Commons Sitting of 12 February 1973

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

    Airline Pilots (Medical Examinations)
    Dr. Stuttafordasked the Secretary of State for Trade and Industry if he is satisfied with the present system of medical examinations being carried out for the licensing of pilots.
    The Minister for Aerospace and Shipping (Mr. Michael Heseltine): This is a matter for the Civil Aviation Authority.
    Dr. Stuttaford: Is it not also a matter for the passengers and crew of the aircraft, some of whom may be our constituents? Are we not trying to use Tannochbrae medicine in the cockpit of a Boeing 747, and does my hon. Friend agree that we are not using the most sophisticated methods of medical examination? Is he, as the Minister responsible, allowing this state of affairs to continue?
    Mr. Heseltine: Of course, my hon. Friend is correct in one respect. It is a matter of concern to the travelling public and to the crews, but the authority responsible for carrying out reviews of the method used is the Civil Aviation Authority. I have asked the chairman of the authority to consider as a matter of urgency whether any measures can be adopted which will deal with the situation that my hon. Friend has in mind.
    Mr. Tebbit: Will my hon. Friend take note that he should not move from Tannochbrae medicine to panic brain medicine and that history shows that the success of medical examinations by the present methods has been very good over the last quarter of a century?
    Mr. Heseltine: My hon. Friend the Member for Epping (Mr. Tebbit) has great expertise on this matter and he is correct. I think he will agree, however, that we must be constantly vigilant concerning this subject.

    Airframe Industry
    Mr. Walter Johnsonasked the Secretary of State for Trade and Industry what are the Government's plans for the future development of the British airframe industry.
    Mr. Michael Heseltine: Announcements on specific policy developments have been made as they have arisen. I have at present nothing further to add.
    Mr. Johnson: Will the Minister consider giving launching aid to the airframe industry, particularly to enable it to develop short-haul and vertical take-off aircraft? Is he aware that specialised Rolls-Royce design teams are leaving because of uncertainty in the industry?
    Mr. Heseltine: I shall obviously consider any propositions that are put to me. At the moment there are two—the stretched Skyvan and the HS146. Until I receive propositions from the industry I cannot consider them.
    Mr. Rost: Is my hon. Friend satisfied that every possible support will be given for the finding of alternative markets for the Rolls-Royce RB211 engine in a British airframe?
    Mr. Heseltine: That is a matter for the manufacturers. I gather from conversations I have had that they are pursuing every outlet they can find.
    Mr. Mason: Will the Minister say what finance the Government are giving to the development of short take-off and landing aircraft, particularly the HS146, and what importance they attach to this development?
    Mr. Heseltine: At the moment the Government are not giving any support to the HS146 because the proposition has been put to them for consideration for support. We are now considering it and obviously an answer to the right hon. Gentleman's question will be more relevant when we have reached a decision on it.
    Mr. Mason: Will the Minister explain therefore, if the Government are not at this stage financing the HS146, what short take-off and landing projects they are financing and to what extent they attach importance to this development?
    Mr. Heseltine: The Government have not turned down any projects for short take-off aircraft. We have received one proposition from Hawker Siddeley—the HS146—which we are considering.
    Mr. Michael McNair-Wilson: On a point of order, Mr. Speaker. I have a later Question—No. 28—about the HS146. Is it in order for the Minister to give an answer to that Question before it is reached?
    Mr. Speaker: I hope that we shall reach the hon. Member's Question. Nothing has happened which is out of order.

    Airports Policy
    Mr. Adleyasked the Secretary of State for Trade and Industry which areas of the United Kingdom have been excluded from examination by the British Airports Authority in its search for a national policy for airports; on whose instructions; and why.
    Mr. Michael Heseltine: The Civil Aviation Authority, which under the Civil Aviation Act 1971 is the body responsible for this work, tells me that the answer is "None, Sir".
    Mr. Adley: I thank my hon. Friend for the answer and also for his agreement to study the Severnside proposals. Will he first seek discussions in his Department and with the Canadian Ministry of Works about the similar decision to Maplin which is being taken in Canada? Does my hon. Friend agree that to make the decision to proceed with Maplin before the Civil Aviation Authority had a chance to produce a national airports policy would be similar to the Football Association telling Sir Alf Ramsey to select a football team but instrucing him what his forward line must be?
    Mr. Heseltine: We had a thorough discussion on the whole subject of Maplin last week and the House gave the Government authority to proceed in that matter.
    Mr. Mason: Will the Minister say when the Civil Aviation Authority expects to report on future development in airport expansion or on new developments in Yorkshire and Humberside? What assessment have the Government made of the adverse effects of Maplin on Northern Region airport development and expansion?
    Mr. Heseltine: I am sure that the right hon. Member regrets that he did not take part in the Maplin debate when all these matters were thoroughly ventilated. The development of an airport in South-East England is necessary regardless of the growth we anticipate for the other regions in the country. The Civil Aviation Authority is proceeding as a matter of urgency with its studies and I hope to hear from it in the not too distant future.

    Prices
    Mr. William Priceasked the Secretary of State for Trade and Industry how many complaints about price rises have been received by his Department since the beginning of the freeze.
    The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): My Department had received 8,800 complaints by the end of last week.
    Mr. Price: Is not that a staggering figure? Is it not becoming more and more apparent that the only people who believe that the price freeze is working are Ministers—and nobody is likely to believe them? In how many of the 8,000 instances has action been taken?
    Sir G. Howe: The significant fact is that of the inquiries and calls that come to my Department, only one-sixth are complaints. The great majority are inquiries for guidance about how to apply the standstill. A large proportion of the complaints—about half—do not relate to the standstill. Of those which have been or are being investigated, which is about 4,800, almost 3,500 have been found not to be substantiated. Investigations have been completed in about 300 cases. In all those cases the prices have been reduced. That fact in itself underlines the high level of support we are receiving from industry, trade and commerce in the standstill.
    Mr. Alan Williams: In the light of election promises, how can Ministers live with their consciences when, because of the increase in meat prices, we read of experiments in the use of synthetic meats for school meals and when we read in the Sunday Mirror yesterday of an increase in the sale of horse meat for human consumption? What pride is left to a pensioner when he is told that the cheap cuts of meat——
    Mr. Speaker: Order. The Question relates to complaints on price rises. The hon. Gentleman cannot make a political speech.
    Mr. Williams: I am sorry, Mr. Speaker, but I am speaking of the consequences of the very rises in price to which my hon. Friend the Member for Rugby (Mr. William Price) referred. The point I was trying to make was that meat has become so dear that the pensioner has to ask for scraps for his Sunday lunch. How does the Minister explain this and how does he make it compatible with his so-called promises at election time?
    Sir G. Howe: The hon. Gentleman knows perfectly well the position with regard to food prices, which does not arise from the Question. In any event, pensions have been raised under the present Government and are being raised annually. They have so far been raised by 35 per cent., at least 10 per cent. ahead of the rise in food prices, since we came to office.
    Mr. Edwin Wainwright: Does the right hon. and learned Gentleman feel that the Government are happy about the success of their measures? Can they tell the housewife that things are as they should be, or are prices still far too high?
    Sir G. Howe: The hon. Gentleman knows that with non-food prices the standstill has achieved almost complete success. He also knows that for food prices the position remains exactly as it was when his Government introduced a similar standstill: that there is a limit to the extent to which any Government can regulate the impact of world prices on food prices. What we can do and have done is to take measures to help the lower-paid and other people dependent on social security benefits.
    Mrs. Sally Oppenheimasked the Secretary of State for Trade and Industry what steps his Department intends to take with regard to those retailers, manufacturers or vendors who, in breach of the Counter-Inflation (Temporary Provisions) Act, are imposing hidden price rises by providing a reduced quantity for the same price.
    Sir G. Howe: We have received very few complaints and none has been substantiated on investigation.
    Mrs. Oppenheim: Is my right hon. and learned Friend aware that if he were to buy a bar of Cadbury's chocolate called "Laughs", the laugh would be on him since he could buy the same bar in a plain wrapper for the same price but weighing more? Is he further aware that it is not uncommon for quantities and weights to fluctuate in those goods for which there is no requirement to give actual weight or quantity, which constitutes a hidden price rise which is almost undetectable to the consumer?
    Sir G. Howe: I am not aware of that case but I have examined those which have been drawn to my attention, including one other which my hon. Friend herself has raised with me. We should regard a reduction in quantity not accompanied by a corresponding reduction in price as a contravention of the standstill.
    Mr. Carter: Will the right hon. and learned Gentleman inquire into the affairs of traders and manufacturers who are conducting massive advertising campaigns telling people to buy their goods at value added tax prices when in many cases, on the basis of the assurance given to the House last year by the Chancellor of the Exchequer, the price of these goods should be reduced given a 10 per cent. or lower rate of VAT?
    Sir G. Howe: Those cases which have been drawn to my attention have been investigated because the point made by the hon. Gentleman is entirely valid.
    Mr. Evelyn King: Will my right hon. and learned Friend also accept that whoever may be responsible for inflation and price rises—and there are many candidates for the blame—it is not in the main the fault of retailers? Would my right hon. and learned Friend prefer, on the contrary, to pay tribute to the 90 per cent.

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    of retailers who have behaved reasonably and moderately? In this context, in my constituency there has been only one complaint about a firm, and that concerned undercharging. I have not had a single complaint of anyone overcharging.
    Sir G. Howe: I willingly endorse what my hon. Friend has said. I have already paid tribute to the way manufacturing industry and the retail trades are supporting the provisions of the standstill. They are anxious to discover what they are allowed and not allowed to do and to remedy any matters drawn to their attention which have gone wrong.
    Mr. Alan Williams: Some unscrupulous firms are seeking a way round the standstill and the situation will be worse when value added tax is introduced. Unit pricing would be a useful check for housewives. Will the right hon. and learned Gentleman introduce legislation to enforce unit pricing'? If he does, we will co-operate in getting it on to the Statute Book as quickly as possible.
    Sir G. Howe: Unit pricing has some value in certain cases but if applied across the board it might easily itself add to the costs of commodities to purchasers. The question of unit pricing is already before the House in the Private Member's Bill introduced by my hon. Friend the Member for Cannock (Mr. Cormack) and in the form of an amendment to be discussed on the Fair Trading Bill. It will be fully discussed, therefore, in one or other of those forums. Although it has some value, which I have in mind, it cannot be regarded as the panacea in shopping.

    Development Areas
    Mrs. Renée Shortasked the Secretary of State for Trade and Industry what amount will he spent from the EEC budget on development areas in the United Kingdom in 1973; and if he will make a statement as to which industries now facing severe competition from EEC countries will he helped.
    The Secretary of State for Trade and Industry (Mr. Peter Walker): It was agreed at the October summit that a new Regional Development Fund, to be financed from the Community's own resources, should be set up by the end of 1973. The Community's existing arrange-
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    ments for assisting regional development are not financed from the budget.
    Mrs. Short: Was not it agreed that the amount of the Community budget for the purpose would be only 2 per cent., which is very small? Is the right hon. Gentleman aware that many industries in this country, from shoes and textiles to the steel industry, will be in a very difficult situation once EEC competition really begins? Is he aware that in the West Midlands, for example, thousands of steelworkers will become redundant during the next decade? Does he not think that he should try to get a better bargain than it appears we shall get?
    Mr. Walker: As to steel jobs, the steel industry considers that entry into the Community will be of benefit to it and not detrimental. I stated in my reply that the finance to assist regional development did not come out of the budget. For example, for steelworkers in particular the finance comes out the budget of the Coal and Steel Community and not the budget of the Community itself.
    Mr. Marten: How much would my right hon. Friend like to get back from the Community for regional development?
    Mr. Walker: As much as possible.
    Mr. Benn: Can the Secretary of State be a bit more explicit? We want to know what he is asking for. The House is entitled to know what he thinks is necessary so that hon. Members may compare it with what he gets. Can the right hon. Gentleman satisfy the House that the definition of assisted areas which is accepted in this country will be acceptable for the purposes of receiving money under the European Regional Development Fund?
    Mr. Walker: The reason why no decision is being made until the end of 1973 is that we want to analyse the total European problem. The Government will then decide what they consider to be correct for this country.

