuing is certain to perpetuate failure. The essence of the present mixture is to invite confrontation, not co-operation, with the unions, but to fall back in disarray when confronted by determined union action, and at the same time, until today at any rate, to have a money supply increasing by about 23 per cent. per year and a public sector borrowing requirement of £3,000 million a year. All these policies are not wrong, but in combination they are an absolutely certain recipe for failure on the central inflation front.
  I hope that what can be achieved is a longer-term solution. What I fear is that the Government will go on bumbling, doing nothing when they should act and then being pushed into too drastic a short-term solution in the autumn or a little later which will solve absolutely nothing.
  1750
  Neither side of the House can afford to be dogmatic about prices and incomes policy. None of us has achieved total success, though I am amazed that a Government so surrounded by disaster in this field should be quite so dogmatic in rejecting everything that was done, particularly in the early years of the 1964 Government, when the Prices and Incomes Board, voluntarily accepted, did a great deal of useful pioneering work. There is no room for dogmatism. It was not perfect in our day, but the present position is a disaster, and everyone knows it is a disaster and a menace to the future of the country.
  We do not want just something which will try to get the Government out of a short-term difficulty. We want something which will set us on a better long-term course. In order to achieve that, the Government must seek more agreement, consent and co-operation. I do not think they quite realise the bitterness with which they are viewed by sections of the community whose co-operation they now desperately need. They will not assuage the bitterness unless they are prepared to make considerable sacrifices of their own pride, their own measures and their own face. The plain fact is that their central policy has failed. They have not curbed inflation, they have not contained unemployment, they have not stimulated investment or initiative, they have released no new energies. They have merely redistributed the national income in a more regressive way.
  Unless they are prepared to make those changes, the failure will continue. They will be the Government of unprecedented inflation and a weakening £, and it will not help the Prime Minister at the end of the day to sit there pulling his cloak of self-righteousness about him and saying, "It was everyone's fault but mine."
  7.9 p.m.
  Mr. J. Enoch Powell: The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) suggested that his speech might be regarded as almost a maiden. So perhaps he will permit me, in accordance with custom, to extend to him almost a welcome—into the wilderness which I trust he, too, will not find entirely uncomfortable or unliveable.

  1751
  The Government invite the House in the Motion to approve the decision to float the £. I am sure that my right hon. Friends are not surprised, and I hope they may be a little gratified, to learn that in that I can support them.
  But there is just this difficulty. There is that extra word in the Motion. Alas, how often when one thinks that one's hopes have been fulfilled and rushes open-armed to embrace that fulfilment, one finds there is still something amiss, something not quite complete, less than perfect; and here, sure enough, it is—the word "temporarily". I will not take refuge in the consolation of the proverb that that which is temporary is normally permanent; for I fear that the word "temporarily" in the Motion is the mark of a profound incomprehension, and I believe that until we are free in this country of that incomprehension we cannot reap the benefits of the decision which the Government have taken and we cannot be freed from many of the inhibitions under which the country as a whole has laboured this past quarter of a century.
  My right hon. Friend the Chancellor of the Exchequer looks forward to fixing the rate of the £ again as soon as possible. But there is no point of time and there is no point of parity at which the rate can be refixed where it will not be as vulnerable again to the causes which resulted in its being unfixed last week. By 1967, the fixed rate of 2·80 dollars was too high and could not be sustained; by August, 1971, the fixed rate of 2·40 dollars was too low and could not be sustained; last week the rate, fixed only last December, of 2·60 dollars was too high and could not be sustained.
  In this I dissent from the right hon. Member for Leeds, East (Mr. Healey) when he said he hoped that the Government would not refix the parity "prematurely". A fixing of the parity is always premature, if it is supposed that it can be fixed at such a point as to be impervious to all the real changes of the economic world. One of the many illuminating points in the speech of the right hon. Member for Stechford, was when he reminded us that the pressures upon a parity, its lapse into unreality one way or the other, are not wholly domestic. It is not entirely what happens here in this country, the internal purchasing power of
  1752
  the £, which renders this or that parity unrealistic. It is also what happens in the rest of the world.
  The market value of a currency in relation to other currencies, above all that of a currency such as sterling, is a reflection of the infinite complexity of interacting forces and economic and monetary changes throughout the world. If one were to point—and here again I am on the track of the right hon. Member—to the greatest single factor which has forced these changes in parities in the last five years, it would probably be the Vietnam war, with its effect upon the American economy, and thus upon the dollar, and through the dollar upon all other currencies and their values.
  My right hon. Friend and so many others yearn to keep a fixed parity or to return to a fixed parity because it will give, they think, stability, security. Trade, it is stated, business, investment and the work of the world need assurance; they need to know what values are going to be in time to come. It is time to end this fond illusion that we can freeze the real and unforeseeable changes in the economic world by declaring that from now onwards such and such is to be the parity. Surely we have lived through enough not to fall for that again.
  What sort of security was there for business before 1967? For how many months before 1967 could any sure calculation in terms of sterling at 2·80 dollars be made? What security was there in the months before August last year? What security has there been in these last six months since the Smithsonian agreement of 15th December last year? None whatever. There has been no stability, no assurance, no firm basis for the calculations of those in business and commerce. As soon as the realities move away from what the politicians are saying, it is the realities after which men at work, men in commerce, men in trade, have to attempt to chase—and it is very significant that during the period in which the £ floated in the closing months of last year the CBI was urging the Government not to refix the parity, and that it was amongst the first, after these six months, to welcome refloating when it happened at the end of last week.
  My right hon. Friend referred to the vast masses of money which move across

  1753
  the exchanges and thus create an unsettling effect. "Speculation" is the term attached to them. The right hon. Member for Stechford, was right to remind the House that the element of pure speculation is relatively small in the total of monetary movements which take place at such times. However, it is not speculation, leads and lags, and the rest which cause the trouble. It is their impact against fixed exchange rates. With a floating exchange rate, speculation is not only harmless; it actually does its work, of moving the rate to correspond accurately with the net total of all anticipations. Speculation only becomes harmful, it can only do baleful work, when it is confronted with a blatantly false assertion made and attempted to be sustained by Governments in terms of a fixed parity.
  Mr. Harold Lever: Why is it less baleful under a floating system, when speculation drives the rate down, than it is baleful under a fixed system, when it drives one off a particular rate to a new one?
  Mr. Powell: Because as long as the rate is fixed the speculator is on a one-way option. As soon as the rate is determined by the market, speculation is equal and opposite at the market rate. One has only to imagine what would be the position—and it is not an entirely out-of-the-way analogy—if there were to be fixed rates on the Stock Exchange. Everyone would know when they were false and did not correspond with the realities. The consequence would be that from time to time we should have to unpeg the fixed rates, with catastrophic changes of value, instead of the market rates being determined by the judgments of all who participate in the market. The same happens with a floating rate for a currency.
  Of course, we all want the nearest approach we can get to a reasonably stable environment in which to conduct our affairs. But in a world of economic change and in a world where the major monetary powers are likely for a long time to come to be pursuing their own different policies, the nearest approach to stability we can have is by allowing those changes to be reflected in rates which are free to move. We ought now, at last, to abandon the illusion that we can call change to a halt and live in a world of our own pretence, and instead to provide, by a sensitive and continuous recognition
  1754
  of changing reality, at least that stability which is available.
  I referred at the outset to the loss and suffering which the attempt to impose and sustain fixed parities has brought with it over the last 25 years.
  Mr. Dick Douglas: Would the right hon. Gentleman not concede that what fixed parities have brought over the last 25 years is an enormous increase in world trade?
  Mr. Powell: That is begging the question. Parities have not remained fixed over those years. They have often been altered at the last moment, in cataclysmic movements which have brought about avoidable interruptions to trade, while the periods of attempting to maintain them were characterised by interference with freedom of trade, controls upon the movement of capital, controls upon current account, controls interfering with freedom of choice and decision. Those are the things which always accompany the attempt to fix a reality which is constantly changing.
  For the great public out of doors the business of exchange rates, the parity of the £, floating rates, is a technical matter, a closed book, or a book that they do not care to open, a page in the newspapers that they do not bother to read. It would be well if they were not affected by it; but unfortunately this technicality, as it is made to appear, is something which directly affects the well-being of millions of ordinary men and women. For when a fixed rate is fixed too high, the consequence is that deflationary policies, which deliberately reduce employment and output, which deliberately interfere with the freedom of the citizen to make his own choices, are imposed in the country concerned. In how many of the last 25 years has output and the progress of well-being in this country been held back under both Governments for the sake of the fetish of maintaining a fixed exchange rate?
  The evil is equal and opposite when the rate is fixed too low. The consequence then is that which we have experienced recently—and my hon. Friend the Member for Horsham (Mr. Hordern) brought this out, not for the first time, earlier today. When the rate is fixed too

  1755
  low, the consequence is floods of money—the Germans have experienced this, and we have experienced it—which bring with them the evils of inflation, once again coming home to millions of people, who have no suspicion of the origin of what it is that affects their daily lives.
  This is not an academic debate, and the interest in it is not academic. The question of fixed or floating parities, of a market price or an artificial price, is a question which deeply affects the well-being of the ordinary people of this country. The reasons why, over many years, I have advocated, not only with vigour but with passion, a market rate, a floating rate, for the £ sterling is because I am convinced that it would remove at any rate some of the avoidable burdens and evils from the backs of the people.
  Of course, with a floating rate we should still have to cope with our own domestic inflation. Of course, with a floating rate we cannot guarantee this or that rate of increase in our domestic product. But, with a floating rate, of this we can be sure, that we shall not artificially, for the sake of a shibboleth and a fetish, impose upon this country alternately the evils of deflation and of inflation, that we shall not go on repeating the bad film seen so often during the last 25 years.
  I know that in these debates, very properly, the only Amendment allowed to be debated is that moved by the official Opposition. Yet, there is another Amendment which I would gladly have seen moved and carried tonight. It is a very simple and I believe a very important one: "Leave out the word 'temporarily'."
  7.26 p.m.
  Mr. Emlyn Hooson: The right hon. Member for Wolverhampton, South-West (Mr. Powell) is perhaps more accustomed to the diet of locusts and wild honey in the wilderness to which he welcomed the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). I will not follow him in what he said about the advantages, as he advocated them, of the £ permanently floating. It seems that whether the £ floats, and there are obvious advantages and disadvantages in that, or whether the £ is at a fixed parity, and there are
  1756
  obvious advantages and disadvantages in that, the basic problem facing the country is that if we are to have a strong currency, whether floating or at a fixed parity, it depends on what we do internally.
  It was therefore the latter part of the right hon. Gentleman's speech which attracted me in particular. Over the years in this House I have listened to successive Chancellors of the Exchequer, including the right hon. Member for Stechford and the present Chancellor, speaking of the great importance to this country of a successful anti-inflationary policy. No one can doubt the importance of this for a moment. Inflation is eating away steadily at the heart of this country. It is undermining its economic and its social stability. The truth is that this Government like their Labour predecessors have failed hopelessly to implement their anti-inflation policy successfully.
  It has been said that inflation is almost endemic in the Western economies, and so it is or appears to be. But let us face reality, which is that it is much more rampant in this country at present than in any other Western country. It is showing no signs of abating. We should be making a grave error if, in congratulating the Chancellor on the success and skill with which he carried out the floating of the £, we were to allow this to mask the fact that it is an acknowledgment of defeat for the Government's economic policy generally. The circumstances in which the £ came to be floated were that we were driven to it. It was not a deliberate decision, taken in the cool atmosphere of a strong economic situation; it was a decision forced upon the Government by circumstances. It marks a serious defeat for the country as a whole and yet another step in her general economic decline.
  Whether the decision be to float the £ or to devalue to a fixed parity does not matter for present purposes. It represents a recognition of the sharp loss of confidence by holders of sterling in this Government's ability to run the United Kingdom economy efficiently and well so as to maintain the value of the currency. The run on sterling would have been reflected whether we had fixed parity or whether we floated the £. Galloping inflation lies at the root of the general malaise of the country, which is a lack

  1757
  of confidence in the country's future. It is a cause of great discontent. Inflation is a cause of real hardship in sections of the community.
  Reference has been made to two defeats which the Government have sustained on the economic front—in the coalminers' strike and in the railway settlement. People seem to ignore the defeat which is about to occur in the engineering industry where 2 million employees will surely have very substantial rises now that the unions have been called back to the national negotiating table during the past week. This will mark another twist in the wage spiral.
  Outside observers would be forgiven if, in observing the state of this country, they thought that we were indulging in a massive exercise in self-destruction. There is an absence of common purpose. There is excessive emphasis on sectarian interests and there is a general feeling, which we may as well recognise, of the inevitability of decline. This tendency to self-destruction manifests itself in the growing differences which are expressed in this House. It is to a degree represented by the escape into mythology, in countries like Wales and Scotland, represented by nationalism. It manifests itself in excessive wage claims by the unions. It manifests itself in the Government's refusal to recognise the reasons why a voluntary prices and incomes policy is not possible.
  When people talk of the need for a voluntary prices and incomes policy, they generally mean such a policy to apply to everyone else but not to themselves. The atmosphere of the country is all wrong for a voluntary prices and incomes policy to succeed. We are living in an age of paradise for the speculator. Too many people in this country have a vested interest in inflation.
  Let me quote the Financial Times ordinary share index. In January, 1962, it stood at 306·4; in October, 1964, at 365·6; in March, 1966, at 344·9; in June, 1970, at 334·6; in May, 1972, at 537·6—a rise of 200 in the last two years. This has been accompanied by galloping inflation.
  The truth is—and this is what makes it impossible to have a voluntary prices and incomes policy—that the gap between those with wealth and those with-
  1758
  out wealth is ever increasing. There is a general feeling of unfairness which politicians do not spell out to the country. The Labour Party as well as the Conservative Party did not spell it out. If I were a trade union leader, how could I possibly argue against massive demands for wage increases in the light of the general increase in the wealth of those who own property and shares?
  The prevailing problem is illustrated by a quotation from an article by Mr. Michael Braham on stockbrokers' incomes in the Observer of 11th June. He said:
  "While complaining bitterly about the level of wage claims being made by the unions, some brokers have collected as much in a year as a train driver can hope to make in a lifetime".
  The article points out that the commissions and volume of trade of stockbrokers have so increased that their incomes are enormous. The railway men do not want to pay any more for coal, but they want a massive wage increase. Lawyers do not want to pay any more in train fares, but they want larger fees. This is the situation throughout the country. Every section of the community seems to be following its own sectarian interest without regard to the true interests of the country.
  Mr. Arthur Lewis: Perhaps the hon. and learned Gentleman would go a step further. The Tory philosophy makes the situation worse. The Tories say that, however much richer the rich become does not matter; that is good and is marvellous advancement. In fact, it is quite the reverse.
  Mr. Hooson: I shall not take up the hon. Gentleman's intervention, although there is some truth in it.
  Part of the blame lies fairly and squarely on the Government's shoulders who, when they took office, preached an old-fashioned version of laissez faire which no self-respecting Liberal had preached for at least half a century. They dismantled the whole apparatus for restraining price rises. They got rid of the apparatus for regional incentives and for helping development areas. There was an unnecessarily abrasive approach by the Prime Minister and his team.
  People with property and capital invested—and I am a believer in the

  1759
  capitalist society, unlike the hon. Member for West Ham, North (Mr. Arthur Lewis)—are much more likely to co-operate in a voluntary prices and incomes policy than people without property and investment. The climate for a voluntary system is all wrong. It will not succeed because gross inequalities result from inflation and the lack of Government policy. The great tragedy is this: the more inflation affects us, the worse becomes the position of the lower paid. The more the unions pursue high wage claims, the greater the inflation and the greater the inequality. That is why union leaders are bound to be in a dilemma.
  Take the position of man renting a council house and earning £30 a week at the beginning of this year and compare it with that of a man who owns his house, and has some capital in shares whether small or large, and was also earning £30 at the beginning of the year. The Government asks for restraint in prices and incomes. If they get it, what happens? With galloping inflation, the man who rents his house will be much worse off at the end of this year. The man who owns his house is much better off. The latter can afford to abide by a prices and incomes policy; the former cannot.
  Mr. Neil Kinnock: The hon. and learned Gentleman says that he supports the capitalist system. Does he acknowledge that he has just pointed out a major weakness in the capitalist system? He is saying that the capitalist system favours those who own to the detriment of those who earn.
  Mr. Hooson: As the hon. Gentleman knows, I am not a Socialist. I believe that the capitalist system is capable of great adaptation. I believe in the Keynesian theory that the Government owe a duty to intervene. They owe a duty to redress the balance. They owe a duty to the community to protect the economically weak against the economically strong and robust. But Government supporters must acknowledge that there is a widespread feeling that they are showing no realisation that they owe a duty to balance fairly and to intervene between the economically strong and the economically weak and vulnerable. Therefore, before we can make any progress, there is a great need to change the prevailing political climate in the country.
  1760
  I believe firmly in the urgent need for a fair prices and incomes policy, not for a short time and not a price freeze, but a policy which will extend over a number of years. That can be achieved only by a statutory policy with a real bite to enforce it, and that is unacceptable to the country in the present climate. It could be accepted only if it were based on the clear recognition of the need for a new social contract which should result from it.
  There is a great inequality of wealth as opposed to income. The only source of wealth for most people is income. I have a modest property, but I make more in the capital appreciation of that modest property than in income from the Bar or the House. That is not right. It is still too difficult to make capital out of income. The disparity in economic growth and economic wealth between the Birmingham-London complex and the rest of the country is still far too great. We must acknowledge a far greater right of workers to be consulted on major decisions and to have a share in the wealth of their companies and in the decisions that affect their future.
  The capitalist system is capable of great modification and development. The Government came into power with preconceptions of returning to an idealistic, free trade, open competition economy. That no longer exists. We must believe in a mixed economy in which there is a place for private enterprise and a place for Government interference.
  The one sector which has had a successful prices and incomes policy for many years is agriculture. There was correlation between farmers' income, price to consumer, land values and wages paid to agricultural workers. By and large it was thought to be fair, and it worked. It resulted in our country having the cheapest food in the world. It was a most successful policy and I wish that it could be imported into the Common Market.
  The Tory Government have failed, every bit as much as the Labour Government failed, to cure inflation. They have failed to create a sense of common purpose. They have failed to satisfy the country that they are proficient in managing the economy. The chief charge

  1761
  against the Government today is their incompetence in managing the economy.
  The floating of the £ is merely a recognition of what already exists. The fixed exchange rate has to a considerable extent become an illusion. For it to have any impact it is necessary for all other currencies to remain fixed. There are considerable disadvantages in going for a permanent floating rate. But we must at least have flexible bands within which the £ can float.
  I am sorry to be a Jeremiah, but it seems to me that the country is heading for further and greater trouble. We are about to join the Common Market, and the right hon. Member for Birmingham, Stechford said that a European monetary system was possible only with integrated economies. How can one integrate economies with the present common agricultural policy of the Common Market? The CAP is directly linked and dependent upon fixed parities within very narrow limits, and it is impossible to hope for the £ to float within flexible limits until that policy is modified. Therefore, we are heading for further inflation.
  The Chancellor of the Exchequer was right to float the £ when he did, but he did so because he virtually had no option. It is a general acknowledgement of the failure of the Government's economic policies, and, above all, of their failure to create confidence in the country. Some of the Government's policies may have been good in themselves, but their combined result has been to make the rich richer and the poor poorer, and to make the country feel that we are driving towards economic disaster.
  7.45 p.m.
  Mr. John Hall: I hope the hon. and learned Member for Montgomery (Mr. Hooson) will forgive me if I do not comment on his remarks. In view of the number of hon. Members who wish to speak I shall be brief. It is sufficient for me to say that I join him in his support for the capitalist system.
  I want to concentrate not on the events that have led to the debate but rather on the action that we need to take to deal with the problems at home which themselves affect the rate of the £ abroad. The Chancellor of the Exchequer's back is broad enough to bear his mete of
  1762
  praise and blame—although it is sometimes more difficult to bear praise than blame. In his absence I am sure he will not flinch when I join those who have congratulated him on the speed and technical efficiency with which he operated on Friday. It was a remarkable operation, and he deserves the congratulations he has received from all quarters.
  I join my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in expressing regret at the use of the word "temporarily" in the Motion. Like him, although not perhaps for so long, I have long been an advocate of the floating rate—
  Mr. Arthur Lewis: You will have to come out of the Market, John.
  Mr. Hall: I was about to come to that point. However temporary this measure is, when we go into the Common Market we shall be bound to cease to allow the £ to float from 1st January next.
  I was impressed by the speech of my right hon. Friend the Member for Wolverhampton, South-West. It took me back to a speech he made in my constituency some years ago when he spoke with the same passion and fervour about the £, to such effect that at the end the whole audience of about 1,200 rose and acclaimed him, although I hazard a guess that more than 99 per cent. understood not a word he was saying. He can speak with great passion on these matters, and I support much of what he said.
  The Chancellor of the Exchequer has been given time, but very little time, by the recent measure. If during the next two or three months it can be seen that we are taking decisive and effective action to deal with the twin problems of inflation and industrial unrest from which we suffer I would guess that the £ will settle down after a month or two to somewhere about 2·45, roughly speaking a 6 per cent. devaluation on the unrealistic rate of 2·60 which was imposed by the Smithsonian agreement. If, however, we are not seen to take effective action and the problems from which we suffer appear to be increasing in intensity, I cannot say how far the £ will sink. It may well sink below the 2·40 to which it went in the 1967 devaluation. If it does, it is likely to affect many other currencies throughout the world and we

