ECONOMIC AND ENERGY SITUATION

HC Deb 19 December 1973 vol 866 cc1349-480

[SECOND DAY]

Motion made, and Question proposed, That this House do now adjourn.—The Prime Minister.

3.41 p.m.

Mr. Denis Healey (Leeds, East)

I start with some remarks with which I think the whole House will agree. This is now, as the Chancellor of the Exchequer, the Prime Minister and the Leader of the Opposition have said, the gravest situation that Britain has faced since the Second World War. Our domestic problems, however we define them, are likely to be aggravated very seriously for perhaps many years by a world energy crisis. We all agree on the nature of the energy crisis, although it is difficult to make accurate predictions about its scale. We know that the increase in the price of Arab oil is bound to make inflation worse in Britain and to widen the deficit in our balance of payments.

We do not know by how much or for how long the Arabs will cut the supply of oil below the levels on which we had been counting. We must assume that there will be cuts and that they will last for many months, and probably for many years. All over the world Governments are having to face the fact that the reces-cession in world trade which they were expecting to take place in 1974 may become a slump.

Historians, on looking back to the events of the present year, will see the Arab-Israel war of October as a turning point in the post-war history of the world, in the sense that international affairs, after having been dominated for 25 years by political and military confrontation between the Soviet and Atlantic power groups, are likely for many years to be dominated instead by economic competition among all non-Communist Powers for limited supplies of essential raw materials.

We are conscious now of the competition for oil supplies. We may find before long that there is similar competition for tin, copper, or even food. In the last day or so we have seen two events which dramatically symbolise the revolution in world affairs. A British Government, which only last week promised in all circumstances——

Mr. J. Enoch Powell (Wolverhampton, South-West)

On a point of order, Mr. Speaker. Is it in order for papers to be distributed by an hon. Member up and down the whole of the benches?

Mr. Speaker

I did not see what was happening. I am not sure what was happening. I do not think that it is in order, except on certain specified occasions.

Mr. Healey

I was saying that the transformation in world affairs had been symbolised in the last two days by the fact that a British Government, who promised in all circumstances to put the nation's security above all other considerations, have decided to make a major cut in their planned expenditure on defence. That is a cut which the Labour Party welcomes and wishes had gone further. A British Prime Minister, who staked his political career on Britain's entry into the Common Market, has now threatened to wreck the Common Market unless he is able to keep full control of Britain's energy supplies. That, too, we welcome.

Those two facts mark a major change in the world situation and inevitably in the reaction of Governments to the situation. I think that we can all agree that there will now be a much harsher and more difficult climate in which the United Kingdom will have to operate. We know that in many respects the change in the world situation may bring a hitherto unexpected revolution in our prospects as a member of the world community before 10 years are out. By the end of the decade oil from the Celtic seas—[HON. MEMBERS: "The North Sea."] No, in both seas. The oil from the Celtic Seas, by the end of the decade, will have transformed the relative weight of the United Kingdom in world affairs. The problem is to emerge from the next few years with the economic capacity to take advantage of our new energy supplies and with the fabric of our society intact.

I hope that no hon. Member will dispute that that is essentially the nature of the problem that faces us. It is a short-term problem by historical standards, but a grave one. Unfortunately, we face the immediate future far weaker than any of our competitors in the world community. I shall deal with the economic aspects of our problem. I must begin by recording that a Government who inherited an ideal springboard for steady and sustained growth in Britain have contrived in three and a half years to produce disaster in almost every major aspect of our economic activities.

The growth of our economy, which has been the justification of all the Government's policies, has fallen in the last three months to an annual rate of under 3 per cent. Investment, which is the key to growth, is still more than 20 per cent. below the level of 1970. In the last two months our balance of payments deficit has been running at a rate of £3,000 million a year. That was before any but the most minute impact of the increased price of Arab oil had affected our trade figures. We have seen the pound devalued by 18 per cent. of its value three years ago or, indeed, 18 months ago in terms of a weighted average.

Above all, the Government's borrowing requirement is standing at over £4,000 million in the current year. As a result of all those factors, inflation in Britain is running at an all-time high. In the first year of the so-called counter-inflation policy the Government now tell us that the retail price index is well over 10 per cent. higher than the level at which it stood a year ago. It is well above the post-tax rise in national earnings over the same period.

The Chancellor and the Prime Minister have talked in recent days about the country's need to accustom itself to no increase in its standard of life in the coming year. The overwhelming majority of the population saw no increase in its standard of life in the past 12 months, in spite of the fact that there was a 4 per cent. increase in the nation's wealth. During the coming year the standard of life of the average British family is certain to fall well below the level at which it stood in 1972.

That is the situation which the nation faced before it became aware of the full dimensions of the energy crisis. Of course, the oil crisis makes the situation worse in almost every respect, and particularly our balance of payments deficit. I should like to ask the Government—I gather that the Chancellor is to conclude the debate this evening—how they propose to deal with their existing deficit and with the enormous increase in the balance of payments deficit which is certain to follow, at least for the next six months or so. At present, they are seeking to protect sterling partly through interest rates, which are highly inflationary and damaging to investment—do the Government think that they can push them higher?—and partly by encouraging public authorities to borrow abroad in the Eurocurrency market at interest rates which are up to three times as high as the Government would have to pay if they were borrowing from the IMF.

Indeed, this policy of foreign borrowing—I understand that over £1,000 million has been borrowed since last March—is likely to impose on us an interest burden in foreign expenditure of at least £2 million a week from the beginning of next month. Do the Government propose to increase this public authority borrowing on the Eurocurrency market, or will they go to the International Monetary Fund, or seek to arrange support from foreign central banks? If, as I suspect they will be forced to do, they choose the latter courses, what sort of price will they have to pay in terms of foreign control and monitoring of our monetary affairs?

What I think the Government are finally recognising is that in many dimensions of the new economic crisis facing us, their future and the whole future of their policy will depend on international agreement—international agreement to support the pound, international agreement to avoid competitive deflation, international agreement to avoid an interest-rate war, international agreement above all, to control the short-term capital movements which are certain to be vastly expanded by the injection of Arab oil revenues into the international currency scene. In this period, when international agreement is likely to be the foundation and precondition of success in many fields of economic policy, the Government's international influence stands at an all-time low——

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The right hon. Gentleman has said that international agreement is very important. Will he agree that European agreement is at least a first step towards international agreement? Why has his party shunned all European involvement?

Mr. Healey

I am coming to that point. If I may echo the words of the right hon. Member for Wolverhampton, South-West (Mr. Powell), that shows the unwisdom of giving way in the middle of an argument. The fact is that the international agreement which we require must be world wide. It must include the United States and Japan, as well as the European countries. Indeed, in many respects we require American support far more than we require support from across the Channel. But to answer the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), let us look at the facts. Our relations with the United States have not been worse at any time since the Suez War in 1956, when, again, it was the actions of a Conservative Government which ruined transatlantic relations, and the temperature of our relations with all but one of our European neighbours now stands at many degrees below zero. The fact is that our only friends in the world today are those we made by grovelling, namely, the French Government and the Arab Governments. But the Prime Minister will soon learn that though a poodle may make friends, it has a very limited capacity to influence people.

The situation which I have described—and I do not believe that any hon. Member on either side of the House can dispute that the broad facts I have outlined are correct—was the background to the statement which the Prime Minister made last Thursday and the statement which the Chancellor made on Monday. This country faced a national emergency which required national unity in a national approach. There were three major areas in which this country needed decisive action. First, and most important and urgent, we needed measures to take immediate action on the problem of inflation and to curb and reduce the balance of payments deficit. Secondly, the measures which we took to deal with the immediate problem of prices and the balance of payments had to be compatible with the need to maximise our capacity for growth through the best possible use of our diminished energy resources. Thirdly, there was the need to put more of our reduced output into investment and exports—a need that was recognised on both sides of the House—which made a fall in the nation's living standards inevitable in the coming year.

It was vitally important that the sacrifices which are inevitable in this country for at least a year to come should be fairly shared according to the principle that those best able to bear the burden must carry the largest percentage of its weight. Many of us believed, between the Prime Minister's announcement on Thursday and the Chancellor's announcement on Monday, that the Government would announce this week proposals to meet these needs, and I think that we were ready to sink personal or party differences in a united effort to deal with what we saw as a national problem. But the fact is that the Chancellor's proposals were a disastrous failure by every test.

To take the first requirement of immediate action to deal with inflation and the balance of payments, the only measures that he put before us on Monday which were relevant to this immediate problem were the restrictions on hire purchase and controls on credit. We welcomed these so far as they went, in spite of the burdens that they would impose on many ordinary families, but of course they will have a very limited effect. I hope that the Chancellor will tell us how much demand he expects these measures to take out of the economy, and how fast, in the immediate months. But what I cannot understand of a Government who we thought were aiming at national unity is that having imposed these Draconian restrictions on the borrowing of the average family, the Chancellor did nothing to withdraw or reduce the tax relief on loan interest for-the better off, which has undoubtedly been responsible for a major part of the inflationary demand in this country in recent years.

The only other relevant proposal for dealing with inflation and the balance of payments that he made on Monday was the enormous package of public expenditure cuts, totalling £1,200 million. As I think he admitted when he spoke to us on Monday, those cuts are not likely to bite, certainly not in full, for up to a year—and let us face the fact that the Government's record of success in controlling, or indeed in predicting, Government expenditure is so appalling that no one can have the slightest confidence in such intentions which they announce so far ahead.

Mr. Peter Jay has stated some of the relevant facts this morning in The Times. During the last week, estimates have been given to the Public Expenditure Committee suggesting that there may have been a £1,500 million shortfall in the Government's estimated expenditure on public building and capital account during the current year. Although I know that the Treasury was prepared to dispute the exact figure, it was unable to convince the Committee that its adviser had been incorrect in predicting a shortfall at that level; nor was it prepared to give any alternative estimate of what the level really was.

Mr. J. Bruce-Gardyne (South Angus)

As the right hon. Gentleman recognises, the position was that one professional adviser to the Public Expenditure Committee produced his estimate that there would be a shortfall of £1,500 million. The Treasury pointed out that that estimate was based purely on a projection of the first quarter's figures. It disputed the conclusion that was reached and the Public Expenditure Committee itself did not express any opinion.

Mr. Healey

That is precisely what I have just told the House. If the hon. Member had no more to contribute to our discussion than that I wonder why he bothered to intervene.

This estimate was given and no alternative was offered by the Treasury. Moreover, a couple of days later there was a Government request for £800 million of Supplementary Estimates because in other respects their expenditure was expected to be considerably higher than estimated. If we add the two changes in Estimates together, we find that the combined error in the Government's projections of expenditure this year is nearly twice the planned saving of £1,200 million put before the House on Monday.

Let us assume that the expenditure cuts are actually carried out. Here we must investigate the second main requirement that I have mentioned, namely, to make the best use of the nation's diminished resources in order to achieve maximum growth in capacity during the next few difficult years. If these cuts are carried out, many of them will make the nation's problems worse, not better. We must maximise growth, particularly investment. We know that industry now faces serious constraints on supplies of energy and other materials, particularly steel, yet the Chancellor proposes to subject the steel industry to a major cut in its planned investment. We must reduce our dependence upon Arab oil, yet far from rationing the consumption of petrol by the private motorist, the Chancellor has chosen to make cuts in public transport, in the railways, in the tubes, in the buses and in freight carriage by road. The Chancellor has chosen to put up the price of coal, gas and electricity—our indigenous fuels—yet he refuses to increase the tax on petrol, of which we are likely to be seriously short in the coming year.

It is clear, particularly from the Chancellor's party political broadcast on Monday, that he chose cuts in public expenditure for one reason above all. He thought he could persuade people that they had got off scot free through the Government cutting their own expenditure. Yet, apart from major redundancies and short time in the construction industry, engineering and aerospace, which will follow directly from his proposals, every family in Britain will suffer from the increases he plans in rates, coal, electricity and gas. Tens of millions of families in Britain will suffer from the overcrowded classrooms which will result from cuts in the school building programme. Millions of families will suffer from the cuts in expenditure on old people's homes. Tens of millions will suffer through having to wait far longer at the bus stop or on the platform of the tube station for the public transport in which investment has been cut. In addition there will be lay-offs throughout industry as a result of the shortages of steel.

That is a very odd way for a Government to deal with the problems created by the energy shortage. The plain fact is that ordinary families will suffer far worse than the better off, far worse than the surtax payers, from all the measures which I have described. Let us make no bones about it. The Chancellor has admitted that the country as a whole will suffer a serious and substantial cut in its standard of life in the coming year. In such a situation it was absolutely imperative that the right hon. Gentleman should have attempted to mend some of the social divisions opened by Government policy in their first three years by a genuine attempt to redistribute the nation's wealth and income.

The Chancellor could have increased tax on luxuries such as fur coats, wines and brandy to subsidise the basic foods, but he chose not to do so. He could have withdrawn tax relief on second homes. He could have reduced tax relief on mortgages by limiting it to those paying the standard rate of income tax, and he could have used the money thus obtained to reduce rents and mortgages for the average family. He chose not to do so. The only measure which he adopted in this direction was to take £35 million from surtax payers, who have already received over ten times as much in the last three years through tax changes and the disaggregation of wives' and children's income.

The Chancellor plans to meet his deficit not by taxation, which could be distributed according to the capacity to pay, but by letting inflation rip so that people pay more tax although their living standards are falling, and so that the purchasing power which remains after tax is mopped up by rising prices. This is the economic strategy behind the proposals put forward by the Chancellor on Monday and it is a strategy calculated to widen all the gulfs which already separate the components of our national community.

There is one final weapon in the Government's economic armoury—the three-day week in industry. This will mean a colossal fall in the earnings of ordinary families—a fall of £18 a week for the average wage earner. It will mean millions out of work and hundreds of millions of pounds worth of wealth thrown away every week. This is all because of the Prime Minister's stony, limpet-like attachment to the minutest details of phase 3, which was devised in a totally different situation and based on assumptions long since proved mistaken—a policy which the Government themselves have already torpedoed this week by increases in the cost of products of the nationalised industries.

If the Prime Minister wants a statutory incomes policy he could at least have done what the Labour Government did in the late 1960s and what Sir Stafford Cripps did in the late 1940s. He could have treated manpower shortages in vital industries as justification for exceptional increases in wages. He will have to do so because there is no alternative. With men leaving the pits this year at twice the rate of last year, and with the coal in the ground ready to be dug, he will have to pay the rate required to obtain the men to dig that coal.

But as always the Prime Minister is fighting the last war long after he has lost it. He is fighting it on a slogan of unconditional surrender, a strategy which has always proved disastrous. What is even more serious than that, however, is the desire of some of his right hon. Friends, especially the Chancellor of the Exchequer, to fight the next war against the working people of this country. In the last three days the Chancellor has presented the economic crisis in a way which is deliberately calculated to inflame class feeling, to rouse the suburbs against the cities, the middle class against the working class. He has chosen to divide the nation in order to unite the Tory Party.

The Chancellor of the Exchequer has shown no concern for the crisis facing the people of Britain. He has been concerned only with immediate party advantage. He is not the first political leader to base his policy on the slogan of, "After me the deluge". He should remember what happened to his royal predecessors in pre-revolutionary France. If only he gives the British people a chance to pronounce a verdict on his conduct of his responsibilities and the attitude towards the British nation which lies behind that conduct, he and all those who think like him will be swept into the dustbin of history by a tidal wave of popular disgust.

4.10 p.m.

The Secretary of State for Employment (Mr. William Whitelaw)

I must apologise, Mr. Speaker, for not rising immediately to speak. I did not realise that the right hon. Gentleman had finished.

I should like to begin by agreeing very much with one of the things which the right hon. Gentleman said at the start: it is perfectly clear that this country in the years immediately ahead will have to operate in a different and difficult climate due to effects and affairs beyond our shores.

I believe that we must consider these problems and their effects on what we do at home quite calmly, without panic or rancour of any sort. I should have thought that that was a truth that was worth bearing in mind on both sides of the House. I am entitled to say just that to some of the things that the right hon. Gentleman said at the end of his speech. It is in that spirit that I intend to deal with the industrial situation at home because that is the central part of my speech. I know the right hon. Gentleman will understand my position if I do not deal with the wider economic issues, but it is right to look at our problems at home in the context of the difficult situation that we shall have to face from outside.

We are today faced with three serious disputes—in the coal mines, on the railways and from the electrical power engineers. I wish to deal in detail with each one of these in turn, but before I do so I must repeat what my right hon. Friend the Prime Minister said yesterday. The regrettable action that we have had to take to limit electricity supplies to industry is not directed at anyone on strike.

Mr. Neil McBride (Swansea, East)

On a point of order, Mr. Speaker. The right hon. Gentleman mentioned three disputes and then referred to people on strike.

Mr. Speaker

Order. That is a comment on what the Minister said. It is not a point of order.

Mr. Whitelaw

I said that these measures were not directed at anyone on strike. That is the technically correct phase, but if by any chance I suggested that there were people on strike in these current disputes I was wrong and I apologise to the hon. Gentleman and the House.

Nevertheless, it remains the fact that these measures are in no way directed at anyone in that sense. They are not, as the right hon. Member for Bristol, South-East (Mr. Benn) suggested, psychological warfare of any sort or kind. They are measures of common prudence. No Government can stand aside and take no action and allow stocks of coal and oil at the power stations to run down to danger levels. If they did, they would rightly be accused of a grave dereliction of duty.

Industrial action in the mines and on the railways has made these cuts inevitable. It is true that even if the industrial action were to stop, we should still face the economic problems resulting from an oil shortage and increased oil prices, but the three-day working and other restrictions would not be required.

It is fairly argued, "What are the Government doing on the other side of the coin? How are they trying to settle these disputes?" That is the task into which I have found myself thrown in at the deep end. [An HON. MEMBER: "Can the right hon. Gentleman swim?"]—I may cause a considerable tidal wave, but I can just swim.

To turn to more serious matters, our nation has never thrived on nor, indeed, relished confrontations of any sort. The vast majority of our people want only to get on with their jobs in peace, and rightly so. It is asked why these disputes have arisen. We must seek the answer against the background of what must surely be the twin objectives of any British Government, namely, the maintenance of full employment on one hand and, on the other, the vital need to control inflation.

The right hon. Gentleman was perfectly correct when he talked, perhaps in another context also, but certainly in this context, about the need to take action on inflation. In our present situation of an oil shortage and rising oil prices there is a danger that, as a nation, we shall stoke up inflation by continuing to pay ourselves more—sometimes substantially more—than we are earning. That state of affairs could make the situation all the more dangerous.

If we decided to take the easy course and pay ourselves as a nation what we do not earn, our prospects of continuing to make our living abroad would be poor indeed. The effects on output and employment at home would be serious, and it is against that background that I wish to look individually at the three particular disputes confronting us.

The first concerns the Electrical Power Engineers' Association. I do not wish to make any detailed statement at this stage—[HON. MEMBERS: "Why not?"]—I am about to explain exactly why not. As the House will be glad to know, delicate negotiations in search of a settlement are now in progress between the Electricity Council and the EPE.

Mr. Eric S. Heffer (Liverpool, Walton)

About time, too.

Mr. Whitelaw

Naturally, we must all hope that these negotiations will lead to a successful outcome.

I saw the EPE representatives on Monday. They explained to me the sense of grievance that they feel, but at the same time I found them a public-spirited and responsible body of men who wish to find a way out to a settlement. I am glad, as I should have thought the whole House would be, that in the negotiations they have responded as they have done.

Mr. Arthur Lewis (West Ham, North)

They should make the right hon. Gentleman Prime Minister.

Mr. Whitelaw

No one can be sure that these negotiations will succeed, but it is at least satisfactory to the House that the negotiations have started and it is to be hoped that they will produce a satisfactory result.

Mr. Harold Wilson (Huyton)

I am sure we all hope that these negotiations will be successful, but can the right hon. Gentleman say whether, if the report of the Pay Board on this anomaly in relation to other electrical engineers had been ready on time, it might have been possible to get negotiations going earlier and by now have arrived at a settlement? Is not the delay of a month serious in this context?

Mr. Whitelaw

I do not think so, but I accept that the right hon. Gentleman and I have the same interest, namely, that now that negotiations have started we wish them to come to a successful conclusion.

I now turn to the ASLEF dispute, which arises in different circumstances. It is not, as Mr. Buckton has made plain, a dispute about stage 3 at all. It arises from a series of complex negotiations on a pay restructuring involving all the railway unions and British Railways. Two of the unions, the NUR and the TSSA, are still in negotiation on the employers' proposal and only ASLEF has taken industrial action.

Attempts have now been made from three quarters to get this action stopped. The right hon. Gentleman the Leader of the Opposition appealed to ASLEF not to inconvenience the public during the Christmas period. I saw the ASLEF executive last week and told its members that, in my view, the right course was to refer their difference for arbitration by the Railway Staffs National Tribunal whose chairman, Dr. McCarthy, was recently appointed with their approval. This is the next step in the procedure to which they have long been a party.

Over the weekend the General Secretary of the TUC, Mr. Len Murray, intervened in this dispute, and I welcome his intervention. As I understand it, he was seeking to bring the parties together in informal discussions under Dr. McCarthy's chairmanship. In preliminary discussions, the Railway Board indicated its willingness to accept such a proposal, but made clear its position that, since the industrial action by ASLEF was in breach of the agreed procedure, that action should cease and normal working be resumed before such talks took place. As I understand it, that was the proposition which Mr. Murray put to the ASLEF executive. In the event, the executive refused to accept that its action should be called ofi before such discussions took place.

The right hon. Member for East Ham, North (Mr. Prentice) was reported in The Times on Monday as saying: I feel there is no justification at all for the action they are taking. They have arbitration machinery available to them under a new chairman, who was nominated by the unions, and if they have confidence in their case they ought to take it to arbitration. I share the right hon. Gentleman's view. I sincerely hope that the ASLEF executive, which explained its position plainly and reasonably when it came to see me, will review its position in the new circumstances, cease its action and return to put its case within the procedure available to it.

Mr. Reg Prentice (East Ham, North)

The right hon. Gentleman quoted my view, which I hold strongly. He will recall that in that article I gave some advice to him and his colleagues. I said that they would be in a better position to appeal to the unions for moderation if they did certain other things, such as repealed the Industrial Relations Act, imposed a stricter control on prices and froze all rent increases. Having quoted part of what I said in that article in The Times, I hope that the right hon. Gentleman will comment on some other parts of it.

Mr. Whitelaw

The right hon. Gentleman is very fair, and I take the point that he makes. I was not going to comment further on the points referred to by the right hon. Gentleman. I take the point made by the right hon. Gentleman, and I agree. I shall consider further what he said.

Mr. Sydney Bidwell (Southall)

As a former railway worker, I want to help the right hon. Gentleman. On the possibility of getting the Railway Staffs National Tribunal procedure under way, will the right hon. Gentleman bear in mind that, historically, all three railway unions have sometimes used that machinery, and at other times have not done so? Its use is not axiomatic. It depends upon the prevailing mood, and the thought that the dice may be loaded against them.

Mr. Whitelaw

I have occasionally heard right hon. and hon. Members say that they regretted having given way, but on this occasion I do not. I am grateful to the hon. Gentleman, with his considerable experience of the railway industry, for intervening. I am prepared to bear in mind what he said and to consider the point that he put to me.

It would not be my desire to deny any hon. Member a little pleasure at any time, but I think that I ought to remind the House that if I cannot proceed with some serious matters that I wish to put forward it will mean that I shall take longer with my speech than I should, and that will shut out others who wish to make a contribution to the debate.

I now turn to the miners' dispute. It is suggested by some that this dispute is due to a rigid attitude on the part of the Government in carrying out the counter-inflation policy approved by Parliament. That is simply not true. In the same way as all previous Governments have done, the present Government are standing up through this policy for the interests of the whole country against the evils of inflation. That has been the position of all Governments, including the Labour Government.

The right hon. Gentleman the Leader of the Opposition and others are now calling for more flexibility in dealing with the miners' wage claim. I think one has to ask oneself very carefully—as I know they do—exactly what they mean by that. Do they really suggest that it is possible or sensible for us to be planning to pay ourselves more at a time when, owing to the oil situation, we are bound to be earning less? That was the point made by the right hon. Member for Leeds, East. If they are not suggesting that—and I cannot believe that they are—then flexibility can only mean some groups of workers having more and others having to accept less.

No one can describe the present counter-inflation policy as rigid. Indeed, as my right hon. Friend the Prime Minister said yesterday, more than 2¾ million workers have already accepted arrangements under it. The policy has a considerable element of flexibility. Under it—and I believe quite properly—the miners are getting preferential treatment under the present proposals. Of course it is true that in the current energy situation we need miners. Of course it is true that they have a difficult and dangerous job which few of us in this House would like to do. Of course it is true that the miners are patriotic people who have served our country well in peace and war, and that has been recognised widely by my right hon. Friends. [Interruption.] My right hon. Friend does not need to hang his head.

I believe that the counter-inflation policy has recognised the country's need for more coal. That need has been recognised by the present Government ever since they came to office. It has to be remembered that during the decade of the 'sixties the level of miners' average earnings fell from 7 per cent. above the average in manufacturing industry at the beginning of the decade to 3 per cent. below at the end of it. Wilberforce restored their position in 1972, only for the inflationary settlements which followed in other industries to erode it again rapidly, until the standstill had to be introduced. The NCB's current offer would more than restore the Wilberforce position and that relativity would be underwritten by the Government's counter-inflation policy.

Let me repeat that the NCB's current offer amounts in total to £44 million, and that it represents an average increase of over 13 per cent. in miners' earnings, with the possibility of another 3½ per cent. through an efficiency payments scheme. It is this offer—one of the best ever made in the history of coalmining—which is at present being rejected by the mine-workers' union.

I have arranged to see the national officers of the NUM tomorrow to discover how they now view their position in the present circumstances. I know that this is a very difficult problem. We cannot expect a quick and easy solution. But we must all work for a settlement within the terms of the policy approved by Parliament. Such a solution must be found soon both in the national interest and in the interest of the long-term future of the coalmining industry, which the Government have already done so much by their investment policies to secure.

Several Hon. Members rose——

Mr. Whitelaw

I see that three hon. Members representing the mining industry have risen, but I can give way to only one of them. I give way to the one who rose first.

Mr. J. D. Concannon (Mansfield)

I am sorry to interrupt, but the right hon. Gentleman has spoken about relative wage rates in the mining industry and about the Wilberforce award bringing wages up to date. Last week the Chancellor of the Exchequer gave me a Written Answer about certain coal fields where the average wage of a face worker in 1957 was £18.87. He said that for that worker to have the same relative income last March his average wage would have had to be £54.99. Therefore, the Wilberforce award did not bring miners back to the 1957 level. The relative wage rates of all underground and surface workers between then and now has remained exactly the same. That was the answer from the Chancellor of the Exchequer. Therefore, either the workers were overpaid in 1957 or they are underpaid now.

Mr. Whitelaw

I should like to stick to the facts which I have given about the claim, which are perfectly correct and ought to be put on the record. The exact details are matters which can easily be discussed. I am looking at the overall position under the counter-inflation policy, which has been clearly stated and which can be justified as giving the miners a very preferential position compared with workers in other industries.

Several Hon. Members rose——

Mr. Whitelaw

I have already given way to one hon. Member representing the mining industry, and I shall not give way further.