    Copyright (Home Recording)
    Mr. Edward Lyonsasked the Secretary of State for Trade and Industry what steps he is taking to mitigate the damage to the income of composers and others caused by the practice of home recording in breach of copyright.
    Sir G. Howe: I am aware of this problem which is one appropriate for consideration by the committee which I have it in mind to appoint to look into our law of copyright generally.
    Mr. Lyons: When does the right hon. and learned Gentleman propose to set up the committee? In view of the thousands of cases of breach of copyright now occurring daily through home recording, making a laughing stock of the Copyright Act, will he recommend for the committee's consideration the German system, now supported by the British Copyright Council and broadcasting organisations here, whereby manufacturers of recording equipment pay up to 5 per cent. into a fund for distribution among copyright owners?
    Sir G. Howe: I am aware of the problem, but the hon. Gentleman will be aware of the difficulty of policing any effective remedy. In that context the German system will no doubt be something that the committee will want to look into. I shall tell the House as soon as I am in a position to answer the hon. Gentleman's question about the date of the committee's appointment.
    Mr. Edelman: Will the right hon. and learned Gentleman refer to the committee the question of public lending right and authors as well?
    Sir G. Howe: That matter has been under review by my right hon. and noble Friend the Paymaster-General. It is not clear whether it would still be appropriate for reference to the committee but I shall bear the hon. Gentleman's point in mind.
    Mr. Lipton: Is not it impractical to think of any method of effectively controlling home recording, especially in view of the grossly exorbitant price of gramophone records?
    Sir G. Howe: The hon. Gentleman's point about the impracticability of control is the one I mentioned in my first supplementary answer. It is because of that impracticability that the German law which deals with the matter in another way is clearly something that the committee will want to look into.

    Heathrow (Noise Monitoring)
    Mr. Hugh Jenkinsasked the Secretary of State for Trade and Industry why
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    the fully automatic noise monitoring system at Heathrow airport promised to be completed by the summer of 1968 was not completed; when it will be operational; and if it will monitor approach as well as departure noise.
    Mr. Michael Heseltine: The system was not scheduled to be completed by the summer of 1968; it is expected to become fully operational by June 1973 and will be used only to monitor take-off noise.
    Mr. Jenkins: The hon. Gentleman's answer lacks his usual accuracy, as the Kew Association for the Control of Aircraft Noise was promised that the system would be developed in 1968. However, now that it is to be developed at long last, will the hon. Gentleman reconsider the question of approach monitoring? Is he aware that it takes place at Frankfurt, Zurich, Los Angeles and one or two other places? As the problem of Heathrow is mainly an approach problem, it would be useful for him to consider that. As the system is now to be introduced, will he consider whether approach monitoring should be incorporated in it?
    Mr. Heseltine: I assure the hon. Gentleman that my answer was accurate. It was the trial system that was promised to be in operation in 1968, and it was in operation in 1969. As a result of that, we are now proceeding to the installation of a full system, which is hoped to be in operation in 1973.
    On approach monitoring, the view is taken that it would not be advisable to blur the safety factors involved in pilots keeping on the glide path as they come in by introducing this sort of additional discipline. The problems of congestion around Heathrow are very different from those at the airports the hon. Gentleman mentioned.
    Mr. Jenkins: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

    Manufactured Goods (Date Marking)
    Mr. Kaufmanasked the Secretary of State for Trade and Industry whether he will introduce legislation compelling manufacturers to label all goods with the date of manufacture.
    Sir G. Howe: I do not consider that general legislation is needed. But my right hon. Friend the Minister of Agriculture, Fisheries and Food hopes shortly to announce the Government's decision on the recommendations of the Food Standards Committee about the date marking of certain foodstuffs.
    Mr. Kaufman: Is the right hon. and learned Gentleman aware that I have in my possession evidence of a case in Manchester in which Fisher-Bendix marketed as new a washing machine that was five years old, thus causing intolerable inconvenience and expense to the customer? Fisher-Bendix has been disgracefully unhelpful about the matter. Should not the public be protected from such fraudulent and swindling activities with manufactured goods as well as foodstuffs?
    Sir G. Howe: I am not prepared to comment on the case which the hon. Gentleman has mentioned. There has not yet been forthcoming any evidence to suggest that date marking of manufactured goods is something for which there is a general need. If it was shown that particular cases required such treatment across the board, I would be prepared to look at them.
    Mr. McCrindle: It not this taking a sledgehammer to crack a nut? Will my right hon. and learned Friend tell me what conceivable advantage would ensue to me if I were to know the date of manufacture of a kettle or a sweater?
    Sir G. Howe: That is precisely the point that I had in mind. There has not yet been shown to be any general need for date marking of manufactured goods.
    Mr. Alan Williams: How does the right hon. and learned Gentleman explain that the Sunday papers were able to announce yesterday the Government's intentions about date marking before the House has been told about those intentions? As foodstuffs are not currently date marked, how will the Government ensure that the prices of old stocks of canned meat are not inflated by as much as 30 per cent. in the next few weeks when the EEC levies come into force?
    Sir G. Howe: No doubt these points are matters which my right hon. Friend
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    will have in mind when he announces the Government's decision.

    Park Royal Industrial Estate
    Mr. Pavittasked the Secretary of State for Trade and Industry how many factories on the Park Royal Industrial Estate are still vacant following closures; what is the total amount of space available; and what action he proposes to take to encourage skilled industries to settle in this area.
    The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): Factories in the estate belong to a number of owners and the information requested is not readily available. The incentives to encourage industrial expansion on a countrywide basis have been provided by the Government in the measures announced by my right hon. Friend the Chancellor of the Exchequer last March.
    Mr. Pavitt: May I inform the hon. Gentleman that there are wide open spaces in an area which used to be the workshop of the world? Will he seriously consult the Department of the Environment and the Department of Employment to change the situation, which is having a terrible effect socially in my constituency? We find that what was a skilled area with a multiple number of trades within it is becoming a derelict area of warehouses.
    Mr. Grant: Whilst I will always discuss these matters with the Department of the Environment, I must put the matter into perspective by asking the hon. Gentleman to remember that the unemployment rate for the London area is one of the lowest in the country; it is half the national rate. The loss of jobs in manufacturing industry has been partly set off by increased employment in the service industry in the area.
    Mr. Mackie: This is becoming a problem in other estates in London where firms are closing down. It is all very well to say that there is plenty of employment, but when a man has been employed for 20 or 30 years in a particular job it is much more difficult for him to change than the Minister thinks. I agree about the unemployment figure.
    Mr. Grant: The hon. Gentleman must accept that there are areas in the country with very much graver problems than the London area.

    Steel Industry
    Mr. Ashleyasked the Secretary of State for Trade and Industry when he proposes to make a further statement about the productive capacity of the British Steel Corporation.
    Mr. Peter Walker: I have already announced a 10-year strategy for the modernisation and expansion of BSC's productive capacity. Further details are contained in the White Paper on the strategy published on 8th February, Cmnd. 5226.
    Mr. Ashley: Has the right hon. Gentleman noted the fine productivity record of Shelton Steelworks with existing inadequate equipment? Is he aware that if electric are furnaces were installed the investment of £4 million that is required would be repaid within a year and the existing profits would be doubled to £5 million a year?
    Mr. Walker: There is no intention in the immediate future for closure of Shelton to take place. The British Steel Corporation has pursued a policy of giving all the financial facts which result in its decisions being given to those concerned. I am sure that if and when a closure comes, as far as Shelton is concerned this will be provided.
    Mr. Skeet: Does my right hon. Friend agree that productivity investment depends on demand and relative prices and that to have too high a productivity capacity which the market cannot warrant would not be in the interests of the steel industry?
    Mr. Walker: There is a need in any strategy for flexibility, and I believe that in the strategy approved by the Government there is that flexibility. We must have modern steel plants that can compete with our major overseas competitors.
    Mr. Golding: Will the right hon. Gentleman say whether it is certain that a steel-producing mini-plant will be provided at Irlam, Bilston or Shelton? Will he further tell us what length of life that steel-producing plant is expected to have?
    Mr. Walker: That is a separate question. I do not know the details of the answer. I will write to the hon. Gentle-
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    man or he can put a Question on the Order Paper.

    Hairdressing (Costs)
    Mr. Bruce-Gardyneasked the Secretary of State for Trade and Industry what estimate he has made of the percentage increase in wage costs in the hairdressing industry resulting from the implementation of the wage council award on 1st January 1973; and to what extent he has authorised hairdressers to recover these additions to costs during the period of the standstill.
    Sir G. Howe: The percentage increase, if any, will vary from employer to employer, according to the proportion of staff previously paid less than the new minimum rates and their grades. Employers unable to absorb in full increased wage costs directly resulting from this have been permitted to raise their prices so as to recoup not more than 50 per cent. of them from 1st February 1973.
    Mr. Bruce-Gardyne: I am grateful to my right hon. and learned Friend for that reply. However, can he lift the corner of the veil which hides the deliberations of his Department when deciding in any given case what is the appropriate proportion of unavoidable cost increases which may be passed on? Why is 50 per cent. right for hairdressers and 70 per cent., for instance, right for people who face unavoidable increases in the cost of raw materials? Lastly, what is the court of appeal?
    Sir G. Howe: The appropriate factor depends upon the circumstances in each case. In relation to certain raw materials costs, which have risen very substantially and which form a high proportion of the total cost of the product, the figures of the kind my hon. Friend mentioned have been permitted. For hairdressing, the figure was decided upon in the light of the very substantial proportion that wages represent in hairdressing costs and the low profitability of many of the firms in this service trade, which has a very large number of operators in it.
    Mr. R. C. Mitchell: Is the right hon. and learned Gentleman aware that when selective employment tax was introduced

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    all hairdressers substantially increased their prices? What evidence has he that when SET was halved last year there was an equivalent reduction in prices?
    Sir G. Howe: The evidence of the many individual cases, together with the general submissions considered by my Department and by myself personally, which showed very clearly the facts underlying the circumstances of this trade.
    Mr. Bruce-Gardyne: What about the court of appeal?
    Sir G. Howe: I take my hon. Friend's point. Many of the decisions are taken in the light of guidelines laid down by myself, but in particular cases representations are made to me personally.