  1763
  shall be facing an international monetary crisis of considerable severity.
  I suggest that one of the essential steps is to bring together all the countries of the world for the umpteenth time—I cannot remember how many times these conferences have already been held—to try to reform the international monetary system. In a speech last Tuesday my right hon. Friend the Prime Minister pointed out that all currencies, however sound, are at risk until this is done. I am not an expert in these matters and I do not wish to suggest the form of such an international currency reform. I merely expess the hope that in implementing such a reform we should not find ourselves back as a snake in the tunnel. I have never liked snakes and I am claustrophobic about tunnels, but I certainly do not regard this form of monetary manipulation as very good for us.
  International monetary reform will not solve our domestic problems and it is domestic problems we should be talking about. We suffer from a disease which has been somewhat inelegantly but expressively described as stagflation. It began many years before the devaluation of November, 1967, and the treatment of Stagflation has varied according to the Government in power and the philosophy adopted. We have attempted to cure it either by blood-letting through high taxation or by dieting through controls. We have then had subsequent treatment in the form of blood transfusions by reducing taxation. That treatment seems to be beginning to work even though it is working much too slowly. Furthermore, despite the Conservative Party's denunciation of the use of drugs to keep dying ducks alive, we have made available massive doses of drugs for dying ducks of all levels.
  Subsidising outdated and inefficient industry is inflationary in its effect and wasteful in its use of national resources. In the short term it can help to maintain employment and this may be reflected in the next few months but it is at very high cost. However, in the long term we shall be faced with exactly the same problem of redeploying labour in a more productive way.
  I can say nothing harsher about the proposals put before the House in the
  1764
  Industry Bill than was said by my right hon. and hon. Friends about the more modest Labour Act which preceded it. When I intervened in the debate in the Industry Bill to point out that in our Bill we had gone further than Labour, that was not intended as praise, as the righthon. Member for Bristol, North-East (Mr. Benn) thought but was intended as a criticism—a criticism strictly in line with past Conservative Policies in this respect. I am reluctant to express this criticism because the Government have had a remarkable record of real achievement in many respects over the past two years, but I am expressing this view because I have the old-fashioned feeling that being stood on one's head is not very good for one. Old Father William expressed it rather well some time ago. If we are made to stand on our heads too much and too often, it can have slightly disturbing effects.
  Despite the fact that we as a Government have a very good record in many respects—and when we examine the proposals put before the electorate at the last election we see that many of the things we said we would do we have succeeded in carrying out—I would agree with the hon. and learned Member for Montgomery shire that in common with our predecessors we have not succeeded in dealing with inflation. This has been our major failure and indeed has been a major failure on the part of all Governments over many years. This is a problem which has bedevilled our economic and social life. It is generally agreed that at the present time we are suffering from cost-pull inflation—and it is possible that if things go wrong we could add to that demand inflation. It is also agreed that the first victims of inflation are those who are least able to look after themselves, namely, the retired, the unfortunate and those living on social benefit, on savings and so on. It is also agreed that higher costs when they can be recovered only in part by increased prices tend to create unemployment.
  There was an interesting article in the Economist last week in which there was a statistical study by two Cambridge economists, Mr. Barker and Mr. Woodward. In the latest National Institute Report it has been suggested that each time a group of trade union leaders push up the going rate of wage inflation

  1765
  by art extra 1 per cent. this means, in the absence of yet further demand, reflationary action by the Government, arranging for employment to drop by over 300,000. The fact is that employment has not dropped by that figure and that unemployment has been to some extent reversed—indeed, there has been a considerable drop in unemployment over recent months—shows the extent to which the Government have reflated to overcome the effect of excessive wage increases.
  The trade unions must face these facts. Much as I understand their motivation and the reasons behind some of the very large wage demands which have been made in recent months they must understand that the effect of these demands will be to create unemployment. We have only to look at the way in which an employer reacts to a large wage demand which is not compensated by increased productivity. First, he looks to see how he can compensate for the increased wage bill in other directions. If he finds that he cannot increase his industrial efficiency he looks for ways and means of reducing his labour force. One sees examples of this in every industry.
  Another effect of the higher wage bill caused by excessive pay demands lies in reduced company liquidity. This can have very undesirable effects. It affects a company's investment plans. If they have to decide whether to curtail their activities, to go out of some business or to defer their investment plans altogether, they often will decide to defer their investment plans and hope that things will improve So leaving cash available to meet the increased wage bill. This in turn further threatens employment in the capital goods industry. One of the undesirable and disquieting features of the present economic scene is the very slow rate of investment and the slow growth in the capital goods industry. The situation in the machine tool industry is becoming increasingly grave.
  One or two of the other effects of inflation are less well known, but nevertheless very real. Members of the Opposition have on occasion referred to the increased profits which have been made in recent years, but when these profits are examined it can be seen that they are not as great as they appear to be. I have
  1766
  been looking at the accounts of several companies. They show steady increases in profits and their dividends have been up during the last two or three years. However, when we adjust those profits in line with the fall in the value of money and again express those profits in terms of diminished purchasing power, and when we also look at the increasing costs involved in replacing wasting assets, we find that many companies are not making such high profits and in some cases would be making a loss if account was taken of current money values.
  Mr. Arthur Lewis rose—
  Mr. Hall: I am sure that the hon. Member is rising to say that the same thing affects the worker, but the rate at which wages have been increasing has been faster than is represented by increases in the cost of living.
  Mr. Arthur Lewis: If the hon. Gentleman looks at this morning's newspapers he will see a report by the Department of Employment which disputes what he has just said. That report says that those in an average family earning £30 a week are finding, even with the so-called "inflated increases", that they are worse off when one takes into account the rise in prices. This was exactly the point the hon. Gentleman was making with regard to profits. The trade unions are claiming the same as he is claiming in regard to profits. However, profits are an isolated matter, but for a worker his wages are the only money on which he and his family have to live.
  Mr. Hall: I fully understand what the hon. Gentleman says, but in many industries there have been demands in terms of wage increases of up to 15 per cent. and these have been a good deal in excess of any increase in the cost of living. I know that there are exceptions but they are by no means general. The point is, how do we deal with the situation—
  Mr. Denis Howell: Give examples.
  Mr. Hall: Does the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) wish to intervene?
  Mr. Howell: Yes. If I catch your eye, Mr. Deputy Speaker, I shall take up this point, and it might be helpful if the hon.

  1767
  Member for Wycombe (Mr. John Hall) could give examples of trade unionists who have sought and obtained wage increases in excess of the cost of living in the last 12 months.
  Sir Harmar Nicholls: I hope that my hon. Friend the Member for Wycombe (Mr. John Hall) will bear in mind the figures which have been reported on that. They show that in manufacturing industries over the last 10 years wages have gone up 100 per cent. and price costs 59 per cent. Is that the answer that the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) wants?
  Mr. Hall: I think that we ought to to try to avoid a cross-exchange of interventions, because many hon. Members are still hoping to take part in the debate.
  I was about to ask how we ought to deal with the problem. There are a great many points that I want to make but, in view of the time, I confine myself to one suggestion that I wish to put before the House.
  There is no doubt that we have no need to restrict domestic growth in order to make room for an expansion of our economy in terms of exports. The right hon. Member for Leeds, East (Mr. Healey) suggested that our productive capacity was insufficient for us to increase our exports without reducing domestic production. However there is considerable slack in our productive capacity at present, certainly enough to allow us to stimulate an export drive without effecting our domestic production. Perhaps I shall be excused if I am guilty of using a platitude, once described as a truth that we are all tired of hearing, if I say that to be competitive in terms of exports we have to be able to sell at the right price and to give the right service and the right delivery. We do not seem able to keep down prices and to relate the wages and incomes that we take out of industry to the productivity of industry. Yet, as both sides of the House are reluctant to see the introduction of any kind of statutory prices and incomes restriction, we have to find another way.
  Some time ago, I suggested that an attempt should be made to agree a national average increase in wages which the country could accept and which was
  1768
  related to the national productivity. It was my view that having once agreed that figure, which might be 5 or 6 per cent., an attempt should be made in co-operation with the TUC to see how it should be split between the various industries. As an hon. Member opposite pointed out, it is folly to have a fixed percentage increase for every industry regardless of conditions in that industry. In some cases it might be that workers ought to have 10 per cent., in others a very much smaller percentage, and perhaps in some cases no increase at all. However, having agreed a figure that the country as a whole could afford, it could be distributed in unequal proportions between the various industries. In that way it ought to be possible in theory to contain inflation. To deal with cases where wage settlements above the norm were arrived at, the excess could be taken away in taxation, the taxation being used to compensate those who were likely to be harmed by the inflation which followed.
  When I made that suggestion originally, I was shot down in flames. After one or two timid attempts to resurrect it, I gave up. However, I bring it up again today because no less a journal than the Economist has also suggested it, although in rather more detail. Looking at the Economist for 17th June, I believe that there might be something in my suggestion after all.
  I hope that my right hon. and hon. Friends will examine this possibility. It may mean introducing a form of prices and incomes policy against which I know they have set their minds. But even the absence of a policy is a policy in itself, so the Government should not reject it on these grounds alone. It is worth careful examination.
  We have spent a great deal of time analysing the reasons why it was decided on Friday last to let the £ float. There have been accusations and counter-accusations about why the action had to be taken. We spend a lot of time criticising each other. Right hon. and hon. Gentlemen opposite criticise the present Government and my right hon. and hon. Friends criticise the Opposition for what they did when they were in power. However, I believe that the situation is getting too serious for this kind of across-the-Floor criticism. It is time that we as a

  1769
  House got down to finding a real solution to a problem which will damage us all if we do not solve it.
  The main problem at present both here and in the country is psychological. We have to learn how to work with and not against each other. I admit that there seems to have been a greater division between management and the trade unions over the last 12 months than for some time past. There are many reasons for it, and I do not lay the blame entirely at the door of the Industrial Relations Act, the main provisions of which I support.
  We have to find a way of rousing the British people from their apathy or inertia. Over many years both political parties have failed to get the right response from the people if the economy is to move. Above all, we ought to discover exactly what people want out of life. We always concentrate upon the improvement of the economy, and we always talk about increasing the gross national product. We are almost hypnotised by the need to strive after economic progress. If we attempted to discover what people really want out of life we might find that the leaders of both parties had been leading the people in a direction in which they did not want to go. That may be the reason for the apathy amongst the people as a whole.
  8.7 p.m.
  Mr. Douglas Jay rose—
  Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. Will you draw attention to the long-standing custom and practice of this House that when an hon. Member has made a speech, he ought in courtesy to listen to at least the following speech if not the two following speeches before leaving the Chamber? It is becoming more and more frequent for an hon. Member to make a speech and to leave the Chamber immediately afterwards. That does not help any debate. What is more, the same hon. Members always seem to be called. They appear to know when they will be called. But my chief complaint is that they leave the Chamber immediately after they have made their speeches, and the debate has no chance of success.
  Mr. Deputy Speaker (Mr. E. L. Mallalieu): It is a well-known and
  1770
  honoured custom. I have not noticed that it is being breached.
  Mr. Jay: My brief and modest speech will not contain the words "devaluation" and "inflation", and I hope that it will be the better for that.
  The Chancellor of the Exchequer said that he could not see very much wrong with the economy at any point. But he did not explain why, in those circumstances, it was necessary suddenly to float the £ last Friday. To my mind there is no mystery about it. The Government floated the £ because they were forced to and not because they wanted to. It was a case of economic reality breaking through and shattering a lot of the complacent dogmatism that we have had from the Chancellor of the Exchequer and other Ministers in recent months.
  In my view, one main reason why economic reality broke through was that the appalling burdens which entering the European Economic Community and accepting the common agricultural policy would force upon this country undermined confidence in the eyes of the financial world, which knows all too clearly that these burdens will be unsupportable if we join on the Government's terms.
  I thought that the weakness of the speech of my right hon. Friend the Member for Birmingham, Stetchford (Mr. Roy Jenkins) was that it totally ignored 1st January, 1973. In this House a week ago, I was bold enough to say:
  "…the immediate balance of payments outlook and the position of sterling are not strong enough to bear the extra burden of £1,000 million a year on our balance of payments, which everyone in Europe, except the Chancellor of the Duchy, knows will be the consequence of joining the EEC on these terms. Indeed, to rush into that situation and at the same time accept a régime of a more rigidly fixed exchange rate is a policy of economic madness."—[OFFICIAL REPORT, 21st June, 1972; Vol. 839, c. 488–9.]
  That was said to one Chancellor on 21st June and proved true by the other Chancellor on 23 June and the comment of a leading writer in the Financial Times on 27th June was:
  "The fresh evidence of our economic weakness and the inability of our Government to do much about it, that has emerged in the past few weeks, must re-open the economic side of the argument"
  on EEC entry.

  1771
  That is the Financial Times. Yet now both the Chancellor and the Prime Minister, learning nothing and forgetting nothing, continue to ignore these realities and protest that we shall both accept all the burdens of EEC entry and soon return to a fixed parity and later to the monetary union which is proposed in the EEC. That, to my mind, is to defy all the economic lessons of the post-war world and to pursue a policy which is bound to lead to further crises.
  Meanwhile, the Chancellor seems to me to have struck a new blow at the Commonwealth and the sterling area by his announcement about investment in the overseas sterling area. I think we must be told before the end of this debate whether the Chancellor means what he said, that direct investment from this country in the overseas sterling area is not to be controlled as a result of this new decision. If that is true, it is not what almost everybody, including the Malaysian Government, understood over the weekend. If, on the other hand, it is the truth, and there is to be the same control in the sterling area, as we have had for the outside world in recent years, this is a new blow to the Commonwealth and means the virtual extinction of the sterling area as we have known it.
  I turn from some of the recent policies of the Government to examine what I believe are the real economic issues facing us. There are two broad policies which are necessary to achieve for this country full employment, growth, an overseas balance of payments and reasonably stable prices. The first is a comprehensive incomes policy at home. The second is an exchange régime which combines short-term stability with long-term flexibility. Both are perfectly practicable given the will to achieve them.
  First, an incomes policy will mean recreating the Prices and Incomes Board in some form. It will have to cover everyone—judges and doctors as well as miners and railwaymen—and it will have to be lasting and not temporary. Secondly, what we need on the exchange control front is day-to-day control, with fairly wide margins round the peg and a peg which itself moves in the longer term not by Government decision and political upheaval, but under the influence of the real underlying economic forces. To return
  1772
  to fixed parities in a few months' time—and here I agree with the right hon. Member for Wolverhampton, South-West (Mr. Powell)—as the Government apparently intend will lead to another similar crisis thereafter, and so on, and so on.
  But both those essential policies are impossible if we are bound by the Government's present settlement with the EEC. More flexible exchange rates are impossible if we gratuitously attach ourselves to the EEC's extraordinary policy of narrowly fixed margins to be followed later by complete monetary union, a policy which is based, not on any sort of economic sense, but simply on the obsession of the French with bolstering up the CAP at almost any cost to anybody but themselves. That way lies disaster for this country.
  Similarly, it seems to me that there is no hope of the incomes policy which we so sorely need, by almost common consent now, as long as the Government follow their present course of deliberately raising food prices against the British consumer and the British worker. This is not merely unjust but is gratuitously forcing up our industrial costs and damaging our competitive competition throughout the world just when we ought to be bending every possible effort to improve it.
  As CAP prices are fixed in dollars the latest depreciation of the £—and this has not been mentioned so far—means that if we join the EEC the rise in food prices will be even greater than those that were previously estimated and the whole balance of payments burden on this country that much heavier.
  As long as the Government pursue this dear food policy the ordinary working population of this country are, in my considered judgement, fully justified in putting forward substantial wage claims, and until that policy is altered public opinion will, broadly, support those claims.
  It is the Government's dear food policy, together with their rent proposals, which, by making any sort of national unity and consensus impossible, are doing most to undermine the British economy. No tinkering with these mistaken policies will be enough. Our present difficulties are likely to worsen and deepen unless we make a clean sweep of these policies and of all those who support them.
  8.17 p.m.
  Mr. Edward du Cann: At 3.30 this afternoon we had a business statement, followed by a statement from the Home Secretary, followed by a statement on Ulster, followed by a point of privilege, followed by a point of order. They were all significant matters, but it meant that we did not begin the debate until a quarter to five. I hope that my right hon. Friend the Leader of the House will consider the arrangement of our business, particularly on Thursdays. It seems wrong that we should have so little time for so important a debate as this.
  First, may I echo some of the things that were said by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and my hon. Friend the Member for Wycombe (Mr. John Hall). Secondly, perhaps I may come to some of the points, and particularly the constructive points, made by the right hon. Member for Battersea, North (Mr. Jay), that is to say those points which are not part of the two rather well-worn records which he was playing, even though he plays them happily to his own great amusement.
  I recall hearing a prophecy when I first came to the House that I should, in general loyalty, vote almost as often for matters of which I disapproved as for my own enthusiasms, and so it has been this week, last week, and I dare say it will be so next week, and today is a similar example.
  The trigger for this debate was the Chancellor's decision to float the £ sterling. I think that that decision was correct. He was right, he was speedy, and I believe that he was wise in what he did. Indeed, this afternoon he proved his case beyond a peradventure. We are fortunate to have been able to float so early, for a revaluation of some kind sooner or later before we went into the EEC was inevitable, and we have now happily avoided a later and possibly damaging speculation.
  There is advantage to us of kinds which right hon. and hon. Gentlemen opposite are even better aware of than I am. Yet the reality is shameful, as the right hon. Member for Leeds, East (Mr. Healey) and others have said. Irrespective of one's party, the pressure on sterling represents a failure on our part nationally, and I do not see how we can view the circumstance with any pride.
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  Incidentally, as the right hon. Member for Battersea, North said, the Chancellor's announcement last Friday included an obituary for the sterling area. This needs much wider comment than is possible today. I deeply regret this further, but by no means inevitable, decline in Britain's political and economic involvement with so many of our friends.
  Like some of my right hon. and hon. Friends, I am anxious about the Chancellor's use of the word "temporary". None of us seems to know, and the Chancellor plainly cannot declare today, how temporary "temporary" is. I hope that we never return to the narrow bands we have been discussing, that is to say, any system which permits fluctuations only within narrow limits. As the restrictions are artificial, they are constraining and plainly dangerous. After all, fixed parities can become unrealistic very quickly and for perfectly innocent reasons. They are not viable.
  I give one example of the danger. I believe that narrow bands can actually encourage the speculator, who may gain much if he is right, yet who can only lose little if he is wrong. I was so pleased that the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) and my right hon. Friend the Member for Wolverhampton, South-West spoke a little about speculators. Speculators should not be blamed as frequently as they are. I speak as the chairman of a merchant bank which deals in the foreign exchange markets. I do not deny that there is speculation, both inside and outside this country, on occasions, and perhaps too often. But the speculator is often merely the competent businessman dealing forward, as he needs to do and as he must if he is to do his job.
  It was wise of the Chancellor to remind us of the scope of trade today. The total of payments for exports and imports in any one year, in United States dollars, in which we all have to calculate today, is now 62,500 million. Right hon. and hon. Members can calculate in a second for themselves what one week's transactions alone may be, or two weeks'—and two weeks', perhaps, is precisely the figure to which the Chancellor was referring earlier today. We have to get accustomed to new scales, and this is difficult for us to do. But it is a factor with which we have to cope.