If the present arrangements were to be further changed—because of the new energy situation and current shortages—to the miners' advantage, even more than under the current policies, let us be perfectly clear that other trade union leaders would have to underwrite that position. They would have to accept substantially less for their members. They would have to declare that they would accept leaving the miners as a special case compared with their own members, thereby making sure that the miners' relative position in the wage scale was effectively maintained. They would have to make it clear that in negotiations they would not seek to follow the miners' lead. We are all aware of the difficulties which would face any trade union leader in giving an assurance of that sort.

The Leader of the Opposition's first law of inflation was that one man's wage increase was another man's price increase. There is a second law, which applies all too frequently, that one man's wage increase is another man's wage claim.

I hope I have shown that Her Majesty's Government will continue to do everything in their power to solve these difficult industrial disputes within the confines of stage 3 of the counter-inflation policy, which is fair to the community as a whole. We in this House must never forget that we guard the interests of many people who have no organisation to speak for them. They, like all of us in all parts of our society, have a vested interest in defeating inflation.

That is what is at stake in the present crisis. In some quarters it has been suggested that the cost of settling the dispute on the terms demanded would be less than the cost of the emergency measures which we have been compelled to take. This is false arithmetic. The true balance is to be found in the cost to the country of an acceleration of inflationary wage demands across the board.

Those who advocate peace at any price, when faced with any difficulty, may buy a temporary respite from trouble, but they will have taken another step on the road to inflationary disaster and so to the undermining of our democratic society. Equally, those who thirst for confrontation and see the problems——

Mr. Alex Eadie (Midlothian)

Cut out the electioneering and solve the problem.

Mr. Whitelaw

—as an occasion for a battle within our society are surely not in tune with the real and abiding mood of our British people.

I have not always agreed with my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). But when yesterday he said "reconciliation there must be be" he was surely right. Indeed, as my right hon. Friend the Prime Minister said yesterday, our actions as a Government speak far louder than all the words of the Labour Party.

Mr. Harold Wilson

While the right hon. Gentleman is busy agreeing with his right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), how does he reconcile what his right hon. Friend said with the reported statement of the Lord President to a Tory audience that "We are engaged in a struggle with the miners and the engine drivers"?

Mr. Whitelaw

I still maintain that it was a perfectly fair point which my right hon. Friend the Lord President was making. No one is seeking a confrontation. The confrontation to which my right hon. Friend was referring was certainly none of his, or this Government's, seeking in any way. It is to turn history and facts on their head for the right hon. Gentleman to pretend that it is.

Mrs. Renée Short (Wolverhampton, North-East)

What about the cost of living?

Mr. Whitelaw

With regard to reconciliation, as my right hon. Friend the Prime Minister said yesterday in the last 18 months he and my right hon. Friends concerned have had the most intensive and detailed discussions with the CBI and the TUC that any Government have ever had. That is a basis on which we should stand. Many of the policies put forward have been pursued, and can be seen to have been pursued, as my right hon. Friend pointed out yesterday.

Nor can anyone deny that the measures taken by my right hon. Friend the Chancellor of the Exchequer are designed in the same way. There has been action against property speculators. It is considerable action. There has been action through the 10 per cent. surcharge to ensure that the richest in our society bear their share of the burden at a time of national crisis. [Interruption.] The Opposition shout and bellow and make a lot of noise because they do not like these facts, because they know they are true.

There has been no imposition of indirect taxation which would put up prices. There has been no increase in direct taxation on the lower and middle-income groups.

In the last fortnight many of these policies have been urged on me by various trade union leaders, and I can point to the fact that many of the points have been met. Of course, it will be said "Oh yes, but others have not". Such is life. The Opposition will say that the measures do not go far enough. They do not want to see us have reconciliation. They want—[Interruption.] The longer I seek to show that a policy of reconciliation is right, and the more the Opposition shout and laugh, the more I know that it is what they do not want.

Mr. Denis Howell (Birmingham, Small Heath) rose——

Mr. Whitelaw

I am sorry, but I will not give way. I am just coming to the end of my speech.

I can only say that I do believe in reconciliation, as do my right hon. and hon. Friends. I do not believe in confrontations, and nor do my hon. and right hon. Friends. Our position on that is clear

What we have done, and the proposals we have put forward, certainly justify a helpful response from our trade union leaders. No one would deny that we face grave difficulties. Both in this country and throughout the world, democracy is threatened in various ways. We in Britain can meet the threat from outside and overcome it, if we can show again those qualities of patience and determination which arc, fortunately, part of our national heritage. I have sufficient faith in our country to believe that we shall.

4.42 p.m.

Mr. David Marquand (Ashfield)

The House has rarely been presented with a more remarkable change of front, in presentation and style, if not in content, than the difference between what we heard yesterday from the Prime Minister and what we have just heard from the Secretary of State for Employment. I hope that the right hon. Gentleman will not think me impertinent if I say that I hope he will bear in mind the advice given to Winston Churchill by Lloyd George in the 1940 debate on the Norwegian disaster, when Winston Churchill stood at the Dispatch Box defending the policies of the Chamberlain Government. Lloyd George warned him not to allow himself to be used as an air raid shelter to protect his right hon. Friend. I would say the same to the right hon. Gentleman. I think that he may become an asset to this country in due course if he does not indulge in too much protection of that kind.

The House agrees that we face perhaps the gravest emergency the country has ever faced in peacetime. In normal circumstances, the whole House would accept what the right hon. Gentleman said at the beginning of his speech, that a Government facing a national emergency of this sort are entitled to ask the whole nation to rally behind them, and to ask for a cessation of partisan squabbling. The trouble is that the approach taken by the Secretary of State is not that taken by the Chancellor of the Exchequer. We are unfortunately debating the proposals put to the House by the Chancellor, which violate what the Secretary of State said at the beginning of his speech.

If a Government expect the nation to rally behind them in facing a national emergency, the Government are under an obligation to approach that emergency with candour, to explain to the people exactly what the emergency is and why it came about, and to put forward policies that are likely to deal with the emergency in a way which will unite the country.

In the Chancellor's statement on Monday there was no approach of that kind. There was a total absence of candour. The Chancellor pretended then that the crisis with which his measures were designed to deal had been caused solely by the industrial action of the miners, the train drivers and the power engineers. The House knows that that cannot be so. The Chancellor said that it was necessary to deflate home demand by the amount in question because of the three-day working that would take place in the new year. That three-day working will last either for a long time or for a short time. If it lasts for a long time, the amount of deflation caused in the economy by the three-day working itself will be so much in excess of anything this country has ever experienced before that to say that it is necessary to deflate demand by an additional £1,200 million is like trying to apply leeches to a corpse. If the three-day working lasts for only a short time, as the Government presumably hope, the public expenditure cuts will not start to come into effect until the three-day working is already over.

We all know the truth. The right hon. Member for Taunton (Mr. du Cann) let the cat out of the bag yesterday, as he often does in our debates, when he said that the country was already facing a severe and deteriorating balance of payments situation, and that the measures announced by the Chancellor on Monday would have had to be announced in any event, whether or not there had been a war in the Middle East and whether or not there had been any overtime ban by the miners. We all know that that is true.

If the Government expect the nation to rally behind them in the present emergency, the least they can do is to tell the people that truth. The fact is that the Chancellor's policies were in ruins long before the war in the Middle East started, and he has found a way out by being able to blame industrial action for his troubles. No doubt he is thanking his lucky stars he was able to do so.

Why was the balance-of-payments situation deteriorating? Part of the reason was the explosion in world commodity prices. I entirely accept, and no one on this side of the House has ever challenged, that that is not a matter in the control of any British Government. But that was not the entire reason for the balance of payments deterioration. In addition, there was the dogmatic, obstinate refusal of the Chancellor to jeopardise his personal popularity in the Tory Party by increasing taxation when the downward float of the pound made it necessary to divert resources into exports.

The Chancellor won great applause from the Conservative benches by his tax cuts in 1971 and 1972. As a result of those tax cuts, he produced a consumption-led boom of unpredecented proportions. Then he was forced to allow the pound to float downward. It floated downward so far that we also had a devaluation of unprecedented proportions. In other words, on top of the consumption-led boom which the Chancellor had created through his tax cuts we had an export-led boom struggling to be born as a result of the devaluation of the pound. The two together were more than we could cope with.

Therefore, the balance of payments was bound to deteriorate, and sooner or later some measures would have been necessary to disinflate the home economy. We all know that that is true, and it is about time the Chancellor faced up to it and admitted it.

But my accusation against the Chancellor goes deeper than that. Having now, at last, admitted—if not explicitly, at least implicitly—that there is a balance of payments crisis and a need to disinflate home demand, what does he do? He still obstinately refuses to jeopardise his personal popularity in the Tory Party, and instead deals with the domestic situation in the most wasteful, regressive, inefficient and divisive manner that he could have chosen by putting the brunt of the cuts on the public services of our people.

I am not saying that every item in the public expenditure programmes is sacrosanct. I do not say that there should be no cuts whatever in public expenditure. On the contrary, it could be argued that, in present circumstances, the right hon. Gentleman should have cut more than he has cut from the road programme. It is ludicrous to be spending as much as we are at present on road building when no one can tell what the relative economics of road and rail transport will be in five years' time.

But the right hon. Gentleman did not make any attempt at selectivity in his cuts. He has applied a crude cut across the board on every programme in the public sector. He pretended that it was necessary to impose cuts on the public sector because the private individual would already be hit hard as a result of the economic situation in general—as though, in some extraordinary way, cuts in the public sector do not affect private individuals whereas tax increases do. This is nonsense. Cuts in public expenditure affect private individuals as much at tax increases do. The only difference is that cuts in public expenditure will affect my constituents, whereas increases in tax will affect the constituents of the hon. Member for Cities of London and Westminster (Mr. Tugendhat) more than mine.

Mr. Christopher Tugendhat (Cities of London and Westminster)

It is kind of the hon. Gentleman to give way, even with that crack. It is fair to point out, in view of what he said about public expenditure, that the Chancellor said that there would be a variety of exceptions—for example, in investment in the energy industries and public sector house building. It is hardly fair of the hon. Gentleman to say that the cuts are being placed equally across the board.

Mr. Marquand

The Chancellor made some absolute exceptions, but apart from that he was totally unselective and had no priorities whatever. The fact of the matter is that public expenditure programmes have increased under every Government, even this one, because, in the society in which we live, demographic changes alone make it necessary for public expenditure to increase even if the existing inadequate standards are to be maintained. If constituencies such as mine and many others represented by my right hon. and hon. Friends are to be brought up to the standard considered minimally satisfactory by the country at large, public expenditure programmes have to increase even more rapidly than they would otherwise have to do.

In a village in my constituency, every time there is heavy flooding the sewage pours out into the living rooms of the people, so overloaded is the sewerage system. It is not the fault of the present local authority. It is a result of long decades of inadequate social investment in that area. What the Chancellor said in effect on Monday is that it is more important to give incentives to higher-paid taxpayers than to provide an adequate sewerage system for Annesley village in my constituency.

Mr. Hugh Dykes (Harrow, East) rose——

Mr. Marquand

I would rather not give way again. Time is pressing, and many hon. Members wish to speak.

There is a more fundamental reason why I regard the measures announced by the Chancellor, the Chancellor's statement and the Prime Minister's speech yesterday as falling far short of what the circumstances require. I believe that the crises we are facing—the fuel shortage, the industrial relations crisis, the energy crisis in the Middle East—are all symptoms of a much more fundamental crisis which is going to affect our society with increasing urgency in the years ahead.

Since the early 1950s, this society, in common with every other society in the industrial world, has been functioning on the assumption that each one of us can enjoy every year, both individually and collectively, a steadily increasing standard of living, and that economic growth will continue indefinitely and inevitably into the distant future with no limit. The argument between us both across the Floor of the House and within the two parties has been about how fast economic growth should be and what the techniques should be, not about its desirability or possibility.

The energy crisis has shown that it is now time for all of us to recognise that this bonanza has ended. The party is over. Santa Claus does not exist. We are moving into a cold climate in the world as a whole. Automatic economic growth into the indefinite future is no longer possible as a goal of social policy. We are going to have to face, in a much harsher way than any of us wanted to do, the problem of how we redistribute income against a static or very nearly static economic situation. It is going to be enormously more difficult than to redistribute income against a background of expansion. Nevertheless, it is what we are going to have to do, whether we like it or not, because we live in a finite world of finite resources.

All this will present a challenge to our democratic institutions of a gravity which they have never faced before in our history. Somehow or other, we are going to have to devise institutions by which society can decide as a whole which groups should have priority and which groups should take a lower place in the queue. It is going to have to be done against a static background, and it will be enormously difficult. It can be done only by consensus, compromise, conciliation, discussion and democracy. If it is not done in that way, the alternative is some form or other of authoritarianism, whether of the Left or of the Right.

I believe that the challenge to us democratic Socialists and also to the Conservatives is to devise new institutions by which it can be done democratically and by consensus. My real charge, not so much against the Secretary of State for Employment as against the Prime Minister and the Chancellor of the Exchequer, is that by their dogmatic approach, by their whipping up of an atmosphere of class war and of group against group and nation against group in our society, they have made that task immeasurably more difficult than it would otherwise have been.

5.0 p.m.

Sir John Hall (Wycombe)

Apart from the closing words, I find myself in some sympathy with the latter part of the speech made by the hon. Member for Ashfield (Mr. Marquand). He is absolutely right to draw to our attention the problems that will face us in the not-too-distant future, although I am a little more optimistic than he is as to our ability to overcome them. The hon. Member for Ashfield began his speech with a quotation from Lloyd George. Perhaps the House will forgive me if I refer to another saying which emanated from Lloyd George. He once said that war was too serious to be left to generals. It could be said, with equal truth, that the economy is too serious to be left to party politicians.

When under stress we all tend to take refuge in political catch phrases, slogans and name calling. We tend too often to be concerned with party warfare and to ignore the danger that threatens us all and will engulf the nation unless we are prepared to turn together and face it. Encouraged by the example of my right hon. Friend the Secretary of State for Employment, I intend to exercise the old Adam and make as constructive and non-party a political speech as my limited abilities allow. I hope that the House will bear with me and not intervene too much.

First, the energy crisis. It is not a matter for disagreement that the oil-producing countries are entitled to husband their resources and to charge the rest of the world whatever the market will bear. We might think that they could have done it with greater consideration for the effects of their actions on the oil-consuming countries, but all advanced industrial countries should have been aware of the possible danger. Indeed, the countries were aware of the danger in an academic way but they have been deluded by the wishful thought that other sources of fuel and energy supply would become available before the blow fell. The oil-consuming countries miscalculated in that.

Nevertheless, although we are likely to suffer some hardship and difficulty in the short term—by which I mean over several years—I am inclined, in my perhaps perverse and rather masochistic way, to welcome the reduction in oil supplies. It will, I hope, hasten the development of a wide-ranging energy policy concerned not only with the exploitation of our indigenous fuels and the more dynamic development of nuclear power but with other sources of energy provided by the sun, the sea, various forms of water power, the use of waste materials and in many other ways.

The reduction in oil supplies will, I hope, encourage the development of public transport to a point when the commuter will be happy to leave his car at home, a concept that is dear to the heart of my fellow members of the committee, of which I was chairman, which produced the report on urban transport. It may also encourage the development of fuels which do not pollute the air, so that we are not forced in future to do what people walking on the streets in Tokyo have to do on certain days, that is, to wear a face mask.

All this will happen only if the oil shortage is with us for some time. Because of the effect on our balance of payments, the increase in price is much more serious for us than is the cut in supplies. This will ensure that we economise considerably in the use of oil for some time to come, until we and the rest of the world have managed to adjust ourselves to the increased prices which by then will have worked through into the cost of goods and services. In the meantime, we are presented with a splendid opportunity, if we will take it, of pursuing a dynamic energy policy which deserves the full-time attention of a Minister.

I am, therefore, not too depressed about the oil situation, but I am alarmed about the effect of the combination of oil shortage and industrial action, not so much because of the damage it can and undoubtedly will do to our economy, serious as that is, as because it is a further and particularly sharp example of the sickness that afflicts our society.

There is an old saying that those whom the gods would destroy they first make mad. Any celestial visitor to these islands at present would conclude from our genius for self-inflicted wounds that the attempt to destroy our sanity had been only too successful. The immediate consequence of our form of insanity is the introduction of fuel rationing, with all it implies, including the disruptive effect of three-day working—let no one make a mistake about the damaging effect that will have—and the measures announced by the Chancellor of the Exchequer on Monday.

Remembering that earlier barbers were also surgeons, it is perhaps appropriate that the Chancellor should engage in this blood-letting operation to bring down the temperature of a patient suffering from over-heating. It is becoming the "in" thing to talk about the over-heated economy, and I do not dissent from the diagnosis. Nevertheless, I have a shrewd suspicion that two of the reasons for overheating are, first, that there is a degree of over-employment from top to bottom throughout industry—by which I mean that we could all work more effectively, without having to work harder, and be a great deal more productive—and secondly, that we are suffering from a comparative immobility of labour, which means that we have large pockets of unemployment in some areas and a number of unfilled vacancies in, for example, the South-East.

It would be wrong to say that I welcome the Chancellor's statement. Indeed, as a surtax payer facing the payment of two amounts of surtax next year plus the 10 per cent. levy, "welcome" is perhaps not the most appropriate word to choose. The levy can make little practical contribution towards the cure of our economic ills, but if it can make even a marginal pysychological contribution it must be accepted.

The Chancellor has been criticised in the House and the Press for not doing enough, but I do not agree with that. The real danger at the moment is that we, together with other countries that are similarly affected, are likely to take too drastic action and thus produce a world depression, the result of which could be very serious in the long term. For that reason, we should not be tempted to introduce excessive deflationary measures, and I believe that the Chancellor is right in leaving his options open, provided that he is quick to act, as he says he will, should it become necessary either further to depress or to stimulate the economy.

I turn now to the long term and the more serious problems which will confront us even when we have solved our present fuel problem. My distinguished late constituent Benjamin Disraeli once referred to two nations, and his warning is as apposite now as it was then. If we are to solve the many serious problems that will confront the world during the next half century, including shortages of basic raw materials, to which the right hon. Member for Leeds, East (Mr. Healey) referred, it is essential that all sections of society, particularly management and men in industry, should reexamine their attitudes towards each other.

The industrial scene is complicated by the fact that the issues involved are political as well as industrial. There are elements that wish to overthrow the existing society which, despite all its faults, has the support of the overwhelming majority. This tends to make the rational settlement of differences rather more difficult than it would otherwise be. However, this small minority would have little influence if there were not genuine grievances and genuine misunderstandings within industry of which the minority never fail to take full advantage. There is very much to admire in British industry. There is also much that needs to be put right, particularly in the pay structure, with which I include pensions and other benefits.

Phases 1, 2 and 3 were introduced because it was believed that we could not accept inflation generated in part by large annual wage increases running well ahead of any increase in productivity. Certainly the effect of unrestricted wage and salary increases added to all the other inflationary factors would make life intolerable for those who could not increase their incomes. I need not mention the various sections of the community who are affected in that way.

Personally I was and remain opposed to statutory prices and incomes policies, and I have said so in the House. I have supported reluctantly the various phases as a temporary expedient until more lasting solutions could be found. I was and remain unhappy about stage 3 because, if we are to exercise control of prices and incomes against the present background situation, stage 3 is too flexible rather than too rigid.

Without going into the problems facing a democratic government endeavouring to impose a policy which by its very nature is bound to be unacceptable to some of those whose co-operation is essential, I believe it is clear that we shall not find long-term solutions to our economic and social problems without all of us drastically rethinking our attitude both to these problems and to each other.

Economic debates too often are concerned only with statistics and economic theories. They should be about people—about the kind of life we want for ourselves and are able to offer to those who follow us and about how to make the best use of our diverse talents and our industrial resources to achieve the aims we set ourselves. It would be easy for me to concentrate on fiscal or monetary solutions, but these and other techniques of economic management are useless unless we get the human relations right. I make no excuse for concentrating on the human rather than the technical side of our economic problem.

One of these problems is the chaotic wage structure that exists both within certain industries and between industries. There are large differences in reward which bear no relation to the work or contribution of the individual but which result from historical accident or particularly powerful union pressure. There are wage differences which reflect status and which the workers concerned endeavour to maintain regardless of economic need. There are differences so difficult to understand that they are themselves a ready source of industrial trouble. There is sometimes failure to recognise that the economic or social value of a particular industry has changed and that reward in that industry should be moved up or down. In private enterprise, market forces tend to produce the necessary change, although not always, but in nationalised industries—subject to interference by all Governments—adjustment is often more difficult, as we have found in recent months.

There should be a national review of wages carried out by the trade unions, the CBI and management organisations, with the Government represented, in an endeavour to bring about greater order in our national wage structure. With the developing techniques of job evaluation and other management tools, including the computer, this should be a possible if formidable task. If as a result it were possible to agree a wage system throughout the country that was accepted as fair as between one person and another, it would do much to remove the cause of industrial unrest.

It will be argued that any form of national incomes policy is impossible, that every trade union and industry would endeavour to make the adjustments considered most favourable to itself, without regard for the national picture. This is a real objection, and this is why earlier I said that we shall need to change our attitudes to each other if we are to find a lasting solution.

The alternatives are not encouraging. They are to yield to unrestricted and unrestrained demands for high—and, in the economic sense, unjustified—demands, leap-frogging each other, which in the end are self-defeating and destructive, or to move towards a more authoritarian control over the economy. Experience in other countries does not suggest that this type of authoritarian control is desirable or that it produces the desired result.

Surely there are enough resources of common sense and good will in the community as a whole to enable us to examine the wage and price structures of key industries, taking into account the interests of those industries and of the nation as a whole. We should seek to bring into the open all the old forms of defensive restrictive practices, all the myths, traditions and habits of thought which have accumulated over the years, to see whether we can arrive at a modus vivendi between us which will make industrial relations so much easier. I hope that the National Union of Mine-workers will take part in such an exercise and, in the meantime, will suspend its present action.

I conclude on a note that is perhaps appropriate to the season of the year. In the Middle East nearly 2,000 years ago was born a man whose birthday we celebrate this month and whose teaching and example have had a profound effect on our thinking and our way of life. Today, when our objects of worship are the growth of the national product, higher productivity and what is described as the good life, whatever those words mean, the word that comes out of the Middle East is not the word of comfort or of peace but a word which could equally influence our thinking and our way of life. The action of the oil-producing countries, coincidental with the action of the trade union leaders, is forcing us to stand back and to ask ourselves where we are going and why. If we respond to the challenge, as I am sure we can, then whatever the short-term discomforts and difficulties we can look forward to the growth of a happier, more responsible and more stable society. This is surely what we all desire.

5.17 p.m.

Mr. Roy Mason (Barnsley)

I rise in this unaccustomed position on the back benches to address the House as a miners' MP. I listened with interest to the speech of the hon. Member for Wycombe (Sir John Hall). His speech was like the curate's egg—some parts good and some parts bad.

I applaud what he said about relativity in wages, and indeed the Pay Board is undertaking a study of that nature. Let us hope that something good comes out of it. It will take a long time, but we shall have to face the fact that we must pay the right wage to the person who gives of his best and who serves the nation to the full.

Secondly, I support the hon. Gentleman in his remarks about an energy supremo. There must come a time when the Government—and this will apply when a Labour Government takes office—will appoint a person of Cabinet status to examine questions of North Sea gas and oil, the coal industry, the resources of the Irish Sea, the Celtic Sea, and so on. Such a person will be able to deal with fuel resources as a whole.

I am sorry that the Secretary of State for Employment is leaving the Chamber because I wanted to make some comments about his speech. I am a little depressed today because I have a cold, but I am even more depressed having heard the right hon. Gentleman's speech. The right hon. Gentleman spoke as though he was fastened rigidly in the straitjacket of phase 3 as enunciated by the Prime Minister. Secondly, he made the same mistake as the ministerial spiv who heads the Department of Trade and Industry and who last Monday had to withdraw a remark when telling the miners to get back to work. Last night he used the word "strike" again and he withdrew it. Then the Secretary of State for Employment used the same word today. This is the sort of mentality that per meates the Cabinet and indeed the thinking of many Tories. Until we get rid of that attitude, we shall not reach the conciliatory tone which we require to solve the problems of the miners.

Mr. W. R. Rees-Davies (Isle of Thanet)

Can the right hon. Gentleman explain why a farm worker would not be prepared to leave his animals to starve over a weekend to maintain the farm, whereas a miner can take the view that he will not maintain his pit equipment over the weekend? Is not that attitude very much worse than a strike, since the inability to maintain equipment in working order may affect the miners' livelihood? Is it not worse than a strike to take pay in those circumstances? Surely this question must be answered by somebody of the right hon. Gentleman's experience.

Mr. Mason

It is a ridiculous analogy to compare life and death with a piece of working equipment. Furthermore, during the course of the five-day week that they work, the miners maintain the machinery. It is not their fault if the maintenance still requires to be done at weekends. They are still working a full five-day week, and they are managing to keep up output and to maintain machinery as well.

I want first to address the House on the oil scene. I do not think that there will be a quick political settlement between the Israelis and the Arab bloc in order that we might get the oil flow back to what it was prior to the Middle East war. I do not see any political agreement. But anyone who knows these war-torn areas and how strongly the Israelis feel about them also knows that if they resist giving them back the Arabs will continue the shortfall and the escalation in price, with all that that will mean in adverse effects on our balance of payments.

The even-handed policy of the Government has had no effect, and it will have no effect in the years to come. It is possible that gradually we might be able to get out of our present energy-starved situation. The United States can quickly come to live with it. They have vast domestic coal and oil reserves. They have oil-bearing shale. They can cut back on domestic consumption and live within their means. The Japanese are in a very different situation. They are dependent almost completely for their economic growth on the import of vast quantities of oil and therefore they will be frantically fighting to get the largest possible share of Middle East oil irrespective of the type of pact that they make with the Arabs to do so.

In spite of the even-handed policy of the Foreign Office, the United Kingdom Government, too, are sending their cohorts to the shahs and sheikhs of the Middle East in order to grab what they can. The European Economic Community States, because their own selfishness outweighs the Community spirit, are so far unable to come to any agreement on an energy policy.

All these energy-greedy nations will now be scrapping for their share of the oil which is to flow while, over the next decade, they hurriedly search for and invest in alternatives.

The threat of increased oil prices began long before the Middle East war. The Arab producing countries which dominated the world's oil supplies foresaw the threat of technological change which would challenge their dominance. That technological change was the ability to design, build and launch these treat oil drilling rigs which were capable of combating the turbulent seas for the exploration and exploitation of oil. As soon as that happened, vast areas of the world opened up for the first time and the dominance of the Arab producers was bound to decrease, probably in a decade. So they began nationalising. They started banding together to bring the oil companies to heel, and they started increasing prices.

These factors mean that the United Kingdom will never again return to its previous position of having a glut of imported cheap oil. Those days are gone. We are at the end of an era, and (his nation, like others, has to live with that fact.

We have about a decade in which we can grow out of this energy-starved situation. During that time much will depend on the coal industry and the miners.

I ask what we can do about it. We have heard no programme from the Government. We have had numerous de bates on fuel and power and energy, but the Government have not yet a programme.