    Concorde
    Mr. Bishopasked the Secretary of State for Trade and Industry what options and what orders have now been placed for the Concorde aircraft; and if he will make a statement.
    Mr. Michael Heseltine: BOAC and Air France have signed orders for five and four aircraft respectively. Iranair have signed a letter of intent to purchase two aircraft and the Chinese national airline has signed a preliminary purchasing agreement for three aircraft. In addition there are 33 options held by 10 airlines. Details were given in my written reply to my hon. Friend the Member for Oswestry (Mr. Biffen) on 1st February.—[Vol. 849, c. 468–9.]
    Mr. Bishop: Will the Minister be a little more forthcoming on some of the points which may have a bearing on Concorde's future? Can he say how soon we may expect the confirmation of options from Japan Airlines and Qantas? Secondly, will he tell us about the prospect of landing rights for Concorde in the United States? Thirdly, will he comment on the prospects of a commercial agreement with the USSR to bring about a supersonic corridor via Russia to the Far East?
    Mr. Heseltine: As the hon. Gentleman knows, there is an opportunity to debate these matters on Report stage of the Concorde Aircraft Bill on Thursday of this week. As the questions put to me are detailed and require long
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    answers, perhaps that might be a more appropriate time to deal with the matter.
    Mr. Michael McNair-Wilson: Will my hon. Friend tell the House how the recent tests in South Africa with the new aircraft have gone and whether the newer engines are achieving the lower noise levels for which we all hope?
    Mr. Heseltine: I have no information from South Africa about the tests but by Thursday I will endeavour to answer my hon. Friend's question. The noise levels of the recent preproduction model flying from Toulouse have not yet been checked because the aircraft has not proceeded to that stage in its programme.
    Mr. Sheldon: The hon. Gentleman's answer might have been a little more convincing in reply to my hon. Friend the Member for Newark (Mr. Bishop) if in the last debate he had answered the questions that he said he would answer. It is of little value to us to be given the answers in Thursday's debate. Will the hon. Gentleman let us know what is happening as a result of the discussions with Japan Airlines and Qantas, and not just content himself with being a spokesman only for the aircraft industry?
    Mr. Heseltine: I am happy to give the hon. Gentleman the answer that Japan Airlines' option expires at the end of this month, as is generally known since it has been widely commented on in the Press. Qantas's option expires towards the middle of the year. The United States administration recently published its latest regulations dealing with aircraft flying within America. They do not cover the question of international flights. I have always taken the view that as there will always be far more aircraft with the noise attributes of Con corde—such as the DC8, the VC10 and the Boeing 707—using American airports, Concorde will not provide any problem that is not already in existence in far larger numbers of cases.
    Mr. Palmerasked the Secretary of State for Trade and Industry if the loan of up to £350 million to the British Aircraft Corporation for the production of Concorde aircraft will permit manufacture of 30 Concorde aircraft, as proposed by the French Government under its loan to Aerospatiale.
    Mr. Michael Heseltine: The Concorde Aircraft Bill provides for an initial limit of £250 million on loans to be made both to BAC and to Rolls-Royce (1971) for Concorde production. This sum is estimated to be sufficient to manufacture more than 30 Concordes. The Bill also provides for the limit to be extended to £350 million but after affirmative resolution of the House.
    Mr. Palmer: Is the hon. Gentleman aware how irritating it is to many of us who are supporters of the Concorde project that information is made freely available to the French Chamber of Deputies but is not available to the House of Commons? Will he be more forthcoming in the debate on Thursday?
    Mr. Heseltine: I am sure the hon. Member will be aware that I made available a very large amount of information to the Standing Committee on the Concorde Aircraft Bill. I have followed very-closely the policy of all Ministers responsible for this project not only in connection with Concorde but with other funding operations by the Government towards civil aerospace projects.
    Mr. Adley: Is my hon. Friend aware that he is to be warmly congratulated on his determination to press ahead with this aircraft after 10 years' successful testing, and will he take note that many of us hope that this time the lessons of the Viscount, the Comet, the TSR2 and the VC10 will not be lost?
    Mr. Heseltine: Certainly we have made it clear that we shall give every support to the manufacturers in their sales campaign for this aircraft.
    Mr. Edelman: Is the hon. Gentleman aware of the very grave dearth in orders which have been placed for the crucially important carbide brakes, and that this will mean that many men will be standing about idle while the costs escalate and no production orders can be fulfilled for at least another year? What does he say about that?
    Mr. Heseltine: I have kept in touch on the question of brakes for Concorde. That matter is not part of this specific Question, but I assure the hon. Member that I am aware of his anxiety and that of British industry about this matter and that I will continue to keep an eye on it.
    Mr. Benn: Can the Minister assure the House that he has reached full agreement with the French Government on the phasing of production orders beyond those which have already been authorised?
    Mr. Heseltine: No. I have not reached agreement because I have not sought agreement. We obviously have to deal with production orders in the light of sales circumstances at the time, and one cannot deal with this in advance of events. When I say I have not reached agreement no alarmist conclusions should be drawn from that. It is simply that it has not seemed appropriate to seek agreement at this time. We have authorised full production of 16 models and placed advance purchase orders for the materials for a further six.

    South Yorkshire
    Mr. Edwin Wainwrightasked the Secretary of State for Trade and Industry how many new jobs have been created in the area known as the South Yorkshire intermediate district since the 18th June 1970; and how these figures compare with the number of jobs declared redundant over the same period.
    Mr. Anthony Grant: It is not possible to make a meaningful comparison. Applicants for IDCs estimated that 8,700 new jobs would be created when their projects were complete and fully manned. But this figure excludes the services sector, which in 1971 provided 38 per cent. of total employment. The number of redundancies recorded by the Department of Employment for the Yorkshire coalfield intermediate area, excluding Worksop employment exchange area, from 1st July 1970 to 31st December 1972 was 8,900, including the services sector.
    Mr. Wainwright: Does the hon. Gentleman realise that people who are unemployed in large parts of the South Yorkshire area are getting bored to death with the inactivity of the Government in supplying them with jobs? When will the Department find a tenant for the advance factory at Mexborough? Cannot we have something done about the infrastructure in that area, making it attractive and thus getting more jobs and reducing the unemployment, which is twice the national average?
    Mr. Grant: The question of infrastructure is for the Department of the Environment. I cannot now deal with the detailed case mentioned by the hon. Gentleman but I am sure that the people in that area are aware that redundancies were down by one-third last year while unemployment has fallen by 1·3 per cent. The trend is in the right direction.

    Tariffs and Trade
    Mr. Martenasked the Secretary of State for Trade and Industry if he is now in a position to explain the attitude which Her Majesty's Government will take towards the forthcoming GATT negotiations.
    Mr. Jayasked the Secretary of State for Trade and Industry what policies the Government intend to put forward in the international negotiations on trade and tariffs due to open in September.
    Mr. Peter Walker: The United Kingdom will pursue, in concert with its partners in the enlarged Community, the objectives adopted by the October 1972 summit meeting of encouraging the development of international trade on the basis of progressive liberalisation.
    Mr. Marten: Can we have an assurance that, before the Government adopt a common policy towards the Common Market approach to these negotiations, the House will have an opportunity to express its views and tell the Government what it thinks they ought to be doing? Will the Department lift another corner of another of its seven veils and assure us that they will press for the reduction of the common external tariff?
    Mr. Walker: The liberalisation of international trade has been the policy of successive Governments in this country over a period of years. It has now been adopted by the Common Market as its approach to these trade negotiations. If the House wants to discuss the decisions made at the summit conference, approaches can be made through the usual channels.
    Mr. Jay: Are there to be any specifically British proposals in these extremely important negotiations, or do the Government no longer regard themselves as the Government of an independent country?
    Mr. Walker: When the right lion. Gentleman was President of the Board of Trade and became involved in a number of detailed negotiations for liberalising trade, he did not bring to the House every liberalising measure he had in mind.
    Mr. Benn: This is the second time today that the right hon. Gentleman has said that he cannot reveal the stance of the Government before the Community discusses the matter. First, it was regional policy. Do we take it, therefore, that he regards himself as being unable to make statements to the House about the British Government's policy until the EEC has in every case reached a view?
    Mr. Walker: I wish the right hon. Gentleman would listen to the answers. I made clear the policy of the Government which was agreed at the summit conference last October.
    Mr. Moateasked the Secretary of State for Trade and Industry if Her Majesty's Government share the objective of the United State Government to secure the elimination of all barriers to international trade; and if he can yet make a statement about the British position in the forthcoming multilateral trade negotiations.
    Mr. Peter Walker: Such an objective has not been put forward by the United States Government.
    Mr. Moate: Does my right hon. Friend agree that the present currency crisis adds even more to the urgency for requiring reductions in agricultural and industrial protectionism and that these views have been expressed in the past by the United States administration? Even if that is not the case, would it not be helpful for the success of the GATT talks in the autumn if the British Government were to give more public support and an enthusiastic commitment to securing a reduction in tariffs, especially industrial tariffs, as soon as possible?
    Mr. Walker: I recently had talks in Washington with the United States Government about this. My right hon. Friend the Prime Minister had talks with the President on this topic. We very much urged on the United States Government the belief expressed at the European summit that it was vital for world trade

    971
    that there should be a liberalisation on both sides.
    Mr. Jay: Cannot the right hon. Gentleman at least say that the British Government will at once propose drastic liberalisation of the common agricultural policy in these negotiations?
    Mr. Walker: This is a matter for detailed negotiation on both sides. We have agreed to the common agricultural policy as it is. Agricultural products will certainly be among the items discussed but not the policy, which is an agreed policy.

    Computer Industry
    Mr. Goldingasked the Secretary of State for Trade and Industry what communications he has received from the Commission of the European Economic Communities concerning aid to the British computer industry.
    Mr. Anthony Grant: None, Sir.
    Mr. Golding: Is the hon. Gentleman aware that there is concern in North Staffordshire that there should be no reduction, because of the Common Market, in Government aid to ICL? Is he further aware that there is concern that the Government should increase their aid to the computer industry generally?
    Mr. Grant: We have no reason to believe that our support policy conflicts with Community rules. The French and Germans give considerable financial support to their computer industries. Discussions are continuing with ICL about its longer-term needs.

    Package Tours (Prices)
    Mr. R. C. Mitchellasked the Secretary of State for Trade and Industry how many firms operating package tours at home and abroad have applied to him to increase their prices for the 1973 season; and what replies he has sent.
    Mr. Anthony Grant: Problems affecting package tour operators have been dealt with through the Association of British Travel Agents. We have agreed that operators may levy surcharges on package holidays abroad only so far as necessary to reflect currency fluctuations and cost increases in individual countries
    972
    beyond their ability to control. The association has also approached my Department about other increases for the 1973–74 season and its views are being considered.
    Mr. Mitchell: Is the hon. Gentleman aware that nearly all the holiday firms have very substantially increased their prices for the 1973 season? Did he read the article in yesterday's Sunday Times on this point? Is he further aware that many firms, including Butlin's, are sending out invoices with the full 10 per cent. value added tax charged on them?
    Mr. Grant: The answer I gave is that the only agreement which the Government have made is on overseas holidays, because of currency changes. As far as home holidays are concerned, travel firms are in precisely the same position as the rest of industry. Deals not concluded before the Government standstill come under the counter-inflation policy.
    Mr. Kenneth Lewis: Is my hon. Friend aware that any increases which have taken place are almost entirely due to the floating £, which made them necessary, and that these holidays are still the cheapest bargain available? Is he further aware that many of these companies are losing money?
    Mr. Grant: I note what my hon. Friend says. It was precisely on that ground that my original reply was given.
    Mr. Arthur Davidson: Will the hon. Gentleman take this point seriously? Is he aware—he probably is not—that I have had complaints over the weekend from constituents who say that they are now no longer able to take the same holiday they went on last year because of increased charges, some of which are called "general increases", while in addition they have already been charged the 10 per cent. increase for value added tax? Will the hon. Gentleman look into this?
    Mr. Grant: If the hon. Gentleman will give me details of the cases he has in mind I will do so. What I want to make clear, as I have done on a number of occasions, is that any excuses for increased charges over and above the VAT figure of 7 per cent. or in some cases 10 per cent. are wholly unjustified on VAT grounds. In other respects the industry is in precisely the same position as other industries.