  1775
  I am highly suspicious of the cult of immutability of fixed parities. I would go further and say—not for the first time in the Houses—that it is for our most serious consideration whether we should not regard fixed parities in our case for the next several years as something to be altogether disregarded.
  Let us look at some of the anti-floating points generally made. Surely some things are clear to us all. United Kingdom floating does not in any way injure the concept of European monetary union. Some say that that is light-years away in any case, especially when viewed in terms of national sovereignty, that is to say, the surrender of control over national resources that will be needed in the wider international interest. I cannot see the Germans, Italians or French tumbling over themselves to volunteer to do this very thing. Indeed, let us measure the progress to date. The mobilisable resources in the EEC are puny when compared alone, for instance, with the total size of the Eurodollar market, now no less than 65,000 million United States dollars. It will come, of course. It may well be right for it to come. But it will come by no means yet, and our floating today affects the issue not one iota.
  Let us be realistic about international monetary reform. I think that this is also years away and that we shall not, in our lifetime, have a perfect world system. The Chancellor was right at the latest IMF meeting to put forward his proposals. He is quite right in attempting to do so in July. He and I were colleagues in the Treasury in 1962, and I remember, as an Economic Secretary, going with the Chancellor to the IMF meeting in September of that year, at which Britain made a minor initiative. We were warmly attacked by all our friends. It is extraordinary that there are always arguments for not doing things in this world, especially in this country. Eventually we had the special drawing rights, but that was seven years later. By all means let us agitate while we wait. We might take a leaf from the writings of Voltaire and cultivate our garden and go about our own affairs. We have urgent problems to solve in this country which must have first priority. As the right hon. Member for Stechford said, it is true that we may run the risk of pro-
  1776
  voking other crises. Certainly we must not be selfish. But the truth is that within the 25 years about which my right hon. Friend the Member for Wolverhampton, South-West spoke so eloquently, we have brought about many of these crises through our own fault. It is high time that we put our house firmly in order.
  The Government's strategy is to develop the economy for the Common Market. I am not a great supporter of that ideal, but I am a supporter of the strategy, and the whole House, I believe, is all for growth. If fixed parities inhibit us, away with fixed parities. In his Budget, my right hon. Friend the Chancellor presupposed a degree of flexibility. He was absolutely right to do so.
  There is one question above all which the debate must attempt to answer. How did it happen? Why was it, as the right hon. Member for Leeds, East said, so unforeseen? Anyone who was watching the financial markets could see, I should have thought, certain indications a week or two beforehand. Why did it happen? How could it happen when our reserves are at record levels, when we have no debt, when we have substantial borrowings as of right which are quite untouched and which are still available to us, and when we have a surplus on our balance of payments? On the face of it, it was impossible. Certainly it was wholly unpredicted.
  To take the most important reasons first, the Chancellor said today that he thought the value we fixed on the £ in the Smithsonian agreement was about right. I do not agree. It was very much too high. The narrow band system was bound to lead to trouble sooner or later. The right hon. Member for Leeds, East played his part with his careless remark, but I do not want to over-emphasise that. However, the length at which he excused himself was notable.
  Let us come to economic reality, about which the right hon. Member for Battersea, North spoke. I happened to be not in Luxembourg on Monday but in Switzerland on Friday, talking to English and Swiss bankers. While the Chancellor presupposed a degree of flexi-House, I had a splendid opportunity to see ourselves as others see us, the way in which people living abroad see us.
  I shall report to the House shortly what people told me. They said that

  1777
  they thought that our trade figures now were unimpressive. I believe that to be a fair comment. They said that our society was becoming unstable. I think that that is unfair, but one realises the reasons why people abroad think like that. They said that they believed that the exceptional wage increase in this country is now becoming the norm. That is fairer comment than it seems to be at first sight, because last year's exception usually becomes this year's norm. I have always agreed with the right hon. Gentleman the Leader of the Opposition, that one man's wage increase may be another man's price increase. But this point can be pushed much too far if one believes, as we all do, in a high-wage economy. At present, when incomes are being pressed very much too far, this point seems incontrovertible.
  Thus, those who judge us think that the advantage that devaluation gave us, as the right hon. Member for Stechford said, is being eroded—thatis a matter of fact—that we are increasingly uncompetitive in world markets—that is fact again—and that the balance of payments will face new strains fairly shortly with our entry into the Common Market—that is a fact once more. I say that all this apart inflation at its present level is intolerable.
  The lesson of it all is surely this: if this is the sort of thing that one's friends and sympathisers think of one, no currency can be held at a parity widely believed to be wrong and no currency can ever be held at a parity which people will shortly prove to be wrong.
  Mr. Arthur Lewis: The right hon. Gentleman mentioned a whole category of things about which the Swiss bankers were worried—such things as the large wage applications put in by trade unions. Did they not mention high dividends and profits and payments to company directors and unit trust directors? Were they referring only to the poor workers?
  Mr. du Cann: I am very glad to say that they kept the hon. Gentleman's affairs out of the picture.
  They went on to ask—this was perhaps an unreasonable question; I told them that it was—whether the Government have lost control, and they asked what our policy was and what it should
  1778
  be. To that matter I finally direct myself.
  I welcome again, as I am sure the whole House does, the present conversations between the CBI and the TUC and those between the TUC and the Government. I hope that they develop. I believe that there has already been too much misunderstanding.
  I do not believe that the CBI and the TUC will succeed in producing a coherent, practical, enduring prices and incomes policy. I may be wrong. I hope that I am. I certainly think that they may well produce conciliation machinery. That would be useful. Indeed, it would be most valuable. However, I beg leave to doubt that they will provide a lasting rational structure for price restraint or for wages increases, covert and overt, linked only, let us say, to productivity.
  Above all, I do not think that I wish to wait to see what will happen. Like the right hon. Member for Stechford, I say that we cannot wait and we dare not wait. The right hon. Gentleman made criticisms of present Ministers. At least I can claim to be consistent in having criticised the right hon. Gentleman and in making the same point now.
  It is not surprising—I am surprised only that this matter has not been more mentioned in the debate—that people are talking about a temporary freeze on prices and incomes of all kinds. I am not sure that that may not be the right thing to do for a short period. The good will certainly exists for it in the country. If the situation is as out of control as it seems, may there not be something to be said for some shock treatment to bring about a temporary stability? Is there not much to be said for giving the Government an opportunity to resume their earlier strategy which, as my hon. Friend the Member for Wycombe said, it seems that they have temporarily abandoned?
  Surely it is right to do everything that we can to get the Government back on that original course. It was a course of courage. It was a course of realism. "I have the ambition", said the Prime Minister, "to change the mood of this country". My right hon. Friend spoke also of "the quiet revolution".

  1779
  I say that is for me, and that is for the whole Conservative Party; and I believe that it is a recipe that is right also for the country. It was taking many forms. I will not retail them all, but it was economically realistic. In a case or two it was pursued too far, as for instance in the lame duck analogy. It makes me sad that we hear from our leaders talk on this subject less often than we used to hear it, and I believe too rarely.
  There is a danger that the Government are abandoning a policy just at a moment when it was being understood. I do not say that it was not opposed. I say that it was beginning to succeed. At least it was becoming clear. I do not argue for any alternative. I am a supporter of that policy, and I wish to see it brought back. I wish to see time bought whereby some machinery may be established—I do not know what it is; a jibe was heard from the other side about the rebirth of the National Board for Prices and Incomes—for the expression of public opinion, a public judgment on prices and incomes increases.
  If it is right to trust people to use their own individual judgment, it is right to give them the disinterested information on which they can exercise that judgment. Frequently judgments to which they are exposed are those only of arbitrators, and usually too late and with settlements that are too high.
  I also believe that it is high time that we afforded more protection to some parts of British industry. If it were right to talk about the scale of dealings in the international currency market, we should be realistic in Britain today and acknowledge that there are some industrialists abroad who would destroy whole sections of British industry. There is much to be said for protection in that defensive sense.
  If we were to have for a short time a prices and incomes freeze, I do not think that there would necessarily be an explosion afterwards. What would happen would be that we should take the steam out of the present situation. I propose this not so much with enthusiasm as with reluctance. It is the Government's duty to govern and to lead, and even sometimes to put forward policies one does not like, if one believes it is right to do so, as was
  1780
  the case with the rationalisation of Rolls-Royce. Politics is not only doing the acceptable. It is doing what has to be done, what everybody knows in their heart of hearts must be done. The Chancellor said that in matters affecting exchange rates prompt action can be and usually is crucial to success. In coping with what comes after, promptness is no less vital.
  8.35 p.m.
  Mr. John Horam: The central truth, which shines through all the comment here and in the Press and elsewhere of the last few days since the flotation of the £, is that it was a devaluation caused by the Government's failure to control inflation. It is this idea which is embodied in our Amendment to the Government's Motion.
  Of course, the Government seek to deny that. They must do so. The Prime Minister says—I found it hard to understand what the Chancellor was saying as he sought to submerge us in a mass of boring detail—that the flotation of the £ was caused by speculation and hot money totally unrelated to the underlying realities. If that were true, we should eventually re-fix the £ sterling in relation to the dollar at the old exchange rate. We all know that this will not happen. It will be an exchange rate below 2·60 dollars. We have seen 2·80 dollars and 2·60 dollars go for good. The Government's explanation or purported explanation does not hold up in reality.
  Therefore—several hon. Members opposite also made this point very strongly—the central feature of this last move is that it is a failure based on the Government's lack of ability to control the problem of inflation. Within that failure there are two clear points to which we should pay attention. First, this failure is based partly on the fact that the Government misread the lessons of the Labour Government's experience of prices and incomes.
  The point was continually made from the benches opposite, in the Press and elsewhere that the Labour experiment in prices and incomes failed. That is highly debatable to say the least. People would be happy now with the rate of price inflation with which they had to put up during the years of the Labour Government. If there were an acceleration

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  after the Statutory Instruments were withdrawn, that was far more to do with the devaluation which we had to effect than it was with any explosion resulting from pent-up frustrations and the rest of it. That is a far more complicated explanation than the one that is put forward by the Government, that there were pent-up feelings which, when the barriers were opened, burst forth inevitably and inexorably.
  That is only a small part of the story. They totally misread the experience which we gained in a very hard manner. The hon. Member for Yarmouth (Mr. Fell) seems to disagree most violently, but there are some hon. Members opposite who acknowledge the truth in what I have said.
  Mr. Anthony Fell: To write off, as the hon. Gentleman is doing, the pent-up frustrations that result from a wage freeze is nonsense, as he must know.
  Mr. Horam: It is not nonsense. There were several factors. The major factor had more to do with our devaluation than with the consequences of our policy to achieve an element of stability with the statutory imposition of the prices and incomes policy.
  Secondly, and more important, the Government are trying to put through a social policy which is far more provocative than any which we on this side of the House could envisage in our wildest dreams. I need not go into the details. We all know them.
  The Government do not agree that their measures in social, economic and other spheres are divisive. We say they are. I am confident that any independent assessment of the situation would come down emphatically on our side of this crucial question.
  We, as Socialists, argue that it is always wrong to pursue socially divisive policies. It is particularly and tragically wrong at this time in our social history. There are developing and accelerating trends to which we must pay close attention in looking at the whole phenomena of prices and wages and social life generally over the last few years.
  As a result of television, greater mobility, cheaper holidays, affluence,
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  education, and so on, people are more aware than at any time in our history of the real inequalities which exist and are far less prepared to tolerate them.
  Mr. Douglas: Internationally.
  Mr. Horam: Internationally as well. It is a credit to the younger generation that they are in many ways bringing this realisation home even to older people who have put with the old deferential ideas for far too long.
  Mr. Douglas: Deferential or differential?
  Mr. Horam: Deferential. Ironically enough, in fact both deferential and differential. People are beginning to look up and they do not like what they see. Fundamentally, they see a working man as a person doing a disagreeable job, on the whole, for a poor standard of living and with very little part in the decision-making processes of democracy. Only occasionally does he have a rôle in those processes. Then they see the elite doing agreeable jobs, on the whole, with a reasonable income and taking most of the major decisions. Since our pay rise in January, I feel that all Members of Parliament are on the wrong side of that barrier. On top of that they see certain businessmen involved in land and property speculation, and so on, making excessive amounts of money with very little social purpose—indeed, quite damaging in social terms. I refer to the Harry Hyams, and all the other speculators.
  I agree that many Conservative commentators have condemned this kind of thing. Indeed, many of them are sincere in what they say. However, some of their supporters are less sincere. They see the greed of some as showing up too much the underlying realities for the truth to be wholly welcome. This is certainly an element in the motives behind some of the remarks which have been made, even if I confess the sincerity of others.
  This obviously stokes up in people the bitterness about which my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) talked so eloquently in his speech, the social resentment and the militancy we have witnessed in wage claims. This is the basic factor underlying the present situation. In this

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  situation, how can we be other than 100 per cent. behind any wage claim which is presented?
  The real core of this matter, as working-class people see it, is a struggle over the distribution of income. Fundamentally, we on this side of the House can only be on their side of the question. At Question time today the Prime Minister repeated that that is not a responsible attitude. But the deeper irresponsibility, in my view, lies with the Government who create these socially divisive policies, dividing the nation so much that people can only see, desperately, their own sectional needs.
  The hon. and learned Member for Montgomery (Mr. Emlyn Hooson) made that point, and he was entirely right. When one does not try to keep the people together, engaging their feeling that they are all together in one ship, of course they will be overwhelmed by the need to care for their own first interest, which is themselves. That is obviously true, and the extent to which the Government have departed from it is a plain cause of the problems which we now face.
  To some extent, the truth of what I am saying is borne out by the rather surprising reaction to the Government's pet line of blaming the unions for inflation. One would have expected it to work to some extent, and so it has, but I am surprised by the degree to which it has not worked, by the way in which people say, "We can understand the unions putting forward the claims that they make, given the climate of events and the Government's policy in other spheres, and given what a wage claim adds up to when tax effects, price effects and the rest are taken into account". That is certainly an opinion widely expressed by my constituents, and I am sure that it is expressed also by the constituents of many hon. Members opposite.
  What it boils down to is a question of fairness, and fairness is a problem of redistribution. I believe redistribution of income to be fundamental, to whatever degree one carries it, to the kind of successful attack upon inflation which the Government must attempt to mount. Curiously, this rather turns on its head the old argument which we have heard for so long, certainly in the last few years, about growth, redistribution, inflation and the
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  rest. We have heard it from the Tories, we have heard it from independent people, and we have heard it even from this side of the House, that if we got growth all would be well because we could then achieve a certain amount of redistribution without punishing too much those who had to give up some of their income, those who would have to lose to some extent in the course of the redistribution.
  Ironically, however, we see now that, in order to achieve growth we must do something about inflation, and in order to do that we have to do something about redistribution, engaging people's real feelings. Redistribution, therefore, is the central piece of our economic as well as our social edifice, and without it we shall be unlikely to have the degree of growth which we need to keep the economy moving along. It is an ironic comment on the way in which the argument on growth has gone in the last few years.
  That raises another question: given that the question of redistribution is so much at the heart of things, can the present Government govern this country? Committed as they are to their social policies, can they master the inflation which they are committed to mastering? It is ironic that one should pose that question when one remembers that, before the 1964 election, it was often argued that it would be difficult for a Labour Government to manage the economy, that a Labour Government, in some way, because of their background, were debarred from understanding and managing the sort of economy which we have.
  Now, however, because the need to engage the feelings of the people in a positive policy which would combat inflation is so central, we see that it is the present Government who have reneged upon their agreement, their commitment and their promise to the people and who are finding it so difficult to make any movement at all against inflation.
  I doubt that the Government can get very far. Their attitude is reflected, fundamentally, in what the Prime Minister says about prices and incomes, and this is why he has been so cagey on the subject, not giving anything away. He knows in his heart that they would have to change too much. They would

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  have to lose too much of what was distinctive about Toryism to make the fundamental changes necessary to engage people's feelings in a positive policy which would help towards curing inflation. Possibly a Tory Government could do it, though I doubt that it could be one led by the present Prime Minister. To be fair, I must say that the policies being pursued by the Secretary of State for Northern Ireland in that context, a crisis context of a different kind, are the kind of fair, honest and open policies which, I should have thought, would have similar success in the economic field. We find that the Prime Minister is conspicuously lacking in this open-handed and fair-minded approach.
  I have always felt that there were sound reasons politically, culturally and geographically for this country to join the nations of Continental Europe. But there was always a question fundamental to the kind of constituency I represent—what price would we have to pay it and who would pay it? It is indisputable that the events of the last 12 months have shown that price to have escalated remarkably, and it is above all clear who will pay the price. It will be paid by the sort of people I represent. Therefore, while I voted against the Common Market with some reluctance last October, I none the less feel far more happy about my decision now in view of the events of the last six months.
  The Government can get its way over the Common Market because it has to deal only in Parliamentary majorities and in getting legislation through. But to deal with inflation, they must also get the full-hearted consent of the people. They must engage the trade unions, the people they represent and the ordinary men and women of this country. I doubt very much whether they have their full-hearted consent for the policies they are following and I do not see any signs of change. I do not believe the Government will meet with any success until they dramatically reverse those policies.
  8.53 p.m.
  Sir Henry d'Avigdor-Goldsmid: I hope that the hon. Member for Gateshead, West (Mr. Horam) will forgive me if I do not take up the argument he was advancing, because I have a few points to make and
  1786
  only a few minutes in which to make them. I begin by quoting from the Economist of 10th June which says
  "Earnings are now running six and a half per cent. above the level a year ago—a rate of increase nearly halved since the frenzied 1970 boom days."
  This refers not to this country but to Germany. Germany has had the sort of inflation which we have been having and the German reserves have remained absolutely intact. That is because the German people have known inflation. Twice in their lifetimes their currency has been wiped out. They do not want to go back to that again, and the people of the west understand that the Germans will go to any lengths to prevent this happening.
  If our Government could give a similar sort of impression, I am quite certain the difficulties of inflation we are now facing could be eliminated. Our fault over the years was that we have been over-sanguine. In 1931 we thought we could maintain the international gold standard. In 1948 under Doctor Dalton we accepted premature convertibility. In 1967 we had the devaluation but we also had the very useful Basle Agreement, which was arranged by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever), and now we are in the same situation again. Each time we have lost a bit of ground, and now we have very little ground left.
  One point which has not been brought out in this debate is that we have in the Bank of England, according to the figures published by the International Monetary Fund, exactly one-third of the gold reserve—I stress gold reserve—that we had in 1965. We have a great many dollars, which we boast about, but those dollars, which we were worrying about until very recently have been very hard to get rid of, and, as the Financial Times suggests today, they may still be very hard to get rid of.
  What we need is to show our determination to meet the problem. The useful steps my right hon. Friend the Chancellor took last week have been to some extent vitiated by a concession made by the Bank of England to the clearing banks to enable them to increase their reserves. I believe that the logical outcome of the steps my right hon. Friend rightly took, which he was praised for

  1787
  taking, was that the banking system should learn to adjust itself to the new situation. To throw it away and immediately make concessions to the banks casts serious doubt on the Government's willingness and intention to meet the threat of inflation, which every hon. Member who has spoken in the debate is conscious of.
  No member of the Government can be unaware of the very grave unhappiness caused in this country by the continuous debauch of our currency over many Governments and many years. The currency has been consistently debauched. After we lose the sterling balances which are pegged to the 2·40 mark, we shall have no stop before we reach a Brazilian situation. Therefore I urge my righthon. Friend, who has behaved with great skill and coolness in this situation, to infuse the same coolness and skill into his colleagues, the banking system and British industry. Then I am certain we have the necessary reserves to pull us through what will be a difficult period, but one which will be worth while if we are getting things right.
  When in 1931, in the absence of Mr. Montagu Norman, the Governor of the Bank of England, in Canada, the decision was taken to abandon the gold standard, he received a telegram from the Deputy Governor and one of his senior directors en clair saying, "Old lady goes off Monday." Mr. Norman, as he then was, interpreted that as the excessive solicitude of his colleagues about his mother's holiday plans. As I understand that the Governor of the Bank was not present when my right hon. Friend took his decision last Friday, I suppose my right hon. Friend sent him a telegram saying, "Anchors aweigh". I call that a good omen, and I hope he will take courage from it.
  Mr. Deputy Speaker (Sir Robert Frant-Ferris): Mr. Harold Wilson—
  8.58 p.m.
  Mr. Harold Wilson rose—
  Mr. R. J. Maxwell-Hyslop: On a point of order, Mr. Deputy Speaker. You may not be aware that this debate did not come on to the back benches from the Front Benches until less than 2½ hours ago, at 6.30 p.m. It lies within
  1788
  your power to give some protection to back benchers by not having your eye caught by Front Bench speakers until, say, 9.25 p.m. There is little purpose in a debate of this kind, which is supposed to be a full-day and not a half-day debate, if you allow your eye to be caught by a Front Bench speaker after less than 2½ hours of debate on the back benches, before it is even 9 o'clock.
  Mr. Deputy Speaker: I think that the hon. Gentleman will recollect, on reflection, that the immemorial custom of the House is that when a member of the Front Bench rises in his turn after a speaker on the other side of the Chamber, the Chair calls him.
  Mr. Fell: Further to that point of order. I apologise to the right hon. Gentleman, the Leader of the Opposition. The fault lay not with your calling the right hon. Gentleman now, Mr. Deputy Speaker. It lay at the beginning of the debate when the two first speakers took—
  Mr. Deputy Speaker: Order. That is not a point of order.
  Mr. Wilson: I give notice that any further encroachments by hon. Members opposite on the time at my disposal will be taken out of the time available to the Leader of the House for his reply.
  Mr. Fell rose—
  Mr. Wilson: No. I am sorry, but there is a great deal of ground to cover.
  Mr. Fell rose—
  Mr. Wilson: No.
  Mr. Fell rose—
  Mr. Deputy Speaker: Order. The hon. Member for Yarmouth (Mr. Fell) has spoken to his point of order, which I told him was in fact not a point of order. A good Parliamentarian will leave the matter where it is now.
  Mr. Wilson rose—
  Mr. Fell rose—
  Mr. Wilson: I begin from the position that, in the situation in which the Government found themselves last Thursday evening, the action they announced on Friday was the least harmful course they could have taken. It was technically well