I suggest, first, that we ought to look seriously at the production of oil from coal. This country has done some research into this, as have the United States and Germany. We know that we can get 3½ barrels of oil from every tons of coal. We know that we can get 3.5 million barrels of oil per year from one major mine. In the past, because of the price of oil, we thought that it was economically unreasonable to go ahead with an oil-from-coal processing plant. With the escalating cost of oil. it is now economically feasible.

Therefore I suggest that the Government should look at the research and development stages which have been reached in Germany, the United States and here at home, and that they should find out whether they are at a higher technological level than we are. If necessary, they should buy in and be ready to go ahead with a prototype oil-from-coal processing plant. If such plants could be built alongside our major mines we would have an added dimension to our fuel and power resources, and there is no reason why that should not be done now.

Sir John Hall

Will the right hon. Gentleman add South Africa to that list, which is the most advanced country in the world in this respect?

Mr. Mason

We have carried out a great deal of research, but I do not know the extent to which the Government are giving it the impetus and urgency that is required.

Secondly, I remind the House that we have done the major research into the fluidised-bed technique of power generation. We had experiments at Leather-head run by the National Coal Board. However, because of the lack of funds, we embarked upon a joint venture with the United States. I suggest that we ought also to urge on research and development into the fluidised-bed technique.

Many hon. Members may not be aware of what I am talking about. It is a method of using powdered coal in a floating bed within a power station. The cost of generation is much cheaper than in a conventional power station. There is higher efficiency from the plant. Environmentally it is the cleanest of all stations. That is why the United States came in on the joint venture. Above all, it uses powdered coal, and that is precisely what we produce from our highly mechanised mines.

Thirdly, I suggest that we ought to stop procrastinating about our future nuclear programme. We led the world with our Magnox reactors. We have supplied more energy to the national grid from our nuclear power stations than the rest of the world put together, including the United States. Then we embarked upon our advanced gas-cooled reactors, the next generation, and this is where there is concern. But it is for the Government now to apply more expertise, designers and engineers to overcome the troubles which are causing them to be built late. There is bound to be another energy gap in 1979–1980 if they are not built on time.

In my view we should not buy the American light-water reactors. The hon. Member for Abingdon (Mr. Neave) spelt this out yesterday. It would be a shattering blow to our nuclear power industry. We should find ourselves fastened to American technology for a generation ahead, and at any time they could hold the nation to ransom over the supply of necessary equipment, spare parts and know how in respect of light-water reactors. In my view we must press ahead with the advanced gas-cooled reactors and get them built quicker than the present time scale.

Fourthly, we must quickly develop the Irish and Celtic Sea resources. It has staggered the nation that we have been able to find untold wealth already in the North Sea in terms of gas and oil, and undoubtedly there is a lot more to come. I know from my own ministerial experience that we were rather more excited about what the Irish and Celtic Seas could give up. There is much wealth there and there is no reason why we should not begin exploration and exploitation in those seas.

Given developments such as these, within 10 years all the methods of fuel and power resources could be feeding the nation and there could be more than enough for our own requirements.

What of the interim period, given the shortfall of oil and its increased price? We all know that only coal can fill the gap. But the problem in the coal industry is the drain of manpower and the lack of recruitment. According to the National Coal Board, it is estimated that by 1985 the industry will need 178,000 men to mine the coal in the tonnages that we shall require by that time. The National Coal Board has just released figures showing that only 122,000 will be available by that time, and we are already facing a shortfall of 56,000 men.

Prior to the overtime ban, men were drifting away from the mines at the rate of 550 per week. The rate is now 800 per week. Taking into consideration recruitment, as some men are coming back to the pits, we are still losing men at an annual rate of 15,000 in addition to the shortfall of 56,000 which I mentioned earlier. That is the seriousness of the manpower situation.

I wonder whether the House appreciates that so far this year coal production is down by 2 million tons compared with a similar period last year. Why? Because the coal industry is beginning to eat its own seed corn. We are so short of men that development work necessary to drive roads and prepare new coal faces is being left in order that men can be put on production to get the tonnages that we require. But in recent weeks mechanised coalface mining, which operates on a 24-hour three-shift system, has had to stop operating one shift, stop coal turning, and put men back on to development because it is lagging behind. So coalfield activity is slowing down.

Because of the overtime ban the NCB is now losing 750,000 tons of coal production per week. It is incurring heavy losses. It will break through its statutory deficit quite soon and will have to ask for further borrowing powers because it is losing at least £5 million per week.

Stocks of coal in this country will soon be critically low. The national executive of the NUM met on 13th December and it is due to meet again on 10th January—a four weeks' gap. In that time we shall have only 12 days' production of coal, and they will not be full days because some will be Mondays when coal cannot be turned as the faces will not be ready.

If the overtime ban continues, without the Government acting, by mid-February we shall have the gravest industrial crisis of all time. Power station coal is running out. There will be only a trickle from the mines. Most industry will have stopped as there will be no power available. Millions will be laid off. Industry in general will be paralysed. The national grid will be operating at between 20 per cent. and 30 per cent. of its full capacity. The nation would be blacked out There would be millions of depressed people. The economy would be in ruins and industry would be flat on its back. It would take years to recover. It is frightening to think of the hundreds of small firms which may face bankruptcy.

Should this happen? What are the obstacles? The first is the dogmatism and stubbornness of the Prime Minister who is boxing himself in every time he opens his mouth. The second is the refusal by the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Employment to talk to the miners and to be prepared to pay the rate for the job. It will be a small price to pay when we think of the millions of pounds that will soon be lost and the general depression that will occur.

Stage 3 is already shattered. The circumstances in which it was conceived have vastly changed. The economic strategy of the Government is already in ruins. So I ask, why force upon our people unprecedented industrial strife if it can be averted? Why stick doggedly and rigidly to an out-dated philosophy, laudable as it was to try, when external forces alone have shattered the Prime Minister's dreams? We know that he is fighting for his political life and that back-bench Tory MPs have said, "Give in to the miners and you are politically dead." We are witnessing the Prime Minister struggling to save his political neck whilst all around him the nation despairs and we rapidly sink into a quagmire of industrial and economic depression from which it will take years to recover.

At this stage we need a conciliator, not a bully.

Mr. Patrick Cormack (Cannock)

Will the right hon. Gentleman give way?

Mr. Mason

The Prime Minister must allow latitude to the Secretary of State for Employment. He must not keep boxing himself in and commit his chosen conciliator for the job.

Mr. Cormack

Is the right hon. Gentleman conciliating?

Mr. Mason

Can it be done? I believe that it can be done. There are numerous ways in which it can be done. First—every day that goes by will make the situation more difficult—I suggest that the conciliator should meet the union and the National Coal Board and consider what latitude there is for rejigging the award so that those who are paid increases of between £8 and £9 on the unsocial hours aspect for night-shift working may forgo 22p per night shift or £1.10 per week of their total increase to the lower paid. That is one possibility. But as each day passes and as every miner realises what his take will be, and as attitudes harden, a settlement will be more difficult. The Government have stood back for so long that it will be difficult for the NUM to accept such a settlement.

Secondly, the Prime Minister in his haste—because he wants a confrontation—refused the clocking-on suggestion. With more mines closing miners have to travel many miles from their mining villages to the nearest available mines. The mines are not located within or near their villages now. Miners are having to get up at 4.15 in the morning, start an hour's journey at about 4.30, and get to the pithead at about 5.30. They have then to be prepared for work. They have to put on their safety clothing, boots, tin hats, cap lamps and other safety equipment and be prepared to descend the mine, for which they do not receive a penny. Factory workers get paid from the moment they clock on and start to put on their safety clothing. The Government should think seriously about that possibility.

Thirdly, why not use the European Coal and Steel Community funds? Our coal and steel industries are members of the ECSC. Before the end of this month the Treasury will have to make its first contribution of £7.9 million to the budget of the ECSC and that has to be made up to £25 million within three years. The German and French coal industries have received millions of dollars from that budget over the past year for resettlement and retraining of coalminers. We do not have that problem. Our problem is recruitment and the stabilisation of personnel.

Why cannot the Department of Trade and Industry, which is preparing its bid now, which must be in before 31st December, claw back part of the funds which have jointly gone into the ECSC budget? I understand that it is proposing to claw back money for research purposes and for the education of the sons and daughters of miners who have been killed in the pits. Why not consider clawing back some of that money for recruitment and the stabilisation of personnel, thereby using that money for the coal industry? The attraction of the idea is that only one other industry can follow suit—the steel industry—but it has no claim pending and no other union can make a similar claim. It would not open the floodgates.

Fourthly, there is the 3½ per cent. productivity deal in the offing, but not in the take. The miners have been offered a total of 13 per cent. on their basic pay, with fringe benefits. The 3½ per cent. is for productivity. The NUM and the NCB have been trying to negotiate a productivity deal for 20 months. Wilberforce recommended it. They have 20 months in the bag already. Therefore, why should not the conciliator "ask the board and the union to agree on productivity and bring some of that 3½ per cent. forward from the offing into the take? That would increase the basic wage.

Finally, irrespective of those four ideas, the Government will have to set up a coal commission for the good of the nation and the industry, because we cannot allow this drainage of manpower and lack of recruitment to continue. We must have the coal and the manpower. A coal commission will have to be established with terms of reference that allow recommendations to be made on how best to halt the drain and to recruit. It will obviously involve recommendations on pay and other incentives in order that we can get the men for the coal that we require.

Therefore, we are thinking about a package, about items 1, 2 and 3. There is no reason why the new Secretary of State should not be able to find an answer. If he negotiates, if he is a real conciliator and is given latitude by the Prime Minister, there is no reason why he should not be able to find a solution.

Finally, I introduce a personal note. I went underground at 14 years of age. I worked for 14 years in the pits. I was carried out three times. I have seen men killed by my side. My father, a miner, was crippled for life. My mother died at the age of 46 after nursing him back to health. There was no National Health Service then. So I have awful memories of the coal mining industry.

I estimate that I spent four years of my life underground; four years of loss of fresh air and the sky and the beauties of the earth. Men who are retiring today at the age of 65, who went underground at 14, have lost 12 years of their lives in the bowels of the earth. That is why at the age of 65 they look so much older. That is why they rarely live long to enjoy their retirement.

Last year 64 men died in the pits, 454 were seriously maimed, and 58,000 received injuries necessitating more than three days off work. Another 626 men contracted that dreaded dust disease, pneumoconiosis. That is one year's toll of death and injuries in the coal mines. This year we have had three disasters, Lofthouse, Seafield and Markham Main. Thirty men were killed in three mining accidents.

The miners are paying their price for coal with their lives. What do we as a nation propose to pay them in the up-to-date revised offer? For a man who is married, with two children, going down a mine on five days a week, for 7. hours a day, the offer is £29.80. It is not the starting rate for a learner guard on the London tube trains. For the man who braves the coal face, who is skilled, operating power-loading machines, which is a highly dangerous occupation, in dust-ridden seams, we are offering less than £40 a week—£39.60. We are giving him a straight 7 per cent. increase. That is why the men are leaving the pits. That is why we cannot recruit them.

When I was Minister of Power I had the unpleasant job of shunting out of the Coal Division a civil servant who dealt with miners as if they were units. He acted like a computer-minded statistician. I wanted at the head of the Coal Division a man with feeling and understanding. We were then making redundant between 20,000 and 30,000 miners a year. They were being treated like dots on a chart. I therefore convened the Sunningdale conference in October 1968, and we stopped the rapid rundown of the miners from that date.

The inhumanity of it all depressed me. The inhumanity of man rang in my ears all that time. Working underground in a coal mine is not a life for any man. It is not fair on his wife. It is not fair on his family. It is a pity that we cannot close all the mines tomorrow—but we cannot. The nation depends upon them. That is why we must pay the miners, and pay them well, until that day of the final closure gloriously arrives.

5.45 p.m.

Mr. Daniel Awdry (Chippenham)

The right hon. Member for Barnsley (Mr. Mason) has made a most powerful, sincere and impressive speech. Everyone in the House who listened to it realises that no one in the Chamber knows more than the right hon. Gentleman about the coal industry.

This is a general debate on economic affairs. The right hon. Member for Barnsley spoke throughout his speech about the miners and, my goodness, he knows a great deal about miners and the mining industry. The whole House was very moved when he referred to his personal experience, the 14 years which he spent in the mines, and the suffering he witnessed. I ask him to accept that those of us who are backing our party at present would say that we also realise that miners do a dangerous job of work and that it is a job which we would not particularly want to do.

One of the most impressive parts of the right hon. Gentleman's speech was when he emphasised the immense power which is today in the hands of the miners, and the tragedy of the overtime ban. He explained how, if that ban continues long enough, the entire economy of this country could be ruined. I ask the right hon. Gentleman, therefore, with utter sincerity, to be willing, if a way can be found to solve this dispute within the general context of our incomes policy—the right hon. Gentleman suggested a re-jigging—to use his immense influence to try to bring the miners to understand the national interest and to withdraw from their overtime ban.

I go along with the right hon. Gentleman to this extent. He said that he would like to see a coal commission to look into the future of the industry to see what further action must be taken in the light of changing energy needs of this country. I agree with that. We on the Government side of the House respect the right hon. Gentleman deeply. We ask him to use all his authority to try to find a solution for the sake of the country.

Like many hon. Members I have sat through the whole of the debate. I have been waiting to be called to speak since yesterday. It was rather a shame that the beginning of the debate yesterday was so full of heat, fury and emotion. The mood has clearly changed today. But I think that all in the House would agree that anger will get us nowhere and that the situation is far too serious for that.

The background of the debate is the gravest economic situation which has faced the country in my lifetime, and I was born in 1924. The debate seems to fall into two parts, and two questions have been raised. The first question is whether the Chancellor's measures are appropriate to the needs of the country and whether they are fair. The second question is whether the miners should have an increased offer.

I welcome the Chancellor's measures, believing them to be fair and appropriate. Some hon. Members have said that a tax should have been put on petrol. It was even suggested that we should, perhaps, have had petrol rationing. It was somehow suggested that the Government's policies were restrictive on public transport. I do not believe that the country would have understood an increase of indirect taxes, particularly on petrol; nor an increase in the basic rate of income tax. This surely would have encouraged more wage demands, because it would have placed additional burdens on trade unionists. I believe that it was right to increase the burden of tax on surtax payers, and I am sure that they accept this. But let us not forget that many of them have seen their savings fall in value severely in the last few weeks, and that is a fact which they also accept.

Mr. E. Fernyhough (Jarrow)

Every day I meet men, in the ordinary working men's clubs, who have the same experiences. They think that they are backing winners, but they back losers. They never moan.

Mr. Awdry

I do not think that surtax payers are moaning, but it is a fact that we should take into account. Some people, after their working life, have put their savings into investments and have seen a very severe fall in the value of those savings in recent months. In the total burden that people are bearing at present, that is a fact. We should recognise that they do not moan about it; they accept it.

The increases in tax in relation to the sale of land are overdue. They are not chicken feed. A rate of tax on an individual of 75 per cent. on the sale of land is not a derisory tax. It means that three-quarters of the proceeds of a sale will go to the Government. I believe that that is socially just. I have argued before on those lines, but I do not think that it is fair to describe that measure as chicken feed. It was agreed by most people that the Chancellor of the Exchequer had to do something. We may debate whether he has increased taxes in the right places, but all of us agree that certain measures were necessary.

The emphasis however throughout the debate has been on the industrial situation, and it is to that situation that I shall address myself. I describe myself as a moderate person. I am a fairly nonpartisan politician. I am one of those hon. Members who tend to see both sides of the case. Perhaps that is why I am still on the back benches. I do not speak very often. This is the first time that I have spoken during this Session. I am almost a member of the silent majority. I do not believe in confrontation. I believe in give and take in all our affairs.

All our institutions—for example, Parliament, the legal system and council chambers throughout the country—depend on tolerance, good will, a sense of fair play, a sense of humour and, in the end, an acceptance by the minority of whatever decision the majority takes. If those qualities cease to exist in our institutions, the institutions will fail. No one knows what would take their place.

The hon. Member for Ashfield (Mr. Marquand) made a brilliant speech. He said that the assumption, which all of us may have made, that we shall always be better off year after year, is dead. That is right. We shall need new ideas and new institutions to handle the future.

The actions which some minorities are taking in Britain go beyond the line of fair play. Someone may explain to me where I am wrong, but I cannot understand, for example, how it is fair play for a train driver, who has driven his diesel engine quite happily for several months without a speedometer, suddenly to say that he will not drive it this week because it is not fitted with that speedometer, thus bringing misery to thousands of people, young and old alike. That driver must know when he refuses to take out his train that he will certainly cause misery to members of the public who have no part in any dispute in which he is involved. I cannot believe that action of that kind is fair play.

I say with sincerity to the right hon. Member for Barnsley that in this perilous time I cannot understand the actions of some of the miners' leaders, bitter and frustrated as they may justly be. I cannot understand that it is fair play to try to refuse to have a ballot on the overtime ban. It may be the view of some of the miners' leaders that their action will smash the Government. I know that some of the miners' leaders have said that it is their intention not just to have negotiations with the National Coal Board but to destroy the Government.

Mr. Harry Ewing (Stirling and Falkirk Burghs)

Does the hon. Gentleman agree that there are leaders in the National Union of Mineworkers' who have accepted—and said so publicly—that it is the job of the Labour Party to bring down the Government and not the job of the trade union movement? Will he agree that that is the predominant view in the trade union movement?

Mr. Awdry

I wish I could agree. I respect what the hon. Gentleman says. I am not on the executive of the National Union of Mineworkers, but I understand that there are moderates on the executive. They have put their views forward. I understand that Mr. Gormley may be one of the moderates. However, it seems that the majority on the executive is not moderate. There are people on the executive who feel that industrial action could smash the elected Government. Some hon. Members in the debate describe such action as the flexing of industrial muscles. Yesterday that expression was used on several occasions. I should describe such action as industrial blackmail.

Mr. James Sillars (South Ayrshire)

The hon. Gentleman has been lecturing the miners. Why does he not turn his attention to his right hon. Friends who brought in the Industrial Relations Act? He will find that Sections 138 and 141 give his Government complete power to ballot the miners.

Mr. Awdry

I accept that the Industrial Relations Act needs to be amended. There is no doubt about that. I do not believe that it necessarily creates the best climate in which to handle the present situation. I believe that if a ballot were called for under the Act the miners would take that action in the wrong spirit and regard it as a provocative step. If the ballot decision is taken it must be taken by the miners themselves.

There are a number of trade unionists who believe that the right thing for the trade unions to do is to unite in total opposition to the Government's policies. That is a threat not only to this Government but to the whole system of parliamentary democracy. We are all apt to take our democracy for granted, but we are foolish to do so. Democracy depends on allowing an elected Government, however much it is hated, to govern. It means that all must respect the authority of the executive and Parliament. It is fair enough to have rows in this place but in the end, if the system is to work, the Government must have the right to govern.

Mr. J. D. Dormand (Easington)

Will the hon. Gentleman tell the House how the miners are not respecting the Government?

Mr. Awdry

Perhaps the hon. Gentleman missed the point which I was making. I was saying that there are many trade unionists who feel that the correct line of approach is to have a united trade union movement in total opposition to the Government. I said earlier that there are some leaders of the National Union of Mineworkers who feel that by their action they can break the Government. Hon. Members may disagree, but it is a serious threat to Parliament.

Yesterday the right hon. Member for Bristol, South-East (Mr. Benn) said: I am amazed that when Conservative hon. Members come to Parliament to debate economic matters they always make speeches based upon their knowledge of the City or of industry, but never do they represent, in the House, what must be brought to their attention—as it is to our attention, week after week—namely, the problems of people who are confronted with these economic policies. Every speech by a Conservative Member is always a speech from a would-be Chancellor of the Exchequer."—[OFFICIAL REPORT, 18th December 1973; Vol. 866, c. 1268.] I can assure the right hon. Gentleman with sincerity that I am in no way a would-be Chancellor of the Exchequer. I claim that I understand the people whom I represent. I understand the views and the problems of ordinary people. I represent 65,000 constituents. They are bewildered and worried by the prospect of a three-day week. Many are desperately anxious about their jobs, their savings and their families. None of us knows what the three-day week will involve but we all know that it will mean colossal hardship to the nation.

I have found a most wonderful response in my constituency to the present emergency situation. People who are members of all parties ring to tell me, for example, that the lights are on in a certain street, that they are using up electricity and that they should be turned off. Last night a man rang and told me that he had a lorry doing nothing. He asked if he could send it up to London to bring back some of the mail which is delayed because of the rail dispute. He told me that he wanted no money for this.

This is something of which we should take account. There is a feeling in the country that, whatever the hardship and the sacrifice, people do not want an elected Government to be broken by militant forces acting outside Parliament. These people are not only Conservatives; they are people who passionately believe in the importance of this place and in the importance of democracy.

Mr. Arthur Lewis

Will they go to work in the pits?

Mr. Awdry

I am referring to the entire nation.

Hon. Members

Oh.

Mr. Speaker

Order. I am desperately anxious to call as many hon. Members as I can, and these interruptions simply prolong matters.

Mr. Awdry

I agree, Mr. Speaker. I will leave the hon. Member for West Ham, North (Mr. Arthur Lewis) alone. But there are deep lessons to be learned. I agree with Mr. Bishop's letter in The Times today. I think that the NEDC should appoint a panel to study the problems of manpower in industries which serve the national need on a priority basis. Perhaps there should be special contracts given to those who work in those industries, as we have in the Services and in the police. I also agree that in this country we need a general job evaluation exercise and that this should be undertaken as soon as possible, although clearly it is a very long-term undertaking.

In the meantime we have a short-term crisis. We are immediately threatened by a three-day week which will severely cripple Britain. I trust and pray that the miners, the train drivers, the TUC and the Labour Party, who have great influence in these matters, will deeply ponder in the next few days what is the wisest course for the miners and the train drivers in the national interest. But if, at the end of the Christmas holiday, the miners decide to continue their work to rule, I hope that the Prime Minister will not flinch from appealing to the British people, because I honestly believe that he will receive a greatly increased mandate to continue to govern our country.

6.2 p.m.

Mr. Norman Atkinson (Tottenham)

I want to take up one or two of the points which the hon. Member for Chippenham (Mr. Awdry) has made and to discuss briefly what has been described as Powellism among the Conservative Party. I should also like to mention a couple of the issues that have been debated within the Labour movement.

First, the hon. Member for Chippenham repeated some of the points made by his colleagues yesterday, although, compared with what he said about syndicalism in the Labour movement, the speeches yesterday sounded more like Christmas broadcasts. I should like to explain the situation to the hon. Member and to say why syndicalism has been rejected for some years.

Members of the Conservative Front Bench repeatedly talk about using the method of industrial dispute and general strike to further the political objectives of the Labour movement. It may surprise the hon. Member to know that that method is overwhelmingly rejected and is not now used. It is within the power of the trade unions and the Labour movement to stop the economy tomorrow if they so wish. It is possible to have a general strike. If people were so motivated politically, they could have a general strike and bring down the Government.

The reason why they do not do so, and why syndicalism has been rejected throughout the Labour movement, is that we all recognise that although we can stop the economy we cannot restart it. If we stop the economy, we forfeit our right to decide what comes afterwards, what sort of society we shall then have. If we suspend, no matter how temporarily, the whole democratic process in this country, we cannot then rebuild it because of the very conditions that we have created in stopping the economy.

Syndicalism is therefore rejected throughout the Labour movement, and I am amazed that hon. Members opposite frequently try to sustain the argument that there are active trade unionists —so-called mindless militants—whose sole purpose is to stop the economy of this country. That is not true, and Trotsky theorising, as it is now called, is rejected by the general stream of the Labour movement. I could say quite a lot about that subject, but I will say only that the more British capitalism becomes internationalised, the more the prospect of syndicalism having real effect diminishes. I hope that Conservative Members will begin to learn some of the lessons.

Front Bench spokesmen, including the Prime Minister and the Chancellor of the Exchequer, talk about democracy being threatened because they believe that such talk will ultimately pay them political dividends. But it will not do so, because the people of this country understand what we and the leadership of the Labour movement are trying to give to them and how we are trying to solve their problems.

Before turning to the economic Blimpism of the Conservative Party, I should like to say that I am giving notice to the right hon. Member for Wolverhampton, South-West (Mr. Powell)—I hope that the pigeons have been released and the message will reach him—that I want to take him apart if he returns to the Chamber.

May I first point out to the Secretary of State for Employment, however, that he and the Prime Minister and the Chancellor of the Exchequer tried to delude the House by suggesting that the present offer to the miners is 16½ per cent. of the total wage bill when it is not. Rumours of that sort, put about by the Prime Minister in furtherance of his political and psychological warfare, should be stopped at the root. The Under-Secretary of State for Employment shakes his head. If he believes that the offer to the miners is not 16½ per cent. of the total wage bill in the industry, then let him say so. The Prime Minister said that the Government were flexible and generous and were offering the miners 16½ per cent. on top of their wages, but that is not true and the Under-Secretary knows that it is not true. If what I am saying is misleading the House, any member of the Government Front Bench can get up and say so. But I hope he will also tell the Prime Minister to stop propagating these ideas about the size of the offer.

I see that the right hon. Member for Wolverhampton, South-West has arrived, so before I get on to the question of the Labour Party's policy, which he and others have challenged both privately and publicly, and before I deal with the alternatives which we propose, let me put a question or two to the right hon. Gentleman. Towards the end of his speech yesterday, he recognised that what he was saying would mean some increase in the level of unemployment. The right hon. Gentleman shakes his head. If he is denying that, I have no case to make. If he was not saying that there should be an increase in the level of unemployment in this country, as a prerequisite of the solution which he offered to the House——

Mr. Powell

The hon. Member is totally mistaken. What I have said repeatedly is that any reduction of inflation, however brought about, must be attended as a consequence with some degree of unemployment.

Mr. Atkinson

I do not know how you, Mr. Speaker, would interpret what the right hon. Gentleman has said, but it seems to me that what he is saying is that if we use his methods——

Mr. Powell

No, I did not say that.

Mr. Atkinson

—to reduce the level of unemployment—I am sorry but I should have said "inflation"; I must get it absolutely right before I set about the right hon. Member—they must increase the level of unemployment.

Mr. Powell

The hon. Member has it exactly the wrong way round. The increase in unemployment is not a cause or a method of the reduction in the rate of inflation. It is an inevitable consequence of reducing inflation, however the reduction in inflation is brought about. It is, therefore, a substantial misrepresentation to say that to reduce inflation by a particular method causes unemployment. It is the reduction of inflation, and not the method, which causes the unemployment.

Mr. Atkinson

That is standing Greek logic on its head. It is absolutely unfair. The right hon. Gentleman and those who support him are being dishonest if they say that a rise in unemployment is a consequence of the methods they advocate and that it is not a significant aspect of their argument to reduce employment in this country as a means of lowering inflation.

Mr. Powell indicated dissent.

Mr. Atkinson

The right hon. Gentleman still shakes his head, but I am a student of his comments about the economy. Those who adopt the Blimp-like attitudes of the Tories and those who support the theory of reducing the money supply must understand the consequences. If money supply is reduced as the right hon. Gentleman suggests, the level of unemployment will be possibly 2,500,000. But he is dishonest about that because he refuses to specify the consequences.