    Nationalised Industries (Exports)
    Mr. Loveridgeasked the Secretary of State for Trade and Industry what proportion of United Kingdom exports was produced by the nationalised industries in each of the past five years.
    The Under-Secretary of State for Trade and Industry (Mr. Peter Emery): Direct exports by the nationalised industries have accounted for about 3 per cent. of United Kingdom exports in each of the past five years.
    Mr. Loveridge: Is not that a very small proportion and does it not illustrate the dependence of our economy upon private industries to secure our livelihood abroad? Will the Government therefore limit the endless outpouring of capital into these monopolistic State gods?
    Mr. Emery: While I accept that exports must rely considerably on private enterprise I do not think we should underestimate the fact that many nationalised industries are unable to export the product they produce. Electricity, for example, is not available for export. In the figures I have given I referred specifically to direct exports which do not take account of the amount of steel which will be exported indirectly.
    Mr. Palmer: Does the hon. Gentleman agree that the nationalised industries could contribute to the export trade, particularly through consultancy services, if they were allowed to do so by the present administration?
    Mr. Emery: I do not believe that there is any restriction by the Government which would stop any aspect of export trade on the part of the nationalised industries, even that referred to by the hon. Gentleman.

    Tarmac/Wolsely-Hughes (Merger Bid)
    Mr. Norman Lamontasked the Secretary of State for Trade and Industry why he referred the bid by Tarmac for Wolsely-Hughes to the Monopolies Commission.
    Mr. Peter Walker: Because the bid was within the scope of the Monopolies and Mergers Act 1965, and I considered a full investigation to be justified.
    Mr. Lamont: While I appreciate that this bid, like many bids, was opposed by employees and management, may I ask my right hon. Friend whether he would not agree that some uncertainty has been caused by the Government's attitude towards conglomerate mergers? Will he give an assurance that conglomerate mergers are not necessarily regarded as undesirable and that opposed bids will not in future be referred simply because they are made by diversifying companies?
    Mr. Walker: The reason why this bid was referred was not purely that it was an opposed bid. The Government had previously made it clear that we would be using the existing referral power rather more in the future than in the past. A number of arguments were put forward and it struck us as being worthy of a reference to the commission.
    Mr. Pardoe: Is the right hon. Gentleman aware that some of us are more likely to ask him why he has not referred a matter to the Monopolies Commission rather than to ask him why he has done so? Is he aware that we congratulate him on this reference? Is he further aware that reference alone is not enough? A number of Monopolies Commission reports say that although circumstances in an industry are not now against the public interest they may become so if certain things happen. What process does the right hon. Gentleman have for ensuring that the Department keeps an eye on the changing affairs within an industry?
    Mr. Walker: One of the advantages of making more references to the commission is that it will build up a considerable amount of information about such mergers and about their effects, economic and social and in every other way. This will enable us to develop long-term strategy.
    Mr. Rost: If an increased number of such bids are to be referred to the Monopolies Commission, may I ask my right hon. Friend whether there is not a case for decisions to be speeded up so that those in industry and the City can get on with the mergers and takeovers where they are regarded as desirable?
    Mr. Walker: Yes. That is desirable. There is a problem of the key staff and

    975
    the qualifications of the staff involved. It would be my objective to try and speed up decisions.
    Mr. Walter Johnson: Is the right hon. Gentleman aware that the Monopolies Commission should be inquiring into the activities of the building societies?

    Drained Weight
    Mr. David Watkinsasked the Secretary of State for Trade and Industry whether he has received a letter from the Chairman of the North East Region of Consumer Groups on the subject of drained weight; and what reply he has sent.
    Mr. Emery: Yes. In the reply which I sent I explained the considerable problems involved in the loss of moisture by different fruits and why it is not possible to act quickly on the Consumer Groups' request for a drained weight marking on canned goods.
    Mr. Watkins: Notwithstanding the stone-walling nature of the letter, which is equalled only by the stone-walling nature of that answer, may I ask the Minister to give urgent consideration to the introduction of legislation requiring the drained weight of foods packed in liquids to be displayed on the cans?
    Mr. Emery: Anyone who describes my reply as "stone-walling" does not understand the problem involved. The hon. Gentleman obviously does not realise that much of the tinned fruit which is consumed here is imported. Any regulations imposed might have a deleterious effect on the consumer.
    Miss Fookes: Would my hon. Friend agree that this might well be a problem which could be resolved by the Director General of Fair Trading who will come into being under the Fair Trading Bill? Will my hon. Friend also take note of my experience recently when I bought a dubious brand of grapefruit only to find that the so-called segments were tiny pieces and that most of the contents of the can was juice? The fact that I bought it in the line of duty at a Conservative bazaar did not lessen my annoyance.
    Mr. Emery: My hon. Friend will realise that the source of her purchase has nothing to do with the answer which
    976
    I give to her. We realise that there is a problem. No one is suggesting other than that. The Government are looking at this. As I said in my letter, it is not a matter of stone-walling. We are concerned to ensure that we overcome the problem if we can. My hon. Friend is right that the Director General will be able to deal with this matter, when he is in office, after the Fair Trading Bill has become law.
    Mr. Alan Williams: Is the hon. Gentleman aware that in the report by the North East Region of Consumer Groups liquid content as high as 67 per cent. is shown for some canned fruits and as high as 57 per cent. for some canned vegetables? How will the Government ensure that canners do not evade the freeze in the next few months simply by further increasing, if possible, the liquid content in canned goods?
    Mr. Emery: It is not only the North East Region of Consumer Groups which has been in touch with the Ministry. A number of other consumer groups are concerned. This is a real problem. We are not trying in any way to sidestep it. The belief that it can be cured quickly and easily stems from a misunderstanding of the depth of the problem.

    Australia (Tariffs)
    Mr. Bodyasked the Secretary of State for Trade and Industry what changes have taken place in tariffs upon United Kingdom exports to Australia since 1st January 1973.
    Mr. Peter Walker: None, Sir.
    Mr. Body: In the course of this year there will be a number of changes which have been proposed and announced and they will have the result of diversifying trade to our disadvantage and the advantage of the Japanese. One example of that is that they are now buying beef produced in Australia, which we could have had, and which is now available to Japanese housewives at 39p lb.
    Mr. Walker: I think my hon. Friend will agree that the trade figures between Australia, Japan and Britain during the last 10 to 15 years show that throughout the whole of this period there has been a substantial switch of trade from Britain to Japan.
    Mr. Jay: But if the Secretary of State says "None" in answer to this Question is he aware that he is quite wrong? A number of tariffs were imposed by Australia on British exports on 1st February.
    Mr. Walker: I apologise if I am wrong. My information is that none has been imposed at the present time, but if I am wrong I apologise.

    HS146 Aircraft
    Mr. Michael McNair-Wilsonasked the Secretary of State for Trade and Industry what answer he has given to submissions by Hawker Siddeley Aviation for financial assistance to launch the HS146 airliner; and if he will make a statement.
    Mr. Michael Heseltine: I have the company's request under consideration and hope to make a decision shortly.
    Mr. McNair-Wilson: My hon. Friend must be aware that the company concerned is only asking the Government to match the money that it itself intends to put into the project. Is he aware of the industry's present extreme concern at having no new civil aircraft project on the stocks except Concorde? How can we keep up our export record without a project like HS146?
    Mr. Heseltine: Perhaps I may be allowed to pay tribute to the remarkable export record which the British aerospace industry has had in the past 12 months. I am fully aware of the points that my hon. Friend has put to me.

    Electricity Generation
    Mr. Hardyasked the Secretary of State for Trade and Industry if he will enter into consultations with the Central Electricity Generating Board on the subject of the provision of future generating capacity, with a view to his making an early statement in the House.
    Mr. Emery: My hon. Friend the Minister for Industry will continue with me to maintain our normal close contacts with the electricity supply industry on this question.
    Mr. Hardy: I would ask the Minister to bear in mind that he has not answered that part of my Question which requests that the House be kept informed on this
    978
    matter, but given the continuing and commendable increase in productivity, and the accepted and real need for a viable coal industry to be maintained in this country, does he agree that it is reasonable that the question of future coal-fired generation capacity should be fully discussed and favourably viewed?
    Mr. Emery: If at any time I thought the House not fully informed by parliamentary question and answer and debate I would be willing to make a statement, but I think adequate opportunity has been given for full discussion of the viability of the coal industry generally on the Bill which is now before the House, and during its Committee stage, which has just concluded.
    Mr. Varley: Can the Minister be more specific? For example, in spite of today's Press reports that the Central Electricity Generating Board will not now go ahead with Drax B, can he confirm that this will go ahead as announced by the last Government on 29th October 1969? When it does, will this at least be coal-fired?
    Mr. Emery: I have to say to the hon. Gentleman that no proposals have been made to me or my right hon. and hon. Friends by the Central Electricity Generating Board for the construction of Drax B power station. When proposals are put to me we will, of course, make our assessment and an announcement.

    Car Hire Firms (Charges)
    Mr. Moyleasked the Secretary of State for Trade and Industry whether he will investigate the recent allegations of increased charges by car hire firms over the Christmas holiday period.
    Sir G. Howe: It is the normal practice of the car hire trade to increase charges at Christmas to cover the cost of higher wages paid to staff for working during a public holiday. Firms were not infringing the prices standstill if their charges did not exceed those made during the Christmas period in 1971, and I see no reason to order any special investigation.
    Mr. Moyle: Does the right hon. and learned Gentleman agree that some of the information I have sent him shows that car hire firms doubled their charges

    979
    over Christmas? Even if cabbies require more money when working on Christmas Day can he tell the House how cars depreciate twice as fast on Christmas Day as on any other day? Is not this an example of prices going up whilst wages are held down?
    Sir G. Howe: The pattern to which the hon. Member referred is no different from that on previous Christmas occasions, because firms have to pay their staffs double and even treble the normal rates at such periods.
    Mr. Kenneth Lewis: Is it not rather odd that the Labour Party on more than one occasion at this Question Time has been opposed to increases in prices while opposing the prices and incomes policy?

    Shipbuilding (Booz-Allen Report)
    Mr. Wingfield Digbyasked the Secretary of State for Trade and Industry when he expects to receive the BoozAllen report on shipbuilding.
    Mr. Peter Walker: The Booz-Allen report on the shipbuilding industry was received on 1st February 1973.
    Mr. Wingfield Digby: Is my right hon. Friend aware that there is much interest on both sides of the House in this report, and will he make it available to hon. Members before he reaches any firm decisions on it?
    Mr. Walker: The report contains information given in confidence by commercial concerns, so one would have to study the report before doing so, but I inform my hon. Friend that, in terms of the atmosphere of the industry in general, orders for shipbuilding in the fourth quarter of last year were the best for four years, and probably at the moment outstanding orders in British yards are in value the highest they have ever been in history.

    Bankruptcy Examinations
    Mr. Peter Archerasked the Secretary of State for Trade and Industry whether he will amend the Bankruptcy Rules 1952 to provide that any person sought to be made the subject of a
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    question in the course of public examination should be given due notice.
    Sir D. Walker-Smith askedthe Secretary of State for Trade and Industry if he will introduce legislation to amend Section 15 of the Bankruptcy Act 1914 so as to provide for the attendance or representation of interested or affected persons at the public examination of a debtor.
    Sir G. Howe: As my right hon. and noble Friend the Lord Chancellor said in another place last week, proposals for amendments to the Bankruptcy Rules are under consideration.
    Mr. Archer: While I accept that events have to some extent outdistanced the Question, may I ask whether the right hon. and learned Gentleman agrees that the proper way to protect public men against irresponsible allegations is by means of tighter procedures and rules? Is it not rather unfair to expect individual advocates to conceal allegations which are in their instructions and which are relevant to their clients' cases?
    Sir G. Howe: I do not wish to comment on any particular case, but it is important to keep this matter in perspective and to realise that the rules which apply to bankruptcy proceedings are not much different from those which apply to other court proceedings. The hon. and learned Gentleman will appreciate the difficulties of accepting to any significant extent the proposals implied in his Question.
    Mr. Arthur Davidson: None the less, does the right hon. and learned Gentleman agree that it would be very damaging and very dangerous if the public were to think that men in public life were to enjoy a protection which the ordinary private citizen was not given? This is a matter of free expression. Will the Minister take that seriously also?
    Sir G. Howe: This is a point which my noble Friend has very much in mind. Any changes which were to be made in the rules in this or in any other area would be changes of general application not conferring any special privilege on any special class of persons but reacting to the needs which arise from irresponsible allegations made in a whole host of court proceedings.