  1789
  executed. How they got themselves into that situation we can leave for a moment. The fact is that the Bank Rate was increased on the Thursday morning. It did not do the trick and the speculative run on sterling seems if anything to have increased following the rise in Bank Rate. The figures quoted today by the Chancellor of the Exchequer were horrifying.
  The Government could not face an intensive run on sterling on Friday. They could not allow the speculators a free hand. To have gone for an open devaluation last Friday—the decision to float is, in effect, a decision to devalue—would have meant a hasty decision on what the rate should be. Too small a devaluation would have invited a further run on sterling, probably of the same virulence, within perhaps a short period. Playing safe by a more swingeing cut could have triggered off not only a state of total confusion in Europe, which we have so far avoided, but only so far, but would possibly have completely undermined the Washington Agreement of last December. Therefore, in that situation the Government took the right decision. But they must recognise that that difficult choice—the "Morton's fork" of too small a devaluation, or too large—has only been deferred. The decision has to be made when floating gives way to a return to a state of grace.
  Last Friday, considering the situation they had got themselves into, the action which the Government took was the least damaging for that day, and it had the merit of giving them time to consult, which they had not done despite their obligations, and time to think—a painful process, as we all know, in the circumstances. So, in a world where floating has become respectable, they were in the circumstances—I emphasise "in the circumstances"—right to float.
  Two other points should be made which will evoke echoes from the Treasury Bench. The first relates to the suddenness and virulence of the concentrated attack on sterling, whatever the cause. For two years, the Government have not had to face, as we had repeatedly to face, bear raids, many of them for totally irrational reasons, on sterling. They did not have to face them because of the record balance of payments surplus we bequeathed to them,
  1790
  combined for a time with the weakness of the dollar. Indeed, for a great part of the two years, what they had to contend with was the influx of "hot" money —embarrassing no doubt but in its way comforting as well. It is a question for further debate whether they did not render themselves vulnerable by taking in so much "hot" money, and in particular whether their over-confident attitude towards it did not lead to unwise outflows of portfolio investment, which could not be mobilised in a crisis. Borrowing short and lending long is a classic recipe for trouble.
  What is clear is that the power, force, and suddenness of a bear attack on a major currency, almost out of the blue, has increased, is increasing and must be diminished. If there is a parallel in the world of nature, this latest attack can be likened to the hurricane which simultaneously and suddenly swept through Pennsylvania and other States a week ago. Ministers were right, following the weekend, to bring the attention of their overseas colleagues to the need for an analysis of last week's events and the need for safeguards against speculation.
  To my mind the cost of the increased borrowings may well be the prodigious volume—and here I take a phrase from my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) speaking in Vienna this week—of footloose funds, mercurially mobilised funds, splashing about in the Euro-dollar market. Estimates have been published showing a total of some 85 billion dollars in the Euro-dollar market—the Chancellor can perhaps tell us the exact figure—restless, uncontrolled paper generating paper.
  I warned a year ago that a breakdown of confidence in one of the major Eurodollar operators could sooner or later generate a crisis comparable with the Kredit Anstalt disaster which plunged the world into depression over 40 years ago. It has not been such a development which has provoked this crisis, but Euro-dollars clearly played their part last week. If it is the sinister speculator one seeks, then his masse de manoeuvre his fire power, is immensely increased by the growth of the Euro-dollar market. But speculation for speculation's sake apart—and it is only a part—custodians of

  1791
  the liquid reserves of multinational companies, treasurers and financial controllers on both sides of the Atlantic, seeking perhaps no more than the prudent disposal of their funds, are in this multinational age capable of decisions, individual decisions reasonable to them, which in the end become decisions of a Gadarene herd which can overthrow parities literally overnight.
  They had seen the Chancellor's statement in his Budget Speech de-throning parity—we understand why he made it and we did not criticise him for it—and they thought, however wrongly, that he was about to invoke it. I think they were wrong. They saw the shambles resulting from certain cases brought before the Industrial Relations Court; they feared, some of them feared, some of them saw a chance of profiting from it, a national dock strike. They could not foresee the benevolent influence which the Official Solicitor could exercise. Because of their inability to see that, £1,000 million and more of sterling was lost on the expectation of action by an ultimately grounded court official—the tipstaff who launched £1,000 million and never got his man! The danger—and I think the Chancellor recognises this—is that all this could happen again.
  My second point is that on all the evidence—I agree with the Chancellor, although it may not be a popular view—there is nothing to suggest that the £ at this moment is over-valued. It is vulnerable, yes. The balance of payments surplus which the right hon. Gentleman inherited went on, as we forecast in the election—and the Prime Minister falsely denied—from strength to strength for 18 months thereafter. But that balance of payments surplus has gone and now we just see a tenuous statistical battle between a worsening visible trade deficit and an invisible payments surplus.
  That is not all. We have all seen figures and charts showing that in terms of comparative costs, comparative export prices, the advantage accruing to our exports from the 1967 devaluation has been dissipated by rising costs in Britain. Having said that, none of it justifies the massive attack on sterling which took place. I am sure that I am carrying the Chancellor with me on this because we are tonight discussing a national crisis affecting us all. We may have differ-
  1792
  ences about how the causes develop. I hope that I am carrying the right hon. Gentleman with me, because I hope to carry him with me later when I refer to the lessons which have to be drawn from the crisis.
  The fact is that confidence in the £ has been destroyed temporarily, not by comparative costs but by a realisation abroad as well as at home that the Government have failed, that they have no policy for countering inflation and have not a clue about how to set about getting one. The House must examine the price that has been paid for the events of the last week. For the period of the float—and the Chancellor as far as I know has set no time to it; I will put a question about that in a moment—British manufacturers and exporters are in a state of total uncertainty.
  Let the House think of a plant manufacturer negotiating a £10 million contract—say, an export contract for an electrical or chemical plant, some kind of turnkey factory. How can he at this moment or as long as the float lasts form any idea of the rate he must quote either in sterling or in the foreign currency? For this reason, there will be a paralysis of new orders and in later years any gains from the 1972 devaluation will be diminished by the loss of orders due to the present uncertainty. We shall pay a heavy price in exports for this uncertainty and the inability to quote.
  Secondly, with whatever maidenly delicacy the Government seek to present their action, this is devaluation. I do not think the Chancellor has used the word, but it is devaluation. If the Government do not admit this, the rest of the world knows it. The exchange markets know it, despite the easement—and there has been an easement, the Chancellor would agree—due to the technical position of sterling earlier this week—and the speculators were obviously very short of sterling earlier this week—and despite also the help, which we welcome, from the repayment of the New York swap. That was not aid from America, which I hope is realised abroad; it was repayment of a debt to us. The Stock Exchange knows it, and that is why we had the boom last Friday in the shares of export companies.
  It may be a dainty devaluation—that is about the right phrase for the Chancellor

  1793
  —but it is a devaluation which will have to be admitted sooner or later. It is a dribbling devaluation, going on from day to day. But, because it is a devaluation, the Chancellor must admit that it will increase prices, especially food prices. He must admit, as I am sure he will sooner or later, that those with lowest incomes will suffer. In the 1967 devaluation announcement we at once announced immediate help for those in need—the large families through family allowances and increases in supplementary benefits. As soon as possible the Government must discard their cover story, admit the facts and announce the help to those who most need it.
  Let the Government admit, too, that their action will sharply increase the already intolerable burdens which the Government accepted as the price of our contribution to the Common Market common agricultural policy. Devaluation means still higher food prices for the housewife as a result of the CAP deal, still higher payments across the exchanges.
  Then there is the problem: how much devalution? The decision cannot be postponed for ever. Too small a devaluation and the whole grisly speculative process could start again, particularly if the Government remain paralytic over a policy for prices. Too big a devaluation and the right hon. Gentleman—I know that he realises this—could plunge the world into total monetary chaos, with our devaluation advantage eroded by the competititve devaluations of major currencies.
  The Government have not entirely covered themselves in glory in their international transactions of last week. Europe? On 24th April the Chancellor blithely signed the Common Market Financial and Monetary Agreement, whether wisely or unwisely. We have formed a view about it now. This was the famous "snake in the tunnel" agreement. It can be no satisfaction to the Chancellor, or to any of us, that the soft underbelly of the snake proved to be sterling, just beating the lira to it. Another week and they might have been there first. The Prime Minister, after all he has said about Europe, cannot be proud that on the first of the many agreements which the Government signed with the Market—the first to come into effect—Britain defaulted within two months.
  1794
  The Press reports that the Chancellor intends to get back into the agreement. Why does he want to do that? I must press the right hon. Gentleman for an answer to the question which my right hon. Friend put to him but which he surprisingly refused to answer. Has he given any indication in private to the EEC or to anyone else setting a term to the float? Has he said to them privately that there is a definite time when the float will end and when he will return to the agreement? The House has a right to know the answer to that question. Perhaps the right hon. Gentleman will tell us the answer.
  Mr. Barber: What I said quite unequivocally is that we intend to return to a fixed parity as soon as possible and that I hope this will be before 1st January. In answer to the right hon. Gentleman's question, I would certainly not have said that if I had given any other assurance whatsoever. In other words, what I said to the House represents the position, neither more nor less.
  Mr. Wilson: Neither more nor less—the House will accept what the right hon. Gentleman has said. He must feel now that it was wrong for him to enter into the monetary agreement. According to the Financial Times, when it was suggested to him in Luxembourg that Britain might have adopted it somewhat prematurely, he smiled wryly. We know that wry smile; it usually bodes ill for somebody.
  The Prime Minister cannot feel much satisfaction that he now has to meet the whole inordinate cost of entry into Europe, a cost escalated by devaluation, and that he has to meet it with the payments surplus he inherited gone. The man who was going to be the arbiter of Europe has, on his first European test, gone back to Europe as an erring suppliant.
  What about the United States? Was there no consultation there either? Is it a fact, as stated in the Press, that the hot line was not even used? After the blatant use of Lord Cromer in the election, was the right hon. Gentleman too embarrassed to use Her Majesty's Ambassador? No consultation! We knew the Prime Minister was a loner, but not that lone. Perhaps he feared that President Nixon would point out that when he made

  1795
  his dollar announcement President Nixon announced a counter-inflationary policy as well. Our relations with the United States at the moment cannot be very affectionate.
  It is election year and President Nixon was hoping that the currency situation was tucked up neatly in the Smithsonian blanket. Now the dollar is threatened again, not by American inflation but by British inflation. Whatever cosmetic may be used to save the right hon. Gentleman's face, it is a remarkable achievement in international diplomacy to have upset France and the United States at one go in a matter of two hours on a cold Midsummer's Eve.
  We must ask ourselves about the sterling area. Is this the end of the sterling area? The right hon. Gentleman indicated that it might not be, but that is how it has been taken in some sterling area countries. What some of us fear by the action he has taken, having just liberalised capital exports to the sterling area, is that, having so disappointed Europe, he had to prove what a good European he was by kicking the sterling area in a rather painful place.
  I have referred to the cost, in real terms, of this devaluation exercise. My right hon. Friend the Member for Leeds, East (Mr. Healey) and I both recognise that it is not enough to talk about the cost of what happened last week, and that the Opposition has an obligation to say what ought to be done, first, in the international sphere and, second, on the domestic front. Internationally, there must be a much greater sense of urgency both for international monetary reform and in the devising of safeguards against irresponsible speculation. For the reasons I have given, the international monetary system—even if an agreement can be reached on the provision of an acceptable currency relationship—is impossible to defend in the face of massive speculative attacks. Sterling one moment; other currencies the next. Part of this is associated with gold speculation, much more of it is due to the footloose funds of the Euro-currency markets. The City has shown great expertise in becoming the major market operator, but the greater our involvement the greater our vulnerability.
  1796
  No modern country would tolerate the existence within its shores of a major, private enterprise, credit-creating system, bound by no rules requiring it to conform with national policy and monetary stability, but we accept it internationally. It is of the utmost urgency that Finance Ministers address themselves to this question and to the major measures needed to combat speculation.
  National reserves are not enough. Swap arrangements are not enough; regional defensive pacts are not enough. The Luxembourg monetary agreement has a ridiculously inadequate defensive fund of 2 billion dollars. Nearly half this amount in dollars poured into Frankfurt in one hour last Friday. The Chancellor of the Exchequer said that more than this figure was lost in hours in the Bank Rate last Thursday. International Monetary Fund arrangements are too rigid, and on too small a scale. It is like equipping the London Fire Brigade with two small hand-pumps mounted on carts.
  But, more generally, it is tragic that the impetus given to imaginative world monetary reform by the events of last autumn should be driven into the sands. An American Minister spoke last week about there being two years' worklying ahead. We have not got two years. We need action now.
  Chancellors of the Exchequer in successive Governments—the right hon. Member for Barnet (Mr. Maudling) and my right hon. Friends the Members for Cardiff, South-East (Mr. Callaghan) and Birmingham, Stechford (Mr. Roy Jenkins), many of us—were involved in far-reaching proposals to ensure (that world currency expands commensurately with the needs of world trade—so that the trade mechanism of the world does not seize up like a car which runs out of engine oil. Special drawing rights were a step in the right direction, but only a step.
  The problem will not be solved until there is a world currency independent of national treasuries and central banks. As long as there are vulnerable and unstable national currencies, to say nothing of reserve currencies, there can be no guarantee against the kind of hurricane we all felt last week. I think the Chancellor of the Exchequer agrees with this because he said almost as much to the IMF last year.

  1797
  I have long advocated for nine years—and this owes a debt to the revolutionary proposal of Maxwell Stamp—that in addition to the creation of an adequate and freely acceptable world currency, there should be provision for the creation of additional currency to finance world development—for example, to finance payment for physical development capital without plunging either the receiving country or the exporter into payments difficulties. It was failure to rise to that degree of imagination which caused the depressing failure of UNCTAD III.
  Whatever is done in international monetary reform, the specific British problems remain. Last week's crisis is a response not to over-valuation—this is my personal view—but to a world-wide realisation that the Government's economic policy has broken down—or, worse, that they have no idea at all where to turn. The realisation this week is that, unlike President Nixon's announcement last August, a crisis statement has not been accompanied by anti-crisis domestic measures.
  The world realises that after two years' rule, the Goverment have failed to deal with inflation, still face intolerable unemployment and have converted a record payments surplus into a prospective deficit.
  The Prime Minister referred to this point last week. He refuses to say why two years ago he hailed what proved to be a £19 million trade deficit for a single month as the harbinger of disaster, and is now so complacent with an average deficit in the last four months, not of £19 million, but of £52½ million a month. He sought an escape route last Friday by claiming that my right hon. Friend the Member for Stechford had pressed last year to use the surplus to reduce unemployment.
  But the Government have not done it. They have pumped money into the economy on an almost unprecedented scale. Investment grants abolished in haste have been revived in repentance. Easement of tax on unearned incomes will not help. They have printed money—they have increased the money supply on a scale we have not seen before. But only a small fraction has gone into increased production. It has gone into speculative enrichment.
  1798
  The Stock Exchange, in Harold Macmillan's phrase, has become a casino again. There is portfolio speculation abroad, land speculation and property speculation—to the point where this week five bungalows and a larger house, built at £6,000 each 12 years ago, have been sold for speculative development for a total of £½ million. Misled by the Prime Minister's election promises about house prices, young people today ask the Prime Minister for a home and he offers them an in sanitary cowshed for £7,500.
  As we warned 15 months ago, the hire-purchase boom would be an import boom, not a jobs boom. With all the money they have poured out, investment remains stagnant; export prices have risen, but export volumes have not. The Government have failed because, so far from fighting inflation, they stoked up inflation from the moment that they took office. They scrapped the National Board for Prices and Incomes, controls over prices and controls over rents. They abdicated all responsibility and told the country to get on with it. They forced up prices by re-introducing the Corn Laws, the import levies. They forced up price expectations by the intolerable terms that they negotiated for Common Market entry, with VAT still to come. They introduced a policy for wages—wages, not prices—based on violent and costly monthly confrontations, the denial of conciliation, threats, warnings, norms, N-minus-ones, all rushed out to the Press and denied in Parliament. They introduced into our system of industrial relations a form of bogus law, law courts designed to be puppet courts, law which no one can understand, differing interpretations of the same words by different courts, because bad law was indecently rushed through a gagged Parliament. They deliberately forced up local authority and new town house rents. They are blackguarding the unions one moment and pathetically appealing to them the next to bail them out with a policy that they are unable to think out for themselves.
  So the Government want a policy to beat inflation. Then let them first accept the TUC's proposals for threshold, price-related wage settlements. The Prime Minister has had it before him for 17 months. Does he accept it, reject it, or leave it in the pigeonhole? Second, let

  1799
  the Government apply restraint, where-ever they can exercise influence, on top people's remunerations and not those of the lowest paid. Third, let them reintroduce control over strategic prices, the main cost of living prices, and bring back the Consumer Council. Fourth, let them repeal the food levies—I might almost say keep British beef in Britain. Fifth, end the vendetta against the public sector. Deal with the problem that the right hon. Gentleman undertook four months ago to consider, that of labour-intensive public industries and services such as coal, the railways, education, the Post Office, the hospital service and local authority manual employment where today, if workers are to get a fair and comparable wage, as they are entitled to have, the resulting increases in charges go right through the economy in an inflationary way. This has to be dealt with. Sixth, repeal or render inoperable the Industrial Relations Act before it does more grave harm, and transfer Sir John Donaldson to more productive judicial employment. Seventh, take the Housing Finance Bill and the Housing (Financial Provisions) (Scotland) Bill and slit their dirty throats. Eighth, consign VAT to the morgue.
  These are matters that the Government ought to consider, and perhaps if they accept them before the next crisis, there will not be one.
  In voting for our Amendment, we are not unsympathetic with the Chancellor of the Exchequer in what he has suffered from those causes of these events which are outside his control. We know what the right hon. Gentleman has been through. We have been through it. I pass over his record in opposition and what he had to say when we were going through it, not to mention the Prime Minister, of course. Because we are sympathetic and compassionate, we understand. We faced speculative raids on sterling, some instituted from within this country, which is not what has happened to the Chancellor of the Exchequer.
  What we are voting against—not with any lack of sympathy for the Chancellor—is the whole miserable record of failure of the Government's economic policy in the area in which events lie within their power to control.
  9.29 p.m.
  The Lord President of the Council and Leader of the House of Commons (Mr. Robert Carr)rose—
  Hon. Members: No.
  Mr. Deputy Speaker (Sir Robert GrantFerris): Order. I hope that the House will accord to the Lord President of the Council the same good hearing as it accorded to the right hon. Gentleman the Leader of the Opposition.
  Mr. Carr: In summing up this import ant debate I think that perhaps the first thing that should be done—
  Mr. Andrew Faulds: Do not be so bashful, Ted. On your feet.
  Mr. Carr: I wish that the House were being televised, because then the country would know that it had no alternative Government.
  In summing up this important debate perhaps the first thing that needs to be done is to put on the table some of the basic facts about Britain's present economic state, because when one does that one sees a very different picture from that which is being so luridly painted in many of the Opposition speeches and in so much of the fevered comments of the pundits outside.
  All this woe and disaster is simply not true. I invite the House to look at five basic facts of our economy—a balance of payments surplus, high reserves, no burden of short- and medium-term official debt, an economy growing faster than for many years and set on a 5 per cent. growth rate and unemployment falling sharply. When, if ever, for at least the last ten years has it been possible to claim that all those basic facts in our economy were at one and the same time so favourable and strong?
  The woe and disaster brigade inside and outside the House have a heavy responsibility because, if they continue with their lurid and exaggerated talk, they could, indeed, talk our country into a wholly unnecessary state of affairs. Of course inflation remains serious. Of course it remains the central, most critical problem facing the country and threatening the standard of life of every one of us, but do not let us forget or underestimate the progress which has been made in tackling it.