That is one of the reasons why the Treasury and others have devised a sort of gobbledegook with which they can talk among themselves about how the money supply should be reduced and how unemployment can be increased as a means of regulating the economy. They can talk about Ml and M3 because no one then knows that they are talking about unemployment or about taking the bread out of the workers' mouths. It is much better for them to be able to talk about the diminution of Ml and M3, but they are discussing unemployment. The right hon. Gentleman says that he has been wrongly quoted, but that is precisely the purpose of his argument.

Mr. Powell

No.

Mr. Atkinson

He wants to use unemployment as a means of regulating the economy but he presents it in this form of gobbledegook. The workers should clearly understand what the right hon. Gentleman is saying when they suggest that Powellism might be the answer. Powellism is the most dangerous theory that this country could put forward, and the country must clearly understand what it means. It must understand why the Conservatives debate it in the way they do and why such a large percentage of them accept that theory, it is the core of the argument put forward by the Conservatives.

Mr. Ridley

The hon. Member has wasted the last five minutes of his speech upon what appears to be a mistaken interpretation of what my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) said. Will he now apologise to my right hon. Friend for apparently having got it totally wrong, according to my right hon. Friend who is sitting here, and will the hon. Member say when he is going to take my right hon. Friend apart?

Mr. Atkinson

I hope I have done that in the sense that I have exposed what the right hon. Gentleman means when he tries to camouflage his argument. I feel it is our responsibility to tear away that camouflage from his argument and to put the facts into language that people are able to understand, especially when the right hon. Gentleman acts so deviously in covering up the real meaning of his words. That is the job of Parliament and I hope that we have done that job.

Mr. Dykes

On a point of order. I apologise for interrupting, Mr. Speaker, but undue repetition is also——

Mr. Speaker

Order. That is a question for the Chair.

Mr. Atkinson

I shall now conclude my remarks about the situation as the Labour Party sees it. The TUC in its submissions to the Government in July and the Labour Party in statements issued on two occasions say that we are now calling for the restoration of voluntary collective bargaining", added to which the TUC document contains a further quotation which says that All prices must be legally and rigidly controlled". We therefore say that these two things must be taken together.

Thus, those Conservatives who say that the Labour Party alternative is to advocate free collective wage bargaining while at the same time calling for price control throughout the economy, not only for foodstuffs but for other consumer products, are absolutely right. That is the policy of the Labour Party, and all those newspapers which reported recently that overtures had been made to the TUC by the Parliamentary Labour Party to seek a review of that policy have been totally wrong. The Labour Party is not asking the trade unions to reconsider that aspect of policy. It is upon that basis that we shall contest a General Election and it is the basis of the policy which we advocate.

Why is it the correct policy? The first thing to be made clear is that we recognise the changing character of the system in which we live. Gone are the days of entrepreneurial capitalism as such. We are now moving into a period of managed capitalism. We are conscious of the changes that are taking place and of the need for us to pursue the policy we advocate. The whole process of mergers, multinationals and State industry and the fact that now no more than 100 firms dominate the economy and have established a system of price leadership emphasises the need for our policy.

The big multinationals, and certainly the largest companies in this country, now raise their capital or investment from fixed-interest borrowing rather than by going to the market as they did in the old entrepreneurial conditions. Therefore, we define managerial capitalism not as something to do with personnel within the system but as an economy where less than 30 per cent. of the price system remains what is euphemistically called a free market system. In other words, when more than 70 per cent. of the market is non-competitive and is managed we say that we have moved into a period of managed capitalism. That is the situation that we see at the moment.

Recognising these changes, there is no doubt that, whatever the rate of growth within the economy, price inflation is inevitable. It is built into the system and it is directly related to the level of investment in production industries. It is from our analysis of that situation that we have concluded the Government intervention in the price system must be across the board and that we must build a system of management using Parliament so that our intervention to bring about a greater redistribution of wealth is within the price system and in no other way. Therefore, we look upon it as an instrument of economic management, a technique that I hope we shall develop. Our economic policy will involve price control of that sort.

This highlights the difference between the Labour Party and the Tories in the sense that they argue that there should be wage control in the absence of price maxima. They talk about profit control giving the desired result but they have dismissed the argument for any sort of direct intervention in the price system. However, we take the opposite view. This demonstrates more clearly than any other aspect of policy the difference between the Conservative representatives of capital on their side of the House and the representatives of labour on this side.

In arguing the case for a price strategy in the situation facing the Government, we say that dealing with the existing price system and allocating the resources of the country is a matter of priorities, and that the Opposition must intervene to make sure that priority is given to those whom we represent. That is the basis of our intervention.

Prices controlled in that way must be linked to a system of subsidies and variable purchase tax. In that sense we present a comprehensive analysis of the system as we see it and the sort of things we want to introduce. We argue against the present Government's concept of a prices and incomes policy. We reject it totally because it is alien to the kind of society that we foresee and the kind of society for which we argue.

It is because we believe that we should now be talking about the price of our production and not merely about one aspect or one element of it in the price structure that we resent the policy being pursued by the Government. If the Government were prepared to talk about prices in the coal industry, they would not be faced with the present impasse. The Labour Party's conclusion from experience throughout Europe is that wage restraint in its present rigid form is not possible and does irrevocable damage to the economy and to the whole of the wage structure within the country. Therefore, we reject such a policy.

Given the time, one could discuss many other aspects of the prices and incomes policy which we reject. Conservative members are prisoners of their own policy. They have reached the situation of saying that there can be no deviation from phase 3, and that has led many Members to talk about a General Election as being the only way out of the Government's impasse.

But that is not on. Conservative Members have rejected that idea because they want to remain absolutely rigid in their arguments. A spring election would be contested on the basis of permanent wage control. That would be the issue. But that is not the point we are discussing today. Our concern today is that the Government have introduced the most brutal Budget that has been seen not only in post-war years but in the 'thirties too.

The Government have been enabled "at a stroke" to introduce a shortened working week throughout industry. I return to the argument employed by the right hon. Member for Wolverhampton, South-West that to get the equivalent of this degree of short-time working as a deflationary measure from 1st January it would be necessary to have about one-fifth of the total working force unemployed in the manufacturing and production industries.

When these fiscal and monetary methods are used normally to deflate the economy, they are unselective. It is when deflation is aimed at the manufacturing and production industries that there has to be such an enormous cut-back in the economy in order to attain the reductions which the Government now seek.

It is a vicious Budget in that sense, because the Prime Minister's statement must be read alongside that of the Chancellor of the Exchequer. It is obviously part of their plan to talk about three-day industrial working, for however short a period. The economists suggest that if it operates for about 12 weeks from now, a £400 million saving on our balance of payments will be achieved and that that is one way in which to correct the economy. It is those calculations which fit into the calculations of the right hon. Member for Wolverhampton, South-West when he talks about an enormous rise in the level of unemployment as a solution to the problem.

I can see, Mr. Speaker, that you are getting somewhat upset—[HON. MEMBERS: "Hear, hear."]—but this may be the last occasion on which I shall speak in the House. [HON. MEMBERS: "Hear, hear."]

Mr. Speaker

Order. I am not getting upset, as the hon. Member puts it, but he has spoken for 24 minutes. I hope he will conclude his speech fairly soon.

Mr. Atkinson

It is a costly 24 minutes, Mr. Speaker. I have sat listening to the debate, as many other hon. Members have done, for more than 13½ hours. I do not know what the methods are or how many times hon. Members speak, but my last comments in the House on economic matters were made on 24th February of this year. I am not trespassing on other hon. Members' time. I am not being greedy. I do not hog the place. You, Mr. Speaker, are bouncing up and down in outrage saying that it is about time this fellow shut up. I have tried to set out my arguments in 24 minutes as cogently as I can on what I believe to be important issues facing the British Labour movement as opposed to some of the issues which Tory Members wrap up in a load of camouflage.

Other hon. Members have spoken for 35 minutes. If I am offending my comrades on this side of the House I apologise, and I shall not do it again. I am sorry to upset the Chair, but it is important that we should try to set out the principles in which we believe, and this is the debate and the time for that to be done. If by decree or some other method I receive no priority in the future, so be it, but I have been able to contribute something by talking about the principles on which we have based our movement and about what we are trying to do in the future.

One of the difficulties on the Left of the British Labour movement is that of communicating with our people. The only way in which that can be done is by travelling many miles throughout the country. Hon. Gentlemen opposite may smile, but the Conservatives almost totally control the British Press and nearly all broadcasting and television is slanted towards their arguments. That is their only reason for objecting to some of the freedoms of television. It is extremely difficult for the Left of the Labour movement to communicate with anything approaching an audience throughout the country. This is the only way in which it can be done, whether or not it is reported. There is an audience here, and I do not apologise for going on about the principles facing us.

Mr. Speaker

The hon. Member said that I was upset over the length of his speech. I was not the least bit upset, but if hon. Members speak for so long they deprive other hon. Members of the chance of speaking.

5.52 p.m.

Mr. Christopher Tugendhat (Cities of London and Westminster)

I, too, have sat through the whole debate, and it is fair to say that the speech of the lion. Member for Tottenham (Mr. Atkinson) was one of the longest. I leave it to the rest of the House to judge whether other Opposition Members who may be squeezed out as a result could not have put the time to better use.

Hon. Members who have spoken so far seem to be united on one point, and that is that we face both an internal and an external problem. I wish to deal with the external problem of oil supplies to this country, but before doing so I must declare an interest. I am a director of two oil companies and I have been interested in the international oil industry for most of my working life, having written about it in the Financial Times before coming to the House.

Having stated my interest, I probably carry the House with me when I say that we are all agreed that the problem we face is a short- to medium-term one in the sense that everyone assumes that in the 'eighties we shall have a variety of different fuels to call on in this country and outside.

We have to try to find some way of getting through the next seven or eight years. There is no doubt that during that time we shall face considerable difficulties. The oil producers want the highest possible price, and they are determined to keep supplies tight during this time. As the hon. Member for Ashfield (Mr. Marquand) said, the days of cheap energy are over, but even if they return they will not do so for a number of years. That being so, all industrialised countries will face a grave problem regarding both industrial costs and balance of payments.

In those circumstances, it is vital that the Governments of the consumer countries play a much more active rôle in international oil matters than has been the case hitherto. They must endeavour to work closely together. By that I do not mean working closely together against the producer countries. I mean working closely with each other and in combination with the Governments of the producer countries.

It is up to the Governments to establish the framework for the industry. That having been established, and the Governments having dealt with the important points of policy—to which I shall return in a moment—the companies should then be left to organise the industrial matters of exploration and production in our own areas such as the North Sea, refining, distribution, marketing and supplies. The companies will operate within a framework organised by Governments, but the problems which the Governments will have to face will be severe, and my main fear is of a scramble for scarce supplies.

It could be argued that the oil producers have not been responsible for putting up the price of oil in recent years. It could be argued with a good deal of truth that the main reason why prices have risen so astronomically in recent years is that there has been so much pressure of competition from consumers. The catalyst for this is the fact that the Governments of the oil-producing States have acquired a stake in the concessions in their own countries. They have therefore had participation oil under their own control, and this oil is being bid for by organisations, groups and companies from consumer countries.

We have seen prices bid up to nearly 17 dollars a barrel in Nigeria, and the same sort of thing has happened in Iran. In Iran the price per barrel is about three times the posted price. My fear is that these auctions in which consumers bid against each other could lead to a further escalation in prices, which would be very much to the detriment and disadvantage of all those who import oil.

This is a dangerous situation and one that will get worse, because the Governments of the producer countries will accelerate the rate at which they take over concessions in their own countries. Therefore participation oil, instead of being a relatively small proportion of the total volume of oil entering world markets, will become very much greater and within the foreseeable future will account for the bulk of the oil entering world markets. In those circumstances it is possible that auctions of the sort that we have seen recently in Nigeria and Iran will become the principal determinant of oil prices.

If that should happen, the price of oil will go through the roof and that will have a terrible effect on the people, rich and poor, who live in all those countries which import oil. Because of that, it is essential that the Governments of the consumer countries co-operate more closely. I mean primarily those from North America, Europe and Japan. Only Governments can handle problems of this nature.

The second priority with which we shall have to deal is the provision of some form of incentive to oil-producing nations to produce the oil which the world needs. Some countries will be anxious to do so in any event. Iran and Nigeria, which have large populations with low standards of living and which have embarked upon ambitious and far-reaching development plans, will be anxious to sell to the world as much oil as they can produce at the right price. But Saudi Arabia, Abu Dhabi and Kuwait, which have small populations and astronomical financial reserves and earning power, will be much more reluctant to provide the world with the oil that it needs. Several of their Ministers have said as much.

In those circumstances we must devise incentives for the countries to produce the oil that we require. They have had bad experiences in investing in sterling and dollar-dominated investments as a result of devaluations. If they are to produce the oil we want, they will seek the opportunity for capital appreciation. I do not mean capital appreciation per se, but capital appreciation of a more rapid nature than the increase in the value of oil in the ground, because the oil in the ground is in itself a good investment.

This is a complicated subject, and a short speech in a debate of this nature is not, unfortunately, the time to go into details of how that can best be done. It is fair to say, however, that the only possible outlet that will provide the sort of opportunities that these Governments and their peoples will need is investment in the capital formation of the West. The amount of money will be substantial, but, if we assume that oil producers will be generating revenue surplus to their requirements of 50 billion dollars a year, at the end of the decade that would be only about 5 per cent. of total capital formation of the West.

Equally important is the need to bring the oil-producing nations much more closely into the negotiations for creating a new international monetary system. We all know that the balances of the oil producers will be a major factor in international financial affairs. It is important that the holders of those balances should feel that they have a stake in the system. If they do not feel that they have such a stake they will disrupt the system, and if they do not have a stake in it there is a grave danger that their large resources will lead to considerable destabilisations. In those circumstances, it is essential to give oil-producing nations the importance that they deserve in international financial negotiations.

It is vitally important too that the West should do everything possible to encourage these oil-producing countries to embark upon major industrialisation and development programmes within their own countries. I envisage great opportunities for money from oil-producing States, combined with Western technology and help, to do something to raise living standards not only in the oil-producing countries but throughout the rest of the Arab world. This should also be done in the underdeveloped and developing countries, which are far more badly hit than we are by the increased price of oil and have none of the offsetting factors that we have.

The oil-producing countries have a duty to endeavour to provide some kind of redress to the Third World for the effects of what is happening. One of the best ways in which that can be done is by combining the vast amount of money in the oil-producing countries with Western industrial and technological know-how in projects in countries such as India and many others.

These are complicated matters of a far-reaching nature. We must demand that the Governments of the oil-consuming nations play a more active rôle in the international oil industry than has hitherto been the case, and they should concentrate on two matters. The first is the price of oil and the factors that will affect it. The type of arrangement that will have a bearing on the price of oil must be determined in negotiations between the two sides. The second matter is volume and the considerations that will affect the amount of oil produced by the oil-producing countries.

Those two factors, price and volume, should be put into a wider context of mutual industrial and technological development for the benefit not only of the oil-producing countries but of the developing countries of the Third World. They should also be put into the wider context of financial and monetary cooperation.

I believe that the industrial aspects of the industry—for example, refining, marketing, distribution and exploration and production within our own areas such as the North Sea—are best left to the companies but that the framework within which the companies operate should be established by the Governments of producer and consumer countries working side by side and in co-operation with each other.

6.40 p.m.

Mr. John Cronin (Loughborough)

The hon. Member for Cities of London and Westminster (Mr. Tugendhat) will forgive me if I do not follow his speech in detail, but I am anxious to keep mine as short as possibic to assist other hen. Members who wish to take part in the debate.

There is general agreement on both sides of the House with the opening remark of the Chancellor of the Exchequer on Monday that the situation we now face is by far the gravest since the war. A lot of people, especially on this side of the House, will agree that the responsibility for that grave situation lies entirely at the Chancellor's door.

When the Labour Government left office in 1970 they left behind them, thanks to prudent measures of my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), a state of real economic strength, with a massive balance of payments surplus. Now, we find the economic situation totally catastrophic. The most urgent need is to do something about our balance of trade, now running at a deficit at an annual rate of £3,000 million.

The Chancellor's measures announced on Monday are quite inadequate. One feels oneself somewhat in the position of seeing a man bleeding to death and someone applying a piece of sticking plaster. The effects of the Chancellor's measures will be negligible in correcting the balance of payments situation. The cuts in public expenditure will not take place until towards the end of 1974, and then in any case one is expecting a world recession. But we know that there is already a slackening in public expenditure, so that these new cuts are more likely to be theoretical than actual in their effect.

The Chancellor gave no indication of the nature of the cuts. He referred to them in a most general way. We do not know, for example, whether they are to apply mostly to hospitals, schools or the Armed Forces. He gave no idea of the basis of his calculations. So this aspect of his measures seems to be of limited nature and rather nebulous as a prospect.

The right hon. Gentleman has increased the burden on surtax payers, but this works out on average at about £90 for every surtax payer. That is rather more perhaps than the cost of a suit. It is rather difficult to believe that surtax payers will be really upset by that at a time when the whole country is expecting a severe financial blow.

Nothing has been done by the Chancellor to deal with the real scandal—the ability to set interest payments against taxation. This is one of the economic situations which are dividing society more and more, making the rich richer and having a deleterious effect on the poor. There has been no attempt to have a more effective tax on people of higher incomes. There is certainly room for much bigger increases in taxation on higher incomes than the right hon. Gentleman has attempted.

Most people are dismayed by the inadequacy of the Chancellor's measures to deal with property speculators. Even Tory Members are beginning to feel some dismay about it. Such speculation is one of the obscene scandals of the present age in that a group of people, whose work is in any case of a parasitic nature, should amass enormous fortunes at the expense of all of us and can do so with every help and encouragement from the Government.

The Chancellor himself said that all that can be raised by taxation on property appreciation will be about £80 million a year. The Metropolitan Estate & Property Corporation, the largest of these companies, alone since 1969 has seen an increase in its portfolio values of £400 million but has paid only £21 million in taxation. One can say the same of most other property companies.

Then one must remember the individuals involved. The famous Mr. Harry Hyams started some years ago with a capital of £50,000, while the noble Lord, Lord Samuel of Wych Cross, started with a capital of £19,000. The total capital of these two gentlemen is now assessed at about £500 million in their own personal holdings. Why is it that the Government are so much in favour of people who are doing this?

Mr. Arthur Lewis

Because they are contributing to Conservative Party funds.

Mr. Cronin

I do not think that even that is a substantial factor, but it is astonishing that the Government cannot find effective measures to cope with something which is one of the great scandals of the age.

One wonders why the Chancellor's measures are so inadequate. One wonders whether there is not some dishonesty behind them. Is he deliberately avoiding taking effective action in the hope that the present industrial troubles will rub some unpopularity off on to the Labour Party, so that the Government may have an election, win it and then introduce the really effective deflationary measures needed after the election? Is that the trap being prepared for the electorate? If that is the case, the Government are likely to have a serious disappointment.

The Prime Minister's speech yesterday gave a lot of credence to the views expressed by the right hon. Member for Wolverhampton, South-West (Mr. Powell) some weeks ago. The right hon. Member for Wolverhampton, South-West expressed doubt as to the Prime Minister's mental stability. When one hears the Prime Minister saying that the Government propose to continue having a three-day week until the miners return to normal work, one cannot help feeling that there is a good deal of strength in the argument of the right hon. Member for Wolverhampton, South-West. One feels that the Prime Minister is really becoming unhinged. There is a slight feeling that we have a General Amin sitting on the Treasury Bench.

The Prime Minister's obstinacy about this has no affinity to virtue or wisdom. The miners are determined to have a fair deal and are not to be talked out of it. The Leicestershire and South Derbyshire miners in my constituency are firmly behind the industrial action taken by the NUM. If they are a sample of the psychological attitude of the miners, as I am sure they are, there is no question of the miners giving in.

The miners are particularly affronted by the despicable tactics of the Prime Minister and the Government in suggesting first of all that their industrial action is illegal. But this again is part of the delusion of grandeur, which is a serious psychological symptom. Again, it has been suggested that the miners are in conflict with Parliament, but even the right hon. Member for Wolverhampton, South-West has insisted that this is an. absurdity.

The important thing we have to bear in mind is that the cost of continuing the three-day week must be thousands of times the cost of giving the miners the little they want. It is incredible folly. Because of the Prime Minister's reckless adherence to phase 3, he intends to subject the country to enormously more economic hardship than it would suffer if the miners were given their modest requirement.

We have to accept that coal is a very cheap form of energy and that, with the rundown in the industry's manpower which is taking place, the miners have to be paid more sooner or later. It is so obvious that there can be no escape from it. Why do we have to go through the horrible tragedy of having three-day working week after week when paying the miners would put an end to this economic disaster?

The Secretary of State for Employment suggested that to pay the miners what they require would have a very inflationary effect. Could any effect be more inflationary than mass unemployment resulting from a three-day week, accompanied by unemployment benefits, which will be spent in the usual way? This will be infinitely more inflationary than settling the miners' comparatively modest claim.

The Government should face the facts of political power. The miners have control of the industry of this country; there is no escaping from that. They cannot be talked out of the situation by the words of the Prime Minister and other Ministers. The miners must receive some concession. Confrontation will achieve nothing but an increasingly disastrous effect.

Few hon. Members, on either side, would disagree that, from the point of view of justice and equity, the miners require to be paid much more than at present. Their work is most arduous, dirty, unhealthy, dangerous and inconvenient, and it involves living in social isolation. How can we get men to continue working under such conditions when it is proposed to pay them rather less than some people get for sweeping the floors of motor car factories? It is an absurd situation.

The miners are hardworking, courageous and loyal members of the community. The time is overdue for the Government to face the facts and to make sure that the miners have a substantial concession which would end the present tragic situation.

One of the worst aspects of the Chancellor of the Exchequer's measures—and perhaps the worst aspect of the Prime Minister's speech yesterday—was that no concession has been made, and nothing has been done to cope with the appalling divided state of the country. A small minority of people are enjoying the profits and a large majority are carrying the burdens. That is the psychological reason behind all the industrial disorders. The Chancellor's measures have done nothing helpful. There has been no increase in taxation of the higher incomes groups. The Government do not intend to deal with the anomalies of the Industrial Relations Act or to do anything about the Housing Finance Act. Neither do they intend to deal with the iniquity of tax relief on interest payments.

There is nothing in the Government measures, at this crisis in our lives, for the impoverished people of the low income groups. There is nothing for the trade unions, for hardworking, respectable people. The time has come for the Government to get out and to make way for people who can run the country in a less catastrophic manner.

6.53 p.m.

Mr. Christopher Woodhouse (Oxford)

The speech by the hon. Member for Loughborough (Mr. Cronin) has clearly illustrated what has been in my mind throughout the debate, namely, that there are really two debates taking place concurrently. The hon. Gentleman has contributed to both of those debates, but I shall contribute to only one.

The subject of one debate is whether the Government have got their calculations right. The subject of the other debate is whether they have got their psychology right. I shall not contribute to the debate on the arithmetic of the measures announced this week, except to say that when I was a member of the Select Committee on Public Expenditure a year or two ago I gained the distinct impression from Treasury evidence that, as a general rule, cuts in public expenditure contained a large degree of fantasy because estimates of public expenditure for years ahead contained in the first place an element of very arbitrary calculation.

The main question is the psychological one. There are two schools of thought about it, both inside the House and outside. There are those who contemplate a fight to the finish and those who look forward to a truce and a closing of the ranks. I take my place unhesitatingly with the second group.

It is important to realise that a closing of ranks will not come about simply by agreeing to let bygones be bygones any more than it will come about by forcing an unconditional surrender. It will come about only by finding common ground, however small to begin with, on which we can all agree and which we can exploit and expand together.

I shall suggest one or two areas in which this is still possible. The first is in industrial relations. Everyone with any industrial experience knows that the Industrial Relations Act is not working. That is partly—but only partly—because of the refusal of many trade unions to operate it or to recognise the National Industrial Relations Court. The boycott of the court is only partial. In a number of cases trade unions are refusing to plead in the court, but having allowed a case to go against them by default they are taking the case to the Appeal Court, thus saving face in an expensive and undesirable way.

But that is only part of the reason. The main reason is that the Act was clumsily drafted and inadequately debated. Anyone on this side of the House who says that naturally invites the question "Why did you vote for it in the first place?" My answer is that I was completely persuaded that an industrial relations Act was necessary. I believed that it was right in principle. I suggested on Second Reading that there were a number of imperfections in the Bill as it was drafted and I did my best at later stages, whenever it was possible to get a word in edgeways, to try to improve the drafting, and I declined to vote for the premature guillotine on the Bill.

But what I do not believe, however firmly it may be said by Opposition Members, is that the Act will ever be repealed in toto. I have the support—very distinguished support—of the late Lord Donovan in saying that. It is equally certain that the Act will be reviewed and amended, probably drastically, and the sooner that is done the better. I hope that the new Secretary of State will make his intention clear on this matter, not by the kind of crafty ambiguities with which he has swept the Irish problem under the carpet temporarily, but by making frank declarations that the Act will be amended in this present Parliament. If he does so, many hon. Members on this side of the House, and elsewhere, will be ready with constructive suggestions.

The second area in which common ground can still be found is that of the cost of living. Everybody agrees, of course, that those who are by far the worst afflicted by inflation today are those living on small fixed incomes, especially pensioners. The Government believe that, if current wage claims were met in full, the inflationary effect would be so severe that everybody would suffer, and the pensioners would suffer worst of all.

Therefore, on the face of it, there seems to be a conflict between the interests of trade unionists and of pensioners. However, a way round the conflict has been available to the Government for more than a year. At about this time last year there was a mass lobby of trade unionists at the House in favour of an increase of pensions to £10 a week for the single pensioner and £16 a week for a married couple. When the trade unionists from Oxford saw me on that occasion I asked them whether they realised that such an increase would inevitably be severely inflationary, unless accompanied by a willingness on their part to abate their wage claims or in some way to compensate for the increase. They unhesitatingly replied "Yes". They said that they recognised that fact, and I therefore agreed to support them.

Unfortunately the Government did not then have the imagination to appreciate that they had before them, offered by the trade unions, a framework in which the interests of workers and pensioners could be reconciled and harmonised, instead of being in competition with each other, as in the past. The significance of that suggestion was precisely that it was the trade unionists who offered it. I hope that the offer may still be open and that the opportunity will not be missed again.

The last point I have to make is again one of psychological significance. It was referred to by the hon. Member for Loughborough. My right hon. Friend the Chancellor of the Exchequer has recognised that property speculators are today the most unpopular creatures in the country. There is one at least whom many of us would like to see clapped in the Tower of London, if not in Centre Point. But there is a valid distinction, which other hon. Members on this side have drawn, between the property speculator and a property developer. A speculator simply buys and sells. A developer performs an essential function, which would still have to be performed even if all those in business today were put out of business.

This contrast was sharply illustrated yesterday in the centre pages of The Times. On the left-hand page there was a nauseating story about a group of property tycoons engaged in a competition in the game of Monopoly. On the right-hand page there was a letter from the President of the Royal Institution of Chartered Surveyors pointing out clearly and forcefully the arguments against imagining that it was possible for development to be a function of local authorities or of the central Government. What he said was perfectly true.

Indeed, many local authorities, particularly those in the old counties, are not equipped even to carry out their present-day planning functions. I speak from experience. I must declare an interest because I am a director of a construction company, but it is a construction company which wants to build houses and other useful buildings. It does not want to be compelled, as it is compelled today by the dilatoriness and incompetence of many local planning authorities, to become, against its will, a land speculator.