    EEC Regional Fund
    Mr. Sutcliffeasked the Secretary of State for Trade and Industry if he will give estimates expressed in percentages of the likely proportion of the British contribution to an EEC regional fund and of the British share of the total disbursement from such a fund.
    Mr. Peter Walker: Decisions on the Regional Development Fund will not be taken until later this year and it is therefore impossible to predict United Kingdom receipts from it. Our contribution to its costs will be the same as our share of the Community budget as a whole.
    Mr. Sutcliffe: Is my right hon. Friend saying that the regional fund will be wholly financed from the common agricultural fund and that he does not expect any further contribution towards the regional fund from member States?
    Mr. Walker: There certainly could be further contributions from the member States, but the contributions from member States in whatever form will be in the same proportion as at present.
    Mr. Varley: In the definition of EEC regions, and particularly the definition which will come out this year of "central area", will the Government insist that all the present assisted areas in Britain will be excluded from the central area and thereby continue to receive preferential aid?
    Mr. Walker: The Government must decide their position after analysing the total European position.

FOREIGN EXCHANGE RATES (DISCUSSIONS)
Mr. Healey Mr. Healey (by Private Notice) asked the Chancellor of the Exchequer whether he will make a statement on his weekend meetings with European Ministers and officials and the decision to close foreign exchange markets.
The Chancellor of the Exchequer (Mr. Anthony Barber): Following pressure last week on certain currencies, notably the Deutschemark, I have been in contact with colleagues in a number of countries over the past few days. I have twice visited Paris for discussions and have also
982
had discussions in London with the United States Under-Secretary for Monetary Affairs.
In the circumstances it seemed desirable that the countries concerned should close their foreign exchange markets today, and the London exchange market has accordingly been closed.
The various consultations are still continuing and are proceeding well, and I know that at this stage the House will not expect me to say more.
Mr. Healey: While I appreciate the Chancellor's reluctance to say more at this stage, he must be aware that these highly publicised meetings can only have created an atmosphere which makes the central problem more difficult to solve. Is he satisfied that sufficient progress has been made at these meetings to justify this risk, particularly as any meetings on this matter without the presence of the Japanese are bound to be like a performance of Hamlet without the Prince of Denmark?
Secondly, will the right hon. Gentleman assure the House that he will maintain the undertaking he gave in his Budget speech last year not to distort the economy by fixing an unrealistic exchange rate either vis-à-vis the dollar or vis-à-vis the other European currencies? Surely the lesson of the Smithsonian agreement into which he was pushed in December 1971 is that it is very dangerous for the sake of co-operation with European partners to accept an unrealistically high exchange rate, which can only lead six months later to a decision to lower the exchange rate, contrary to obligations already assumed.
Does not the nature of this crisis emphasise the dangerous irrelevance of the Prime Minister's undertaking to create a European monetary union by 1980, as a European currency, the Deutschemark, has already appreciated by more than 50 per cent. against sterling—more than against any major foreign currency?
Mr. Barber: The answer to the last part of the question is "No, Sir." It is obviously highly desirable that there should be consultations and also that there should be some meetings. My task in the numerous consultations which have taken place during the past few days has been twofold—first, to help to reach a

983
solution which is equitable to all and realistic and, secondly, in the course of that to safeguard the interests of the United Kingdom. The right hon. Gentleman may rest assured that considerations which particularly affect sterling are being taken fully into account, just as we for our part are taking fully into account considerations which affect other countries.
Mr. Healey: Will the Chancellor answer the specific question: does he still maintain the undertaking he gave to the House in his Budget speech last year not to distort the economy by accepting an unrealistic exchange rate for sterling?
Mr. Barber: Sir, the whole object of these negotiations—and I used the word "realistic"—is that we should arrive at a realistic solution for all concerned.
Mr. Ridley: Does not my right hon. Friend agree that the effect of this crisis on Great Britain has been almost nil? May I, therefore, congratulate him on having floated the pound last year, which enabled us effectively to escape all these troubles?
Mr. Barber: It is certainly true that sterling has not been under pressure, but it is also true, as I have said on a number of occasions, that we intend to refix when conditions permit.
Mr. Roy Jenkins: Does the Chancellor accept these two points? First, it is not much good closing the exchange markets unless we have a fairly clear idea of the new circumstances in which we can reopen them. Secondly, does not the Chancellor agree that what is really at issue here is a fundamental change in the position of the dollar? The old so-called logical asymmetry of the Bretton Woods Agreement is still assymmetrical but has now lost all possible logic. With the dollar having given up its obligation to act as the pivot to gold it is not acceptable in the medium term that when there is pressure on the dollar it should fall upon other Governments, such as the German Government, and not upon the American Government.
Will the Chancellor assure us that the measures for a fundamental reform of the system, which seemed to be moving with some momentum after August 1971
984
but have lost momentum to a considerable extent, will be pushed forward with all the energy he can command?
Mr. Barber: The right hon. Gentleman is right in stressing the fact that events of recent days have shown the urgent need for international monetary reform. After the meetings which were held in London last autumn, the first with the Finance Ministers of the enlarged European Community and shortly thereafter the conference of the 30 Commonwealth Finance Ministers, followed closely by the important and forthcoming speech by the United States Secretary to the Treasury at the IMF, I agree that the time has come to make faster progress. I shall be going to Washington next month for a meeting of Ministers of the Committee of Twenty on this subject.
Mr. Tugendhat: Is my right hon. Friend aware that no one would wish to press him into revealing his hand while the negotiations are in progress. In addition to what was said on the dollar by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) there has also been the fundamental change in the position of the yen. Will my right hon. Friend do his best to ensure during the negotiations that the Japanese carry their full share of responsibility for what is happening? Will he also do his best to ensure that in the event of the Japanese having to restrain their exports to the United States, for whatever reason, they are not allowed to disrupt European markets, including the British market, to the extent that they have disrupted the United States market?
Mr. Barber: I note what my hon. Friend said but I do not think that it would be helpful at this stage to comment.
Mr. Pardoe: Is the right hon. Gentleman aware that we share his profound sense of relief that Great Britain is not under pressure in this crisis? Does he realise that the reason why it is not under pressure is that the pound is floating? Now that money is after all nothing but a commodity, his statement that he wishes to refix would be of the utmost disservice to this country.
Mr. Barber: I did not say that we wished to refix. I said that we intend to refix when conditions permit.

RATING SYSTEM
Mr. Speaker: Before I call upon the hon. Member for Derby, North (Mr. Whitehead) to move his motion, I should say that I have not selected the amendment, but of course the matters contained in the amendment may be discussed under the motion. The amendment is to leave out from 'House' to end and add:
'regrets the failure of the previous administration to implement the quinquennial revaluation due in 1968; recognises the need for such a revaluation to ensure that local rates are shared as fairly as possible between one ratepayer and another; welcomes the steps so far taken by Her Majesty's Government to increase Exchequer support to local authorities and, in particular, to give relief to domestic ratepayers by a larger sum than ever before; and calls upon Her Majesty's Government to give urgent consideration to further measures to alleviate the domestic ratepayers' burden.'
3.38 p.m.
Mr. Philip Whitehead: I beg to move,
That this House regrets that the Government has failed to take adequate measures to relieve the increasing burden on domestic ratepayers consequent upon rating revaluation and the present unprecedented degree of inflation.
The debate falls neatly between the meeting last Friday which the right hon. Gentleman the Prime Minister had with the leaders of the six largest local authorities and his confrontation tomorrow with the Association of Municipal Corporations. The shadow of the rating crisis which hangs over our larger and older cities looms over those talks. Even more threatening, looming over that rating crisis, is the inflation which has affected the country over the last few years.
Before I look at the effects of devaluation, it is necessary for the House to consider the present rate of inflation, what it has done and the extent to which It has affected not merely the living style, habits and patterns of expenditure but also the very expectations of every working man and woman. A Committee of this House is now considering the Counter-Inflation Bill. Our constituents are being told that their wages are to be pegged for a long time to come, yet simultaneously they see staggering increases in the very staples of life, and it is against the background of increases that we have to consider the present
986
rating revaluation. We have seen increases, which the Government say they cannot check, in the price of basic food stuffs. The Grocer magazine's price index has risen by 6½ per cent. in the last three months—an annual rate of 28½ per cent., if it continues—yet the Government have imposed no freeze on essential foods as the Swedes, for example, have done.
House prices have risen by an average of 47 per cent. in the last year, as my right hon. Friend the Member for Grimsby (Mr. Crosland) reminded the House last Tuesday. Other hon. Members like myself have tried to make the Secretary of State take action on flagrant gazumping, notice of which has been given by our constituents, but to no avail.
House rents have also risen under the infamous Housing Finance Act 1972, the latest IMTA figure being 24 per cent. in the current financial year for unrebated rates. That was the figure put by my right hon. Friend the Member for Grimsby during the debate last Tuesday, and it was not challenged by the Government.
That is the background. It is one of rising prices of food, land, houses and rents facing the ordinary citizen at precisely the time when he is being asked to exercise restraint, to peg his wages and to acquiesce in the Government's policy of a compulsory freeze. It is at this moment that he is confronted, particularly if he lives in one of the larger cities which has suffered because of the imbalance of rating revaluation, with rate increases which will be as severe for him as rent and food increases in recent years.
All in all it adds up to disaster for the wage earner. The Government's tardy conversion to a Counter-Inflation Bill will not alleviate that disaster. In the Chinese calendar, last year was the year of the rat. I shall not say that that description necessarily applies to this Government. It was not the year of the rat, but the year of the sinking ship, and one cannot right a sinking ship by turning the tiller through 180 degrees. The Government's conversion to a prices and income policy will not convince the average wage earner if he is confronted right across the board with costs increases which he cannot contain. The Government are finding the hard way that all these factors interact