  1801
  Prices are now rising at only about half last year's figure. That goes for food prices as a whole and for the whole range of prices paid by the consumer. This rate of increase is, of course, still too high, but it is much better than it was, and let me tell the Leader of the Opposition and the Labour Party that prices are now rising less fast than they were in the last six months of the Labour Government.
  In the last six months of the right hon. Gentleman's Government prices rose by 4½ per cent. In the last six months they have risen by only 3½ per cent. In the last six months of the right hon. Gentleman's Government food prices rose by 7 per cent. In the last six months under this Government they have risen by 4 per cent. Therefore, although the rate of increase is still serious, it is now at a slower rate both in relation to prices as a whole and to food prices than it was in the last six months of the right hon. Gentleman's Government prior to the election.
  Those are the facts and they should be known and stated. It is not complacent to state them because they still represent a very serious problem.—[Interruption.] One hon. Member said, "Hypocrite", but they are the facts and I challenge anyone to examine the facts and to prove that they are different from those I have just given.
  Mr. Harold Wilson: Will the right hon. Gentleman challenge the Financial Times index of food prices, which goes a month further on than the Government's figures, and find that what he is saying is wrong?
  Mr. Carr: I seem to remember that the right hon. Gentleman, when he was Prime Minister, was always content with his Government's official statistics. As he was prepared to rest on the Government's statistics, so are we. I still believe that they are the most reliable, and they are the statistics which are always used.
  The action we took has been notable for its substance, its purpose and its promptness. In taking it, we have avoided deflation. We have also avoided using up our precious reserves and resuming the harsh burden of short and medium-term debt which left us as a country in the straitjacket of stagnation under the previous Government. Even the right
  1802
  hon. Member for Leeds, East (Mr. Healey) and the Leader of the Opposition have acknowledged that my right hon. Friend has handled this skilfully and taken the right action in the circumstances. Of course no one would claim that the present difficulty in which the country finds itself is a victory. My right hon. Friend has certainly never done so. As so many people have said, it underlines the need for reform of the world monetary system. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said that we have had too many monetary crises in recent years affecting too many currencies. Reform is urgent. The right hon. Gentleman the Leader of the Opposition made the same point. No one has been giving a stronger leader for international reform than my right hon. Friend the Chancellor over the last two years. What he said today indicated the next moves that he would be taking in this direction.
  At this point it would be convenient to deal with a number of questions I was particularly asked to answer. First, the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) wanted to know about direct investment. I am now referring of course to a number of questions about the sterling area. Outward direct investment in sterling area countries by United Kingdom companies is now subject to control, that is to say, approval is required from the Bank of England. But there will be no restrictions on bona fide direct investment projects and approval for these will be given freely.
  The right hon. Member for Leeds, East asked what the effect would be on the sterling balances. We believe that there is no reason why the action announced should have an effect on the present level of the sterling balances. But the action taken should prevent a further increase in official sterling balances which might have resulted if there had been an outflow of United Kingdom residents' funds on private account of the kind which the exchange control measures are designed to prevent.
  A number of right hon. and hon. Members asked about the meaning of the word "temporary" in relation to these measures in their concern with the sterling area. I can only repeat what my right hon. Friend the Chancellor explained earlier today, that the present measures

  1803
  are indeed intended to deal with a temporary situation. My right hon. Friend also indicated that, given the serious world problem of massive short-term capital movements, he could not say—no one could say—what arrangements would be appropriate for the future.
  Mr. Roy Jenkins: Will the right hon. Gentleman clarify the sentence he used about the peg on official balances and the outflow on private account? I did not follow that.
  Mr. Carr: I will do my best to do that. If there were not some exchange control on the outflow of United Kingdom residents' funds to other parts of the sterling area, there would be a corresponding increase in official sterling balances; because obviously, for example, an Australian citizen selling Australian dollars would acquire in return sterling, which presumably he might then deposit with his own Australian central bank and this would lead to an increase in the sterling balances held by Australia. That was the point I was trying to make.
  Another question was asked about whether there would be incentives to keep funds in London and to prevent diversification. My right hon. Friend the Chancellor has already indicated that he is in consultation with the Governments of the countries with which there is a sterling agreement. Therefore, I do not think that it would be helpful for me to comment in detail today on particular suggestions which might be the subject of discussion by the Chancellor in the context I have just mentioned.
  I return to what I believe is central to the action we have taken. It has become fashionable to accuse the Government of having lost their direction and purpose. It may have become fashionable, but nothing could be further from the truth. This is shown most clearly by the way in which we have reacted to the present problem, in the fact that we decided to float the exchange rate rather than to deflate the economy.
  This Government are committed to a policy of sustained economic growth. Expansion is the central strategy of this Government. This is our direction and our purpose. We have not been diverted from it, and we shall not be diverted from it.
  1804
  If we want a better Britain, we have got to have a wealthier Britain. We have got to have in Britain a rate of increase in national wealth higher than we have achieved since the War and much more comparable with that of most other advanced industrial countries.
  That is not just a materialist philosophy, because if all the extra wealth, if we can achieve it, were to go simply to personal affluence it would turn sour in our hands. It is needed for many other purposes. Look round this country. Look at the old houses. Look at the old factories. Look at the old hospitals and the old schools. Look at the enormous programme of physical renewal which Britain must undertake. Look not only at the renewal but look at all the new things which are needed still. [HON. MEMBERS: "Hear, hear."] The fact is that when all those old things on the other side of the House were in power we had a stagnating economy; and in a stagnating economy it is impossible for Government to direct adequate resources towards the environmental improvement which we want.
  Equally, let us turn away from the questions of our physical environment towards personal problems and economic problems and afflictions which affect our economy and our society; let us look at the problems of incomes policy and industrial strife and frustration. All of these problems will be very difficult to solve in any conditions. But all of these problems, difficult to solve as they may be in any conditions, are, in our view, impossible to solve except in the context of sustained expansion. If there is any lesson to be learnt from our recent past, particularly the five and a half years of Labour Government, it is that.
  The Government have a strong commitment to economic expansion, and a strong determination to succeed in this their clearly chosen strategy. For that reason we believe that there are two central requirements: first, an absolute commitment to the persistent, unrelenting application of long-term policies chosen to produce a more dynamic and flexible country. That we are determined to achieve through our policies for the reform and reduction of taxation, the stimulation of new industry in the regions, the modernisation of our employment and training facilities, the

  1805
  reform of our system of industrial relations, and our membership of the European Economic Community.
  In every one of these five major areas of policy we have undertaken and are undertaking radical long-term reforms, all of which will mutually reinforce one another, all of which are essential to the policy and the achievement of sustained and more rapid growth. That is the purpose of this country. That is our strategy and direction. The first requirement is to be committed to those policies, and we are and we shall remain so.
  The second essential requirement is to get cost inflation under control. We can do this successfully only within the context of economic expansion. We are well aware that unless we succeed, expansion cannot be lasting and the prospects of millions of our fellow citizens would be put at risk.
  No one denies for one moment how serious and difficult the problem remains. It is equally wrong, as I have already said, to exaggerate it and to be unnecessarily despondent as a result of one or two excessively over-large pay settlements. Since the Wilberforce settlement of the miners' claim, there have been about 50 major settlements covering nearly 2 million people. Of those settlements, 35 were made at a level of under 10 per cent., 27 were under 9 per cent. and 18 were under 8 per cent. It is totally unrealistic to suggest that the two settlements to which I have referred mean that the progress which we have achieved has been brought to an end and is being reversed.
  That progress is not enough. While we have had considerable success in slowing the rate of inflation during the last year, it has to be slowed still further. Above all, it must not be allowed to go back the other way. The same determination which has produced the degree of success last year will be needed and forthcoming in the months ahead. It will be as effective as it has been before. If it is, we shall all have a great deal for which to be thankful.
  Mr. Hooson: Will the right hon. Gentleman give way?
  Mr. Carr: In a few moments. When the Government came to power, we found a relationship between the rate of in-
  1806
  crease of earnings and the rate of increase of national production of about twelve to two. Pay was going up about six times faster than output. Under those conditions the price explosion which followed was inevitable. Now we have reached a situation where it is more like two to one. That rate is still unhealthy, but it is a great deal better than six to one. This represents an enormous degree of progress in the last year.
  Mr. Eric S. Heffer: Will the right hon. Gentleman give way?
  Mr. Carr: I am afraid not. I have had a lot of interruption. I have given way and had a lot of other interruption, so it is fair that I should be allowed to complete what I have to say.
  Mr. Heffer rose—
  Mr. Carr: The right hon. Member for Leeds, East said that if we were to succeed we must be seen to be acting effectively against prices. Of course; and we have been. I have already given figures to show that prices are now going up more slowly than when right hon. Gentlemen opposite left office.
  One of our first steps as a Government was to slash the increases in Post Office charges which the Labour Government had secretly prepared before the election. We followed that with similar action to cut the proposed increases in coal, steel and power.
  As a result of what we achieved, the CBI was able to give its price initiative, and we promised and gave support to the CBI price initiative in the nationalised industries and the public sector. We have also cut purchase tax and selective employment tax. Therefore, we have had a most important price initiative. We have had strong expansionary policies which are giving a big impetus in the regions.
  All these are things for which the trade unions asked and did not get under the Labour Government. They have now been given them. What we need—not the Government, but the whole of the people of this country—is an initiative from the trade unions—
  Mr. Heffer rose—
  Mr. Carr: —of restraint on pay claims—
  Mr. Heffer rose—
  Mr. Deputy Speaker: Order. The hon. Gentleman must realise that the Minister does not intend to give way, so I must ask him to resume his seat.
  Mr. Heffer rose—
  Mr. Deputy Speaker: Order. Mr. Carr.
  Mr. Carr: What we need is an initiative from the trade unions of restraint on pay claims to match the initiative we have had from the CBI on price restraint.
  Mr. A. W. Stallard rose—
  Mr. Carr: For most of the latter half of the 1960s the combination of rising prices, rising taxes and rising insurance contributions meant that real standards of living were bogged down and scarcely rose at all. But now increases in real standards have begun again. Pay increases are exceeding price increases, and reduced taxes are leaving more in people's pay packets. We now need the response which will give that virtuous circle a further spin. I now give way to the hon. and learned Member for Montgomery (Mr. Hooson).
  Mr. Hooson: The right hon. Gentleman referred to the success of the Government on certain wage negotiations. Does he expect the same success with the present engineering negotiations which are of vital importance to the country?
  Mr. Carr: Of course they are vital to the country and we are hoping that there will be the same success. I hope that both employers and unions will realise that and will respond to the opportunity as well as to the problem about which I have just been talking.
  Mr. Stallard: Will the right hon. Gentleman give way?
  Mr. Carr: No, I am afraid not.
  What is it that the Opposition propose instead of the policies on which we have embarked? They suggest, among other things, that the Industrial Relations Act should be dropped. [HON. MEMBERS: "Hear, hear."] That is said to be the condition of trade union co-operation in achieving restraint on wage claims.
  What is the evidence? Let us look back and see, because the Labour Government
  1808
  did just that. They dropped "In Place of Strife" to get such co-operation. What happened? In the year after dropping it, wage rates went up by almost 10 per cent. compared with only 5 per cent. the year before. Is that what we are to do?
  It is also said that if we drop the Industrial Relations Act there will be better industrial relations. What is the evidence for that? Industrial relations—[An HON. MEMBER: "Could not be worse."] Could not be worse? The number of unofficial and wildcat strikes, which the Leader of the Opposition, when Prime Minister, said were doing such damage to the country, are now only about half the number they were then.
  Mr. Stallard rose—
  Mr. Carr: We are told that the Industrial Relations Act was the cause of the threatened dock strike, which in turn is said to have caused the run on sterling. Let us cast our minds back to 1967, when there really was a dock strike. What did the Leader of the Opposition have to say about that? He said that it was a proximate cause of devaluation. Included in the proximate causes of the devaluation, he said,
  "were the dock strikes in London and Liverpool…It seemed urgent to try to settle the Liverpool strike. It was not going to be easy. The Transport and General Workers' Union had virtually lost control of its members…the local strike leadership was in the hands of an unholy alliance of Communists, near-Communists and Trotskyites…"
  There was no Industrial Relations Act then to cause that strike, which did take place, unlike the one last week, which did not.
  As the right hon. Gentleman the Leader of the Opposition knew at the time, one of the causes of lack of confidence in Britain among people overseas was the failure to deal with the problem of industrial relations and the sort of situation which he described in his book. That is why the right hon. Gentleman himself came to believe that industrial relations legislation, as proposed in "In Place of Strife", was essential not just to the survival of his Government but to the health of the country. He knew it then, and, if he is honest, he knows it now.
  The other great contribution which the Opposition ask us to make is to give up

  1809
  the Housing Finance Bill [HON. MEMBERS: "Hear, hear."] In other words, we are asked to deny help on a scale—[HON. MEMBERS: "Rubbish."]—that has never before been given in this country to the council and the private tenant with the lowest income. All such tenants with the lowest incomes will receive help on a scale which they have never had before. So my answer on that score, too, is, "Certainly not".
  There is one answer, and one answer alone, and that is—[HON. MEMBERS: "Resign."]—to go forward with a Gov-
  ernment determined on expansion as opposed to stagnation. This is the way to economic strength. This is the way to political influence in the world. It is the way, also, to provide the national resources without which we cannot provide the better environment for life which we all want, and without which we cannot provide the more compassionate society which is the ideal of us all.
  Question put, That the Amendment be made:—
  The House divided: Ayes, 266, Noes 294.

  Division No. 255.]

  AYES

  [10.00 p.m.

  Abse, Leo

  Doig, Peter

  Jenkins, Rt. Hn. Roy (Stechford)

  Albu, Austen

  Douglas, Dick (Stirlingshire, E.)

  John, Brynmor

  Allaun, Frank (Salford, E.)

  Douglas-Mann, Bruce

  Johnson, Carol (Lewisham, S.)

  Allen, Scholefield

  Duffy, A. E. P.

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

  Archer, Peter (Rowley Regis)

  Dunnett, Jack

  Johnson, Walter (Derby, S.)

  Armstrong, Ernest

  Eadie, Alex

  Jones, Dan (Burnley)

  Ashley, Jack

  Edelman, Maurice

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

  Ashton, Joe

  Edwards, Robert (Bilston)

  Jones, Gwynoro (Carmarthen)

  Atkinson, Norman

  Edwards, William (Merioneth)

  Jones, T. Alec (Rhondda, W.)

  Bagier, Gordon A. T.

  Ellis, Tom

  Judd, Frank

  Barnes, Michael

  English, Michael

  Kaufman, Gerald

  Barnett, Guy (Greenwich)

  Evans, Fred

  Kelley, Richard

  Barnett, Joel (Heywood and Royton)

  Ewing, Henry

  Kerr, Russell

  Baxter, William

  Faulds, Andrew

  Kinnock, Neil

  Benn, Rt. Hn. Anthony Wedgwood

  Fisher, Mrs. Doris(B'ham,Ladywood)

  Lambie, David

  Bennett, James (Glasgow, Bridgeton)

  Bidwell, Sydney

  Fitch, Alan (Wigan)

  Lamborn, Harry

  Bishop, E. S.

  Fletcher, Ted (Darlington)

  Lamond, James

  Blenkinsop, Arthur

  Foley, Maurice

  Latham, Arthur

  Boardman, H. (Leigh)

  Foot, Michael

  Lawson, George

  Booth, Albert

  Ford, Ben

  Leadbitter, Ted

  Bottomley, Rt. Hn. Arthur

  Forrester, John

  Lee, Rt. Hn. Frederick

  Bradley, Tom

  Fraser, John (Norwood)

  Leonard, Dick

  Broughton, Sir Alfred

  Freeson, Reginald

  Lever, Rt. Hn. Harold

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

  Galpern, Sir Myer

  Lewis, Arthur (W. Ham, N.)

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

  Garrett, W. E.

  Lewis, Ron (Carlisle)

  Brown, Ronald (Shoreditch & F'bury)

  Gilbert, Dr. John

  Lomas, Kenneth

  Buchan, Norman

  Ginsburg, David (Dewsbury)

  Loughlin, Charles

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

  Golding, John

  Lyon, Alexander W. (York)

  Butler, Mrs. Joyce (Wood Green)

  Gordon Walker, Rt. Hn. P. C.

  Lyons, Edward (Bradford, E.)

  Callaghan, Rt. Hn. James

  Gourlay, Harry

  Mabon, Dr. J. Dickson

  Campbell, I. (Dunbartonshire, W.)

  Grant, George (Morpeth)

  McBride, Neil

  Cant, R. B.

  Grant, John D. (Islington, E.)

  McCartney, Hugh

  Carmichael, Neil

  Griffiths, Eddie (Brightside)

  McElhone, Frank

  Carter, Ray (Birmingh'm, Northfield)

  Griffiths, Will (Exchange)

  McGuire, Michael

  Carter-Jones, Lewis (Eccles)

  Hamilton, James (Bothwell)

  Mackenzie, Gregor

  Castle, Rt. Hn. Barbara

  Hamilton, William (Fife, W.)

  Mackie, John

  Clark, David (Colne Valley)

  Hamling, William

  Mackintosh, John P.

  Cocks, Michael (Bristol, S.)

  Hannan, William (G'gow, Maryhill)

  Cohen, Stanley

  Hardy, Peter

  Maclennan, Robert

  Concannon, J. D.

  Harper, Joseph

  McMillan, Tom (Glasgow, C.)

  Conlan, Bernard

  Harrison, Walter (Wakefield)

  McNamara, J. Kevin

  Corbet, Mrs. Freda

  Hattersley, Roy

  Mahon, Simon (Bootle)

  Cox, Thomas (Wandsworth, C.)

  Healey, Rt. Hn. Denis

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

  Crawshaw, Richard

  Heffer, Eric S.

  Marquand, David

  Cronin, John

  Hilton, W. S.

  Marsden, F.

  Crosland, Rt. Hn. Anthony

  Horam, John

  Marshall, Dr. Edmund

  Crossman, Rt. Hn. Richard

  Houghton, Rt. Hn. Douglas

  Mason, Rt. Hn. Roy

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

  Howell, Denis (Small Heath)

  Mayhew, Christopher

  Cunningham, Dr. J. A. (Whitehaven)

  Huckfield, Leslie

  Meacher, Michael

  Davidson, Arthur

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Mellish, Rt. Hn. Robert

  Davies, Denzil (Llanelly)

  Hughes, Mark (Durham)

  Mendelson, John

  Davies, Ifor (Gower)

  Hughes, Robert (Aberdeen, N.)

  Mikardo, Ian

  Davis, Clinton (Hackney, C.)

  Hughes, Roy (Newport)

  Millan, Bruce

  Davie, Terry (Bromsgrove)

  Hunter, Adam

  Miller, Dr. M. S.

  Deakins, Eric

  Irvine,Rt.Hn.SirArthur(Edge Hill)

  Milne, Edward

  de Freitas, Rt. Hn. Sir Geoffrey

  Janner, Greville

  Molloy, William

  Delany, H. J.

  Jay, Rt. Hn. Douglas

  Morgan, Elystan (Cardiganshire)

  Dell, Rt. Hn. Edmund

  Jeger, Mrs. Lena

  Morris, Alfred (Wythenshawe)

  Dempsey, James

  Jenkins, Hugh (Putney)

  Morris, Charles R. (Openshaw)

  Morris, Rt. Hn. John (Aberavon)

  Roberts, Albert (Normanton)

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

  Moyle, Roland

  Roberts,Rt.Hn.Goronwy (Caernarvon)

  Thomas, Jeffrey (Abertillery)

  Mulley, Rt. Hn. Frederick

  Robertson, John (Paisley)

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

  Murray, Ronald King

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

  Tinn, James

  Oakes, Gordon

  Rodgers, William (Stockton-on-Tees)

  Torney, Tom

  Ogden, Eric

  Roper, John

  Tuck, Raphael

  O'Halloran, Michael

  Rose, Paul B.

  Urwin, T. W.

  Varley, Eric G.

  O'Malley, Brian

  Ross, Rt. Hn. William (Kilmarnock)

  Wainwright, Edwin

  Oram, Bert

  Rowlands, Ted

  Walden, Brian (B'm'ham, All Saints)

  Orme, Stanley

  Sandelson, Neville

  Walker, Harold (Doncaster)

  Oswald, Thomas

  Sheldon, Robert (Ashton-under-Lyne)

  Wallace, George

  Owen, Dr. David (Plymouth, Sutton)

  Shore, Rt. Hn. Peter (Stepney)

  Watkins, David

  Paget, R. T.

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

  Weitzman, David

  Palmer, Arthur

  Silkin, Rt. Hn. John (Deptford)

  Wellbeloved, James

  Pannell, Rt. Hn. Charles

  Silkin, Hn. S. C. (Dulwich)

  Wells, William (Walsall, N.)

  Parker, John (Dagenham)

  Sillars, James

  White, James (Glasgow, Pollok)

  Parry, Robert (Liverpool, Exchange)

  Silverman, Julius

  Whitehead, Phillip

  Pavitt, Laurie

  Skinner, Dennis

  Whitlock, William

  Peart, Rt. Hn. Fred

  Small, William

  Willey, Rt. Hn. Frederick

  Pentland, Norman

  Smith, John (Lanarkshire, N.)

  Williams, Alan (Swansea, W.)

  Perry, Ernest G.

  Spearing, Nigel

  Williams, Mrs. Shirley (Hitchin)

  Prentice, Rt. Hn. Reg.

  Spriggs, Leslie

  Williams, W. T. (Warrington)

  Prescott, John

  Stallard, A. W.

  Wilson, Alexander (Hamilton)

  Price, J. T. (Westhoughton)

  Stewart, Rt. Hn. Michael (Fulham)

  Wilson, Rt. Hn. Harold (Huyton)

  Price, William (Rugby)

  Stoddart, David (Swindon)

  Wilson, William (Coventry, S.)

  Probert, Arthur

  Storehouse, Rt. Hn. John

  Woof, Robert

  Rankin, John

  Strang, Gavin

  Reed, D. (Sedgefield)

  Strauss, Rt. Hn. G. R.

  TELLERS FOR THE AYES:

  Rees, Merlyn (Leeds, S.)

  Summerskill, Hn. Dr. Shirley

  Mr. James A. Dunn and

  Rhodes, Geoffrey

  Swain, Thomas

  Mr. Tom Pendry.

  Richard, Ivor

  Taverne, Dick

  NOES

  Adley, Robert

  Coombs, Derek

  Green, Alan

  Alison, Michael (Barkston Ash)

  Cooper, A. E.

  Grieve, Percy

  Allason, James (Hemel Hempstead)

  Cordle, John

  Griffiths, Eldon (Bury St. Edmunds)

  Archer, Jeffrey (Louth)

  Corfield, Rt. Hn. Sir Frederick

  Grylls, Michael

  Astor, John

  Cormack, Patrick

  Gummer, J. Selwyn

  Atkins, Humphrey

  Costain, A. P.