The result of that dilatoriness and incompetence is that many houses built today cost as much as 50 per cent. more than they need have cost, because by their procedures, the local planning authorities delay the building by anything up to two years. The best service that the Government could perform in this area would be to shake up local authority planning drastically and severely and impose a much firmer central direction upon it.

I have mentioned just a few areas in which I believe that all of us could find common ground. I hope that the Government will explore them, and that they will exploit and expand all such areas, rather than be misled into conflicts which can end only in unconditional surrender on one side and ruin on both.

7.5 p.m.

Mr. Robert Woof (Blaydon)

In following (he hon. Member for Oxford (Mr. Woodhouse), I promise to abide by Mr. Speaker's request for brevity.

From the objective of trying to grasp the impact of the present economic and energy crisis, the force of the alarming circumstances must bring a haunting sense of meaning.

Confining attention on the intensive situation, the magnitude of short-time working that is unhappily anticipated, and, if I may say so, as Karl Marx interpreted the unemployed as the industrial reserve army, in proportion it will systematically suppress production for every leading form of industrial activity with serious implications of essential services.

We are not unmindful of the economic mould which governs most of our day-today living, but now aggravated by the energy shortage and restricted fuel supplies, to put it very crudely, it will be the coldest of comfort of personal suffering to those who want to get warmth, a light in their home, or to those who have their jobs in industry disrupted, and are sent home to face all the inconveniences.

The harsh realities have staggered the imagination of many. Even thousands and thousands of Tories throughout the land see the cutrain rising upon what looks to be a prolonged period of stagnation, which will affect the economic health of the country.

The dreadful possibilities are, however, dominated by the emergence of causes, with the centre of gravity of antagonisms, and the marshalling of strengths, practically unknown to industrial text books.

There is nothing within the range of human experience to deny the fact that, when representatives of organised labour indicate their disapproval of traditional capitalist solutions to capitalist problems they are taken to task for lack of vision, and not applying their minds to industrial realities, in bringing a strong sense of duty on matters more subject to human decision.

Suddenly, in the past few days, the nation has been made to become highly sensitive and conscious in being overtaken by a tidal wave of catastrophic affairs. We have read acres of comment and explanations which have appeared beneath the headlines, and prominent among them is the discrediting of the miners with mounting criticism for their obstinacy and doing their worst, even from the Prime Minister downwards.

Rightly interpreted, we would do well to be worried about it. We have landed in a great maelstrom of economic antagonism. It is not new. It has not suddenly cropped up this month—it has been drifting with us for a very long time. It lies at the root of realising the likelihood that it would render comfortable existence more uncertain than ever before.

So why do we argue that the crisis of coal production should not have reached the degree that it has in the present atmosphere of dramatic urgency? It is like Rip Van Winkle waking up again, because it has been debated and analysed so thoroughly by the so-called experts that its outlines have become quite wearisomely familiar.

Ever since 1957, we have been bombarded by statements that the coal mining industry is dying. Statements have been made, which must be accepted, that it is inevitable, through the development of nuclear power, North Sea gas and oil and the products of technology. Such gospel was preached and impressed upon us as so great and crucial that a change in the relations of production would be so rapidly brought about.

In constructively criticising past Governments' energy programmes we requested that we should not make the economy dependent on imported fuels and, in particular, when the scramble for markets was going on, that powerful international oil monopolies should not be allowed to intrude in the traditional coal markets. That is now buried in the dustbin of history.

As every hon. Member is aware, the present oil crisis is unpleasant and unpredictable for British industry. It is clear that the once declared paramount and considered cheap imported fuel upon which the economy developed is now over—it is irretrievable. It has been well circulated that the price of oil, even although if normal supplies were to be resumed at any time in the future, will impose a whole series of difficulties on the economy and an increased cost of living.

But now a wide range of industry is confused and bewildered by the severity of the new measure to conserve all the available sources of energy. Many of them are heavily dependent on taking 40 per cent. of the power from the national grid, of which coal supply to the power stations accounts for 70 per cent. of electricity generation. This must be highly valued and cannot be belittled by the nation.

The cruelty of economic progress is, however, just as terrible as the cruelty of nature—it takes no account of feelings or passions. Only when the material basis of individual and social life is fully assured does the higher development of human intelligence and character become apparent.

It is interesting that in assessing the various conflicts and the rôle of the pattern of a prolonged cutback in production, speaking as trade unionists, we want to make clear that we do not wish to see a charter of uncertainty of employment, hoping for better times in a depressed level of production and productivity, accompanied by living standards literally falling in a society where inequalities are so glaring. It is common currency of politics to ask how trade unionists can be expected to exercise restraint in the face of rising living costs. It is almost despairing to read how wholesale prices are likely to continue to rise sharply in the months ahead, because they have still not experienced the full brunt of the sharp increases in import prices over recent months, and not forgetting coming on top of the well-established higher prices that have been inflicted upon us through the Government's acceptance of the common agricultural policy of the Common Market.

These are some of the rock-bottom facts of life as they affect ordinary people, but as a nation we are in effect in danger of losing faith in ourselves, and in the ordinary sense of making use of the word "confidence", how are we to respond to the national mood with a better quality of decision? Even in the Black Hole of Calcutta the richest man there would have given all that he possessed to get the door or the window opened to let in some air in order to survive. Is not that an analogy of the present situation?

But in all the exceptional circumstances we do not feel that the final step to put the situation on a more favourable keel to avoid industrial paralysis has yet been taken. We all understand that it is a period of fear, uneasiness and one of perilous balance that we cannot afford to neglect when demands for higher material standards of life rest on intensifying international competition with vital production for home and abroad that will not be capable of being delivered.

It may well be that events are overwhelming and that many are trapped by circumstances, but what one considers to be defence another considers to be a threat. It is happening all round us but, as the demand for coal is vital to the wheels of industry, it must be unanswerable—it must be obvious—that we cannot disregard the loyalty of the men employed in the mining industry who produce the coal that is needed now more than ever. The Secretary of State for Employment today referred to reconciliation. I only hope when he meets the mineworkers' leaders tomorrow that he will think of the biblical phase, Him that cometh unto me, I will in no wise cast out". That, perhaps, is now of no importance but my final word is that unless the Government come forward with more concrete proposals and undertakings of action to break the deadlock, in the interests not only of the miners but of the nation as a whole, then I am afraid, in human and economic terms, it will have such serious repercussions on many sectors of industry that the consequences will not be difficult to ignore, even by the most naive.

7.20 p.m.

Mr. Derek Coombs (Birmingham, Yardley)

It is tragic that not only does an expanding economy have to come to a halt because of the oil crisis but now, due to industrial action, we may have to switch off to the point that our gross domestic product will fall much faster than elsewhere. From striving to expand more than most other countries, we shall now go backwards faster than anybody else.

The major responsibility for all this lies with the extreme militants in the National Union of Mineworkers. I have talked to some of their top officials and it has been suggested to me that stage 3 is attractive, and that if it had not been called stage 3 the offer would have been accepted. One official to whom I talked even went on to suggest that a lower offer with a higher basic would go down well with the militants, provided that it breached our counter-inflation policy. It is abundantly clear, therefore, that this is not really an industrial dispute. It is a political act by a few men who are using the vast strength of the miners for their own ends. Their prime interest clearly is not the miner's wage. Their political motives are a kind of revolution, and the miners and the public should know this.

Obviously the Government cannot accept this situation, for we are all in this together. If the miners had been offered a 5 per cent. wage increase. I could understand this refusal to compromise. But can anyone seriously suggest that 16½ per cent. is not a very generous offer?

Mr. Michael McGuire (Ince)

But it is not 16½ per cent.

Mr. Coombs

Labour Members in their hearts know that it is 16½ per cent., altough they say otherwise. Here we have the miners turning down an offer of £44 million—not a small sum—which comes to almost £5 per week on average, with some standing to pick up as much as £9 per week extra. It should be understood that the amount that this increase will be worth in real terms in a year's time depends directly on the rate of inflation—and that, in turn, will depend on the impact of the miners' go-slow on the national economy. A speedy settlement must be in their own interests. It will be tragic if we can settle matters in this country only at the expense of 2 million or 3 million unemployed and through drastic cuts in living standards and a siege economy, which could do nearly as much as the shortage of Arab oil to set off a world depression. Therefore, there should be a compromise. I believe that the solution lies in finding some way, over the next few critical years, of encouraging men to stay in the industry and so substantially reduce the constant labour drain.

In the light of present circumstances the Coal Industry Act could be rearranged so that any miner who stays in his job for a period, of say, three or five years would receive a lump sum at the end of that time. To avoid his leaving the industry after the three and five year stages, the money could then be set aside by the National Coal Board and paid to him on retirement independent of his normal pension entitlement.

Surely if we are prepared to consider an incentive scheme for the Arab States to maintain the quantity and price of oil, it is reasonable that a long-term scheme of this kind could be envisaged to encourage the miners to remain in their industry, particularly as it would not require new funds but only a reallocation of existing resources.

We all appreciate that the miner's job is both dirty and dangerous. But this is not new. The job has been dirty and dangerous since mining began. Are we now to believe that dirt and danger suddenly became apparent in one flash of understanding? If dirt and danger are the criteria, it could be argued that a miner is worth £500 a week. But if that is so, what of the worth of others? A man with an empty grate and an acute appendicitis knows the relative worth of a nurse and a miner. Each worker has a purely arbitrary value. Each can think of a thousand reasons why he should be paid more than the next man. If one section of the community exerts its influence to the extent that it seriously impairs or destroys all other sections, it can in the long term be judged only as provocative.

This is the situation in which the miners unfortunately have been placed by their leaders. Their leadership has set the value, made the valuations, charted the course and here we see a form of conduct only thinly disguised as a democratic process. In the first place, it might have been a question of miners versus the Coal Board. Then it became miners versus the Government. Now it looks very much like miners versus the people. In the general show of solidarity this fact might well have escaped the mining community. There is a point where sentiment begins to run out, where sympathy turns to hardness and where hardness turns to hostility. Could it be that this point is not far away?

Mr. McGuire

Section 144 of the Industrial Relations Act will cure the hon. Gentleman's problems.

Mr. Coombs

Any mining leader who thinks——

Mr. McGuire

Has the hon. Member thought about Section 144?

Mr. Deputy Speaker (Mr. E. L. Mallalieu)

The hon. Member for Ince (Mr. McGuire) must not address the House from a sedentary position.

Mr. McGuire

If the hon. Member for Birmingham, Yardley (Mr. Coombs) will give way, I could make my point.

Mr. Coombs

Very well, I shall give way to the hon. Gentleman.

Mr. McGuire

The hon. Gentleman's remarks have excited my interest so much that I must make one important point to him. What does the hon. Gentleman think will be the result of a ballot of the mineworkers in terms of accepting their leaders' advice?

Mr. Coombs

I do not advocate a ballot. I think that in all probability the miners would support their leaders. This does not affect my point that the leaders are misleading the miners. Any mining leader who thinks that his argument is supported by the country as a whole is sadly misinformed. The country is weary of blackmail. There has to be a middle way. It is up to the miners' leaders to show real leadership and to help the Government and the country to get back on the right path. If they really wish to help their members if they really wish to help their country they should show now that they are reasonable and fair-minded men.

7.28 p.m.

Mr. J. D. Dormand (Easington)

I wish that I had the opportunity to take up many of the points made by the hon. Member for Birmingham. Yardley (Mr. Coombs), it was a controversial speech, but it was naive and did not recognise the realities of the situation. However, I intend to obey the injunction laid down by Mr. Speaker at the beginning of the debate and I shall shorten my speech.

Although this has tended to be a wide-ranging debate, inevitably it has concentrated largely, though not entirely, on the question of energy supplies, and I am glad that most speeches have dealt with the coal industry. During the miners' strike last year, I spent a great deal of time with the miners in my constituency. I have 8,000 miners in my constituency and I have met the miners in their picket lines, at meetings and elsewhere. While they were determined to fight and win that dispute, as they did, they at all times recognised the danger to the pits and the possible closures which might arise from lack of maintenance. That factor was ever present in their minds. But when this point is put to them in the present dispute, there is a very different reply. They say, "Very well, if it means closing the pit, then close it. We have had enough. We'll get a job more fitted to human beings."

Let me tell the Government, and the Prime Minister in particular, that there is now a fundamental change of attitude on the part of the miners towards the pit. My authority for saying this is that I come from a mining family and have lived among miners all my life. I feel the change very clearly. It is a brand-new factor in the situation and it is something which has not existed before. This situation can have the most serious consequences not only for the mining industry but, in view of the new circumstances, for the country as a whole. We shall become more dependent on coal than ever before and we should thank our lucky stars that we have so much coal beneath our soil.

One part of the solution to our future difficulties is to ensure that the miners remain at the top of the industrial wages league, however frequently adjustments have to be. The miners' present position completely exposes the great weakness of the Government's incomes policy. I refer to its rigidity. I had intended to expand on this, but my right hon. Friend the Leader of the Opposition, and also my right hon. Friend the Member for Barnsley (Mr. Mason), in an excellent speech, spelt this out in detail and therefore I shall refrain from repeating that argument. I say merely that I know of no previous incomes policy, from the Stafford Cripps policy of 1948 to that of the last Labour Government, which has not made provision for circumstances which exactly currently exist in the mining industry.

The disagreeable nature of the miners' work makes it unique. The Prime Minister said yesterday that the miners are not unique. He knows full well that no other job kills 50 men a year in accidents, kills even more from pneumoconiosis, injures more than any other six industries put together and has daily working conditions which would not be tolerated for one hour in any factory these days. It is those factors which make the coal industry unique. Its uniqueness together with the disastrous net wastage from the industry make it imperative that the Government look at the wage claim outside phase 3.

I do not know why the Government are so obstinate about this. They need not be. I am sure that the people realise that the circumstances are so very different from those which existed when the legislation went through this House, and that they would support a change of mind on the part of the Government in the present critical situation.

It is recognised generally now that we shall be heavily dependent on coal for a long time to come. In those circumstances I want to ask three specific questions.

What is to be done about the recent finds of coal at Selby and in Oxford-shire, which are very extensive? I understand that the National Coal Board has not yet made up its mind. Will the Government bring pressure to bear on the exploitation of these fields? Will the Minister responsible resist all the pressures which will come from the conservationists, among whom I count myself? I was educated at Oxford and I know the beautiful countryside there. But the times are different.

Secondly, is the search for new coalfields to be resumed? I understand that because of the extensive discoveries that have been made in the past two years this work has been stopped. In the new situation I believe that it would be criminal not to pursue the search.

I was delighted to hear my right hon. Frend the Member for Barnsley touch upon what was to be my third question. He is much more knowledgeable and eloquent than I am and, of course, he is a former Minister. So far he is the only hon. Member to refer to the extraction of oil and gas from coal. He produced the figures. As we know, this has always been regarded as an expensive process. However, it is now coming nearer to economic reality. It seems to me that it ought now at least to be explored.

The Government frequently remind the House and the country that they are to spend more money on the coal industry than any previous Government have done. They are entitled to say that. What they are not entitled to say is that it was a free, deliberate choice. The circumstances left them no alternative but to take that action. They fool no one with that claim, and certainly they do not fool the miners.

The old adage that it is an ill wind that blows no one any good was never more true than it is in the present situation. People realise the need for a fundamental change in some of the values of our society and the position of the miner epitomises that realisation. It may be that some hon. Members heard the BBC radio broadcast on Sunday when an interviewer spoke to a number of people on the streets in Sheffield. The first man interviewed said that he would consider going down a pit if he had £100 a week take-home pay. What was even more significant was that the next three people to be interviewed said that there were no financial rewards and no circumstances which would induce them to go down a pit.

I say to the Prime Minister and to the Chancellor of the Exchequer, especially after the Chancellor's disgraceful imputation against the miners on television on Monday, that they must not make the miners the scapegoats for the present situation. If there were no dispute of any kind in the country we should still be in a critical situation because of the Government's profligate policies——

Mr. John Page (Harrow, West)

I have been listening carefully to the hon. Gentleman. To follow up what he has been saying, will he agree that if there were not a dispute in the coal industry the energy situation as a whole would be very much better than it is today?

Mr. Dormand

I thought that that was self evident. But the hon. Gentleman has not been listening to my argument. Is he saying that the miners ought not to be taking this legal action?

Mr. John Page

Of course I am.

Mr, Dormand

In that case, I fail to see the significance of his intervention.

The hastily covered up speech of Lord Rothschild in September now takes on more meaning. I read it again yesterday, and I commend it to hon. Members, especially to Government supporters.

Mr. Atkinson

It should be made compulsory reading.

Mr. Dormand

I agree with my hon. Friend. Further I suggest that the Prime Minister uses that speech as the terms of reference for a "think tank" reappraisal of our present situation.

Lord Rothschild knew that the Government had been building up to the present position for some time. My hon. Friend the Member for Blaydon (Mr. Woof) commented that it had been building up for some time, and perhaps I might cover the bones of what he said with the figures.

The current account deficit for the 12 months to June 1973 was £548 million. For the third quarter after that date it was £334 million; in other words, an annual rate of £1,336 million. The October and November figures are well known to us all. We are now running at a deficit of £2,500 million. This is an appalling situation, but it will be compounded by other factors such as the Common Market tariff which we debated on Monday night, and the end of Commonwealth preferences.

There is no question of the miners being the cause of our present difficulties. For the sake of the Government's future relations with them, I beg right hon. Gentlemen opposite to be honest about the situation. There is no more responsible body of men in the country than the miners. Their long history shows that they are the salt of the earth. If the Government have any sense at all, which I doubt, they will act quickly to produce the improved reasonable settlement which the present critical situation demands.

7.38 p.m.

Mr. Michael Grylls (Chertsey)

I listened carefully to the arguments advanced by the hon. Member for Easing-ton (Mr. Dormand) since he comes from a constituency which is very much in the middle of the mining industry. A lot of his points and the knowledge that he brought to his speech were relevant. Hon. Members on my own side of the House will be well advised to take note of them. However, I know that the hon. Gentleman will forgive me if I do not take up too many of them. I have promised to keep my remarks brief.

My right hon. Friend the Chancellor of the Exchequer reminded us, if we needed reminding, that the present situation was one of the gravest since the end of the war. That set the framework for what has been a thoughtful but at times an acrimonious debate in party political terms, although a great many hon. Members have been genuinely trying to find real solutions to our problems in terms of the economy and of energy.

What is perhaps the most dangerous part is that whereas in other periods in our history this country has been threatened from without, at the moment we find ourselves not only threatened from without because of the Arab-Israeli war and the threat to our oil supplies but threatened from within by industrial trouble at home. This seems to be a deliberate action by a very few people, but I regret that it is action which is undermining the living standards of the vast majority.

With all the problems now facing us, in other days some might have called this sabotage. I do not say this in any provocative sense. I realise that many of the people who are taking this action genuinely believe that they have a grievance. I recognise that the miners are losing quite considerable earnings because of the overtime ban. Therefore, they must believe that they have a reasonable case.

The tragedy is the damage that is being caused to the country. In the last three years the Government have made genuine attempts to achieve expansion of the economy, higher earnings throughout industry for almost all workers and higher pensions year by year. All these aims are threatened and are of great concern to right hon. and hon. Members on both sides of the House. I believe that everyone in the House deeply regrets the situation, although we may argue about the cause and the solution to the problem.

I want to concentrate solely, as other hon. Members have done, on the miners' position. The country will want to know why the miners are taking this action. Is it because the current offer of 13 per cent., rising with productivity to 13½ per cent., bringing some miners £9 extra a week, is too little? There are no miners in my constituency, but I must tell the hon. Member for Easington and others representing mining constituencies that many of my constituents would be delighted if they were to receive an extra £9 a week. Very few of them are likely to receive that amount.

Mr. Dormand

Will the hon. Gentleman give way?

Mr. Grylls

I should like to give way to the hon. Gentleman but I am under severe duress to finish quickly as other hon. Members wish to speak. I hope he will understand.

Most fair and reasonable people would think that that was not a bad offer. Certainly that is the view of many of my constituents, and I believe that they are right. The NCB's offer is certainly generous.

Some might ask: have the miners in general suffered under this Government? If so, they have good reason perhaps to take this action. Between April 1970 and April 1973 miners' earnings went up by 52.1 per cent. Some might argue that that is not enough, but I suggest that it is a considerable increase. The amount of money that the Government have put into the mining industry for expansion is also quite considerable.

The current offer to the miners means that a face worker on a three-shift rota, with overtime, fringe benefits and the productivity deal, will be able to earn nearly £55 a week.

Mr. Leslie Huckfield (Nuneaton)

Rubbish.

Mr. Grylls

Labour Members may say that that is not enough, and perhaps I would agree with them; but we on this side of the House are entitled to look back to what the miners in similar conditions were earning in 1970. I had the information in a recent answer to a Question. The equivalent figure in June 1970 was £29 a week. It cannot be said, therefore, that the Government have ground down the miners. Indeed, I think they have done them pretty well.

Under the current offer a totally unskilled boy of 19 who never goes underground or does night shifts can earn £30 a week. Again, that is not unreasonable.

I think everybody would probably agree that in the past miners have been underpaid. Many people would say that they are still underpaid today. But this Government have made a major contribution to ensuring that the miners have caught up and passed many other sections of industrial workers. Indeed, the figures of those coming back into the mining industry are encouraging. In 1973 there were 5,489 re-entrants.

Mr. Dormand

What is the net wastage?

Mr. Grylls

One gained the impression from some of the speeches made by hon. Gentlemen opposite that miners were leaving the pits at a tremendous rate and that the situation was disastrous. We should take encouragement from the real improvement in miners' earnings over the last three years, because that has meant many more men coming back to the mines.

Why are the miners taking this action if the picture is as I have tried to paint it? In trying to analyse the situation one should look a little more closely, if sadly, at the NUM executive. A minority of the NUM executive—I believe six members at the moment—are card-carrying members of the Communist Party.

Mr. Leslie Huckfield

So what?

Mr. Grylls

Of course, they are entitled to do that. But what are they trying to do? I believe that they are endeavouring to have a confrontation with the Government. Indeed, that is what they have said. They may be entitled to have a confrontation with the Government. But they are determined to defeat the Government, and I believe that that is against the interests of the miners as a whole.

There is no doubt that the miners have attracted a great deal of sympathy, and rightly so. They have a case for continually improved earnings. But I wish that the NUM excutive in general would get down to serious negotiation within the stage 3 proposals recently announced by the Government. Within the flexibility of those proposals there is room to negotiate a better situation for the miners. It is a tragedy that a few people should not really be considering the interests of the miners as a whole.

I hope that the majority of miners will realise that they must get down to negotiate with the NCB and the Government within the terms of stage 3. I believe that the Government can then turn to the miners and say "We will ensure that you are more generously treated in future. When stage 4 comes along, we will see that you are looked after." That is very important.

I advise the miners to accept the offer that has been put forward before it is too late. They should go back to work and help to avoid a three-day working week in industry. I believe that my right hon. Friends will then say "We will ensure that you receive equally generous treatment in future", and miners' earnings will gradually continue to increase.

7.49 p.m.

Mr. Leslie Huckfield (Nuneaton)

I will not pursue what was said by the hon. Member for Chertsey (Mr. Grylls). However, I wonder from time to time whether all the organisations with which he must have dealings are entirely free from membership of the National Front.

When the Chancellor made his statement on Monday I could not help wondering exactly what problem he thought he was dealing with. I cannot believe that when he announced his selected cuts he thought that he was dealing with inflation or trying to keep economic growth going, if indeed we still have economic growth. Surely the Chancellor and the Financial Secretary to the Treasury realise that if we come down to a three-day working week in most factories we shall have a far more serious inflationary situation than at any time since the war and stronger measures than those he announced on Monday will be needed to deal with it.

Perhaps the Chancellor intended to deal with the balance of payments. But I cannot think of one measure that he announced on Monday that would directly affect the balance of payments. Some of the credit restrictions might indirectly and marginally improve our balance of payments situation in the longer term, but I cannot see anything that would put right the devastating trend that we have not only in this year's, but in next year's, projections of the balance of payments.

Perhaps the Chancellor was trying to deal with the energy situation in his proposals on Monday. Again, I cannot help thinking that if he wanted to deal with the energy situation, far more relevant would have been something to exert more control over the multinational oil companies, which do not at present even feel constrained to tell the Government where they are sending their tankers. The present situation is that although Sheikh Yamani may have promised this country more oil, we cannot guarantee that it will get here because we have no control over the companies that bring it to this country.

If it was the energy situation that the Chancellor was talking about on Monday, surely the Government ought to give the new Secretary of State for Employment the opportunity to have a look at the energy situation. I cannot help concluding, as Professor Kaldor did in his letter published in The Times on Monday, that the Government's way of settling the energy situation will be about 800 times more expensive than settling the miners' claim in full. If that is the kind of way in which the Chancellor honestly believes that he will solve the country's energy problems, I fear for growth, for the balance of payments and for the country as a whole.

My right hon. Friend the Member for Barnsley (Mr. Mason) has already elaborated on the flexibility which is inherent in the proposals which have been put forward, if the Secretary of State for Employment really wanted to settle. Those of us who have had some experience in industrial relations know that in some of my right hon. Friend's proposals there is already sufficient flexibility for getting a settlement if that was really wanted by the Government.

I am bound to correct the hon. Member for Chertsey. Having talked to my miners, who have gone through their calculations in full, I find that it will not be a 13 per cent. increase nor a 16½ per cent. increase. For the majority of them it will be a 7 per cent. increase The Prime Minister wrote to me on 13th December. He said in his letter if the offer were accepted not only would the miners' position relative to manufacturing industry be more than restored to what it was after Wilberforce but they would also maintain their relative advantage throughout Stage 3". Perhaps I may tell the hon. Member for Chertsey and the Prime Minister that my face workers in Warwickshire will not get, under the present award, more than about £39.60. But if they went to work in a Coventry car factory, or any other factory in Coventry, they would find themselves earning at least £10 a week and probably £15 a week more than that. If they worked nights they would probably find themselves, in certain cases, able to earn almost double what they can under the present offer by the NCB made under the Government's auspices. Yet the Prime Minister tries to tell me in a letter that this offer will more than restore the miners to their position relative to manufacturing industry.

I have told the Prime Minister that we have a very serious situation in Warwickshire. About 30 skilled men leave the Warwickshire pits every week. We were already 600 men short. Since the present dispute started and before 1974 we shall see another 200 skilled men having left Warwickshire pits. Yet the Prime Minister says Recruitment has been remarkably steady and many ex-miners have been returning to the pits. I know the lodge secretaries in Warwickshire fairly well. They cannot tell me of many ex-miners who have been returning to the pits. Perhaps this is the Prime Minister's and the Chancellor's genuine information. But if they believe that under this offer miners' earnings will be restored and even advanced on the average in manufacturing industry, if they believe that skilled miners are returning to the pits because of the offer, I can only say that they should go down the pits and talk to some of the men at the face. They come to a very different conclusion.

Some miners in my constituency have been almost apologising to me in the past two or three weeks. After about 25 or even 30 years in the mining industry, they feel that they cannot stay in the pits any longer because of the pay. Some of these miners have been transferred from Scotland and from many of the constituencies represented by my hon. Friends. They came all the way to Warwickshire because they wanted to stay in the mining industry, but they feel that they must get out because they cannot tolerate any longer the pay and conditions which they have to suffer.