987
and that inflation cannot be combated in one area unless it is combated in all.
That brings me to the effects of the current rating revaluation and the Government's stern exhortation to local authorities to limit rate increases to 5 per cent. in the coming financial year. That, and the vague phrases in the White Paper about monitoring rate increases in phase 2, have to be seen against the background of inflation facing the ordinary wage earner.
The revaluation itself has been influenced by staggering inflation in property values due to speculation and to the high levels of rent being demanded under the new Act. On 31st January my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) challenged the Minister when he was in full flight about the alleged fairness of the revaluation. My hon. Friend asked whether it was not a fact that the imbalance in the revaluation was due to domestic properties having been revalued in the light of the current inflation of house and property prices. The Minister said that he was coming to inflation, but he never did in that debate, and the Government never do. It is the local authorities who have had to come to inflation and attempt to deal with it and curtail expenditure in the face of an unprecedented level of inflation in peacetime.
The situation of the local authorities was well summed up by the Association of Municipal Corporations which said on 18th January:
"local authorities are faced with cost of inflation up to November 1972 in that year alone at the rate was £410 million of which local authorities would have to find 42 per cent., namely, £172 million. Thus even though assisted by the Government's raising of their proportion of the rate support grant to 60 per cent. instead of 58 per cent., there remains a heavy burden for local authorities."
It went on to say that those figures were averages and that some authorities do not do as well as others proportionately in the grant.
The statement went on:
"It is to be recognised that some local authorities will have estimated for a degree of inflation when they made their rates early in 1972 but there is no reason to think that those who did so will have allowed for more than 5 per cent. (or a figure of that order) and it is clear that the balances in the hands
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costs in recent years, are extremely limited." of urban authorities, faced with these heavy
That is a mild statement of the position.
The fact is that the burden for 1972–73 is heavy despite the increase in the grant. I accept that there was an increase in the allowance for the domestic ratepayer from something in excess of 10p on the rate burden to 15p for 1972–73, but local authorities faced an enormous wage interest bill. At this time of high interest rates and unprecedented inflation, that inflation can run away with estimates, and they would be in deep trouble even without revaluation. The services they provide are mostly statutory obligations. They are not local extravaganza which can be cut by a simple exhortation for financial stringency and economies by the Secretary of State.
All the talk in the world about increases in the proportion of the rate support grant to 60 per cent. for the next financial year overlooked the cutting of the rate increase from 1 per cent, to ½ per cent. for 1971–72 and 1972–73. We look as though on that basis we are back where we were, but in fact the money denied by the cutting of the rate of increase in those years will not be made up by allocating now, so great has been the rate of inflation.
Has the revaluation itself been fair? The Government have been at pains to say so, but for most of the larger cities and for many Midlands boroughs such as Derby, which my hon. Friend the Member for Derby, South (Mr. Walter Johnson) and I have the honour to represent, there has been a major shift of burden on to domestic property from other types of property. The domestic ratepayer will be hardest hit in precisely the areas where the local authority has the heaviest burden in paying for community services, and he will be hit by what is always the most inequitable and most regressive of the taxes that he has to pay.
I think it is accepted by both sides of the House that the burden of rates as it falls upon the domestic ratepayer is regressive and will continue to be until we look fundamentally at the very basis of the rating system. That regression, of its nature, increases the unfairness of what has happened under the present revaluation.
Mr. Clinton Davis: Is my hon. Friend aware that in some of

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the areas to which he has referred, and in particular in the stress areas of inner London, the burden falls particularly heavily on constituencies such as mine where there is little industry, impoverished property and working-class people who are hard hit by the Government's policies? These areas require special support by the Government who have been totally unimaginative and unconstructive in dealing with the problem.
Mr. Whitehead: My hon. Friend has made the point well. It is in the city centres where working-class people have to bear this burden almost alone and where the Government have done nothing to alleviate the burden. It is they who will be most affected.
The problem was succinctly stated by the Institute of Municipal Treasurers and Accountants on 2nd February. It concedes, as the Government will no doubt say in reply to the debate, that the average works both ways and that some local authorities are going to do better out of the revaluation just as others have done worse. The Institute said:
"However, for a proportion of local authorities the increase in the proportion of domestic rateable value to total rateable value is much higher than the national average and therefore such local authorities face the prospect of either increasing the level of domestic rates very substantially indeed, or of making what it would be correct to describe as very drastic cuts in services."
The statement went on to say:
"In some quarters, it is believed that local government could avoid increasing rates by cutting out waste. The pursuit of 'efficiency' and value for money—important all the time—is particularly important this year, but it is totally unrealistic to believe that the rate of increase in local government expenditure can be substantially altered in 1973–74 by administrative savings and technical improvements The scale of local government expenditure is now so large that a significant reduction in expenditure levels in the immediate year ahead is only possible if the Government specially directs, through Parliament, reductions in identified services and of public servants, and the abandonment of the start of a wide range of projects and new developments."
I do not know whether the Government will say today that they are prepared to delineate those cuts saying which services affecting our constituents will be slashed and which projects are not to be started. I do not think they will. I hope they will not. The fact is that something of the sort will happen unless we get assistance of the kind that my hon.
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Friends and I will be calling for in this debate.
What is happening in these cities and towns which are now being told that they must slash services or put up the domestic rate is that the percentage increase of the domestic rate payable for 1973–74 over the previous year is so large that these areas which have declining populations and industry being let off comparatively lightly are bound to put upon their domestic ratepayers a heavy and insupportable burden.
Recently, the Financial Times quoted what some of the figures would be in terms of revaluation. For Wolverhampton, for example, it estimated a percentage increase in the rate burden for the domestic ratepayer of 19·3 per cent., for Birmingham 16 per cent., for Sheffield 15·4 per cent., for Dudley 13·7 per cent., for Basildon 13·3 per cent., for Coventry 9 per cent., and for Derby, where the average multiple for revaluation is 2·46 per cent. and the domestic multiple 2·65 per cent., an 8 per cent. shift in the rating burden to the domestic ratepayer.
The effect of revaluation has been aggravated by the shift in the rate burden to the domestic ratepayer at a time when he is being exhorted from on high to curb his demands, to moderate his wage demands, to live within his means and to have his income pegged by those who know better than he does how to tackle inflation. For some householders there will be an unpleasant surprise when the rate is fixed for the coming year.
The shift of the burden in Derby, for example, is as follows. In respect of a post-war private house there will be an increase of approximately 13 per cent. of the rate burden. On a modern private house it will be 17 per cent. On a private flat it will be 23 per cent. On a private bungalow it will be 27 per cent. On a pre-war council flat it will be 89 per cent. On a post-war council flat it will be 54 per cent. On a modern council flat it will be 25 per cent. The people who live in those council flats are not eligible for the rebates about which I have no doubt we shall hear. They are wage earners. They are those who are told to moderate their wage demands. They are those who will have to pay the new rate in full. Yet they are being told that their incomes must be pegged and that the Government will look

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after the problem of inflation for them. In Derby we are anxious to know how to find a 10 per cent. increase in the domestic rate without slashing services which are essential and not ephemeral.
The IMTA estimates that three authorities expect increases of more than 20 per cent., that seven expect increases of between 16 and 20 per cent., that eight expect increases of between 11 and 15 per cent., and that another eight expect increases of between 6 and 10 per cent. In case hon. Members opposite ask about those below the average, may I remind them that the IMTA estimates that six out of 73 authorities expect reductions.
On Friday last the big six local authorities saw the Prime Minister and, I assume, told him what was on their minds and what would happen to cities like Birmingham, Leeds and Manchester without direct Government assistance. I have made a point of not going beyond the Conservative Press and its reports of how this meeting went and what was thought of the local authorities demands.
An article in the Sunday Times of 21st January entitled "Why rates will soar", discussing what it called a totally outmoded grant system which gives too little help to city areas with the greatest problems, quoted the leader of the Manchester Council as saying:
"Rate bills will go straight through the roof unless the Government acts in what amounts to a state of complete crisis."
Only today the Daily Express, which almost no one could accuse of being a radical newsheet, quotes statements of what is likely to happen to the domestic rate, according to the local authorities, if they are to maintain essential services, continue to employ those who work for them, and meet the effects of the rating revaluation.
Birmingham, as was mentioned by my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) in a debate just before Christmas, has been talking about a 20 per cent. increase in rates or, alternatively, if it is not allowed to do that and the Government's monitoring services work in a mandatory way, of having to sack more than 2,500 public servants. Cities like Bristol and Birmingham have already cut their budgets for next year by more than £3½ million.
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Leeds officials have estimated that its rates for both private and council tenants will go up between 15 and 20 per cent. under revaluation, and Alderman Sir Ronald Ironmonger said in Sheffield:
"It is ridiculous that the domestic ratepayer must in effect subsidise industry. People have every right to feel angry about this".
In Sheffield industry will pay 25 per cent. less and domestic ratepayers 13 per cent. more, a situation described by Alderman Ironmonger as "ludicrous".
We are beginning to hear as we learn more of the effect of the rating revaluation not merely of the rate that local authorities feel that they must charge for the year 1973–74 but also some of the savings and therefore, the subsidy which the private and domestic ratepayer will give, to industry. Over the next few days we shall hear some staggering stories of the diminished rateable values for industry in areas where the domestic rate is hit severely.
What services will be slashed? If the Government say that rate increases are to be contained to 25 per cent., what services will go? Why should the older cities with declining populations and rating resources, which have by that token increasing social needs, be worst hit by this inequitable revaluation? I do not think there are many right hon. and hon. Members on the Government benches who wish to see services slashed, especially when taking into account what Conservative hon. Members have said about Birmingham in the local papers. They have called for a postponement of the revaluation. They have called for Government action and for some kind of direct assistance.
The hon. Member for Birmingham, Selly Oak (Mr. Gurden) will know that his constituency passed a resolution unanimously recognising the fervent desire of the substantial majority of electors for:
"… drastic reform of the present unjust method of financing local government through the rating system."
The resolution called for urgent legislation for a fair alternative in time for the reorganisation of local government in 1974.
The hon. Member for Birmingham, Handsworth (Mr. Sydney Chapman) is quoted as saying that he was confident that the Government would take action

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over any imbalance resulting from revaluation. I hope that right hon. and hon. Members opposite will tell us that they do not wish to see essential services cut. If that is their view and they wish to see some credibility remaining to the Government's prices and incomes policy, they must be in favour of special assistance, given the rate of inflation and its effect on the local authorities.
The Government have given no indication of the basis of their proposed reform of local government finance. We heard in the Gracious Speech that it was to come and that a Bill would be put before us this year. So far we have not had so much as a White Paper. We have had no evidence of the Government's thinking on this subject. About revaluation and the basis of domestic rating, the Government remain silent.
In the longer term—though I hope that the Government will give us some indication of their thinking today, so serious is the crisis which affects the larger cities—we should perhaps be thinking of income-related rates which would be less regressive and which would not involve a locally-administered means test as a local income tax would do. We should also be thinking in terms of supplementary revenue raised from local sales taxes, fuel taxes and so on.
I turn to the immediate crisis and ask why we cannot postpone or phase the introduction of revaluation in the present inflationary situation. This is a point which Labour Members, particularly my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman), have constantly urged on the Government and we have had nothing but stalling from the Government Front Bench in each debate—notably those on 20th December last and 31st January this year—on the subject. If the Government are not willing to postpone or phase the revaluation, surely they can provide something by way of Treasury assistance to the boroughs which are adversely affected and can ensure that assistance should increase by such an extent as fully to counter current inflation.
In the debate on 20th December last, my hon. Friend the Member for Birmingham, Small Heath asked the hon. Member for Bury St. Edmunds (Mr. Eldon
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Griffiths)—who was his usual ebullient and evasive self—whether the Government would avail themselves of one practical solution which was provided in 1963 under a Conservative Government when there was last a revaluation. My hon. Friend then quoted paragraph 15 of Cmnd. Paper 1663 issued in that year:
"It is within the Minister's powers to make an Order derating houses solely in those few areas where the increase in the householder's share is greatest."
My hon. Friend's point was that if that provision could have been made in 1963, as it was, then surely it can be made in 1973 because the rate of inflation this year is very much worse.
Although my hon. Friend made that point on 20th December last, I have searched HANSARD with a toothcomb but can find no response from the Under-Secretary of State when he replied to that debate. I put it again to the Government today: why can we not reactivate that provision in terms of the present unprecedented level of inflation? The Government can take measures now, in advance of the major reform which we are told they contemplate on local government finance, to alleviate the present problem.
I take my last text today from another Conservative newspaper, the Financial Times which says today:
"In the special circumstances of the freeze, the Government could well decide to anticipate these reforms by giving a once-for-all grant on a highly selective basis. It would also be reasonable to mitigate a defect in the present revaluation which arises from the failure to bring into line with today's costs the repairs allowance used in the valuation process. Because of the way the present scale of deductions was fixed in 1963, the failure has meant that the lower-valued domestic properties have been over-valued."
This means that the imbalance is exaggerated. It is the previously low-value domestic properties which will bear the brunt of the burden in terms of domestic revaluation of rates. The Financial Times continued:
"The trouble with these proposals of course is that they require additional public expenditure. But the Government has a straightforward choice between paying additional grant or frustrating the purposes of revaluation—and, on the wider plane, between public economy and the objectives of its counter-inflation policies.