  Gurden, Harold

  Awdry, Daniel

  Critchley, Julian

  Hall, Miss Joan (Keighley)

  Baker, Kenneth (St. Marylebone)

  Crouch, David

  Hall, John (Wycombe)

  Balniel, Rt. Hn. Lord

  Crowder, F. P.

  Hall-Davis, A. G. F.

  Barber, Rt. Hn. Anthony

  Dalkeith, Earl of

  Hamilton, Michael (Salisbury)

  Batsford, Brian

  Davies, Rt. Hn. John (Knutsford

  Hannam, John (Exeter)

  Beamish, Col. Sir Tufton

  d'Avigdor-Goldsmid, Sir Henry

  Harrison, Brian (Maldon)

  Bell, Ronald

  d'Avigdor-Goldsmid,Maj.-Gen.James

  Harrison, Col. Sir Harwood (Eye)

  Bennett, Sir Frederic (Torquay)

  Dean, Paul

  Haselhurst, Alan

  Bennett, Dr. Reginald (Gosport)

  Deedes, Rt. Hn. W. F.

  Hastings, Stephen

  Benyon, W.

  Dixon, Piers

  Havers, Michael

  Berry, Hn. Anthony

  Dodds-Parker, Douglas

  Hawkins, Paul

  Biffen, John

  Drayson, G. B.

  Hayhoe, Barney

  Biggs-Davison, John

  du Cann, Rt. Hn. Edward

  Heath, Rt. Hn. Edward

  Blaker, Peter

  Dykes, Hugh

  Heseltine, Michael

  Boardman, Tom (Leicester, S.W.)

  Eden, Rt. Hn. Sir John

  Hicks, Robert

  Body, Richard

  Edwards, Nicholas (Pembroke)

  Higgins, Terence L.

  Boscawen, Robert

  Elliot, Capt. Walter (Carshalton)

  Hiley, Joseph

  Bossom, Sir Clive

  Elliott, R. W. (N'c'tle-upon-Tyne,N.)

  Holland, Philip

  Bowden, Andrew

  Emery, Peter

  Holt, Miss Mary

  Braine, Sir Bernard

  Eyre, Reginald

  Hordern, Peter

  Bray, Ronald

  Fell, Anthony

  Hornby, Richard

  Brewis, John

  Fenner, Mrs. Peggy

  Hornsby-Smith,Rt.Hn.Dame Patricia

  Brinton, Sir Tatton

  Fidler, Michael

  Howe, Hn. Sir Geoffrey (Reigate)

  Brocklebank-Fowler, Christopher

  Finsberg, Geoffrey (Hampstead)

  Brown, Sir Edward (Bath)

  Fisher, Nigel (Surbiton)

  Howell, David (Guildford)

  Bruce-Gardyne, J.

  Fletcher-Cooke, Charles

  Howell, Ralph (Norfolk, N.)

  Bryan, Sir Paul

  Fookes, Miss Janet

  Hunt, John

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

  Fortescue, Tim

  Hutchison, Michael Clark

  Buck, Anthony

  Foster, Sir John

  Iremonger, T. L.

  Bullus, Sir Eric

  Fowler, Norman

  Irvine, Bryant Godman (Rye)

  Burden, F. A.

  Fox, Marcus

  James, David

  Butler, Adam (Bosworth)

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

  Jenkin, Patrick (Woodford)

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

  Fry, Peter

  Jennings, J. C. (Burton)

  Carlisle, Mark

  Galbraith, Hn. T. G.

  Jessel, Toby

  Carr, Rt. Hn. Robert

  Gibson-Watt, David

  Johnson Smith, G. (E. Grinstead)

  Chapman, Sydney

  Gilmour, Ian (Norfolk, C.)

  Jopling, Michael

  Chataway, Rt. Hn. Christopher

  Gilmour, Sir John (Fife, E.)

  Joseph, Rt. Hn. Sir Keith

  Chichester-Clark, R.

  Glyn, Dr. Alan

  Kaberry, Sir Donald

  Churchill, W. S.

  Godber, Rt. Hn. J. B.

  Kellett-Bowman, Mrs. Elaine

  Clark, William (Surrey, E.)

  Goodhart, Philip

  Kershaw, Anthony

  Clarke, Kenneth (Rushcliffe)

  Gorst, John

  Kimball, Marcus

  Clegg, Walter

  Gower, Raymond

  King, Evelyn (Dorset, S.)

  Cockeram, Eric

  Grant, Anthony (Harrow, C.)

  King, Tom (Bridgwater)

  Cooke, Robert

  Gray, Hamish

  Kinsey, J. R.

  1812

  1813

  Kirk, Peter

  Neave, Airey

  Sproat, Iain

  Kitson, Timothy

  Nicholls, Sir Harmar

  Stainton, Keith

  Knight, Mrs. Jill

  Noble, Rt. Hn. Michael

  Stanbrook, Ivor

  Knox, David

  Normanton, Tom

  Stewart-Smith, Geoffrey (Belper)

  Lambton, Lord

  Nott, John

  Stodart, Anthony (Edinburgh, W.)

  Lamont, Norman

  Onslow, Cranley

  Stoddart-Scott, Col. Sir M.

  Lane, David

  Oppenheim, Mrs. Sally

  Stuttaford, Dr. Tom

  Langford-Holt, Sir John

  Orr, Capt. L. P. S.

  Sutcliffe, John

  Legge-Bourke, Sir Harry

  Osborn, John

  Tapsell, Peter

  Le Marchant, Spencer

  Owen, Idris (Stockport, N.)

  Taylor, Sir Charles (Eastbourne)

  Lewis, Kenneth (Rutland)

  Page, Rt. Hn. Graham (Crosby)

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

  Page, John (Harrow, W.)

  Taylor, Frank (Moss Side)

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

  Parkinson, Cecil

  Taylor, Robert (Croydon, N.W.)

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

  Percival, Ian

  Tebbit, Norman

  Longden, Sir Gilbert

  Peyton, Rt. Hn. John

  Temple, John M.

  Loveridge, John

  Pike, Miss Mervyn

  Thatcher, Rt. Hn. Mrs. Margaret

  Luce, R. N.

  Pink, R. Bonner

  Thomas, John Stradling (Monmouth)

  McAdden, Sir Stephen

  Powell, Rt. Hn. J. Enoch

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

  MacArthur, Ian

  Price, David (Eastleigh)

  Thompson, Sir Richard (Croydon, S.)

  McCrindle, R. A.

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

  Tilney, John

  McLaren, Martin

  Proudfoot, Wilfred

  Trafford, Dr. Anthony

  Maclean, Sir Fitzroy

  Pym, Rt. Hn. Francis

  Trew, Peter

  Tugendhat, Christopher

  McMaster, Stanley

  Quennell, Miss J. M.

  Turton, Rt. Hn. Sir Robin

  Macmillan,Rt.Hn.Maurice (Farnham)

  Raison, Timothy

  van Straubenzee, W. R.

  McNair-Wilson, Michael

  Ramsden, Rt. Hn. James

  Vaughan, Dr. Gerard

  McNair-Wilson, Patrick (New Forest)

  Rawlinson, Rt. Hn. Sir Peter

  Vickers, Dame Joan

  Maddan, Martin

  Redmond, Robert

  Waddington, David

  Madel, David

  Reed, Laurance (Bolton, E.)

  Walder, David (Clitheroe)

  Marples, Rt. Hn. Ernest

  Rees, Peter (Dover)

  Walker, Rt. Hn. Peter (Worcester)

  Marten, Neil

  Renton, Rt. Hn. Sir David

  Walker-Smith, Rt. Hn. Sir Derek

  Mather, Carol

  Rhys Williams, Sir Brandon

  Walters, Dennis

  Maude, Angus

  Ridley, Hn. Nicholas

  Warren, Kenneth

  Maudling, Rt. Hn. Reginald

  Ridsdale, Julian

  Wells, John (Maidstone)

  Mawby, Ray

  Rippon, Rt. Hn. Geoffrey

  White, Roger (Gravesend)

  Meyer, Sir Anthony

  Roberts, Michael (Cardiff, N.)

  Whitelaw, Rt. Hn. William

  Mills, Peter (Torrington)

  Roberts, Wyn (Conway)

  Wiggin, Jerry

  Miscampbell, Norman

  Rodgers, Sir John (Sevenoaks)

  Wilkinson, John

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

  Rost, Peter

  Winterton, Nicholas

  Mitchell, David (Basingstoke)

  Russell, Sir Ronald

  Wolrige-Gordon, Patrick

  Moate, Roger

  Scott, Nicholas

  Wood, Rt. Hn. Richard

  Money, Ernle

  Sharples, Sir Richard

  Woodhouse, Hn. Christopher

  Monks, Mrs. Connie

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

  Woodnutt, Mark

  Monro, Hector

  Shelton, William (Clapham)

  Worsley, Marcus

  Montgomery, Fergus

  Simeons, Charles

  Wylie, Rt. Hn. N. R.

  More, Jasper

  Sinclair, Sir George

  Younger, Hn. George

  Morgan, Geraint (Denbigh)

  Skeet, T. H. H.

  Morgan-Giles, Rear-Adm.

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

  TELLERS FOR THE NOES:

  Morrison, Charles

  Soref, Harold

  Mr. Bernard Weatherill and

  Mudd, David

  Speed, Keith

  Mr. Victor Goodhew.

  Murton, Oscar

  Spence, John

  Question accordingly negatived.
  Main Question put and agreed to.
  Resolved,
  That this House approves the decision of Her Majesty's Government temporarily to float the pound.

  ESSEX RIVER AUTHORITY BILL (By Order)
  Order for consideration, as amended, read.
  10.12 p.m.
  Sir Bernard Braine: I beg to move, That the Bill, as amended, be now considered.
  This is a general powers Bill. Its purpose is to remove certain defects in the present law governing the Essex River Authority's responsibility to deal with certain local problems, and to rationalise the system of financing land drainage and to make it more efficient. The Bill aims to achieve this rationalisation and greater efficiency by abolishing 19 drainage districts, which the authority administers under present arrangements, which would end the levying of the drainage rate, and to do so at a comparatively small increase in the burden borne by the general body of ratepayers.
  I make it plain at the outset of our discussion of what is a highly technical Bill that in asking Parliament to abolish the drainage districts in its own area the Essex River Authority is not attacking the principle of drainage districts as such. It believes, as I do, that in some parts of the country these districts, which still support their semi-autonomous drainage boards, perform an extremely valuable function. In Essex, however, with one or two exceptions there have been no separate drainage districts for about 40 years.
  The drainage district system is seen at its best, of course, in areas that are predominantly agricultural, but where there has been extensive urban development, as in Essex, it gives rise to considerable and increasing difficulties, and these the Bill seeks to remove. The statutory definition of a drainage district is contained in Section 1(5) of the Land Drainage Act, 1930:
  "…such areas as will derive benefit or avoid danger as a result of drainage operations."
  10.15 p.m.
  Inevitably this means that in areas where, for one reason or another, flood levels are changing, drainage district boundaries must change too. Where
  1816
  flood levels increase, these boundaries must be extended, and where as a result of development they fall, boundaries should be contracted. Thus, there has been need for periodical review of drainage district boundaries, and Section 36 of the Land Drainage Act, 1961, provides for petitions to be submitted to the river authority asking for such reviews to take place. There then follows a long-drawn-out procedure before the adjustments can be made.
  It happens that the process of urbanisation has proceeded faster in the County of Essex than almost anywhere else in the country. The mere fact that my constituency has been the subject of four boundary changes since 1945 is proof enough of the enormous changes in the character and population of the county. What may have been a satisfactory arrangement for drainage purposes only a quarter of a century ago no longer meets the needs, as my hon. Friend the Member for Billericay (Mr. McCrindle) will, I know, agree, of our fast-growing and increasingly urbanised county. Indeed, if we take Essex as a whole, only about 10 per cent. of the river authority's total drainage rate is now derived from agricultural hereditaments.
  As a consequence we have a system of financing the essential work of the river authority that is increasingly anomalous and almost impossible for the ratepayers to understand. We have some people in urban areas who pay drainage rates and some who do not. We have some people living on one side of the road who pay drainage rates while people on the other side do not. This is not only unfair but is seen to be unfair.
  Of course, the greater part of the Essex River Authority's revenue is derived from a precept levied on all the local authorities in its area. The effect of this is to levy a charge on every general ratepayer throughout the whole area at a uniform rate. The local councils also exercise some measure of control over the level of the rate demand. This is fair and is seen to be fair. Moreover, it is an efficient system because the local councils act as a collecting agency, and in contrast to the levying of the drainage rate, it is very much less costly to administer.

  1817
  The greater part of the provisions of the Bill are not controversial. Some will be particularly useful. Clause 8, for example, removes a legal obstacle to the obtaining of an order which would enable the Essex River Authority to take over navigable rights on the River Stour which have been in abeyance for some years because the former navigation company went into liquidation. This is necessary in order to resolve certain local difficulties between angling and sailing interests. Then again, Clause 12 is vital to protect underground water resources from contamination by industrial wastes and toxic effluents, especially in the more industrialised parts of the county. This provision is urgently necessary.
  I do not need to detain the House with these provisions since they were all carefully scrutinised by the Select Committee. In fact, with only two exceptions the Bill aroused no opposition whatever. The first exception was in respect of the control and use of underground water by mineral operators, and the provision was struck out of the Bill.
  The second exception was what is now in Clause 9, which provides for the abolition of drainage districts. The Select Committee discussed this Clause for two and a half days before deciding finally to overrule the objections. The House might like to know that the objectors called no evidence but relied solely on the submissions of their counsel. On the other hand, the Essex River Authority provided expert witnesses who were subject to lengthy cross-examination by the objectors' counsel. In the end the Select Committee approved the Clause.
  I understand that my hon. Friends who object to the Bill are not objecting to it as a whole. It would be very odd if they did since no objections to what is now in the Bill, save objections to Clause 9, were registered when it was subjected to close scrutiny by the Select Committee. I assume that they are objecting to Clause 9. Therefore, on that very reasonable assumption, I turn to that Clause.
  We have an anomalous situation in Essex. In the catchment area of the River Roding and in the County Borough of South end no drainage rate is levied. Elsewhere in the authority's area drainage rate is levied but on an increasingly in-
  1818
  equitable basis because of the way in which our county has developed in recent years. Thus, the Bill proposes to end these anomalies by abolishing drainage districts and the drainage rate and replacing the revenue which the authority will lose by a small addition to the existing precept on the general body of ratepayers.
  It seems to me that opposition to Clause 9 is based on the relatively small increase in the amounts which the five objecting local authorities will have to pay by way of precept if the Bill is passed without, in their view, their receiving any corresponding benefit. However, the local authority which will have to find by far the greater part of the increase, the Essex County Council, is not objecting to the Bill. It may be argued by my near neighbour and hon. Friend the Member for Southend, East (Sir S. McAdden)that the County Borough of Southend is already making a contribution, in addition to its precept, towards a large drainage scheme within its own boundaries and that this more than compensates for the absence of any drainage rate contribution. But Southendis not alone in this. Other local authorities in Essex which are not objecting to the Bill are also making contributions to similar schemes, notwithstanding the fact that some of their inhabitants already pay drainage rate. One example is the Ben-fleet Urban District Council, in my constituency. It might be helpful, in order to facilitate the discussion, if I were to answer these objections in advance.
  As I have indicated, there is a totally anomalous and unfair division between areas in our county liable to drainage rate and areas which are not. Many people who are liable to drainage rate are living on low fixed incomes. They simply do not understand the system and consider it unjust and discriminating. I have a great sheaf of letters here sent by private ratepayers, to the rate authority. I do not propose to quote them all, but would like to quote a few to show what such people feel about the system.
  One person writing from Clacton says:
  "Under protest I am paying the sum of £5–9–0. I think this is grossly unfair in this Fleetwod Avenue—some pay, some don't. I am more than 20 yards from Pickers Ditch."
  Because this person is 20 yards away from a ditch he sees no reason why he should pay for drainage.

  1819
  Another person writes:
  "My aged and crippled mother, 87, is worried over her river rates of £2.55. She is on a meagre pension…Has she to pay this amount? She never sees the river as she can hardly walk about the house."
  A third letter is from a constituent of mine:
  "In remitting the enclosed amount of £1·70 I should like an explanation of why we are expected to pay for drainage in this present age. I was under the impression this was already included in water and ordinary rates."
  A fourth person writes:
  "We have just read in the East Essex Gazette that you have exempted many people from river rating, No. 58 right next door to me, and also all houses right opposite, on a level with our bungalow in Slade Road, would you please let us know why we have received a bill for £6·96, even far higher than last year that was £6·38."
  Those letters are expressions of the complete confusion into which people are thrown by the present system. I feel sure that the hon. Member for Goole (Dr. Marshall) will, if he has the opportunity, testify that this is an experience which obtains in other parts of the country.
  Secondly, we are not proposing by the Bill to impose a vast burden on the five objecting authorities. The burden for them will be relatively small and in proportion to that borne by all the other local authorities which are not objecting.
  Mr. John Loveridge: My hon. Friend mentioned one person who paid £5 9s. Even on the precept for 1972–73 the London Borough of Havering would have £131,700 to pay. Is it reasonable that this borough, which already pays more per head in rates because it is largely residential, should have to pay £22,000 extra under Clause 9?
  Sir Bernard Braine: My hon. Friend is not comparing like with like. I was quoting particular instances of individuals who feel that the present system is unfair and anomalous. He surely does not question that. If my hon. Friend were rated in this way and his next-door neighbour was not because of the peculiar way in which our county has developed, he would feel the same sense of injustice. As to whether it is fair and proper for the London Borough of Havering to assume responsibility for a small increase
  1820
  in the precept, perhaps if my hon. Friend will permit me to develop my argument I may be able to convince him that there is justice in what the Bill proposes.
  Thirdly, it may be argued that the spreading of the drainage rates over the precept will relieve agricultural land of any payment towards drainage because such land is derated. In fact, the present agricultural contribution towards drainage rate in Essex yields only £31,000 per annum. The answer is that after the Bill was deposited the Essex River Authority, with great wisdom and foresight, decided to levy a general drainage charge on all agricultural land within its area so as to ensure a fair contribution from agriculture towards land drainage. This change will produce an income slightly in excess of the present agricultural contribution and will, therefore, maintain the present balance.
  Just as the present urban element of drainage rate income will be spread evenly over all the urban areas, so the agricultural element will be spread evenly over all agricultural land through the general drainage charge. We shall then for the first time have a fair and rational system which the ratepayer will understand. This was done specifically in the hope that local authorities like the London Borough of Havering and Southend facing a small increase in their precept would feel that the burden was being spread fairly. I hope that the House, too, will feel that this is a fair and sensible arrangement.
  I mean no disrespect to my hon. Friends who are likely to oppose the Clause when I say that for the sake of all concerned it is imperative that we get the Bill. Surely where flood prevention and control are involved we must have a system which is fair, rational and efficient, and is seen to be so by all concerned. The Thames barrage scheme reminds us that even the great metropolis is not safe from the threat of flood disaster. The Greater London Council and the Government have wisely combined to provide resources to protect communities in London near the Thames. Some London boroughs which would not be directly affected by any flooding associated with the river are nevertheless bearing their share of that burden. Those few London boroughs which are in the Essex River Authority's area are exempt