I make brief reference to the other dispute which has been mentioned by both sides of the House, namely the dispute between ASLEF and the British Railways Board. I say quite unashamedly that I come from a railway family. My father is an ASLEF member. Some of the things which have been said from the Government side of the House do not bear much relevance to the kind of earnings that I know my father brings into his household.

In July 1972, in November 1972 and in March of this year, the ASLEF executive told its members to call off industrial action but without getting any restruturing out of it, without any kind of offer or promise. In November last year it even had to take action just to get the pay talks on restructuring started. When a union has told its membership three times already to call off industrial action and when it has got nothing, it finds that there is a limit on the number of times that its general secretary or executive can tell the men to call off industrial action, knowing full well that nothing is available if they do call it off.

ASLEF is the union which, because of the Scamp manning agreement in 1965, has seen its membership fall from about 47,000 in 1965 to 28,000 today. I do not call that being obstructive. When one bears in mind that the official action which ASLEF took in November 1972 was the first official recommended action that had been taken since 1955, that is not a bad record in industrial relations.

Perhaps the Secretary of State for Employment thinks that the train drivers have been made a good offer. He would obviously tell the House that at present they will receive an increase on their basic wage, which is £33. That is all that an engine driver receives, very often after 40 years on the railways. Perhaps the right hon. Gentleman would say that they will receive about £36.95. But what he would neglect to tell the House is that £2.45 of that will come from consolidation and the loss of bonuses. In other words, engine drivers will once again be asked to pay for their own wage increases. In the last two general increases which have been made, apart from restructuring, engine drivers have literally paid for their own wage increases. We can no longer accept a situation in which offers are bandied about by the British Railways Board when footplate staff know full well that in the end they themselves will be paying for them. All that has come out of the present offer is a £1·50 special responsibility allowance—in other words, thirty bob! That is all that the engine drivers have been really offered by the British Railways Board.

If the Secretary of State for Employment wants a bit of flexibility, he should look at the fact that footplatemen in this country still operate on a bonus system based on 1968 rates of pay. The engine driver's wage in 1968 was £17.55 a week, or 44p an hour. Bonuses paid to engine drivers are still based on that figure. Why does not the right hon. Gentleman consider ASLEF's unique case on the unsocial hours premium? Train drivers can clock on at a different hour each day and they do not know when they will finish. Often the men do not know until the day before what time they will start. Even when they go to work they can rarely tell their wives what time they will be coming home. If the right hon. Gentleman wants to consider matters on which some kind of agreement could be reached, why does not he consider the special responsibility premium, why does he not consider the unsocial hours case which ASLEF has advanced and why does he not consider the fact that engine drivers' bonuses are still based on 1968 rates of pay?

The present situation is that ASLEF and the National Union of Railwaymen are prepared to talk under the chairmanship of Bill McCarphy. Why is it that the Electricity Council will talk to the EPEA while its dispute continues when the British Railways Board will not talk to ASLEF while the ASLEF dispute continues? If the right hon. Gentleman wants a settlement, then he must tell the British Railways Board to come off its high horse and to start talking. That is a way in which the problem can be settled.

Above all we need an appeal for national unity. The proposals put forward by the Government do not constitute to trade unionists an appeal for national unity. For Heaven's sake why do not the Government let the Secretary of State for Employment, who has a proven record in Northern Ireland, try to sort out the present situation? Why do not they let him conciliate? Why do not they let the conciliation officers use their good offices before the whole country, under a Tory Government, is ruined completely?

8.3 p.m.

Mr. W. Benyon (Buckingham)

I accept that matters may look in Nuneaton as the hon. Member for Nuneaton (Mr. Leslie Huckfield) describes them, but I must tell the hon. Gentleman that when I visited his constituency last weekend I had a reaction different from that which he was postulating. I ask him to accept that matters look different in my constituency.

I do not want to strike a controversial note. I begin by saying something which I believe will be acceptable to both sides of the House—namely, that democracy can work only if the minority accepts that it is a minority and the majority accepts that it has a duty to take into consideration the legitimate aims and aspirations of the minority. The whole procedure of the House and our constitution rests on that concept.

In retrospect, following the 1970 General Election, it seems that the Government put too much emphasis on solving the problem of unemployment. It was not unnatural that they should do so. All the commentators of the time said that that was the overriding problem. Few of us can forget the scenes which occurred in the House when the unemployment figure rose to over 1 million. Allowing for the fact that inflation was the enemy all along, it was necessary to cure both unemployment and inflation so that expansion should take place in the economy.

That is where I part company from my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). I do so with rather more deference than did the hon. Member for Tottenham (Mr. Atkinson). It seems to me that my right hon. Friend's remedy has been tried before and has failed. Also he said that we must take the Government out of the present dispute and leave its solution to the National Coal Board and the National Union of Mineworkers, yet the fact remains that the Government are the employers in fact if not in name. At some point the Government's actions are bound to impinge on the settlement of the dispute. Either we shall pay more for coal or the taxpayer will foot the bill. There is no other alternative.

Mr. John Biffen (Oswestry)

We shall pay more for coal.

Mr. Benyon

Yes, that is one possibility. I am a supporter of growth. That was right in 1970 and thereafter and it is right now. The tragedy of the present situation is that it is an interruption—and I hope that it is only an interruption—in the progress which has been made to achieve a proper rate of growth. If we recall events since the 1970 General Election, we shall remember that there was a de-escalation of wage claims. That policy worked until the miners' strike in 1972. The figures which have been published since prove that.

When the miners' dispute of 1972 was settled by Wilberforce, the basis of the settlement was that the nature of the miners' job and its importance entitled the industry to be treated as a special case. In the event, as we all know, no other industry was prepared to consider itself as any less a special case than the mining industry. The Wilberforce terms therefore became the norm rather than the exception. We all know that thereafter the Government tried to reach a voluntary agreement. When that was not forthcoming there was a choice between deflation or statutory controls.

I, like most of my hon. Friends, fought the last General Election in opposition to a statutory wages policy. I still dislike it intensely. But when faced with the stark choice of deflation or statutory controls, I had no hesitation in supporting the Government's action. The Leader of the Opposition was right when he said yesterday that the third stage of a statutory policy is always the most difficult. It is also the most important. It is especially important to those who, like myself, see it as a prelude to the end of statutory controls.

Mr. Raphael Tuck (Watford)

But stage 3 is dead.

Mr. Benyon

It is not dead. If it dies, as I shall seek to show, the alternative is grim. If stage 3 is broken—and it is already over-generous, as my right hon. Friend the Prime Minister said yesterday, in view of the embargo on oil and the increased costs of importing oil—the mining industry and other nationalised industries will be the losers. The workers of those industries will be the main losers under a free-for-all. It is always the nationalised industries which fare worse than the private sector. No one knows that better than the workers in those industries.

Under stage 3 the mining industry has a chance materially to improve not just the monetary level of wages but the standard of living of its workers. If I judge public opinion aright, there is strong support for the Government. I suggest that people understand the issue far better than they did two years ago. Curiously enough, the public's resolve is strengthened and not weakened by the other difficulties which confront us. They realise that if the Government are not allowed to implement a policy which has been sanctioned by Parliament, no future Government will be able to implement their controversial Measures.

I suggest to Labour hon. Members that what is sauce for the goose is sauce for the gander. I can assure them that the desire for political martyrdom does not rest in Socialist breasts alone. There are a number of Conservative supporters who will be watching the events of the next few weeks very carefully. It is on those events that they will react to any future Labour Government should that misfortune befall us.

The present disputes represent possibly the most important aspect of the debate. I suggest that if no settlement is reached the Government should put the matter to the test by a General Election so that the people can decide.

8.10 p.m.

Mr. Robert Hughes (Aberdeen, North)

Throughout the two days of debate there has been running through the speeches from the Government benches the general strand that they do not seek any confrontation with the trade unions. We have had the call for reconciliation; we have had the great conciliator himself brought over from Northern Ireland to sort us out. One would imagine from the tone of the speeches that in industrial relations hitherto all had been sweetness and light, that the calm and serenity on the industrial field had been ruffled only recently by bloody-minded miners and bloody-minded railway drivers, and that if only they had not disturbed the calm everything would have gone according to plan.

Nothing could be further from the truth: The Government's record in industrial relations and in confrontations with the unions has been unmitigated disaster from the start. How many times have we seen Ministers go to the Dispatch Box to tell us that wage increases could not be given because we could not pay ourselves more than we could afford? We remember the piles of rotting and stinking garbage in the streets of our major cities during the Government's first confrontation, which was with the local authority manual workers. I hope we have not forgotten the dispute with the Post Office workers. For the Prime Minister to go to the Dispatch Box yesterday and have the gall to pray in aid Tom Jackson of the Post Office workers after what his Government did, after crucifying the Post Office workers, was to rub salt into the wound.

I sometimes wish that some of the Conservative Members who have spoken, especially today, and have said that there is need to amend the Industrial Relations Act, and those who said "Hear, hear" to that suggestion, as well as the hon. Member who said he supported that Act because he had reluctantly been persuaded that it was right in principle but that he was sorry there had not been a full debate, had spoken up when the Government railroaded the Bill through, curtailing discussion and imposing the guillotine, with not one word of debate in this House about whole clauses, including the clause dealing with the Industrial Relations Court. If they had spoken out more clearly then, the poison which is within our industrial society today might not have been so damaging.

We went from the Industrial Relations Act to the Housing Finance Act and to the wage freeze, and we are now faced with cuts in spending. On every occasion sacrifices have been asked of the people, but it has been the working-class people who have borne the brunt. Inflation hits working-class people harder than anybody else, and unemployment hits working-class people first and most badly of all. It is obvious from what the Chancellor of the Exchequer said that the cuts in spending would have been made irrespective of the railway and mining disputes. In truth, we are back in the old rut of stop-go, and the old rut of deflation.

The Chancellor of the Exchequer has sought to pretend on television and in this House that he is not affecting people's living standards and that he is being magnanimous in cutting the public purse first. One would almost imagine that it was his own money he was spending. In fact, it is the working-class people who will again bear the brunt because, even if direct or indirect taxation has not been raised for the benefit of those at the lower end of the scale, we know who will suffer and who will have to make the sacrifices.

Savaging the health service makes no difference to the patient who is prepared to pay for his private care. Savaging the programme of residential homes for the elderly affects only the working-class people who are living alone and desperately need some sort of good accommodation. Savaging the education expenditure hurts not one whit those who send their children to private schools and are able to buy educational privilege. It is working-class children who will remain in the slum schools and will have outdated equipment, and if the cuts bite so deeply that the teacher supply is also affected it is working-class children who will not have the proper care and attention.

We have been told that there is to be an increase in the price of coal, gas and electricity. Who will benefit from that? Who will be hurt more than anybody else? Again, it will be the ordinary people of this country. In the regions where we have been desperately battling against unemployment and lack of social services, we will suffer most even though we do not yet know how the cuts will be shared out.

The Government and many people in the country have called for a national concordat, for national unity. How can they expect national unity in these circumstances? Given that we are facing a three-day working week because of the energy crisis, any call for unity will need as a first step a suspension of the rent increases due under the Housing Finance Act and a suspension of the rules governing unemployment benefit so that those who are unemployed are taken care of and so that their living standards are not cut as severely as they might be cut.

The Government are now looking to the North Sea for a solution of their long-term energy problems. In many ways North Sea oil exploration and exploitation illustrates the Government's dilemma, because they think that North Sea oil will solve their balance of payments problems. It might help if the Government are able to control the revenues, if they are able to renegotiate licences in order to get more money from North Sea oil. But what the Government have no control over at the moment is where the North Sea oil will go and how it can be used to support the British energy position.

We were told when BP's Forties field was announced as a commercial prospect, that BP intended to refine half the oil at Grangemouth by increasing the capacity of its refinery there and that half would go by oil terminal from the Firth of Forth to Rotterdam. I find it very significant and sinister that work is progressing apace to build the oil terminal for exporting the oil to Rotterdam but that there is not one firm proposal to enlarge the refinery at Grangemouth. Many people in Scotland have told me that BP never intended to refine the oil in Britain and that it will all be exported. I believe that we will have absolutely no control over how these resources are used.

The Government must therefore seriously begin properly to manage the expansion of the economy. They have tried the so-called free enterprise economy of Selsdon Park and they have tried wage controls. These have all failed. They are now trying deflation. The fact that they have the accolade of the fanatic from Wolverhampton, Southwest (Mr. Powell) does not make their policien any better or any more attract tive.The fact is that nearly all Governments of the past two decades have been interventionist, but they have been interventionist in a peripheral sense. They have intervened to stimulate demand when unemployment has been high. When we had the so-called overheating of the economy, they intervened to damp down demand. In fact, they have operated purely on the periphery of the economy. I believe that Governments, of whatever colour, will have to intervene much more directly in the management of the economy if we are to get out of the stop-go cycle that we seem to be in regardless of what happens.

I accept that one can have Government intervention and Government control of industry without having a Socialist Government, and that we could very well be on the brink of a corporate-type State heading towards outfight Fascism. But the latter will be on the cards only if we have a trade union movement which is broken. That is why it is extremely important to have a free trade union movement which is strong and which believes in the policies of Socialism. I believe that it is only by having Socialist ownership and control of the major part of our industry and economy that we shall get out of the economic cycle which we have been in. I believe that only when we can show that the Government operate in the interests of the people, and when it is a Socialist Government, shall we make progress towards national unity. I believe that that day is not so very far away, and I hope that the Prime Minister will give us an early opportunity to have an election so that we can begin to move along that road.

8.19 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The suggestion of the hon. Member for Aberdeen, North (Mr. Robert Hughes) that a Socialist Government might be a panacea for all our ills sounds a little thin and I doubt whether he will persist in that belief, because there are real problems which cannot be dealt with by any amount of Socialism or intervention. That is why I am very pleased that the Government have acted on the deficit in our national accounts, which has not so far been talked about. My right hon. Friend was right in saying that at the moment it is impossible to forecast how demand will go. We do not know about the price of our oil supplies, about the duration of the three-day working week, about the shortfall in spending or about fiscal drag. However, to take £1,200 million out of the deficit through reduced public spending is as good a guess as can be made at this stage.

Also, we do not know, but I imagine that there will be a large extra reduction of demand due to the high price we shall have to pay for oil from the Middle East in the year ahead. If these two factors are put together they will have a considerable effect upon the Government's borrowing requirement next year which will in turn have a moderating effect on inflation in times to come. That seems to me to be not only a good conversion of thinking, but a jolly good guess in so far as it is possible to guess right at this stage.

However, I do not believe that it is possible to conclude on the balance of payments front that the action can possibly be adequate. I am not being critical here, just analytical. The balance of trade is already very seriously wrong and is unlikely to recover in a short period. Added to that we shall have the major extra cost of oil which will be across the exchanges. The adverse balance of trade will not be put right by reducing Government expenditure at home in the coming year by £1,200 million. Some massive deflation would be necessary if we were to right the balance of trade under these circumstances.

Of course, the Government have hinted that they think that the balance of trade will be matched by borrowings from the Arab world, as has been happening up to now. We have been financing our trade deficit by borrowing, and that is to continue. The Arabs have so much money and nowhere to put it that they will be only too happy to lend it to us, we are told. When I consider the hypothetical election that is to be fought on the issue of who runs the country—Labour Members say it is the multinational companies, my hon. Friends say it is the trade unions—I feel that if we borrow their money for very long it will be the sheiks who own the country. I do not think it is wise to cover excessively high standards of living by borrowing.

Of course, North Sea oil will come to our rescue. But the reason the action which the Government have taken appears right on the domestic demand scene, but appears inadequate on the balance of payments scene is, that the extra payment for Arab oil will make essential a reduction at least in the growth of our standard of living and possibly in the standard of living. Therefore we have to choose between reducing the standard of living by means of hyperinflation or by means of deflation designed to help us to export to pay for our oil. That is the basic choice which faces us. To me that is by far the most important aspect of the debate.

Why, therefore, do we not acknowledge that this is the real point? There seems to be one reason, and the hon. Member for Ashfield (Mr. Marquand) was very close to it earlier today. It is also enshrined in something called stage 3 which says that our standard of living will grow by 11 per cent. or more in the year ahead. At the same time the nation's wealth will grow by 3½ per cent. It is quite clearly no longer consistent or realistic to apply these growth rates in the light of what has now happened.

I wonder what service stage 3 now renders. The Government believe that in a way it is useful to restrain "excessive wage increases", but in a way it is very damaging because it encourages other wage increases which otherwise might not take place. Everyone will demand his 11 per cent. and no one will go with less. It is also creating the illusion that growth of both the economy and of earnings are still possible.

It would be very easy to replace stage 3. I can imagine, my right hon. Friend the Prime Minister, just like the ancient medieval herald, coming into the Chamber and saying, "Stage 3 is dead. Long live stage 4." Stage 4 would have greater flexibility and it would make it possible for my right hon. Friend the Secretary of State for Employment, whose eloquence and good intentions impressed the House so much today, to use that power, that charm with which he achieves the compromise and conciliation for which he is so famous, to settle the miners' dispute.

It would enable us to reduce the settlements which others might receive because it would be tougher in some places and weaker in others. It would enable those essential price rises, such as oil and petrol, which we know have to happen, and gas and electricity, which are enshrined in the Government's proposals, to take place whilst restraining other price rises which we believe to be economically less essential. In that way stage 4 would come nearer to reality, with prices a function of supply and demand—the scarcer the goods the more expensive, the greater the supply, the cheaper—and wages a reflection of the relative value to the economy of different groups of people at different times. If stage 4 or 5 or even 6 bring us to the point where we may openly acknowledge these economic forces, although the Pay Board and the Price Commission may still be trying to put the stamp of official approval upon market forces, I for one will be content. I am prepared to go along with the shadow so long as the substance is real.

However, these are but some of the difficulties of continuing with the system of stage 1, 2 and 3. Many hon. Members today have tried to suggest some other way of dealing with the matter, and it is this tendency of the debate which has worried me most. We are all saying that phase 3 is dead and some of my hon. Friends are talking about some form of commission. Labour Members were talking about some participatory arrangement under which wages could be agreed and other hon. Members have been putting forward other types of prices and incomes control.

I do not believe that we should be looking for substitutes for the defects in stage 3. We should acknowledge that the control of prices and incomes, whether by agreement, by statute, by diktat, or by the exercise of ministerial power, charm and arm-twisting, is not the most desirable way to fix these things. It is better to allow them to find their right levels in society and to accept the inevitable consequences. If that can be the transition that we accept out of stage 4 into the later stages, I am content to suggest that it should stay as long as the economic reality is allowed to be understood.

8.30 p.m.

Mr. Denzil Davies (Llanelly)

Having listened to the debate for the last two days one thing upon which we can all agree is that we are facing a difficult and severe national crisis. It would have been reassuring if the crisis had been due entirely to external factors. Then it would have been simple to rally around the Government in fighting for economic survival. Unfortunately, the main reason for the crisis is the financial mismanagement of the country's affairs which the Prime Minister and especially the Chancellor of the Exchequer have shown over the last few years.

We have known for a long time that the Government are unable to communicate with ordinary people, as witness their appalling record in industrial relations. What is becoming more and more clear is that the Government are not very good at managing the economy either, although we are constantly being told that that is something that a Tory Government—a Government of businessmen—happens to be good at. We all agree that the country is facing today's situation partly because of external differences, but at that Dispatch Box on Thursday the Prime Minister tried to tell us that the balance of payments position next year would have improved had it not been for the difficulties of petroleum supplies and their increased costs.

To imply that at this time of grave crisis seems irresponsible. Most people know that, quite apart from the increases in petroleum prices, our balance of payments next year would have been considerably worse than this year. On the evidence of the last two months, the balance of payments next year will be in excess of £2,000 million, ignoring the effect of increased prices of oil.

With a potential balance-of-payments deficit of £2,000 million or more, and with foreign and convertible reserves of only £2,800 million the time was bound to come when the Government would have to take action to remedy the situation. The country could not proceed to cover this balance-of-payments deficit on that basis.

The oil and industrial crises have provided the Government with a thin veil to cover their appalling financial mismanagement. The indictment against the Government is not that they embarked on a policy of growth. We all want and must have growth. What is important is that the fruits and benefits of growth should be evenly and fairly distributed throughout society.

We have often seen other countries where there has been considerable growth but where its effects have not permeated justly throughout society. We must have growth, but the indictment against the Government is that they embarked on an import-led growth without adequate financial reserves on which to fall back should external storms blow up from time to time, as they are bound to.

No one expects the Government to foresee the vicissitudes of fortune outside their control, but I suggest that a prudent Government—and prudence is the last quality that this Government seem to possess—before embarking on such a course would have put their own financial house in order. The Government neglected to do that when they embarked on their policy of growth. To base that policy on the hope that world commodity prices might fall or stabilise, when those prices are entirely outside their control, seems to be financial profligacy of the highest order.

It has become fashionable over the years—and we heard it during the debate yesterday from the Leader of the Liberal Party—to suggest that the restraints imposed upon a country's reserves and its balance of trade should not be allowed to impede growth. Apparently all that we have to do is to free ourselves from the shackles of the exchange rates and the promised land will soon appear before our eyes.

That may be the case for some countries. That may apply to France, which grows most of its own food and is not as dependent as we are on imports. It may apply to West Germany, which has massive reserves to protect it in times of external financial difficulties. But for a country such as ours to embark upon this kind of policy without the financial reserves to support it is a rake's progress which, if it is not arrested, could lead us to the brink of bankruptcy.

One of the Government's troubles is that they believe their own propaganda. The Chancellor and his lieutenants never tire of telling us how high our reserves are. They have been telling us that for the last three years. They have become the victims of phoney financial statements and balance sheets which the Bank of England and the Treasury have been peddling out over the years.

The truth is that our reserves are wholly inadequate to meet a situation such as that which we are facing. It is also true that we do not have any reserves in the true sense of the word. What we do have are debt obligations, of a short-term volatile nature, of more than £4,000 million, and these are covered by reserves of £2,800 million. These are debts that we have incurred to Arab and other countries by paying them cripplingly high rates of interest.

It is a measure of the depths to which the Tory Government have brought this country that when an organisation of Arab States merely suggests that they may wish to withdraw part of their sterling balances that causes panic in the City and confusion in financial circles. How humiliating it is for a great nation such as ours that the Governor of the Bank of England had to be sent hot-foot to the deserts of Arabia to persuade a Bedouin King not to foreclose upon Great Britain.

The lessons to be learned from this crisis are clear, but the Government have not learned them. Like the Bourbons, they have learned nothing and forgotten nothing. When we again embark upon a policy of growth, we must not deceive ourselves into believing that we can achieve that growth with meagre resources and without making the necessary sacrifices at home—and by those who can well afford to make them—in order to shift resources from home demand to the export market. If we want Japanese colour television sets and high-powered foreign motor cars, so be it, but we have to pay for them with our own money that we have earned from exporting our own goods and not as a result of borrowing at 15 per cent. over the short term from Middle Eastern oil sheikhs.

The other lesson to be learned is that if the Government want to solve the problems facing this country they must create a climate of social justice. They will not do that if the Chancellor comes to the Dispatch Box and announces that he is to take £1,200 million from the people who build hospitals and schools, but only £85 million from those who build offices and well-furnished luxury hotels in the West End of London.

We should start committing vast sums of public money to making ourselves self-sufficient in energy. As a start, we should pay the miner sums in excess of the limits laid down by phase 3, and we should cancel Maplin, the Channel Tunnel and Concorde. The savings, and more, should be spent on developing our own indigenous fuel resources. That is the only way in which we can exist in the modern world. We must cancel the prestige projects to which I have referred. Finally, we must not enter into any arrangement with Common Market countries whereby we lose ownership, control and the benefits of our North Sea and, hopefully, Celtic Sea oil.

Having been a Member of the House for three years, it seems to me that what the country expects from the Conservative Party is leadership that is capable of governing the country. The present leadership has failed to do that. It is incapable of governing the country, and it is the duty of the Conservative Party to change that so that the country may be provided with the right kind of leadership. Before Field-Marshal Haig takes us once more into the mud of an industrial Passchendaele, the Conservative Party should get rid of him and put someone else in his place. If the Conservative Party cannot do it, then the British people will.

8.40 p.m.

Mr. Patrick Cormack (Cannock)

The hon. Member for Llanelly (Mr. Denzil Davies) and I have at least one thing in common. We have both been in the House since 1970. In that time I have learnt at least one thing: that it is always possible to lay the blame on the other side of the House. If the country is in the crisis that we believe it to be in, however, those of us who support the Government have to look on this side first.

We have been in government for three and a half years. We have been responsible for running the country, and if great problems now confront us some of the blame at least must rest on this side of the House. I have been proud and pleased to support the Government in most of what they have done, but I believe that Governments create moods, and the mood we have created in the nation is not exactly conducive to the national good. We have tried to do too much too quickly in legislation, and perhaps in economics we have done too little, too late, too often. People throughout the country are perplexed and worried, and there is a mood of disillusion. For us in this House, on both sides, not to recognise it would be to do a disservice to the democracy that we seek to serve.

The people have in their judgment tried the two main parties and found them wanting. I should like to try to get back to the mood that was prevalent in the nation in June 1970, when my right hon. Friend the Prime Minister made his first speech to the nation as Prime Minister and talked about seeking to unite and not to divide. We came in in a mood of euphoria. Looking back, I think we were possibly a trifle abrasive in some of the things we said and did. Labour Members may scoff, but it is not always easy to say these things.

As one who supported the Government and what they tried to do in the Industrial Relations Act, I am prepared now to say that it has not achieved what we hoped it would achieve. I supported it in good faith. I believe that I did not miss a single Division on it in the House. I believed that it was an attempt to bring a sense of stability and a new era of industrial peace and order out of chaos. That was what I genuinely believed I was trying to do, and that was what most of my hon. Friends felt. There was no insincerity in our motives.

But the Act has not worked out quite like that, and it is beyond dispute that it has helped to create militants out of moderates and that it has not produced what we hoped it would. To my mind, in the era of conciliation which my right hon. Friend the Secretary of State for Employment, in a remarkable and moving speech today, hopes to initiate, the Act must be negotiable in many particulars. There are many aspects of it which the Opposition themselves support, but equally there are many things in it which must be negotiable.

I hope that there will be this new era. When one looks back on the industrial history of the last 20 or 30 years, one realises that the Monckton years were not so bad. The mood which prevailed in the Ministry of Labour, as it was then, had a great deal to commend it.

I hope that my right hon. Friend will be given that flexibility here which is not a mark of weakness but is more a mark of strong and firm government. If we expect him to have the ebullience of Pickwick, the wisdom of Solomon and the virtue and sense of mission of the Archangel Gabriel all rolled into one, we expect too much. But he is a man, essentially fair-minded, who is prepared to admit mistakes and to start again. I hope that, in the negotiations he is having with the NUM and the other bodies in dispute, he will have a degree of flexibility, because it is difficult to operate from within a straitjacket.

I do not believe that there is room for a lot more money to be given to any particular group. At the same time, I hope that when my right hon. Friend meets the NUM tomorrow he will perhaps be able to discuss things like a three-year agreement, looking ahead and giving a sense of stability and continuity which is possibly much more valuable—certainly to far-sighted men—than any immediate gains.