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The Financial Times no doubt wishes the Government well and wants it to succeed in its counter-inflation policy. I cannot claim the same bias, but I say to the Government that if they want to retain any credibility for their counter-inflation policies they must look again at the burden they are placing on the large and old cities by rate revaluations. The Government have now wasted half of their calendar time, and all of their election mandate, in pursuing free-for-all policies which have benefited the better-off and they have exacerbated industrial conflict. They say that they believe in an incomes policy which is fair to all, but the little man, with his wages pegged and no windfalls from land speculation or tax relief round the corner, might not be disposed to see any incomes policy as fair. He has already seen that the Government will not help his food bill or his rents. And now come rates. The choice for him is between poorer services and higher bills—perhaps both in 1973 and 1974.
If the Government wish to retain any kind of credibility for their counter-inflation policies, they must intervene either to postpone revaluation or to mitigate its consequences in the cities. It is the least we can ask. It is certainly the least the Government can do.
4.7 p.m.
Mr. Julian Ridsdale: I am sure that the hon. Member for Derby, North (Mr. Whitehead) is quite right to say that we must look at the problem in relation to the prices and incomes policy, and any suggestion I make for reform will have this in mind. The hon. Gentleman was right to draw attention to the difficulties in regard to low-value domestic properties in terms of the Inland Revenue.
I do not want to see essential services cut in the cities, but I want to see that we get value for money. I hope that the hon. Gentleman will not misinterpret what I say if I point out that this matter always comes up in debates on rating. It is like a red rag to a bull to me when I see glossy magazines coming from the city of Liverpool saying what it is going to do. It is those kind of documents which tend to get away from the sort of fairness one wants to see in debates of this kind.
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I welcome any motion which draws attention to the deficiencies of the rating system, and I congratulate the hon. Gentleman on drawing our attention to this problem. Over the last 10 years I have tabled three private Member's motions on exactly this subject, but, alas, up to now I have had little response from both Labour and Conservative Governments to my pleas for reform of local government finance. I must not boast, but would point out that over a period of five years I have foreseen in those motions many of the problems which the hon. Gentleman mentioned. It is no good looking back and saying, "I told you so", but I feel very much like the countryman who, when asked the way, stated bluntly "The difficulty is I would not have started from here."
It is good to hear the hon. Member for Hackney, Central (Mr. Clinton Davis) intervening in debates of this sort, because it is obvious that he finds in Hackney the same problems as those which I have faced in my constituency for 19 years. In areas where there is little industry, the elderly population have not the resources to meet many of the demands which the ratepayers have to bear, and those same elderly ratepayers certainly cannot afford to bear the burdens which affects the larger cities.
We face an unprecedented bill for local government spending. As a result of national policies, particularly the increase in educational spending, the total of expenditure which attracted Government grant in the year 1973–74 was £5,216 million. In previous debates on the rate support grant the figure for 1969–70 was £2,976 million; in 1970–71 the figure was £3,128 million. One cannot help being disturbed by this vast increase in expenditure of over £2,000 million in a few years—a sum equivalent to nearly the whole of our defence expenditure annually in the 1960s.
On 10th March last year, in my third private Members' motion on local government finance, I pointed out that over the year I estimated that local industrial commercial and domestic ratepayers paid out about £2,000 million, whereas five years ago the amount was £1,300 million. Nineteen years ago when I first entered this House the amount was £400 million. A large part of this has been due to the

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increase in the cost of education which was £400 million in 1954 and £1,500 million in 1967, but nearly £3,000 million today. The education bill has doubled in the last five years.
I advocated that the domestic ratepayer should be relieved of having to pay this huge burden for education. Every day I am more convinced that this should be done. I know that of the £5,216 million attracting Government grant the Government will find 60 per cent. in subsidy and domestic ratepayers will be helped, not by 10·5p in the £1 as they were in 1972, but by 15·4p in the £, which is an increase of 46 per cent. But in the long term—this is what essentially we as a House have to examine—this is only nibbling at the problem. In fact it is making it worse as, alas, all subsidies do, because it puts off the evil day of reckoning and disguises reality.
Rather than this subsidy, why do we not face the reality of what the education bill is costing? That is why I advocated a separate education tax when I spoke last March. If necessary it could be supplemented by a value added tax. I am glad to see that a leader in the Daily Express today supports this idea. I am disappointed that we have not tackled local government finance earlier and faced squarely those charges that are national and not local so that we could get a proper balance between the two. Then we could see that responsibility is once again put into the hands of local government.
I am certain that we have to face the reality of national expenditure falling on local government, however unpleasant it may be and even if it means increasing taxation—that is, if we are in earnest in our effort to conquer inflation. That is the answer which I give to many of the points made by the hon. Member for Derby, North about the present inflationary situation. It is caused not by immediate wage increases but by the vast increases we have had in Government spending quite often falling on people who are not able to bear them, and that is particularly true of the education charge to which I have referred. I am sure that present Labour policies to increase Government expenditure would only add to the problem of inflation and would increase the burden on the tax-
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payer and the ratepayer far more seriously.
The amendment suggested by my hon. Friends, which you, Mr. Speaker, have not called, contains ideas in the nature of a holding operation but they do not tackle the problem which faces the country. I do not believe in subsidies; they disguise too much the unpleasant facts which we have to face. That will not help the country in the long term nor in the present serious problem. I therefore hope that we shall not flinch from further measures to alleviate the domestic ratepayers of their burden, but in asking for this I hope that we shall tackle the problem at its roots and face the country with the reality of the kind of bill we have to face for education and see that we get value for money. We are now spending £3,000 million on education, which is more than we spend on defence. Would we ever dream of putting the defence bill on to property owners and domestic ratepayers? Yet we put this huge sum for education on to the rates.
The Government have to act in this sphere. Bearing in mind that, quite rightly, we have brought in a prices and incomes policy, I realise that the Government have to temper their policy on local government finance to that policy. I should have liked them to act much earlier in reforming local government finance, but if at the moment that has to be tempered with policy on prices and incomes, I ask the Government to look seriously at the kind of costs of education which are forced on the domestic ratepayer. Let them as soon as possible relieve the ratepayer of that far too onerous a burden.
4.15 p.m.
Mr. Arthur Jones: I add my thanks to those expressed by my hon. Friend the Member for Harwich (Mr. Ridsdale) to the hon. Member for Derby, North (Mr. Whitehead) for raising the subject of the rating system. The views of my hon. Friend are well known in his wish to see the education budget shifted from local to central government expenditure to a far greater degree. He and I have discussed this on many occasions. There would certainly be some disadvantage, as I think we would lose a great deal of local interest in education

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if that course were followed. Nevertheless, I agree with my hon. Friend that we must look urgently at the question of local government finance, and we cannot do that too soon.
I wish to refer briefly to the context of the problem with which the country and locally-elected representatives are faced this year with their budgets for 1973–74. The expenditure levels for this year used in the rate support grant negotiation were about 14 per cent. higher than the expenditure trends at the time when the rates were levied in the previous year. In preparing their rate estimates, local authorities will be taking into account what they consider to be the inflationary circumstances and other charges between November 1972 and March 1974, which were not taken into account in the rate support grant negotiations. Here local authorities will be exercising their judgment.
We have yet to see the effects of Government policy in phase 2 of their prices and incomes proposals. The Government, I am happy to see, are determined on their course and I believe they have the support of the country in their efforts to contain inflation. The guidelines in the context of phase 2 are between 4 per cent. and 5 per cent., but individual local authorities may be taking a different view and drawing their budget estimates accordingly. There is, I think, little in dispute between central and local government on the prospective increase in local government expenditure which will occur next year. I take the point made by the hon. Member for Derby, North that local government services ought not to be reduced and that their improvement should not be curtailed. I think there is little difference between local government opinion and central government opinion in that respect.
Expenditure prospects for 1973–74 would have been much higher if phase 2 had not been introduced by the Government as local authorities would have been forced to assume very high rates of inflation for the forthcoming year in preparing their budgets. To this extent I am confident that Government policy will have had the effect of reducing the estimates to some degree.
In his motion, the hon. Member for Derby, North calls attention
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"to deficiencies in the rating system."
He made no reference at all to the fact that the Rating and Valuation Act 1925 calls for a quinquennial revaluation. It is no use having a system of rates requiring a periodic revaluation if it is not operated properly. The hon. Gentleman will know that the previous Socialist Administration failed to carry out the revaluation which was due in 1968. This cannot be attributed to other than a neglect of that administration's duty and their statutory duty.
Mr. Whitehead: The hon. Gentleman is, perhaps, about to tell the House that that was the only postponement between 1925 and the present day. If he looks at the figures he will find that it was not and that there were many such postponements as well as the 1968 one. The 1968 one was governed largely by considerations other than the rate of inflation, which rate of inflation was much less severe than the present rate of inflation.
Mr. Jones: The quotations I shall make will make no reference to the rate of inflation. In a Written Question tabled in December 1965 the hon. Member for Cleveland (Mr. Tinn) asked the then Minister for Housing and Local Government
"whether he intends to postpone the rating revaluation due in 1968."
The then Minister, the right hon. Member for Coventry, East (Mr. Crossman) replied:
"The Government have decided with regret that, in view of the shortage of valuers and the increasing commitments of the Valuation Office, it will be necessary to abandon the quinquennial revaluation due in 1968…. At the same time the House will be asked, in the interests of fairness among ratepayers, to give statutory recognition to the established practice whereby new or amended assessments made during the currency of a valuation list are on the basis of `tone of the list'."—[OFFICIAL REPORT, 2nd December 1965; Vol. 721, c. 246.]
On Second Reading of the Local Government Bill in June 1946 the then Minister said this:
"Even if the valuation were always fair and intelligible, which it very often is not, rates are a tax which starts getting out of date the very moment the valuation is over. No wonder local authority treasurers rely on the quinquennial revaluation, and no wonder they were upset when I announced that the revaluation due next year would not take place. The reason for the postponement is the shortage of valuers which has been intensified by other

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commitments such as the establishment of the Land Commission."
I do not accept that that could be a logical and fair reason for the postponement of the 1968 revaluation. However, I know that the right hon. Member for Coventry, East still holds that view. I sat opposite him for the Guildhall centenary celebrations of the Association of Municipal Corporations when a reference was made to the postponement during the Prime Minister's speech. I heard the right hon. Gentleman say, "And very sensible, too." It was not sensible. It was an evasion of the statutory obligation which lay upon the Government of the day. The existing circumstances are greatly exaggerated by the fact that we are now making good a 10-year period of revaluation whereas there should have been an interim step in 1968.
In that same debate my right hon. and learned Friend the present Secretary of State for the Environment said this:
"It is particularly regrettable that he"
—that is referring to the right hon. Member for Coventry, East—
"has abandoned the 1968 revaluation simply by inserting '1973'…".—[OFFICIAL REPORT, 14th June, 1966; Vol 729, c. 1265–92.]
Mr. Reginald Freeson: Before the hon. Gentleman continues to drag in that red herring, in imitation of the Prime Minister, who first introduced this factor into our discussions on the present rating system, may I ask whether he is aware that the only time that a quinquennial review was undertaken was the first one following the 1925 Act? At no time since then has a quinquennial review been adhered to by any Government, Tory or Labour. Therefore, the hon. Gentleman and the Prime Minister are drawing a gigantic red herring across the path. It has little relevance to this issue.
Mr. Jones: I am surprised that the hon. Gentleman should make the point in those terms. The Conservative administration of 1963 undertook that revaluation in the correct year. I am not going back to 1925 because I would not hope to follow the sequence of revaluations right through from 1925 to 1963.
There was an obligation to revalue in 1968. That is inescapable. The right hon. Gentleman who was Minister at the time admits that this is so. The hon. Gentle-
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man was not critical of the fact that we are now engaged on a revaluation in accordance with the obligation that rests upon him. I am sorry that he referred to my reference as a red herring, because it is material to the situation.
Mr. Freeson Mr. Freeson rose—
Mr. Jones: I will not give way again. I have allowed the hon. Gentleman to make his point.
It is one thing to refer to the deficiencies in a rating system. It is quite another to deny an essential ingredient, namely, a periodic revaluation. Rates are non-buoyant. They rest heavily on lower-rated properties. Failure to revalue denies increased resources to local government through the rates and creates inequalities between ratepayers in both relative and actual terms. Clearly the Socialists did not give a damn one way or the other, either for local authorities or for the ratepayers, in denying them an opportunity for a revaluation in 1968.
The present revaluation has resulted in a further shift of the proportion of the total rate to the domestic ratepayer. This is only marginal on a national scale—I understand 1·8 per cent. There is, however, a wide range of differences throughout the country applying to various local authorities and to domestic ratepayers within those authorities. To some extent this is attributable to the statutory deductions from the gross values which take into account repairs, insurance and other expenses to maintain properties in a state to command the rent upon which valuations are placed. These statutory deductions have not been amended in applying the new values, with the consequence that the increase in rateable values for smaller domestic property has increased proportionately greater than other domestic and non-domestic property. Some 88 per cent. of domestic properties fall within this category.
The failure to review the "bandings" for statutory deductions has had the effect of a substantial shift in burden towards the lower-rated property. For example, a house with a rateable value in the new list of £100 is over-stated by 27 per cent., whereas for a property with a new rateable value of £300 it is only 7 per cent. Not to have made this adjustment for the revaluations is a reflection on the professional advice given to the Government.