  1821
  from this burden. But the Essex River Authority is responsible for improving the river defences below the barrier, and I submit that it is only right, as in the greater part of the Greater London area, that all local authorities in the Essex River Authority's area should bear a fair share of the cost of defence works downstream and out to the estuary.
  I would hope, therefore, that my hon. Friends will not press their opposition to Clause 9 to the point of risking the loss of the Bill. If the Bill, with its many non-controversial and valuable provisions, were lost it would be a great setback to a river authority which anyone who has studied the matter knows faces a unique set of problems. It would hamper the authority in work of great importance to vast numbers of people, and it would perpetuate a drainage rate system which increasingly is felt to be unfair. It is right for the House to hear objections. But, that having been done, I hope that my hon. Friends will be disposed to let the Bill go through.
  10.30 p.m.
  Sir Stephen McAdden: I participate in these proceedings with some difficulty. I have known my hon. Friend the Member for Essex, South-East (Sir Bernard Braine) for 40 years, and we have always been on the same side of the fence. What is more, this Bill was introduced at a time when the chairman of the Essex River Authority was Mr. Sydney Bates, a great personal friend of mine. So I have found myself in considerable difficulty in opposing it. Nevertheless, it raises matters of principle, and, therefore, it is necessary to say a few words against it.
  The Bill has been eulogised by my hon. Friend. In support of it, he has adduced arguments in favour of a Bill that we are not even considering. I understand his enthusiasm for the Thames Barrier and Flood Prevention Bill. But that is not the Bill that we are discussing. We are discussing the Essex River Authority Bill, and that is a Bill to which objection is taken by the London Boroughs of Barking, Havering, Newham and Redbridge and the County Borough of Southend-on-Sea.
  At the outset, I ought to declare an interest in the Bill. I happen to be a ratepayer in the County Borough of
  1822
  Southend-on-Sea. As such, I am not anxious to have my burden increased.
  In accordance with Standing Orders, the Bill was deposited in November, 1971, introduced into this House, read the First and Second times, and committed. The five boroughs which I have mentioned presented a petition which was dealt with by the Committee, and now we have the consideration stage in this House.
  The important point is a very short one, and there is no need for me to detain the House very long on this important Bill. The point is whether the statement made by my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food on 22nd December, 1971, constitutes Government policy. On that occasion my hon. Friend said:
  "There is one principle which is fundamental to all land drainage legislation. It is that those who derive special benefit as a result of drainage operations should bear the costs of work done on their behalf."—[OFFICIAL REPORT, 22nd December, 1971; Vol. 828, c. 1591.]
  That was a clear statement by the Parliamentary Secretary on behalf of his Ministry at that time. We who are objecting to the Bill say that that principle is being departed from in the Measure which has been deposited by the Essex River Authority and that the people in the five boroughs to which reference has been made are being called upon to make payments in respect of services from which they will receive no benefit at all.
  This matter was raised before the Committee, and it is not my purpose this evening to attack the distinguished civil servants who gave evidence. I have always regarded it as a wrong principle for anybody to attack civil servants. What they said, in effect, was that as the Minister was the chap who, on appeal, could be called upon to exercise an opinion upon a scheme which might be submitted to him it was wrong that he should be called upon to express an opinion before them.
  I am delighted that my right hon. Friend the Minister is present. I am sure that Essex will be delighted that a neighbour from East Anglia in the person of the Minister should honour us with his presence this evening, and we shall be delighted to hear from him or from his junior Minister that he sticks to

  1823
  the view that one principle fundamental to all land drainage legislation is that those who derive special benefit as a result of drainage operations should bear the cost of work done on their behalf.
  Mr. Loveridge: Is it not the case that this essential principle—namely, that there should be no rate payment without benefit—is an ancient one dating back to 1531?
  Sir S. McAdden: I am not as ancient as my hon. Friend, and I cannot go back that far, but the principle which has been enshrined in our legislation for a long time is that there should be no taxation without representation, and so on.
  The Heneage Committee investigated land drainage to a considerable extent, and its report of 1951 contains certain recommendations. I do not propose to read them, but paragraphs 30 to 40 and paragraph 59 onwards and especially paragraph 64 are relevant. If one reads that report one sees that all the responsible authorities agree with the view expressed by the Parliamentary Secretary. I cannot see why that view should be overthrown in the legislation proposed by the Essex River Authority, and it is primarily for that reason that we have decided to oppose this Measure.
  It is all very well for my hon. Friend the Member for Essex, South-East to talk about the wonderful benefits which could flow from the Bill. I am sure that they will, but my hon. Friend must remember that some of us are guided by cetain principles, and I think that one should remember the view expressed to the Committee by the Ministry's representative. He said:
  "My Department's position is rather special in that we have to bear in mind that if Parliament should decide to strike out Clause 10 in the Bill it would still be open to the River Authority or their successors to make use of the provisions of the Land Drainage Act to promote a scheme—or schemes—and submit it to the Minister for confirmation. The Minister then has a quasi-judicial function to perform and he will be bound to take into account any representations that were made to him in that connection. It is therefore important that he should be seen to be maintaining a completely impartial attitude."
  I can understand that, and I can understand the civil servant representing the Minister preserving the impartial attitude of the Minister, who, as he says, occupies
  1824
  a quasi-judicial position, but I cannot understand why there should be this attempt, as I interpret it, in the Bill to overthrow the views of the Minister as expressed by his Parliamentary Secretary.
  What we who represent the views of the boroughs concerned wish to extract from the Minister this evening—I am sorry that he has to leave, but I am sure that he has left instructions with his junior Minister—is whether he stands by his junior Minister. Does he uphold that point of view? Does he stick to the view expressed on Wednesday, 22nd December, 1971? Does he still hold to the view that there is one principle which is fundamental to all land drainage legislation, which is that those who derive special benefit as a result of drainage operations should bear the cost of work done on their behalf? If he sticks to that we are home and dry and the Essex River Authority can take a long walk off Southend pier.
  This is the one principle that we want established. I hope that we shall have a clear and definite answer from the Government Front Bench tonight. I am sorry that my hon. Friend the Parliamentary Secretary shakes his head. I thought that the Government Front Bench existed to give clear and definite answers.
  The Parliamentary Secretary to the Ministry of Agriculture. Fisheries and Food (Mr. Peter Mills): I was hoping to be able to state my position. The Government are purely neutral on this. They must be neutral. This is a Private Bill.
  Sir S. McAdden: I thought that I had made it clear earlier that the Government were neutral about the Essex River Authority's attitude on the submission of further schemes, but the Government cannot possibly be neutral on the question of principle—principle enunciated by the Government. It is no use my hon. Friend the Parliamentary Secretary pretending that the Government can be neutral on matters of principle. The principles were enunciated as long ago as December last. The Government cannot now say that although they stated in December in reply to the hon. Member for Goole (Dr. Marshall) that these were matters of high principle, they will overthrow that at the last moment in order to please the Essex River Authority.

  1825
  In these circumstances, I hope that the House will agree that the Government have a duty and a right not to be neutral but to stick to their principles whether or not they like them.
  Mr. Dick Leonard: The House will be grateful to the hon. Member for Essex, South-East (Sir Bernard Braine) for the clear and moderate way in which he presented the case for the Bill. Hon. Members who are concerned about the Bill's effects are also grateful to the Essex River Authority for sending them—I assume that it was sent to other hon. Members—a clear memorandum setting out the case for the Bill earlier this week. The memorandum is a skilfully drafted document. It sets out the case persuasively and makes a serious effort to meet the case of the critics, in so far as that was understood by the authority.
  The general case against the Bill has been put very fairly by the hon. Member for Southend, East (Sir S. McAdden). I associate myself with every word of his speech. My borough, Havering, is one of the boroughs which participated in the petition against the Bill. The ratepayers of Havering will be affected adversely by the Bill. It is made clear in the memorandum of the Essex River Authority that Havering will have to pay an extra £22,000 in rate precept as a result of Clause 9. The memorandum describes this increase, and the increase which will be requested from the four other objecting boroughs, in these words:
  "With authorities of this size the increase in the precept might be thought to be of very little significance."
  That was a most misguided comment. I hope that the Essex River Authority realises that a statement such as that is not likely to be appreciated by the Havering ratepayers. They would not regard an extra £22,000 as of very little significance. They have faced a record increase in rate this year. It was justified because of the level of services provided by the borough, but it was largely caused by the heavy rate of inflation during the last year.
  10.45 p.m.
  The purpose of the increased precept is to replace the revenue lost from the abolition of drainage rates which would follow from Clause 9. The London Borough of
  1826
  Havering, unlike the other London boroughs affected by the Bill, pays a drainage rate. In the current year it is paying £2,672. This is not a contribution individually subscribed to by ratepayers in the borough who benefit from the activities of the river authority. It is a sum paid on their behalf out of the rates by the borough, which has sensibly come to what is known as a Section 25 agreement with the river authority. To gain the privilege of having the sum of £2,672 waived in the future, my borough is to be required to pay an extra £22,000 in precept. No hon. Member will be surprised to learn that the reaction of the London Borough of Havering to this extraordinary proposal is "Not on your nelly".
  Dr. Edmund Marshall: What does this represent in terms of pennies in the pound rate?
  Mr. Leonard: I understand from the memorandum that it means an increased payment of 18p per ratepayer. If it is argued that this is a small sum compared with the total outgoings of the borough, I would readily grant the point, but I do not concede that because a sum is small it is necessarily insignificant and should not be scrutinised. The phrase "'Look after the pennies and the pounds will look after themselves" will be as well known in Goole as it is in the rest of the country.
  It is the duty of the officers and elected representatives in my borough to ensure that there is justification for every penny they spend on behalf of the ratepayers. This is an exceedingly bad bargain that is proposed for Havering and the four other boroughs which object to the Bill. It is proposed that they should shoulder a burden which would otherwise fall on the agricultural areas of the county of Essex.
  The hon. Member for Essex, South-East said that the river authority proposes to levy a general drainage charge on the agricultural areas. I welcome this. I do not believe that the charge which will belevied on the agricultural areas will go anywhere near meeting the full benefit which those areas receive from the drainage operations of the river authority. I am not opposed to the idea that the rest of the community should contribute to the support of agriculture. Agriculture

  1827
  has received very generous support from the taxpayer for a long time, in the form of subsidies. When we enter the European Economic Community it will be similarly supported by the funds provided by the common agricultural policy. I welcome this.
  But there is no case why the industrial, office and professional workers in my constituency, many of whom have incomes well below those of the farmers of Essex, should pay an extra subvention over and above the support which agriculture receives from the taxpayer. If there is a case for supporting agriculture, it should be at the expense of the taxpayer, not at the expense of the ratepayers of the London Borough of Havering.
  Sir Bernard Braine: I am following closely the argument of the hon. Member for Romford (Mr. Leonard) but I do not think the hon. Gentleman heard me say that there will be a slight increase in the burden to be borne by the agricultural element. I do not follow the argument the hon. Gentleman is using that industrial workers in his constituency are not interested in this matter. The rain that falls from the sky does not choose between his constituency and the next one. All of us in the Essex River Authority area have some responsibility for seeing that drainage is conducted in the interests of all in a healthy and efficient way. Therefore, the burden should be spread evenly. There are industrial workers living in the areas outside the hon. Gentleman's borough whose local authorities are not objecting to the proposals of the Bill. I think I am right in saying that the councils which are objecting to the Bill are contributing 47 per cent. of the precept and those not objecting are contributing 53 per cent. Let the burden be spread fairly. Surely that is a good democratic principle.
  Mr. Leonard: I have acknowledged that the Essex River Authority was going to make an additional charge on the agricultural areas, but I find it extraordinary that it is suggested there should be equal contributions amongst all the people in the area to the services which are provided. After all, the inhabitants of the area do not receive equal protection or benefit from the drainage operations of the river authority.
  1828
  That was the whole principle of the legislation which was mentioned by the hon. Member for Southend, East when he quoted the Minister in the debate last December. The principle is that those who benefit or suffer from danger should pay, not all the inhabitants in the area of the authority's operation. That is quite a new principle which the hon. Member for South-East Essex argued in his intervention.
  The hon. Gentleman in his speech supported the view that the drainage rates should be abolished by citing letters from disgruntled ratepayers. I strongly agree that drainage rates as levied on individuals are an anachronism in 1972 and that they should be abolished. But to do that does not require the Bill which is before the House. It can be done under Section 25 of the Land Drainage Act, 1961, as is explained by the memorandum of the Essex River Authority. Let the authority come to an agreement with the other local authorities as it has already done with six of them, including the London Borough of Havering. The memorandum reads:
  "instead of drainage rates being paid by individual ratepayers within the area of the rating authority, the total is paid by that body.''
  If it does that it will achieve the main purpose of the Bill while preserving the broad principle that only those who benefit from the operation of the drainage authority should be required to contribute to its costs.
  Mr. Peter Mills: It might be appropriate at this stage for me to make a brief intervention to explain the Government's view.
  My hon. Friend the Member for Southend, East (Sir S. McAdden) has put the case clearly, and, of course, the Select Committee went into it thoroughly. However, I must say categorically, that the Government are strictly neutral in this matter. This is a Private Bill, so it would be unwise for me to go into detail or argue the merits of the case. The Government cannot take sides in the matter. Therefore, I am sure that the House will understand my position.
  I must first comment on the strong point made by my hon. Friend the Member for Southend, East. The principle that those who derive special benefit as

  1829
  a result of drainage operations should contribute to the cost is fundamental to land drainage legislation. The principle is still agreed that district boards and drainage districts are not obligatory. Where there is support and a need for drainage the Acts provide for the creation, abolition and change of drainage districts of all three types. That is what the Bill is about. A change is taking place here.
  I should like to make two brief comments. The first is on the Essex River Authority's proposal to abolish the 19 drainage districts in its area. River authorities have wide powers under Section 4(1)(b) of the Land Drainage Act, 1930, to rationalise and reorganise drainage districts. This is the sort of flexible arrangement, that one expects if the drainage district system is to stand any chance of adapting itself to changing circumstances. With respect to the hon. Member for Romford (Mr. Leonard), there is a change of circumstance here.
  These river authority powers include the right to submit to my right hon. Friend for confirmation schemes to create or amalgamate drainage districts, to change their boundaries, and, what is more to the point in this debate, to abolish them. Under Section 11(6) of the Water Resources Act, 1963, they may apply to my right hon. Friend for a variation of their "main river"map—which determines the extent of their own land drainage responsibilities—to include or exclude water courses.
  In considering proposals of this kind my right hon. Friend would follow the statutory procedures laid down in the Acts which afford opportunities for anyone affected to register objections. These objections would be considered on their merits after a local public inquiry had been held, if necessary, to help him in coming to a fair decision.
  The Essex River Authority could have made use of these procedures, but it has chosen instead to proceed by way of the Bill. This explains why my right hon. Friend's report to Parliament says that he would not wish to object to the Bill. It also explains why he feels it necessary to maintain a neutral attitude on Clause 9, which does no more than the river authority could have done under the procedures of the 1930 and 1963 Acts.
  1830
  As the House will realise, should Clause 9 be rejected, either here or later in another place, it would still be open to the river authority to submit to my right hon. Friend for confirmation schemes under the 1930 Act for the abolition of some or all of the drainage districts in question. These could give rise to objections, and in considering them my right hon. Friend would be acting in a quasi-judicial capacity. To take sides now could give the impression that my right hon. Friend had prejudged the case. That is why I have to be so careful tonight in what I say.
  11.0 p.m.
  Of course, hon. Members have a right to ask how we arrive at a fair decision. The answer is that we do so after a thorough examination of all the factors, whether they be urban, agricultural, land drainage, financial or organisational. This we would aim to do realistically within the spirit of the land drainage Acts, which explicitly provide machinery for change.
  I wish also to discuss the general need for reorganisation of drainage districts. In this respect I wish to clarify the Government' sattitude to the general need for the reorganisation of drainage districts. At present there are 359 drainage districts covering about 3¼million acres—about 10 per cent.—of England and Wales. Nearly 30 per cent. of the districts are over 10,000 acres, and some are too small by modern standards. Some rationalisation, therefore, seems necessary. But the situation varies from one part of the country to another, and, viewed as a local problem, the need for rationalisation can be met by local initiative within a river authority area and does not necessarily call for reorganisation on a national scale. My right hon. Friend the Minister is aware of the need for change and accepts it.
  There is a current major issue affecting drainage matters in the forthcoming reorganisation of water services, and my right hon. Friend hopes to make an announcement soon about the extent to which the new regional water authorities will undertake land drainage functions. Although our proposals will not directly affect the responsibilities of drainage boards, they will cover the functions of the existing river authorities, which, as I have explained, include the

  1831
  reorganisation of drainage districts and boards.
  We have to work out the best form of land drainage organisation for the whole country. That should provide a framework for resolving the problems of drainage districts. That does not mean that the reorganisation of drainage districts and boards should come to a halt until regional water authorities are setup in April, 1974. That would be most undesirable. In short, the proposal by the Essex River Authority needs to be considered now on its local merits and not in the light of the national issue I have just described.
  I am in an awkward position because I must remain neutral. I am sorry to keep labouring the point. I would like to be more forthcoming, but this is a Private Bill and I hope the House understands the position I am in.
  Mr. Ronald Bray: I intervene briefly in the debate in an unusual capacity. I have no constituency interest. I was on the Committee.
  I oppose Clause 9 for the very reasons that my hon. Friend the Member for Southend, East (Sir S. McAdden) put forward. The Bill has been brought forward with what I would term indecent haste, and that particularly applies to the Clause. My hon. Friend the Parliamentary Secretary has explained that the reorganisation of water resources is already under way. The Essex River Authority already has the power under existing legislation to do exactly what is set out in the Clause. Those who benefit should be those who pay.
  Sir Bernard Braine: I do not know whether my hon. Friend has any knowledge of the county of Essex, but I, like my hon. Friend the Member for South-end, East (Sir S. McAdden), was a Member when the 1953 floods hit our county and many people, particularly in my constituency, lost their lives. It was then that I realised just how important proper management of flood control really was. In the county of Essex at any rate, floods make no distinction of arbitrary boundaries.
  Mr. Bray: I accept my hon. Friend's reasoning. But floods, which I agree take no notice of arbitrary boundaries—
  Sir Bernard Braine: It was not my reasoning; it was my experience.
  Mr. Bray: I will say that experience shows that floods take no notice of arbitrary boundaries, if my hon. Friend prefers. But surely the issue is that those who are directly affected should be those who contribute in part or whole, rather than have an overall precept for the district as proposed in the Bill? It was pointed out that a lady in Clacton living at point X was expected to pay a certain poundage and someone living at point Y was not. Those at point X paid because they were vulnerable, and those at point Y did not because they were not liable to flood. That is sound common sense. Why the sudden urge that the Bill be presented to the House and that this Clause be accepted, unless it is for the convenience of the authority in collecting the money?
  Sir Bernard Braine: Rubbish.
  Mr. Bray: That was one of the points made in the Committee. If my hon. Friend studied the Committee's minutes he would see how much more convenient it is to have three, four or perhaps half a dozen accounts to send out to local authorities as opposed to many thousands. If he noted those details, perhaps my hon. Friend would agree with me. I wonder why there is the sudden urge to have the Bill on the Statute Book rather than wait for the report on the organisation of water resources.
  Dr. Marshall: The hon. Member for Rossendale (Mr. Bray) has spoken from the impartial part of Lancashire which he represents. I join him as a Member for a Yorkshire constituency in taking the Wars of the Roses into the far reaches of Essex.
  The contentious matter in the Bill is all in what is now Clause 9. The effects of the Clause in operation would be purely financial. There is no question of altering control of drainage arrangements. There is no question of varying the actual work done for land drainage. It is purely a financial matter.
  The Essex River Authority is in an almost unique position in being able to introduce a Bill of this nature, for the simple reason that all the 19 internal drainage districts within the authority's area are already administered by the

  1833
  authority. Only one other river authority, Sussex, has this 100 per cent. administration by the authority. Therefore, it is within the powers of the Essex River Authority easily to effect the changes which it wishes by introducing the Bill. It is to be congratulated on so doing. There is no question of undue haste.
  Under Clause 9 the authority will first be forgoing its income from drainage rates levied within the internal drainage districts. That is a total income of about £271,000. Of that, some £31,000 is paid in respect of agricultural hereditaments.
  Another point, already mentioned, which must be emphasised in order to make it clear is that the element of agricultural contribution in the drainage rates is to be met by the policy of the river authority in increasing the agricultural drainage charges which operate right through the whole of the river authority's area. In other words, there is no question within this Clause of cross-subsidy, urban to agriculture. The agricultural interests will be paying more when the drainage charges come into operation than they do at the moment.
  Mr. Leonard: An increase is being made in the charges met by the agricultural community, but does my hon. Friend really believe that the authorities which have objected to this Bill and which contribute 47 per cent. of the budget of the river authority get 47 per cent. of the benefit? The case is not that no charge is being met by agricultural areas but that the charge, even though it will be increased, is disproportionately low in relation to the benefit which the agricultural community receives.
  Dr. Marshall: I shall come to that point. The issue I am contesting now is the feeling that somehow the London boroughs and the county borough of Southend are going to be subsidising agriculture. That is not true. As my hon. Friend says, some 47 per cent. of the precept income of the river authority is met by the four London boroughs and Southend. So one has the situation where the income which the river authority will be forgoing because it will no longer be collecting the same drainage rates will be made up in terms of extra precept.
  The increase in the precept will be about 20 per cent. compared with the
  1834
  precept which the county boroughs and the county of Essex and the four surrounding counties currently contribute to the funds of the river authority. In this change-over there will be a saving—estimated at above £30,000—in administrative costs, because no longer will there be the job of having to maintain a register of drainage ratepayers; no longer will there be the business of having to send out individual drainage rate demands; no longer will there be the business of having to look into the complaints such as were contained in the letters read by the hon. Member for Essex, South-East (Sir Bernard Braine).
  I point out to my hon. Friend the Member for Romford (Mr. Leonard) that the increased precept which his borough, Havering, will be paying will have offset against it what it now pays by virtue of a Section 25 agreement, which will bring its total lower than the £20,000 mark. So the effect of this proposal is to switch a burden which is currently borne by the general rate-payers within the present drainage districts scattered around and up the valleys of Essex to the general ratepayers right throughout the whole of the Essex River Authority area.
  The important point here is to remember that the present arrangements for rate rebates apply in respect of general rating but do not apply in respect of drainage rating. So people who are particularly aggrieved at having to pay drainage rates have no means of recovering a rebate. People in difficult circumstances who are unable to meet their general rates can go to the local authority and seek a rebate. Clause 9 would shift the burden to a more equitable administration of rate collection.
  Mr. Bray: Does the hon. Gentleman agree that the operation of the precepts on the local authorities as set out in the Bill represents the least painful method of increasing the revenue of the river authority?
  11.15 p.m.
  Dr. Marshall: There has been no suggestion that that is the purpose of the Bill. I see no evidence to support that. The figures which I have suggested show how the income through drainage rates will be made up by precept, and the two things balance. There is no means of