However, it takes at least two to have a mood of conciliation. I regret some of the more partisan utterances, some of which I have made in the past and some of which perhaps others of my party have made, as well as those made by some Opposition Members this afternoon and in earlier debates, because they are not helpful and not conducive to the national interest. We have all of us got to realise that thta is of paramount concern to every Members of the House.

The Chancellor's measures announced on Monday amount to one of the toughest Budgets presented to this House in living memory, but they will not be enough if in six weeks' time the country is still on a three-day week. Whatever their shortcomings may be, it is in the interests of all of us that they should work. That is a sobering thought as we go off for the Christmas Recess. I support the Chancellor's measures in principle. A nation has to cut its public expenditure when faced with the sort of crisis that we face.

There is, however, among these cuts one which I deeply deplore and profoundly regret, and that is the cut in the defence budget. I know that I shall not carry with me many hon. Members on either side of the House in saying that, but it seems to me that if one categorises the duties of Members of Parliament, however one tries to devise priorities, it is still true that the prime duty of every Government and every Member elected to this House is to do what they can to safeguard the integrity of the nation. There has never been a time when the pressure of world events has been more acutely felt in this country. There has never been a time when it has been more necessary for our nation to be adequately and properly defended. At a time like this, for us to refuse, for whatever reason, a small tax on things like cigarettes, beer or whisky, and yet to cut defence expenditure seems to me to be morally indefensible. I am sorry to say it because I have the highest regard for my right hon. Friend the Chancellor. I hope it is not too late to think again about that

Above all, I hope that after the few weeks when we are away from here—perhaps at a time like this it is a good thing that we should go off to our families, of whom we see too little, and to our constituencies to take stock of the situation—we shall come back to find the spirit of Christmas prevailing a little longer than normally it does, and that there will be a spirit of conciliation and a new and universal determination to settle together the problems of the nation. Do not let anybody in the House believe that a General Election conducted in a spirit of bitterness could do anything but disservice to the cause of democracy.

8.48 p.m.

Mr. Robert C. Brown (Newcastle-upon-Tyne, West)

Although I would dearly love to follow some of the lines of the speech of the hon. Member for Cannock (Mr. Cormack), I am sure that he will forgive me if at this time of night I do not follow them.

Underlying the majority of the speeches by Conservative Members there has been the attitude that all the ills prevailing at the present time are the result of the activity of the wicked miners. I want to refute that. There can be no doubt at all that the present crisis is grave, but it has been around for some months now, and it is the direct result of the failure of the policies of this discredited Government. As I sat listening to some of the speeches by Conservative Members I almost looked under this bench where I sit to see whether there was any Red there, because there has been so much of the Reds-under-the-beds case argued, both this afternoon and yesterday—to an extent that is almost unbelievable. Reds-under-the-beds scaremongering cannot explain away the fact that groups of workers who hitherto have never ever been militants in all their history have become militant in recent times.

Local government workers, including local government officers, ambulance men, gas workers, electrical power engineers, civil servants, post office workers and even schoolteachers, none of whom have been noted for their militancy, have been made militant by the Government. If the Government have achieved anything, perhaps their prime achievement has been that we now have probably the most militant Civil Service in Western Europe. That is something of which we could never previously boast.

I can speak only for those miners in my area in Northumberland. I know of no Communist in the Northumberland area occupying any senior office in the NUM. The miners in my constituency—there are thousands of them—are resolutely behind their executive committee's action. What is more important is that the miners' wives, who are bearing the brunt of the overtime ban, are resolutely behind their menfolk. That is a lesson that the Government should take to heart.

One cannot but be disappointed that if, as we are told, we are in the worst crisis since the Second World War, we have not had the crisis type of action which we could have expected, which would have had the necessary response from the people.

The Government might belatedly have conceded that it would be a gesture to the people if they considered a way to ameliorate the serious increase in food prices. But there does not seem to be even a suggestion that the Government will do anything about it. There has been a 50 per cent. increase in food prices since the last election. Set against the Prime Minister's "at a stroke" pledge to deal with food prices, this must give him a place in history as the greatest stranger to truth since Ananias, who choked to death on the words of his own lies. Poetic justice might yet prevail.

I turn to the disastrously unfair effects of Monday's budget on regions such as the North-East, which are already suffering from an unemployment rate which is twice the national average. Why is there no selectivity in the Government's measures? Why have they not attempted to introduce some selectivity which would give a badly needed umbrella or shield to the underdeveloped regions? The Government's proposals, which go right across the board, will affect the North-East as much as they will affect the South-East or the West Midlands. The Government are like a mother with 10 children, three of whom have tummy-ache. What does she do? She gives a whacking big dose of castor oil to all 10 children.

The regional employment premium is to be phased out. That will be a disaster for the regions. In present circumstances it is reasonable to demand of the Government an assurance that they will scrap the idea of doing away with the regional employment premium and that it will instead be maintained. In view of the unfortunate effects of the present cuts on the regions the premium should be increased, if only as a temporary measure, until we rise from the slough into which the present proposals will push us. I am not pleading a special case for the North-East or for any other region. I ask simply for the same treatment as the South-East and the Midlands receive.

Only six of the 50 major employers in the North-East have their headquarters there. As surely as night follows day, in a recession, cuts are always made to the fingers, never to the body. Therefore, all the regions are at greater risk, because the fingers are Scotland, the North-East and Wales. We are bound to suffer a disproportionate share of the unemployment that must follow, as the right hon. Member for Wolverhampton, South-West (Mr. Powell) pointed out yesterday.

I am concerned about what I hear from industrialists in the North-East. I hope that Ministers can reassure me. This morning I received telephone calls from Tyneside and was told by more than one person that firms had no clear indication when they will have electricity and when they will not. One industrialist told me that when he telephones the Department of Trade and Industry he receives one reply from one official and a different reply from another official.

There is the nonsensical situation that three shipyards on the Tyne, owned by one company, are being allocated separate working days. It is nonsense that three interdependent yards on the same river should be working on Monday, Tuesday and Wednesday in one case, Tuesday, Wednesday and Thursday in another, and Thursday, Friday and Saturday in another. I hope that the Government will deal with such situations.

From all that I hear, it seems that the Department of Trade and Industry does not know where it is going. It is questionable whether any direct instruction has gone out, because the Department seems to be simply muddling through.

The cut-back of investment in steel will have a devastating effect on the regions that can least stand it—Scotland and the North-East. We desperately need to get North Sea oil ashore as quickly as possible, and those regions are heavily dependent on steel to do it. A 20 per cent. cut-back in investment must directly affect the ability of the companies concerned to get North Sea oil ashore. That will have a further detrimental effect on the economies of Scotland and the North-East, which were hoping to cash in on the North Sea oil bonanza. I hope that, in the interests of the economies of those regions the Government will give the matter serious consideration.

I hope that the Chancellor will say something about the extension of REP, and an increase in it to tide us over, as well as having second thoughts on the question of investment in the steel industry, the decision on which can have nothing but a regressive effect on the economy of every region.

9.0 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

The House has just listened with considerable attention to my hon. Friend the Member for Newcastle-upon-Tyne, (Mr. Robert C. Brown) who speaks with great authority, as he has done this evening, on regional problems, to which, as was clear from the exchange on Monday, no attention has been given in the Chancellor's Budget.

There have, in general, been fluctuating responses to the Chancellor's statement in the past two-and-a-half days. At first the general mood was a combination of relief, of unease, of anti-climax. It was almost exactly the wrong mood to have created in a period of national crisis. However, it was combined, as we read the next morning, with some considerable satisfaction on the Government benches that the Chancellor had once again done a skilful party political job, but I do not believe that that remains—if ever it was the case—anything like the unanimous view on the Government benches.

We have heard a number of interesting speeches today. I heard the hon. Member for Cannock (Mr. Cormack), who spoke forthrightly, and the hon. Member for Oxford (Mr. Woodhouse), both of whom, amongst other matters, spoke of the Industrial Relations Act. They would like to see it go. It is clear that there is now nothing standing between its effective repeal but the vanity of some members of the Government. It is time it went.

There are, in addition, too many Government supporters who know that the time for skilful political jobs is over, who know that the methods of the past few years have been responsible for the slither into a financial mess at home and abroad which was there before the oil crisis, before the coal crisis and, as the Chancellor made clear in a perhaps unguarded reply on Monday, would still be there if the immediate issues were fully resolved.

The pattern of leadership which the Government have chosen to present in the past couple of weeks has been fluctuating and confused. It was barely a few weeks ago that, long after the miners' overtime ban had started, the Secretary of State for Trade and Industry was still exuding the uncomprehending optimism of a professional salesman. It was only 14 days ago that the Chancellor of the Exchequer was petulantly and publicly rebuking the Director General of NEDO for daring to suggest that the 3½ per cent. growth target for next year was no longer valid. It was only on Wednesday of last week that the Home Secretary was rejecting, with all the comfortable blanket indignation of a Minister largely detached from central economic policy-making, my charge that the Government were complacent rather than realistic.

Then on Thursday, without warning or consultation, the Prime Minister suddenly lurched into the announcement of the most serious crisis since the war, accompanied by the most drastic and damaging measures for a 40 per cent. shut-down of industry and by the news that the Chancellor was to break his clearly given pledge of 27th July—repeated by the Leader of the House on 15th November—and introduce an autumn Budget. I do not accuse the Prime Minister—[Interruption.] Yes, it is just within the time. Even phase 3 does not change the calendar! I do not accuse the Prime Minister of manufacturing an artificial crisis. I think it is a real crisis.

What is almost impossible, in view of the chronology, is to escape the view that he made a sudden tactical decision, for whatever motives, to move from a posture of reassurance to one of presenting it in the starkest possible terms. What also is impossible is to escape the conviction that were he not seeking a scapegoat, were he not blaming a circumstance which he believes can be to his political advantage, he would have sought to mitigate and postpone the consequences. The contrast between the Government's approach to petrol rationing and that to electricity allocation, even allowing for some inherent difference in the supply position, is too sharp for any other explanation.

Following this sombre and sudden plunging of the country into a half-time economy, we awaited the Chancellor's Budget. We heard the appeals for national unity—re-echoed, quite rightly, by my right hon. Friend the Leader of the Opposition last Friday. We read the Government briefing in The Times of Monday morning, foreshadowing the toughest of measures, but measures also which would endeavour to create a new climate, to right some of the major injustices of the past, to take a grip on the most oppressive of price increases. It was a moment for a fundamental reappraisal of social priorities—a moment maybe for new and considerable burdens, a forbidding task for a Chancellor of the Exchequer, but a moment, too, out of which a new hope might have been born.

When the Chancellor came into the House on Monday afternoon, I must confess that I felt for him a considerable amount of sympathy. Of course, he has brought a lot of it on himself. He has trodden the primrose path only too blithely. He dodged the issue last April. But, God knows, we all make mistakes, and I have advanced too often upon the Government Despatch Box with a heavy task to discharge not to have some fellow feeling. But then, as the Chancellor proceeded, the sympathy died within me. It died first because of the sheer lack of logic of his proposals, a lack of logic arising not by accident but out of his determination, as so often in the past, to do everything behind a smokescreen—to make false excuses for his actions.

It died further as I heard the irrelevance and triviality of his measures.

And then there was the beginning of a smile which came over the Chancellor's face when he thought that he saw the possibility of making a party point against my right hon. Friend the Member for Leeds, East (Mr. Healey). He was beginning to get on secure party ground. Then we had the typical and sought-for reaction afterwards. "Tory MPs believe package good for early Election" was the headline in the Financial Times on Tuesday morning. So much for the appeals for national unity. So much for the Chancellor's attempt to be a statesman.

I come now to why the Budget is trivial and wrong. Presumably it is meant to deal with the mammoth imbalance both in our external trading account and in our internal public accounts. It does practically nothing about the former and it makes a much more modest contribution to the latter than some Government supporters have suggested, including, I thought, the right hon. Member for Wolverhampton, Southwest (Mr. Powell).

The public sector deficit is not and will not be eliminated. The need for very high interest rates or the resort to money printing does not disappear. There is only the prospect of a reduction from the £4,300 million public sector deficit to the hitherto unprecedented level of perhaps £3,000 million or something below. But that will not come effectively into operation until the fourth quarter of 1974. By the same token, there will not be much—even indirect—effect upon the balance of payments until then, when it ought in any event to be improving.

It is suggested that the Western countries as a whole will be in deficit because of oil prices and that it would be a mistake if we all attempted, possibly in a self-defeating and damaging way, to correct that deficit. There is a good deal in that. But what is unique in our position is that, thanks to the Chancellor, we start with a deficit currently running at more than £2,000 million a year. Other countries start as the right hon. Gentleman started three years ago, in some cases from a large surplus, in others from a balance, in one or two from a small deficit. To take a £500 million unavoidable oil burden on top of £2,000 million or more arising quite independently and before the oil trouble had bitten is quite different from absorbing it into a strong or even a neutral position. That is why the Chancellor's special contribution has been to leave us appallingly exposed.

I find the view of the Prime Minister, reiterated yesterday, that this deficit was necessary for growth quite unconvincing. It may be that it would have been necessary to pass through a period of moderate deficit. But to have plunged into this trough, unprecedented in its depth, for this or any other country of similar size, is altogether another matter and cannot have been in accordance with common sense or expectation.

Let us be clear, furthermore, how limited and short-lived has been the Government's growth record so far. The Prime Minister talks constantly as though he had a great store of achievement behind him and that it was to be contrasted, so he implies, to our record. He has nothing of the sort. The yearly growth of the gross domestic product calculated on an average of three possible methods for the 2½ years from the 1967 devaluation to the 1970 election was 2.7 per cent. The average from the election until the last quarter for which figures are available, since when it has tailed down of its own accord, was 2.6 per cent. Like the investment boom, when we are still not back to 1969 figures, it has been a doubtful promise for the future, not solid achievement from the record. The future has now been postponed, if not cancelled.

Almost the only one of Monday's measures which will make any yearly impact on the balance of payments are the hire-purchase controls. It does not need a Budget, mini or otherwise, to introduce them. The attempts at equality of sacrifice window dressing are derisory.

The property development tax, which, to be effective, should have dealt with unrealised gains—this is the real scandal—and, perhaps as a lesser issue, with unlet premises, has all the effectiveness of a feather duster fingered with the distaste which comes from a repugnance to pick it up at all. The total expected revenue is not enough to impose an adequate deterrent upon even a single big property company.

The surtax surcharge takes altogether only a tenth of what has been given away. In more serious circumstances its impact, allowing for the change in the value of money, is barely a quarter that of the special charge that we introduced in the 1968 Budget. To continue in present monetary circumstances, as is now widely recognised, even in the City, with the relief against tax of personal borrowings is a mixture of economic lunacy and fiscal inequity.

Then there is the central issue of the Chancellor's decision to allow the public sector in a broadly, not wholly, undifferentiated way to bear almost the whole brunt. In the first place, it is the easy way out. Generalised cuts, without their policy consequences clearly spelled out, are another example of using the smoke screen. In the second place, it is the postponed way out. Nobody feels anything for some time to time—nor, indeed, does the economy.

In the third place, it is the wrong way out. No one can look at Britain today without realising that for the majority it is not in private spending but in the public services where the weakness, the squalor and the pressures lie. It is not the shops and the restaurants which are breaking down but public transport, schools, and parts of the Health Service.

Can it be right to make those areas bear the burden, particularly without singling out the big, prestige, money squanderers? Can it be right to talk piously, as we have done from both sides of the House, about the devastating problems of the cities and then make it overwhelmingly likely that a grinding shortage of money will be added to all the other difficulties?

The Chancellor has therefore made the wrong basic decisions, both economically and socially. He has also almost certainly left himself or his successor with more to do in an April or an earlier Budget. He has thrown away a great opportunity to make a new beginning, a real impact on the divisive forces in our society. He has shown himself incapable, even at this juncture, of appreciating what fairness means. He has left the President of the CBI, to judge from his speech of 10 days ago, standing out, compared with himself, as an apostle of radical egalitarianism. The Chancellor has become a prisoner of his own tax-hand-out past.

I read with amazement of the Chancellor's unctuous Monday night statement that when he met his fellow Western Finance Ministers he felt a sense of shame for his country. Because of what? Because of two industrial disputes leading to an overtime ban. That shows at once a remarkable personal brazenness and a national lack of proportion. Who does the right hon. Gentleman think that he was meeting then? Was he meeting the Finance Minister of France, whose country went to the verge of civil war five years ago; the Finance Minister of Italy, who has had far worse industrial troubles with which to deal; or the United States Secretary of the Treasury, who came from a city sunk in political scandal?

The sense of shame that the Chancellor should have felt is far more personal. It is a sense of shame for having taken over an economy with a £1,000 million surplus and running it to a £2,000 million deficit. It is a sense of shame for having conducted our internal financial affairs with such profligacy that our public accounts are out of balance as never before. It is a sense of shame for having presided over the greatest depreciation of the currency, both at home and abroad, in our history. It is a sense of shame for having left us at a moment of test far weaker than most of our neighbours.

Whatever is the fate of the present Government, I believe that the Chancellor ought now to go from his present office. He sits surrounded by the wreckage of successive layers of his policy. I believe that by both temperament and outlook he is profoundly unsuited to the hard struggles which lie ahead. It is no longer a question of waiting for the old policies to come right. We need new policies to create hope out of dismay. The Chancellor had a last chance on Monday. He failed to take it. He showed himself tied to the past. He ought now to let a new man try.

Hon. Members on both sides of the House may think that a General Election will help to solve this problem. But whether or not the Prime Minister decides to have a General Election, and whatever the result may be, it will certainly not solve our national problems. The country will still need to be governed, and governed in difficult circumstances. Not only is there the present crisis, which is real in spite of the Government's manipulation of it. Not only is there the underlying weakness which the Government have largely created. There is, I believe, a greater threat to the effective working of our democratic institutions than most of us have seen in our adult lifetimes. I do not believe that it springs primarily from the machinations of subversively-minded men, although no doubt they are there and are anxious to exploit exploitable situations. It comes much more dangerously from a widespread cynicism with the processes of our political system. I believe that the Chancellor contributed to that on Monday. I believe that it poses a serious challenge to us all.

What in these circumstances does the national interest mean? It means, in the first place, that we must all live together to preserve our livelihoods and our tolerance in this crowded and precariously placed island. It does not mean that we abandon our party system, stifle our criticisms or speak to each other and the nation in muted and unconvincing voices. The electorate is entitled to a choice. That means that there is upon us all a responsibility to make that choice real and not contrived. There is upon the Government a duty to reconcile and not to alienate. There is upon the Opposition a duty to offer constructive criticism in accordance with the way in which we could and would govern.

None of us should seek salvation through chaos. There is a duty too to recognise that we could slip into a still worse rate of inflation and a world spiral-ling downwards towards slump, unemployment and falling standards, with our selves, temporarily at least, well in the vanguard. What is required is neither an imposed solution nor an open hand at the till. The alternative to reaching a settlement with the miners is paralysis-I ask the Prime Minister to read the moving and constructive speech made by my right hon. Friend the Member for Barnsley (Mr. Mason). The task of statesmanship is to reach a settlement but to do it in a way which opens no floodgates for if they were opened, it would not only damage everyone but it would undermine the differential which the miners deserve and which the nation now needs them to have.

Few people doubt that the Prime Minister has determination or stubbornness, whichever way it is considered. The question is whether he has judgment, persuasiveness or imagination sufficient to see into the minds of others. That is an essential part of democratic leadership.

We cannot begin to find our way out of the present position without a fairer society. That is appreciated by millions across party lines. The Government have failed for three and a half years to provide such a society. They failed again on Monday. That is why we shall vote against them tonight.

9.30 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

I should first like to endorse the congratulations of my right hon. Friend the Secretary of State for Trade and Industry yesterday to my hon. Friend the Member for Hove (Mr. Sainsbury) on an excellent maiden speech. I should also like to express my regret that I was not able to hear personally the speech of a fellow Yorkshireman, the right hon. Member for Barnsley (Mr. Mason), not only because of his considerable knowledge of the mining industry, but also because of what was, I was told, a very moving description of his own family's experience.

Many points have been raised during this two-day debate, and I want at the outset to deal with some of those and to answer some of the questions which have been put. Then I want to come to what throughout the debate have been the major issues in speech after speech—and they were touched upon by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). First, is the extent to which we have restrained demand too great? Secondly, is it too small? Thirdly—and this has been the topic of many speeches, and certainly of the right hon. Member for Stechford—given the need to restrain home demand which is not in dispute, at least between the two Front Benches, are the measures which I announced the right measures for the situation which now faces the nation?

I want to devote some time to those, but, first, I hope that for one moment the House will allow me to deal with a technical matter which has been raised; that is, the new supplementary technique for controlling the growth of money and credit, because, of course, as a number of speakers have pointed out, this is of the utmost importance in the fight against inflation.

The new supplementary scheme is designed to discourage the banks and finance houses from expanding their interest-bearing liabilities above a certain specified rate. Hitherto, when banks have needed additional funds for lending, they have gone out into the money markets and bid aggressively for them and the result has been to raise interest rates sharply. The new technique which has been introduced by the Bank of England will make it very expensive for them to do this, because once their interest-bearing liabilities have risen to the specified level they will then be required to deposit a rising proportion of any additional interest-bearing funds with the Bank of England at no interest.

Because the banks and finance houses have been asked not to respond to the introduction of these new arrangements with a general rise in their lending rates, such bidding for extra funds would be unprofitable. The new scheme should therefore ease the pressure on money markets and so allow interest rates to be lower than they otherwise would be. That is the first advantage. The second advantage is that it should also operate to slow down the growth in the broader version of money supply, because it is the expansion of the banks' interest-bearing liabilities which has been the major component in this growth over the past two years. Together with the action which the clearing banks are taking to eliminate arbitrage transactions, this new device should lead to a marked slowing down in the growth of money and credit.

Next I come to some points concerning the new levels of public expenditure which have been raised by a number of hon. Members in the course of this two-day debate. The position is that until the Government agreed the new levels. Departments and other public authorities were planning their programmes and their projects and their future orders in accordance with the policies and the programmes which were set out in the White Paper which was published on Monday, at the same time as I made my statement.

As the House knows, those programmes for 1974–75 are now superseded by the reduced ones which I announced, and which were set out programme by programme in the table which appeared in HANSARD. AS I said, there will be some reduction for the current year—and this is important—and the years beyond 1974–75 will now be affected also by the continuing process of review which will be necessary as the situation develops.

When programmes are reduced, as we have reduced them by these measures, it is for the Ministers responsible for each programme to determine the new priorities: which projects are to keep a place—and of course, to make that possible, what can with least harm be allowed to be squeezed out for the time being—which services are essential and which are less so, which purchases can be cut down and which should be maintained. Where the local authorities are concerned, my right hon. Friends have already provided guidance by circular in a number of cases, and my right hon. Friend the Secretary of State for the Environment met the representatives of the local authorities [Interruption.]——

Mr. Speaker

Order. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) was listened to quietly. Surely it is fair to do the same for the Chancellor.

Mr. Barber

A number of specific questions were put to me about the education and other programmes and those who asked the questions would probably welcome an answer. Already some of my colleagues have published parts of their decisions and, for example, my right hon. Friend the Secretary of State for Education has made it clear that the cuts will not affect the basic needs part of the programme for primary or secondary schools, nor will they affect the programme for special schools. Those programmes will go ahead as planned.

May I turn to another point raised by the Leader of the Opposition? He asked about Maplin and the Channel Tunnel. Significantly, it should be noted that the Opposition have not mentioned Concorde where, of course, expenditure in the near future will be greater than on either Maplin or the tunnel. The three situations and the considerations which are involved are quite different. Concorde is the only one of the three on which large amounts of public money have been spent over the years and are likely to be spent in the coming year. The Concorde programme is to be reviewed in conjunction with the French Government in the near future.

The Leader of the Opposition asked about the Maplin project. In contrast, of course, this is still only at the planning stage and recent developments on oil will certainly be fully taken into account in the further review which is to take place before any report is put to the House and before any major contracts are authorised. As for the tunnel, the agreements which we have recently signed with the French Government and with the companies provide only for the initial phase of the work. There will be a full appraisal of the results of this work and of all developments affecting traffic forecasts by 1975, before we accept any commitment going beyond this phase.

I was also asked about regional policy. Reductions in public expenditure do not affect our programmes of support for industrial investment in the assisted areas, whether by regional development grants or by means of selective assistance. But there is no means of differentiating in the reductions in the general run of social and environmental infrastructure programmes and other types of expenditure so as to exempt the assisted areas. I do not believe that it could be within the power of any Government wholly to shield the assisted areas from the effects of fuel shortages, higher oil prices and supply constraints.

I was asked about infrastructure works for North Sea oil. Greater exploitation of North Sea oil has now assumed an even greater importance and my right hon. Friend the Secretary of State for Scotland will certainly ensure that essential public investment associated with oil supplies, such as roads, water, sewerage and so on, will not be jeopardised by reductions in public expenditure which the Government have been obliged to make. Housing for workers connected with North Sea oil industry will be exempt from the present economies.

I have given some illustrations of the decisions on priorities which have already been taken by individual Ministers within the total savings which they will be making. Within the total situation of tightening resources, when materials and equipment are likely to be in short supply as a result of lower industrial output, it would make no sense to attempt to press full steam ahead with all the nationalised industry programmes any more than with public sector investment as a whole. I fully recognise that those industries—each of them—has a major part to play, but it would have been impossible to exclude them all from the reductions that we have had to make. When resources are short as a result of the energy shortage it is a matter of concentrating on those activities of the highest importance which, so far as present investment is concerned, are the energy industries themselves.

I want now to say a word about a subject raised by the right hon. Gentleman the Leader of the Opposition and in the broadcast last night by the right hon. Member for Leeds, East (Mr. Healey)—the subject of local authority expenditure, for local authorities are responsible for some 30 per cent. of public expenditure. It is essential that they should play their part in securing the reductions that have been called for.

As for capital expenditure, the Government have effective control through the machinery of loan sanctions, and this will be adjusted so as to achieve the required reductions in expenditure. As for current expenditure, we are entitled to expect co-operation of all local authorities in making the reductions that will now be required in the national interest. The level of rate support grant will be adjusted to reflect the required savings and I know that we can count on the majority of authorities to be responsible for adjusting their budgets accordingly.

There is one point about rates that I want to make absolutely clear and I hope that hon. and right hon. Gentlemen opposite will make it clear, as will my hon. Friends. In his speech yesterday the right hon. Gentleman the Leader of the Opposition said, … to cut rate support grant … can only mean an additional rate burden on millions of householders."—[OFFICIAL REPORT, 18th December 1973; Vol. 866, c. 1185.] I gather that the Opposition say, "Hear, hear", and that was echoed last night in the right hon. Gentleman's television broadcast when he spoke of the result being another whopping rise in rates.

Mr. Healey indicated assent.

Mr. Barber

The right hon. Gentleman nods. I must tell the House that there is not one shred of truth in those assertions, and I will explain why.

The rate support grant will be reduced only in line with the savings in expenditure and if, like the rest of the public sector, the local authorities reduce their current expenditure in accordance with the Government's request, that will not lead to one extra penny on the rates. That should be perfectly clear. If, on the other hand, any local authority deliberately sets out to flout the national interest—[HON. MEMBERS: "Oh."]—if it deliberately sets out to pursue a policy counter to the request that we have made and the rates go up in consequence, the necessary steps will no doubt be taken to remind electors where responsibility lies. I would add this: such deliberate action could well call in question the continuance of the present system of local autonomy over current expenditure which also carries with it the duty to act responsibly.

Mr. Denis Howell

Local authorities will find repugnant the threat that the Chancellor has just issued. Is not the Chancellor aware that the biggest single factor in increasing the expenditure of local authorities next year will be local government reorganisation, reorganisation of the Health Service and reorganisation of water authorities, which the Government imposed upon them? As the Chancellor's contribution to greater efficiency, will he review local government reorganisation and totally abandon as now unnecessary the reorganisation of the Health Service and the reorganisation of regional water authorities?

Mr. Barber

The answer is "No".

The right hon. Member for Stechford was good enough to say that, at least when I rose to my feet on Monday, though apparently he changed his mind somewhat by the end, he had some sympathy and understanding of the problem facing me and the Government at that time. The point was pertinently made by Mr. Anthony Harris in the Financial Times on Monday morning, when he said: Chancellors frequently complain that theirs is a virtually almost impossible task; but, compared with the difficulties facing … today the usual job of balancing various sectional claims against each other and balancing the popular demand to have more and more services against the popular reluctance to pay for them is kindergarten stuff.' My right hon. Friend the Member for Taunton (Mr. du Cann) made the same point when he spoke in the debate.

The fact is that the prospects for the British economy in 1974 are dominated by the uncertainties over the supply of energy. In the immediate future the overriding uncertainties are domestic—the output of coal, the transport of coal and of oil to the power stations and the generation and distribution of electricity.

But when these domestic problems are resolved we still face the long-term difficulties over the supply of oil. In addition to uncertainties about quantities of coal and oil which will be available to us, we cannot be sure about the effects of a shortage of energy on production. Beyond a point, the shortage of energy must reduce output.

In the circumstances, it is only common prudence to plan against the probability that throughout 1974 economic activity will be held back by shortage of fuels. However, it is very hard to say by just how much output would fall, just what effect the fall of output would have on employment and just how far expenditure by consumers and by industry on investment would be affected.

In addition to all those uncertainties, there are other conflicting considerations that have to be borne in mind. How far will the physical shortages be reflected in unemployment and our balance of payments? One must also bear in mind the prospects for world trade and for the world economy. One must balance the need for action in the interests of this country against the need not to take action which might precipitate a world recession.

Again, our chances of recovery are considerably affected, as we have seen over the past year or so, by world commodity prices. Many commodity prices have doubled in the past year or so. Will they go on rising at the same rate, or is it likely, as many are suggesting now, that the international shortage of oil will cause a break in the upward spiral? If world prices other than oil, as many are suggesting, were to fall in the coming year by as much as they have risen in the past year, many of the problems of this country would disappear.

So I come to the basic question concerning the size of the reduction in demand. There are those who argue that the measures are too severe. If that is so, they may not have fully appreciated the very great opportunities that now exist for our exports and hence the need to make room for them, because nobody would dispute that our export prices are very competitive indeed and, as regards demand for our exports, the effect of the oil shortage on other countries is that they will find that their production is held down. The really important point is that it will probably be held down more than to the extent of their demand for goods and services, and so the demand will be there to buy from us.

There are people who believe that what we have done is too much. However, I rather gather from what the right hon. Member for Stechford was saying a few moments ago that he thought the amount of demand which we were taking out of the economy was too little. I cannot agree with him. If I had judged it necessary to be even tougher, in present circumstances there was certainly nothing to deter me, or any other Chancellor in my place, because in a curious way it might well have been even more popular, in the state of public opinion at the time, to have gone further than I have gone. But I made it clear in my statement that we could probably cope with a 10 per cent. shortfall in oil supplies without loss of production and that some rise in the price of oil would not in itself have frustrated our policy of economic expansion.

The right hon. Member for Stechford described the measures which the House is being asked to approve as trivial. It is interesting to consider the demand effects of the changes which he made in his Budget in 1968. In that Budget he put 4d on petrol, £7 10s on car licences, 2d on cigarettes, 2s 6d on whisky and 6d on wine, and he imposed an all-round increase in purchase tax. He increased corporation tax. He imposed a special charge on investment incomes. He increased selective employment tax by 50 per cent. He increased taxation so as to claw back family allowances, and he increased the betting turnover tax.

In demand terms, those measures were less than the measures I announced on Monday. But I cannot help thinking that if I had done again what the right hon. Gentleman did on that occasion, he would not now be complaining that what I had done was trivial. Indeed, the Opposition would be complaining bitterly that I had stoked up the fires of inflation, penalised the working class and introduced a Budget which was socially divisive. The basic issue of choice of measures between the two sides is clear.

Although I agree that there is room for genuine differences of opinion—the right hon. Member for Leeds, East laughs, but he has made clear what he would have done in the present circumstances. He has made it clear that he would have preferred increases in income tax. Even assuming—I agree with him on this—that, if we were to increase income tax, the burden would have had to be greatest at the highest levels, I wonder whether the ordinary working people would have preferred his remedy of increases in income tax across the board to the proposals I have made.

As my right hon. Friend the Prime Minister pointed out yesterday, the equivalent of taking out the amount of demand which is taken out by my proposals would be Is 6d. on the old standard rate. But—I must be fair to the right hon. Member for Leeds, East—he also made it clear that not the whole burden should fall on income tax. He has other proposals to increase taxation on spending. It is a matter of choice whether in present circumstances that would be appropriate.

But the right hon. Gentleman has been quite specific. He told the country on Sunday that, in addition to increases in income tax, I believe we must have special taxes on consumer durables like television sets, washing machines, and probably an increase in the Car Tax and perhaps an increase in the excise duty on tobacco". I do not disagree that all those are appropriate instruments for increasing the burden of taxation on ordinary working people and that this method of approach is an alternative to the very big cuts which we have made in public expenditure. I wonder however, whether the right hon. Gentleman was right when he concluded by saying: If we tackle the problem in this way the Government will also create the sort of national unity we need to make progress". I wonder what we would now be saying if we had adopted that solution which he put forward.

Exactly a month ago today, I put to the Leader of the Opposition a straight question which he has never answered.

I said that the nation was entitled to know whether the right hon. Gentleman was prepared to speak out against industrial action in support of a settlement outside the limits laid down by this House. The right hon. Gentleman has refused to answer. That was a month ago, and he has never given his answer. The nation was entitled to know the answer of the Leader of the Opposition. It is no use his muttering. He has never said in public what he would do and what his attitude is.

Yesterday the Leader of the Opposition was asked by my right hon. Friend the Prime Minister whether the latest proposals of the Leader of the Opposition meant that the miners should now be offered more than 16½ per cent. Again the right hon. Gentleman refused to answer. He is not prepared to say to the nation whether he is opposed to industrial action in the cause of a settlement outside the limits or whether he and his party believe that the miners should now be offered more than 16½ per cent., but the nation is entitled to know what are the views of the Opposition on this particular proposal.

The right hon. Gentleman again yesterday demanded what he called flexibility. If by flexibility he means that those who wield sufficient industrial power should be rewarded by pay increases above the limits specifically approved by this House, that is the road to anarchy. If the right hon. Gentleman is not prepared to deny that what he is advocating is a settlement

Division No. 25.]	AYES	[9.59 p.m.
Abse, Leo	Darling, Rt. Hn. George	Hart, Rt. Hn. Judith
Allaun, Frank (Salford, E.)	Davidson, Arthur	Hattersley, Roy
Allen, Scholefield	Davies, Denzil (Lianelly)	Hatton, F.
Archer, Peter (Rowley Regis)	Davies, G. Elfed (Rhondda, E.)	Healey, Rt. Hn. Denis
Armstrong, Ernest	Davies, Ifor (Gower)	Heffer, Eric S.
Ashley, Jack	Davis, Clinton (Hackney, C.)	Hilton, W. S.
Ashton, Joe	Davis, Terry (Bromsgrove)	Hooson, Emlyn
Atkinson, Norman	Deakins, Eric	Horam, John
Austick, David	de Freitas, Rt. Hn. Sir Geoffrey	Houghton, Rt. Hn. Douglas
Bagier, Gordon A. T.	Delargy, Hugh	Howell, Denis (Small Heath)
Barnes, Michael	Dell, Rt. Hn. Edmund	Huckfield, Leslie
Barnett, Guy (Greenwich)	Dempsey, James	Hughes, Rt. Hn. Cledwyn (Anglesey)
Barnett, Joel (Heywood and Royton)	Doig, Peter	Hughes, Mark (Durham)
Baxter, William	Douglas, Dick (Stirlingshire, E.)	Hughes, Robert (Aberdeen, N.)
Beaney, Alan	Douglas-Mann, Bruce	Hughes, Roy (Newport)
Beith, A. J.	Driberg, Tom	Hunter, Adam
Benn, Rt. Hn. Anthony Wedgwood	Duffy, A. E. P.	Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Bennett, James (Glasgow, Bridgeton)	Dunn, James A.	Janner, Greville
Bidwell, Sydney	Eadie, Alex	Jay, Rt. Hn. Douglas
Bishop, E. S.	Edelman, Maurice	Jeger, Mrs. Lena
Blenkinsop, Arthur	Edwards, Robert (Bilston)	Jenkins, Hugh (Putney)
Boardman, H. (Leigh)	Edwards, William (Merioneth)	Jenkins, Rt. Hn. Roy (Stechford)
		John, Brynmor
Booth, Albert	Ellis, Tom	Johnson, Carol (Lewisham, S.)
Boothroyd, Miss Betty	English, Michael	Johnson, James (K'ston-on-Huli, W.)
Bottomley, Rt. Hn. Arthur	Evans, Fred	Johnson, Walter (Derby, S.)
Boyden, James (Bishop Auckland)	Ewing, Harry	Johnston, Russell (Inverness)
Bradley, Tom	Faulds, Andrew	Jones, Barry (Flint, E.)
Brown, Robert C.(N'c'tle-u-Tyne, W.)	Fernyhough, Rt. Hn. E.	Jones, Dan (Burnley)
Brown, Hugh D. (G'gow, Provan)	Fisher, Mrs. Doris (B'ham. Ladywood)	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Brown, Ronald (Shoreditch & F'bury)	Fitch, Alan (Wigan)	Jones, Gwynoro (Carmarthen)
Buchan, Norman	Fitt, Gerard (Belfast, W.)	Jones, T. Alec (Rhondda, W.)
Buchanan, Richard (G'gow, Sp'burn)	Fletcher, Ted (Darlington)	Judd, Frank
Butler, Mrs. Joyce (Wood Green)	Foot, Michael	Kaufman, Gerald
Callaghan, Rt. Hn. James	Ford, Ben	Kelley, Richard
Campbell, l. (Dunbartonshire, W.)	Forrester, John	Kerr, Russell
Cant, R. B.	Fraser, John (Norwood)	Kinnock, Nell
Carmichael, Neil	Freeson, Reginald	Lambie, David
Carter, Ray (Birmlngh'm, Norlhfield)	Freud, Clement	Lamborn, Harry
Carter-Jones, Lewis (Eccles)	Galpern, Sir Myer	Lamond, James
Castle, Rt. Hn. Barbara	Garrett, W. E.	Latham, Arthur
Clark, David (Colne Valley)	Gilbert, Dr. John	Lawson, George
Cocks, Michael (Bristol, S.)	Ginsburg, David (Dewsbury)	Leadbitter, Ted
Cohen, Stanley	Golding, John	Lee, Rt. Hn. Frederick
Coleman, Donald	Gordon Walker Rt. Hn. P. C.	Leonard, Dick
Concannon, J. D.	Gourlay, Harry	Lestor, Miss Joan
Conlan, Bernard	Grant, George (Morpeth)	Lever, Rt. Hn. Harold
Corbet, Mrs. Freda	Grant, John D. (Islington, E.)	Lewis, Arthur (W. Ham, N.)
Cox, Thomas (Wandsworth, C.)	Griffiths, Eddie (Brightside)	Lewis, Ron (Carlisle)
Crawshaw, Richard	Grimond, Rt. Hn. J.	Lipton, Marcus
Cronin, John	Hamilton, William (Fife, W.)	Lomas, Kenneth
Crosland, Rt. Hn. Anthony	Hamling, William	Loughlin, Charles
Crossman, Rt. Hn. Richard	Kannan, William (G'gow, Maryhill)	Lyon, Alexander W. (York)
Cunningham, G. (Islington, S. W.)	Hardy, Peter	Lyons, Edward (Bradford, E.)
Cunningham, Dr. J. A. (Whitehaven)	Harper, Joseph	Mabon, Dr. J. Dickson
Daiyell. Tarn	Harrison, Walter (Wakefield)	McAliskey, Mrs. Bernadette

outside the stage 3 limits, the nation will draw the only conclusion—that he and his colleagues are no longer concerned with the welfare of the millions who have no industrial backing. The nation will conclude that he is prepared to pursue any line regardless of the national interest to cling to his leadership of a wholly discredited party, for which the British nation is fast losing all respect.

The duty of the Government is to govern on behalf of all the people, and we mean to do just that.

Question put, That this House do now adjourn:—

The House divided: Ayes 292, Noes 309.

McBride, Neil	Paget, R. T.	Steel, David
McCartney, Hugh	Palmer, Arthur	Stewart, Donald (Western Isles)
McElhone, Frank	Pannell, Rt. Hn. Charies	Stewart, Rt. Hn. Michael (Fulham)
McGuire, Michael	Pardoe, John	Stoddart, David (Swindon)
Machin, George	Parker, John (Dagenham)	Stonehouse, Rt. Hn. John
Mackenzie, Gregor	Pavitt, Laurie	Stott, Roger
Mackie, John	Peart, Rt. Hn. Fred	Strang, Gavin
Mackintosh, John P.	Pendry, Tom	Strauss, Rt. Hn. G. R.
Maclennan, Robert	Perry, Ernest G.	Summerskill, Hn. Dr. Shirley
McMillan, Tom (Glasgow, C.)	Prentice, Rt. Hn. Reg.	Swain, Thomas
McNamara, J. Kevin	Prescott, John	Thomas, Rt. Hn. George (Cardiff, W.)
Mahon, Simon (Bootle)	Price, William (Rugby)	Thomas, Jeffrey (Abertillery)
Mallalleu, J. P. W. (Huddersfleld, E.)	Probert, Arthur	Thorpe, Rt. Hn. Jeremy
Marks, Kenneth	Radlce, Giles	Tinn, James
Marquand, David	Reed, D. (Sedgefield)	Tomney, Frank
Marsden, F.	Rees, Meriyn (Leeds, S.)	Tope, Graham
Marshall, Dr. Edmund	Rhodes, Geoffrey	Torney, Tom
Mason, Rt. Hn. Roy	Richard, Ivor	Tuck, Raphael
Mayhew, Christopher	Roberts, Albert (Normanton)	Urwin, T. W.
Meacher, Michael	Roberts, Rt. Hn. Goronwy (Caernarvon)	Varley, Eric G.
Mellish, Rt. Hn. Robert	Robertson, John (Paisley)	Wainwrighl, Edwin
Mendelson, John	Roderick, Caerwyn E.(Brc'n&R'dnor)	Waiden, Brian (B'm'ham, All Saints)
Mikardo, Ian	Rodgers, William (Stockton-on-Tees)	Walker, Harold (Doncaster)
Millan, Bruce	Roper, John	Wallace, George
Miller, Dr. M. S.	Rose, Paul B.	Watkins, David
Milne, Edward	Ross, Rt. Hn. William (Kilmarnock)	Weitzman, David
Mitchell, R. C. (S'hampton, Itchen)	Rowlands, Ted	Wellbeloved, Jamrs
Molloy, William	Sandelson, Neville	Wells, William (Walsall, N.)
Morgan, Elystan (Cardiganshire)	Sheldon, Robert (Ashton-under-Lyne)	White, James (Glasgow, Pollok)
Morris, Alfred (Wythenshawe)	Shore, Rt. Hn. Peter (Stepney)	Whitehead, Phillip
Morris, Charles R. (Openshaw)	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Whitlock, William Wllley, Rt. Hn. Frederick
Morris, Rt. Hn. John (Aberavon)	Short, Mrs. Renée (W'hampton. N. E.)
Moyle, Roland	Silkln, Rt. Hn. John (Deptford)	Williams, Alan (Swansea, W.)
Mulley, Rt. Hn. Frederick	Silkin, Hn. S. C. (Dulwlch)	Williams, Mrs. Shirley (Hltchin)
Murray, Ronald King	Sillars, James	Williams, W. T. (Warrington)
Oakes, Gordon	Silverman, Julius	Wilson, Alexander (Hamilton)
Ogden, Eric	Skinner, Dennis	Wilson, Rt. Hn. Harold (Huyton)
O'Halloran, Michael	Small, William	Wilson, William (Coventry, S.)
O'Malley, Brian Oram Bert	Smith, Cyril (Rochdale)	Woof, Robert
Orbach, Maurice	Smith, John (Lanarkshire, N.)
Orme, Stanley	Spearing, Nigel	TELLERS FOR THE AYES:
Owen, Dr. David (Plymouth, Sutton)	Spriggs, Leslie	Mr. J. D. Dormand and Mr. James Hamilton.
Padley, Waltar	Stallard, A. W.

NOES
Adley, Robert	Carlisle, Mark	Fell, Anthony
Alison, Michael (Barkston Ash)	Carr, Rt. Hn. Robert	Fenner, Mrs. Peggy
Allason, James (Hemel Hempstead)	Cary, Sir Robert	Fidler, Michael
Amery, Rt. Hn. Julian	Channon, Paul	Finsberg, Geoffrey (Hampstead)
Archer, Jeffrey (Louth)	Chapman, Sydney	Fisher, Nigel (Surblton)
Aslor, John	Chataway, Rt. Hn. Christopher	Fletcher, Alexander (Edinburgh, N.)
Atkins, Humphrey	Chichester-Clark, R.	Fletcher-Cooke, Charles
Awdry, Daniel	Churchill, W. S.	Fookes, Miss Janet
Baker, Kenneth (St. Marylebone)	Clark, William (Surrey, E.)	Fortescue, Tim
Balniel, Rt. Hn. Lord	Clarke, Kenneth (Rushcliffe)	Foster, Sir John
Barber, Rt. Kn. Anthony	Cockeram, Eric	Fowler, Norman
Batsford, Brian Bell, Ronald	Cooke, Robert Coombs, Derek	Fox, Marcus
Bennett, Dr. Reginald (Gosport)	Cooper, A. E.	Fraser, Rt. Hn. Hugh (St'fford & Stone)
Benyon, W.	Cordle, John	Fry, Peter
Berry, Hn. Anthony	Cormack, Patrick	Galbraith, Hn. T. G. D.
Biffen, John	Critchley, Julian	Gardner, Edward
Biggs-Davison, John	Crouch, David	Gibson-Watt, David
Blaker, Peter	Crowder, F. P.	Gilmour, Ian (Norfolk, C.)
Boardman, Tom (Leicester, S. W.)	Davies, Rt. Hn. John (Knutsford)	Gilmour, Sir John (Fife, E.)
Body, Richard	d'Avlgdor-Goldsmid, Sir Henry	Goodhart, Philip Goodhew, Victor
Boscawen, Hn. Robert	d'Avigdor-Goldsmid. MaJ.-Gen. Jack	Glyn, Dr. Alan
		Godber Rt. Hn. J. B.
Bossom, Sir Clive	Dean, Paul	Gorst, John
Bowden, Andrew	Deedes, Rt. Hn. W. F.	Gower, Raymond
Braine, Sir Bernard	Digby, Simon Wingfield	Grant, John D. (Islington, E.)
Bray, Ronald	Dixon, Piers	Gray, Hamlsh
Brewis, John	Dodds-Parker, Sir Douglas	Green, Alan
Brinton, Sir Tatton	Douglas-Korne, Rt. Hn. Sir Alec	Grieve, Percy
Brocklebank-Fowler, Christopher	Drayson, G. B.	Griffiths, Eldon (Bury St. Edmunds)
Brown, Sir Edward (Bath)	du Cann, Rt. Hn. Edward	Grylls, Michael
Bruce-Gardyne, J.	Dykes, Hugh	Gurden, Harold
Bryan, Sir Paul	Eden, Rt. Hn. Sir John	Hall, Miss Joan (Kelghley)
Buchanan-Smith, Alick (Angus, N&M)	Edwards, Nicholas (Pembroke)	Hall, Sir John (Wycombe)
Buck, Antony	Elliot, Capt. Walter (Carshalton)	Hall-Davis, A. G. F.
Bullus, Sir Eric	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Hamilton, Michael (Salisbury)
Burden, F. A.	Emery, Peter	Hannam, John (Exeter)
Butler, Adam (Bosworth)	Eyre, Reginald	Harrison, Brian (Maldon)
Campbell, Rt. ln. G.(Moray & Nairn)	Farr, John	Harrison, Col. Sir Harwood (Eye)

Harvle Anderson, Miss	Mather, Carol	Sandys, Rt. Hn. D.
Haselhurst, Alan	Maude, Angus	Scott, Nicholas
Hastings, Stephen	Maudling, Rt. Hn. Reginald	Scott-Hopkins, James
Havers, Sir Michael	Mawby, Ray	Shaw, Michael (Sc'b'gh & Whitby)
Hay, John	Maxwell-Hyslop, R. J.	Shelton, William (Clapham)
Hayhoe, Barney	Meyer, Sir Anthony	Shersby, Michael
Heath, Rt. Hn. Edward	Mills, Stratton (Belfast, N.)	Simeons, Charles
Heseltine, Michael	Miscampbell, Norman	Sinclair, Sir George
Hicks, Robert	Mitchell, Lt.-Col. C.(Aberdeenshire, W)	Skeet, T. H. H.
Higgins, Terence L.	Mitchell, David (Basingstoke)	Smith, Dudley (W'wlck & L'mlngton)
Hiley, Joseph	Moate, Roger	Soref, Harold
HIM, John E. B. (Norfolk, S.)	Molyneaux, James	Speed, Keith
Hill, S. James A. (Southampton, Test)	Money, Ernie	Spence, John
Holland, Philip	Monks, Mrs. Connie	Sproat, lain
Holt, Miss Mary	Monro, Hector	Stalnton, Keith
Hordern, Peter	Montgomery, Fergus	Stanbrook, Ivor
Hornby, Richard	More, Jasper	Slewart-Smith, Geoffrey (Belper)
Hornsby-Smlth, Rt. Hn. Dame Patricia	Morgan, Geralnt (Denbigh)	Stodarl, Anthony (Edinburgh, W.)
Howe, Rt. Hn. Sir Geoffrey (Relgate)	Morgan-Giles, Rear-Adm.	Stokes, John
Howell, David (Guildford)	Morrison, Charles	Stuttaford, Dr. Tom
Howell, Ralph (Norfolk, N.)	Mudd, David	Sulcliffe, John
Hunt, John	Neave, Alrey	Tapsell, Peter
Hutchison, Michael Clark	Nicholls, Sir Harmar	Taylor, Sir Charles (Eastbourne)
Iremonger, T. L.	Noble, Rt. Hn. Michael	Taylor, Edward M. (G'gow. Calhcart)
Irvine, Bryant Godman (Rye)	Normanton, Tom	Taylor, Robert (Croydon, N. W.)
James, David	Nott, John	Tebbit, Norman
Jenkin, Rt. Hn. Patrick (Woodford)	Onslow, Cranley	Temple, John M.
Jessel, Toby	Sally Orr, Capt. L. P. S.	Thatcher, Rt. Hn. Mrs. Margaret
Johnson Smith, G. (E. Grlnstead)	Osborn, John	Thomas, John Stradling (Monmouth)
Jones, Arthur (Northants, S.)	Oppenheim, Mrs.	Thomas, Rt. Hn. Peter (Hendon, S.)
Jopling, Michael	Owen, Idrls (Stockport, N.)	Thompson, Sir Richard (Croydon, S.)
Joseph, Rt. Hn. Sir Keith	Page, Rt. Kn. Graham (Crosby)	Tilney, Sir John
Kaberry, Sir Donald	Page, John (Harrow, W.)	Trafford, Dr. Anthony
Kellett-Bowman, Mrs. Elaine	Parkinson, Cecil
Kershaw, Anthony	Peel, Sir John	Trew, Peter
Kimball, Marcus	Percival, Ian	Tugendhat, Christopher
King, Evelyn (Dorset, S.)	Peyton, Rt. Hn. John	Turton, Rt. Hn. Sir Robin
King, Tom (Bridgwater)	Pike, Miss Mervyn	van Straubenzee, W. R.
Kinsey, J. R.	Pink, R. Bonner	Vaughan, Dr. Gerard
Kirk, Peler	Pounder, Rafton	Vickers, Dame Joan
Kitson, Timothy	Powell, Rt. Hn. J. Enoch	Waddington, David
Knight, Mrs. Jill	Price, David (Eastlelgh)	Walder, David (Clitheroe)
Knox, David	Prior, Rt. Hn. J. M. L.	Walker, Rt. Hn. Peter (Worcester)
Lamont, Norman	Proudfoot, Wilfred	Walker-Smith, Rt Hn. Sir Derek
Lane, David	Pym, Rt. Hn. Francis	Wall, Patrick
Langford-Holt, Sir John	Ouennell, Miss J. M.	Walters, Dennis
Le Marchant, Spencer	Raison, Timothy	Ward, Dame Irene
Lewis, Kenneth (Rutland)	Ramsden, Rt. Hn. James	Warren, Kenneth
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Rawllnson, Rt. Hn. Sir Peter	Weatherill, Bernard
Lloyd, Ian (P'tsm'th, Langstone)	Redmond, Robert	Wells, John (Maidstone)
Longden, Sir Gilbert	Reed, Lauranc" (Bolton, E.)	White, Roger (Gravesend)
Loverldge, John	Rees, Peter (Dover)	Whitelaw, Rt. Hn. William
Luce, R. N.	Rees-Devies, W. R.	Wlggln, Jerry
McAdden, Sir Stephen	Ronton, Rt. Hn. Sir David	Wilkinson, John
MacArthur, Ian	Ridley, Hn. Nicholas	Winterton, Nicholas
McCrindle, R. A.	Rldsdale, Julian	Wolrige-Gordon, Patrick
McLaren, Martin	Rippon, Rt. Hn. Geoffrey	Wood, Rt. Hn. Richard
Maclean, Sir Fltzroy	Roberts, Michael (Cardiff, N.)	Woodhouse, Hn. Christopher
McMaster, Stanley	Roberts, Wyn (Conway)	Woodnutt, Mark
Macmillan. Rt. Hn. Maurice (Farnham)	Rodgers, Sir John (Sevenoaks)	Worsley, Marcus
McNalr-Wilson, Michael	Rossi, Hugh (Homsey)	Wylie, Rt. Hn. N. R
McNair-Wilson, Patrick (New Forest)	Rost, Peler	Younger, Hn. Georg"
Madel, David	Royle, Anthony
Maginnls, John E.	Russell, Sir Ronald	TELLERS FOR THE NOES
Marples, Rt. Hn. Ernest	St. John-Slevas. Norman	Mr. Walter Clegg and Mr. Paul Hawkins.
Marten, Neil	Sainsbury, Timothy

Question accordingly negatived.