  1835
  getting extra income within the framework of the Bill.
  The benefits to be gained from the Bill are very great. First, there would be an end to all the anomalies of the drainage district boundaries. One sees from the map of the Essex River Authority what unusual boundaries they are, streaking far inland up the watercourses. They are far more scattered and varied than those in my constituency. I have problems with drainage district boundaries, but I shudder to think of some of the problems which obtain in Essex. I am thinking particularly of those free-standing towns in Essex and Suffolk which find themselves partly inside and partly outside a drainage district. Chelmsford, Colchester, Manningtree, Basildon, Maldon and Sudbury all have the experience referred to by the hon. Member for Essex, South-East, in that there are people on one side of the street who pay the rates and people on the other side who do not. Therefore, the second great benefit to be gained from the Bill would be an ending of that sense of injustice among the domestic ratepayers in those areas.
  Thirdly, there would be the ending of the inefficiency of drainage rate collection. At the moment the Essex River Authority must send out 18,500 rate demands a year, and the average amount of each demand is £7.
  Fourthly, the passing of this Bill would end a small anomaly which could be important in future. Three of the internal drainage districts which are to be abolished by theBill—the Ripple, Rainham and Fobbing drainage districts—are scheduled, under the Government's proposals, to go into the regional water authority No. 6, which will be based largely on the Thames river basin. At the moment there are no other internal drainage districts within that river authority area. Therefore, if these three drainage districts are preserved they will be the only ones within the new regional water authority and as such would constitute an anomaly.
  The only objection which I think carries weight was expressed by the hon. Member for Southend, East (Sir S. McAdden) when he reiterated the traditional principle of benefit. He went on to say that if we stuck to that principle we would
  1836
  be home and dry. I have to tell him that if he sticks to the principle of benefit he will be home and wet, because it is one of the accidents of history that the county borough of Southend has escaped having internal drainage districts overlapping its own area.
  Certainly within the principles of the Medway letter, which are the guidelines for establishing boundaries of internal drainage districts, it would be possible to create new internal drainage districts which go inside the county borough of Southend. It would have been open to the Essex River Authority to take that action. This means that there is land in Southend which is in danger of flooding and which benefits from the operations of the Essex River Authority. Anyone who wants to know where the benefit is should go and look at Southend. Southend will benefit just as much from the land drainage operations of the Essex River Authority as other areas throughout the whole of the authority's jurisdiction.
  This is a measure of rationalisation. I know from experience in Yorkshire, where in my constituency there are more internal drainage districts than there are within the whole of the Essex River Authority area, that the system of internal drainage administration is in need of reorganisation. For the country as a whole that is a matter of Government initiative which we eagerly await. I welcome some of the comments made by the Parliamentary Secretary on this subject. The Essex River Authority has taken the initiative because it is in a good position to do so. It is to be congratulated on the Clause, which I hope the House will support.
  Mr. R. A. McCrindle: The hon. Member for Goole (Dr. Marshall) brings to this subject an experience and expertise that none of us would dream of trying to equal. My brief contribution will be on an entirely different, albeit practical, basis.
  I start by declaring an interest, in that I am a ratepayer of the London Borough of Havering. In addition, I represent the constituency of Billericay, which includes Basildon new town. It is fair to concede that the need for additional resources is largely due to the industrial and domestic expansion of the county of Essex over the last 20 years,

  1837
  part of which is concentrated upon Basildon new town.
  I approach this matter with slightly divided loyalty. As a ratepayer of the London Borough of Havering I am not too keen on paying extra rates. On the other hand, I remind the hon. Member for Romford (Mr. Leonard) that there have been many increases for other reasons in the 14 years I have lived there. In all fairness, one should be prepared to face an increase if it is for the benefit of the county and the area as a whole. After listening to the debate with an open mind, I have come to the conclusion that that has been proved by hon. Members who support the Measure.
  I understood the sincerity with which my hon. Friend the Member for Southend, East (Sir S. McAdden) spoke on the point of principle. I listened with great interest to the reply by my hon. Friend the Parliamentary Secretary. I cannot see that the matter that was raised, which seemed to be a derivation from the old business of no taxation without representation, was very appropriate to the matter we are discussing.
  We are saying that throughout the whole area of the Essex River Authority a great number of people benefit, and the intention of the Measure is to equalise that benefit and to equalise the payment for it. There will be people who will not like it. As a ratepayer of Havering I do not particularly like it, but I think it is the right principle.
  Sir S. McAdden: This principle was enunciated not by me but by the Parliamentary Secretary, who repeated what I said earlier, that people should not be mulcted without receiving some benefit.
  Mr. McCrindle: I have listened carefully, and carefully say to the House that my hon. Friend was repeating something said by the Parliamentary Secretary. I am not anxious to take sides or to state where the quotation originally came from, but, having listened carefully, and trying to make up my mind whether to be for or against this Measure on the basis of the debate, I come to the fairly firm conclusion that whether my hon. Friend for Southend, East said it or the Parliamentary Secretary—and I accept that he did, because my hon. Friend says he did—
  1838
  the point has been established clearly that the principle to which we should be paying attention is equalisation of payment as a return for equalisation of benefit as a result of the Measure.
  Mr. Leonard: Perhaps the hon. Friend could explain how there is equalisation? He will know that the London Borough of Havering is named after a hamlet of that name on a hill, and perhaps he could explain how this hamlet will get any benefit from the Bill.
  Mr. McCrindle: The House will be suprised to know that it was my intention to deliver an uncontroversial speech. I wonder whether the hon. Member for Romford was following my speech. One cannot single out a hamlet in part of Havering and try to prove anything. For a Socialist to do that is surprising.
  It seems to me that payment is to be equalised because benefit is to be equalised, in broad terms round the area. My hon. Friend the Member for Rossendale (Mr. Bray), very close at hand in Lancashire, said that there was something rather sinister about the Essex River Authority's having brought it forward at all. If my hon. Friend the Member for Rossendale did not say that, I apologise. Far from being sinister, there is something progressive about it, and the House, far from condemning the Measure, should welcome it.
  I accept what the hon. Member for Goole said about progressive measures that are on the way. I thought that this was a matter for congratulation for the Essex River Authority. Even if it is ahead of the country in this, it is the first of many occasions when this will be the case.
  Having listened carefully and having tried to make up my mind on the basis of what I have heard, I conclude that the matter is one which can and should be supported.
  Question put and agreed to.
  Bill, as amended, considered accordingly; to be read the Third time.

  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Murton.]

  EMSWORTH (ROAD TRAFFIC)
  11.28 p.m.
  Mr. Ian Lloyd: I always try to apply stringent tests to occasions like this when essentially local or parochial affairs are to be brought to the attention of the House of Commons, even when it is represented by so few people as there are in the Chamber this evening. There are occasion when the tests are passed, and the subject of the decision, or what is likely to be the decision, to provide a bypass for Emsworth passes these stringent tests.
  A leading article in the Portsmouth Evening News discussed this subject and said:
  "It affects every community which may find itself involved with a road project devised by engineers who can, it appears, depend upon Department for the Environment support, however weighty the arguments put forward by local residents…Emsworth, and any other town similarly threatened may now wonder whether public inquiries serve such practical purpose."
  Before dealing with the merits of this case, I will state a few of the essentials. Emsworth is a small most picturesque and ancient town comprising 9,000 people. It lies within an area of outstanding natural beauty on the fringes of Chichester harbour. It is a proud and articulate community, to the extent, the House may be interested to know, that even its fishermen have pleaded their cause before the Privy Council, a very unusual achievement.
  The problem which the community faces is the simple but important one of traffic. I may summarise it by saying that in August, 1969, there moved through the centre of this small community—to use a modern term which I have never come across until recently—22,000 private car units a day; that is, about 20,000 vehicles a day. Estimates have been made that in 1974 this will rise to 28,000 and in 1979 to 34,000. It is equally estimated that at present the capacity of this main road—a section of the A27—is a mere 6·5,000 private car units a day.
  The community has been aware of this problem for some 30 years, during which time the centre of the village has suffered trunk road blight in that a large area has
  1840
  not been developed because, these decisions having been placed in cold storage, nothing could be done with the land. The two schemes to deal with the problem—the inner bypass and the outer bypass—were first proposed in 1934 and in 1938, the first being a very short scheme of about one-third of a mile, and the second a somewhat longer and more ambitious programme involving a road going right round the town, a distance of eight miles.
  What an astonishing reflection on the speed of the administrative process! The outer bypass, which is now estimated to cost about £8 million, could have been built in 1938 for the present cost of the inner bypass, which will cost at the most £1 million if allowance is made for a large number of factors. Virtually nothing whatever happened between that date and 1959, 21 years later, when a series of detailed proposals were published. Again, very little happened until 1965, when draft orders were laid, and 1966, when plans and proposals of a more detailed kind were made public. Following this, in 1967 the Emsworth short bypass objection committee was formed; 500 people attended the meeting and over 1,970 signatures were collected in protest against the short bypass scheme.
  The next point which is of interest is that at that stage I personally became involved and discussed the matter with the present Secretary of State, who wrote to a constituent of mine as follows:
  "I have discussed this with your M.P.…and have informed him that I will certainly support him in any action that he is able to take. I share his view that this is one of those compromise schemes which will do considerable damage, and I take the view that by spending relatively little more an interim scheme bypassing Emsworth altogether could be put into operation."
  Following that, a public inquiry was ordered. That started in 1969, and in June, 1969, it was adjourned because of the inadequacy of some of the statistics which were being discussed and produced at that inquiry. The inquiry was resumed in April, 1970, and the report was finally presented shortly after that. The facts are relatively simple, although when dealt with in great detail they can occupy a 140-page report.
  It seems to me that there are essentially three choices. The first is to do nothing—a choice which is attractive to all

  1841
  Governments at all times. The second is to build a short bypass or a portion of it. The third is to build the long bypass, or some version of it, first. The argument lies between those who consider that both will be needed sooner or later, and those who consider that the long bypass will solve the problem virtually completely.
  There is a version of the long bypass which is less expensive and which could be regarded as an interim version of it. It is some two miles in length instead of eight miles, with links at each end to the A27, essentially solving the main traffic problem of the inner part of Emsworth.
  All these arguments were put to the public inquiry. It was a most thorough and objective inquiry, conducted with great efficiency by a retired judge, Mr. Shurlock. The House may be interested to know whether the inquiry reached equivocal and cautious conclusions. In fact, that is not the case. Far from being equivocal and cautious, the conclusions were unequivocal and dramatic.
  I must read the essential conclusions. Mr. Shurlock stated his opinion as follows:
  "There is deep public resentment against the Minister's proposals, and opposition from an extremely wide variety of interests. The scheme is actively opposed by the Havant and Waterloo Urban District Council. There is only very limited support from the Hampshire County Council. The price in terms of social upheaval and environmental dislocation which Emsworth is being asked to pay for a scheme with little to recommend itself is far too high, the interests of the town are being sacrificed and subordinated to the needs of through traffic by proposals which are no more than a temporary expedient—when a perfectly feasible scheme can be made available—and any immediate advantages which the scheme may have are heavily outweighed by its disadvantages. The obvious solution is the optimum short-term scheme to which Mr. Gilbert agreed on traffic grounds. These orders could only be made in the face of and in complete defiance of unanimous public opinion, and the Minister, in my opinion, would be wholly unjustified in making them."
  Those are strong words. But they are the conclusions of a most experienced and mature inspector who has considered the whole matter very objectively and reached his conclusions after the most thorough-going inquiry.
  However, I add one other statement which has been made by a local citizen,
  1842
  a qualified surveyor, who has written to me about it:
  "Briefly, I think that, in face of the Inspector's powerful recommendations, the 1967 view of Mr. Peter Walker, the increasing Government emphasis on the protection of the environment and the imminence of the Havant to Chichester Diversion, the Secretary of State has very formidable obstacles to overcome if justice is to be seen to be done."
  I agree wholeheartedly with both the conclusions of the inquiry and those of my constituent, Mr. Groom. However, I leave the inquiry to pass to one area where those concerned with the decision-making have shown themselves to be subject to a rather popular fallacy of this day and age which I refer to as "the exponential fallacy".
  The decision-makers have examined a 5 per cent. compound traffic growth over the next 10 to 15 years. This is a very popular assumption to make about phenomena such as traffic. But it is like so many other exponential fallacies, whether one starts with the amusing example given by Lord Bowden that if monasteries had continued to be built at the rate at which they were in the first half of the 12th century we should have one in every square mile of Europe, or the other one concerning the growth of Ph.D.s in the United States in the 1950s, about which it was said that practically every citizen would be a Ph.D. by the end of the century if it continued.
  It is not right to make analyses, even of such matters as traffic, completely dependent on the simple, straight-forward assumption of a 5 per cent. compound growth. If that were so, by 1984 not only would the road being considered in the middle of Emsworth be totally swamped by traffic, but virtually every other road in every similar village in the United Kingdom would face serious traffic thrombosis.
  I find surprising and unexpected support for the case that I am putting tonight from no less a person that my right hon. Gentleman the Minister for Transport Industries, who in this Chamber last night said:
  "Difficult as it may be, if we are to preserve narrow city streets, city centres, small country lanes and villages from violation by vehicles which have no place there, I see no alternative to a sensible policy of restriction on routes. I am sure that industry has the statesmanship and broadmindedness to accept this proposition, too."—[OFFICIAL REPORT, 28th June, 1972; Vol. 839, c. 1485.]

  1843
  I share that hope and aim, but in our approach to this problem we need five things. First, we need some imagination, and that is always a scarce commodity. Secondly, we need some rather more energetic traffic management than has been applied to problems of this kind. We need a combination of energy, imagination and traffic management of the kind which exhibited itself in the famous New York traffic commissioner who did so much to unsnarl New York some years ago. Thirdly, we need action on the intermediate section of the long bypass and its links. Fourthly, we need more respect for local judgment and opinion when it is so unanimous and so articulate as it has been in this case. Fifthly, we need above all consistency between our actions and our environmental preservation philosophy.
  It seems to me that in a democracy the exercise of power even in a case of this kind must be seen on the whole to follow victory in argument and success in persuasion, and by these criteria the Minister dare not build the Emsworth short bypass. If the Minister wants to deal with the real problem in a sensible way he should start the long bypass just as soon as he can complete the necessary authorisations and statutory procedures, and that is the main message which I should like to convey to my hon. Friend.
  11.42 p.m.
  The Under-Secretary of State for the Environment (Mr. Keith Speed): I thank my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) for bringing to the attention of the House a problem with which I know he has been concerned in representing his constituency so ably, and that is the question of the Emsworth bypass.
  It is important at the start that we should remember the scale of the problem. As my hon. Friend said, the bypass proposed would be one-third of a mile of 24 ft. single carriageway. It is a road to avoid the heavily congested dog-leg of the A27 trunk road which runs through Emsworth shopping centre in a conservation area. The line has been protected against prejudicial development since its inclusion in the development plan in 1961 following a development plan public inquiry. The facts about this road are that only four properties would have to
  1844
  be demolished, and parts of a public car park and Emsworth Cottage Hospital garden taken.
  Once the Havant-Chichester section of the M27 has been built—and my hon. Friend has said a bit about that—the relief road would serve increasing local traffic. My hon. Friend mentioned the letter written by my right hon. Friend the Secretary of State for the Environment, but I stress that that was more than five years ago, and it may well be that circumstances have changed since then.
  I understand that there are ideas in some parts of the town that dual carriageways will be provided on this trunk route through Emsworth. I am sure that my hon. Friend knows that that is not so. I should like to emphasise that the widening of the proposed relief road junction with North Street would enable central reservations about 100 yards long to be provided which would help pedestrians to cross, but apart from that, there is no intention of providing dual carriageways on any part of the A27 at Emsworth.
  Pending a final decision—and I stress that no final decision has been taken—I am reluctant to argue the merits of the proposal, but I can say a few things which might help my hon. Friend and his constituents.
  First, the Department's case was publicised both before and during the public inquiry into the draft orders and was repeated in the letter of 11th May which said that the Secretary of State was disposed to disagree with the inspector's recommendations. As my hon. Friend said, the inspector recommended that the orders should not be made. The Secretary of State is, however, glad to take into account any new factor or slant on the proposals, and following representations made by my hon. Friend and many of his constituents, the deadline has been advanced to 31st July. We are prepared to receive representations until that date.
  My hon. Friend referred to an editorial in a local newspaper and queried the whole inquiry system. He asked why, if an inspector makes recommendations of this sort and one has a public inquiry, they ought not to be accepted. Every case has to be looked at on its merits. The purpose of holding a public inquiry

  1845
  is to enable the Secretary of State to be fully informed on all aspects of proposals before coming to a decision. An inspector's duty is to ensure that all parties have a fair opportunity to present their cases, for or against the proposal, and to find out and to record relevant facts. An inspector has to report on the objections as they have been presented to him, to express his views on the merits of the proposals in the light of all the evidence and then to recommend accordingly.
  However, it is for the Secretary of State to decide on the proposals, and obviously he does not lightly set aside an inspector's recommendation in any public inquiry. Nevertheless, the Secretary of State has the final responsibility. The buck stops with him; he cannot abdicate his responsibilities for making a decision.
  Two years elapsed between the last session of the inquiry, in May, 1970, and the announcement by my right hon. Friend of his disposition to disagree with the inspector in May of this year. Some time, of course, was required for the inspector to prepare and present his report. The report required careful study, and legal advice was needed on some aspects. No one would have wished for a hurried and hasty decision on what are, clearly, extremely controversial proposals. Objectors have asked for and been allowed nearly three months to make further representations. In retrospect, I am bound to say that my hon. Friend was right to do this. On 11th May three weeks was given for the representations, and in this case that was probably too short a period. It is certainly a period specifically prescribed in the Lord Chancellor's rules for further representations from objectors when a Minister has differed from an inspector on a point of fact and for that reason is disposed to disagree with his recommendation. We responded to my hon. Friend's appeal, and I hope that there is some satisfaction in that.
  Certainly the delay that all this has brought about has shortened the period during which the proposed relief road would serve trunk traffic. Traffic usage is expected to be high, so purely in economic terms—I have noted my hon. Friend's point about the environment—this section of road would be justified even if it served for only two and a half years or three years. We cannot ignore the fact
  1846
  that without this relief road the effect on the A27 before the M27 is constructed could be very serious.
  Regarding the M27—to my hon. Friend, perhaps the much more satisfactory local bypass—it could be asked whether better progress could not have been made with the scheme for the Havant-Chichester length of the motorway. My view is that, unfortunately, it could not. A feasibility study was begun in 1967 into the better alignment of the A27 east of the Havant bypass. A scheme to improve the road was accepted into the preparation pool in 1968. Acceptance of a scheme into the preparation pool enables sufficient engineering work to be carried out to establish a recommended route and to recommend design standards and more accurate estimates of costs and benefits. All these things are incorporated into a preliminary report and this takes time.
  The best forecast was that the M27 could be completed by about the middle of 1976. Only after the preliminary report stage is sufficient information available to enable draft statutory orders under the Highways Acts, to be prepared and published, and this is the position we have now reached with the proposed M27 Havant-Chichester scheme.
  I am pleased to tell myhon. Friend and the House that draft orders are due to be published for this scheme next week, on Tuesday, 4th July. The present forecast—at this stage this is only tentative and still depends very much on the speed of the statutory procedures, the weather and all sorts of factors—is that the construction should be completed by the original forecast date of May, 1976. The procedures were explained in great detail at the public inquiry. By contrast, we estimate that if the relief road were to go ahead it would be completed in about 12 to 15 months, again subject to weather and one or two other variable factors.
  My hon. Friend mentioned the question of the intermediate bypass. The inspector envisaged earlier construction of the western two miles of the Havant-Chichester section of M27 and a link between this and the existing A27 to bypass Emsworth. However, as was explained at the inquiry, there might well prove to be no economic justification for

  1847
  the proposed link, which would be an expensive way to achieve less traffic benefit for Emsworth, since it would have no value for local traffic, and which could hardly be ready much before the full Havant-Chichester length of M27.
  As I have said before, no final decision has been taken. We are ready to consider all comments, objections and further representations up to 31st July. We will take carefully into account everything that my hon. Friend has said tonight. I note what my hon. Friend said about the speech my right hon. Friend made in the House last night. My hon. Friend will probably agree with the points I made in the speech I made in the House last Friday about lorries and the problems of the environment.
  1848
  In the overall approach that we are trying to follow in the Department, we are very conscious of environmental factors and of trying to get the right decision for the town of Emsworth and my hon. Friend's constituents. I can say nothing further usefully, as the matter is still essentially sub judice and my right hon. Friend will be making a decision as soon as possible after he has considered all the representations after the end of July.
  My hon. Friend has done the House and his constituents a service by raising this matter. We will try to make the very best decision possible for his constituents.
  Question put and agreed to.
  Adjourned accordingly at eight minutes to Twelve o'clock.