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I am sure that the matter was looked at. It must have been looked at some years ago, possibly in about 1970. I think that the Department was wrong not to have seen the effect of the statutory reductions which would inevitably flow from the increased rateable values.
I turn to consider the important effects that revaluation has for local authorities. The incidence of the distribution of the rate support grant is altered, some authorities gaining substantially in grant and others coming off much less favourably. Many domestic ratepayers receiving high rate demand notices will fail to understand why the Government's monitoring proposals have not effected a safeguard for them. I hope that this is a point to which my right hon. Friend will address himself later. I hope that an announcement will be made—today, if possible—to ensure help to the domestic ratepayer on a transitional basis.
However, to deal with deficiencies in the rating system is a long-term proposition and does not help in the present emergency situation. Certainly we need to look at the levels of statutory reductions, whether it is preferable to assess properties on a capital value basis rather than hypothetical annual rental, whether there should be differential rating between the different type of occupation. These are all questions which need to be considered in the reform of local government finance.
We have had the Government's Green Paper setting out the options, and I hope that my right hon. and learned Friend will shortly be presenting a White Paper outlining the Government's proposals for reform. Its early appearance is essential if there is to be time for adequate discussion prior to the introduction of legislation, which needs to be effective from 1st April next year.
While recognising the limited options which are open to the Government, the need to provide a third source of revenue for local authorities is imperative. It is a decision which must be taken and it is best taken as quickly as possible and announced to the House. In carrying out their statutory obligations the Government have faced up to the necessity of revaluation for the essential fairness of local government finance and are to be
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congratulated on having done so, having at the same time had regard to the impact of local government expenditure and the increased demands to be levied against the domestic ratepayer.
During the debate on the rate support grant on 20th December the Minister for Local Government and Development announced the largest ever Government contribution, increased by £400 million to £3,130 million, in rate support grant aid to local authorities. Of this sum about £250 million was in respect of specific grants, more than half of which will go to expenditure on police services. In addition, in the domestic element, an increase of no less than 46 per cent. above the 1972–73 contribution is to be made. That is equal to a reduction in the domestic ratepayers' share of the rate burden of 15·4p in the pound in 1973–74, compared with 10·5p in the pound for 1972–73 on present rateable values. In new valuation terms it is equal to an increase in domestic relief of from 4p to 6p in the pound. The third measure to help the domestic ratepayer was announced for domestic households with low incomes which are entitled to rebates for rate demands. The Government have laid an order increasing the income limits used in determining the extent of this help. It will be £16·50 for a married couple, £13·50 for a single person, and £2·75 for each dependent child.
It is easy to recognise the almost infinite variety of subjects involved in local government questions and the differing performance of local authorities is explained to some extent in financial terms by the rate support grant calculations. Figures produced by the Institute of Municipal Treasurers and Accountants, show that of the county boroughs, two are looking for increases in their budgets of between 26 per cent. and 30 per cent.; three county boroughs are seeking increases of between 21 per cent, and 25 per cent.; and four of between 16 per cent. and 20 per cent. Five county boroughs are showing reductions of between 1 per cent. and 15 per cent. in their budgets for next year compared with budgets in the current year.
The figures for the outer London boroughs show that one is proposing an increase of between 26 per cent. and 30

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per cent.; two are proposing increases of 21 per cent. and 25 per cent.; and two increases of between 16 per cent. and 20 per cent. Of the county councils, one is seeking an increase of between 26 per cent. and 30 per cent.; two are seeking increases of 22 per cent. to 25 per cent.; and three increases of 16 per cent, to 20 per cent. Five county councils are proposing a reduction in the rate of between 1 per cent. and 15 per cent.
This is to some extent a confirmation of what the hon. Member for Derby, North said, that it is the cities with great problems which are hardest hit. However, that may not necessarily be the case and that is the danger of applying aid overall and not on a selective basis. The rate support grant arrangements, distribute resources, but I agree with the hon. Member that they need refining to ensure that those in greater need get the largest share of Government support. The figures produced by the IMTA are indicative of the great variations. We must not, therefore, protect the spendthrift authorities, because high rates may not necessarily result from the solving of difficult problems. They may arise for other reasons.
I turn in conclusion to the domestic element and the problems which face the domestic ratepayer. Here again, I hope that a method will be devised by which relief can be selective. At the last revaluation, which became effective on 1st April 1964, we had the benefit of the Rating (Interim Relief) Act. That provided that a rating authority in England and Wales could grant relief to a householder whose rates increased between 1962–63 and 1964–65 by more than a quarter or £5, whichever was the greater. The Act appears to have been little used generally, but by 1st September 1964, Bournemouth, which had at that time 32,000 persons over the age of 65, had granted relief to about 2,320 ratepayers. From a reply to a Question I had on the Order Paper for Written Answer last week, I learned that this power had expired and that the Government now have no power to limit rate levels or to enable authorities to vary rates levied on individual ratepayers.
I am confident, however, that the Government must look for ways and means to protect the domestic ratepayer from the inequalities arising from revaluation, from the penal incidence of the statutory
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reductions, and from the change in the incidence of the rate, to which the hon. Member for Derby, North referred, from the non-domestic to the domestic ratepayer. The Government do not have many options open to them, but I shall be interested to hear whether my right hon. Friend is prepared to consider ways and means by which we can offset the exceptionally high rises in domestic rate levels. Will they consider giving a grant to a local authority if the percentage of its total domestic rateable value for 1973–74 is higher than in 1972–73? This is where the shift of responsibility has moved from the non-domestic to the domestic ratepayer. Will they consider a grant calculated on the basis of taking the net rate-borne expenditure for 1972–73 and perhaps adding to it 5 per cent., which is an acceptable increase in the rate demand. They would then take account of the percentage of domestic rateable value of total rateable value for 1972–73—from the old list—and compare it with the percentage of domestic rateable value of total rateable value for 1973–74—the new list. If it were possible to make an adjustment on that basis it would ensure that domestic ratepayers were protected from abnormal increases. I hope that an arrangement of that sort would not mean too great an additional burden on central Government funds, and some of it certainly could be funded from the local rates. We should obviously need to look at the extent to which this was an added burden on the commercial and industrial ratepayer.
Mr. John M. Temple: My hon. Friend is clearly advocating a shift back to the situation where a greater burden is placed on commercial and industrial premises. Is he satisfied that the nationalised industries are contributing sufficiently to local government finance through the rating system?
Mr. Jones: I do not want to get enmeshed in that involved and difficult question, in which I know my hon. Friend the Member for the City of Chester (Mr. Temple) is well versed. I view the proportion of rates which the industrial and commercial ratepayers meet as a trading expense, and I know that increased rate demands mean higher business costs. But, from the other point of view, the domestic

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ratepayer is having to meet his rates out of his net income. There are substantial areas in which we should introduce differential rating and require the industrial and commercial hereditament to pay a higher share of the total rate demand than the domestic ratepayer. That can be justified on a number of grounds, which the House will not wish me to go into now.
Within the context of the prices and incomes policy we must ensure fairness to the domestic ratepayer. There is an obligation on the Government to give a measure of relief, and I hope that my right hon. Friend the Minister for Local Government and Development will give the House an assurance about that.
4.41 p.m.
Mr. Clinton Davis: I congratulate my hon. Friend the Member for Derby, North (Mr. Whitehead) on having enabled the House to debate the subject of the rating system today. The debate could not have come at a better time, in that the Prime Minister will be continuing his discussions tomorrow with the Association of Municipal Corporations and the London Boroughs Associations. For that reason, I do not suppose that we shall receive a very helpful reply from the Minister for Local Government and Development. He will probably say that we must wait and see. But there is not much time. Virtually regardless of their political colour, local authorities are deeply concerned about the present situation, as are many hon. Members on both sides of the House. We wonder what the Government propose to do. Time is running out, and they must make their decision clear within a matter of days.
The hon. Member for Northants, South (Mr. Arthur Jones) referred to spendthrift authorities, but did not define what he meant. In his general observations he tended to castigate certain unspecified local authorities as being spendthrift. It is not enough to make such generalisations. I often found during my period in office as a Labour local councillor that we were referred to by Conservative colleagues as spendthrift—[Interruption.]—The hon. Member for Hampstead (Mr. Geoffrey Finsberg) says "Hear, hear." I have special regard for the hon. Gentleman, because he is my pair. I refer to him sometimes as Hampstead's Heath.
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But I do not think the hon. Gentleman knows a great deal about Hackney.
Areas like Hackney, with specific and special problems, require substantially increased expenditure, and any proposition that they should hold to the present levels or stay within an increase of 5 per cent. is outrageous and cannot be entertained. There are many areas like Hackney in the inner cities, particularly in the stress areas of inner London, which require special treatment. I have made that point on a number of occasions. Ministers have seemed to assent to the general proposition, but they do not suggest the special attention they will give to those areas which are declining fast. Time is not on their side.
Notwithstanding the wide variations throughout the country, it seems quite clear that the main effect of revaluation will be a general shift in the rate burden towards householders. The hon. Member for Northants, South seemed to accept that.
From what we know now it also appears that local authority tenants will be harder hit than anyone. That was one of the themes of my hon. Friend the Member for Derby, North in the statistics which he cited. This will happen particularly in post-war developments, as to both local authority flats and houses.
Mr. Whitehead: That effect is coming at precisely the moment when local authority tenants are also having to pay the surcharge under the Housing Finance Act, a rent increase which is not being remitted as part of the Government's counter-inflationary policy.
Mr. Davis: That is quite right. In my borough one gentleman has embarked upon a certain course of conduct which some people have depicted as a vendetta against council tenants. He has picked certain areas within the local authority to cause an inquiry into the rating values given by the valuation officer. He has been partially successful, which has meant an increased burden on certain local authority tenants in Hackney.
It also appears that small houses, small flats and bungalows occupied by the elderly have had their valuations increased by more than average. I understand that that is especially so in rural areas.

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Within the non-domestic sector, office valuations have risen by more than average, while those of industrial premises have risen by a small percentage. But householders in council estates in industrial areas and the inner cities seem likely to suffer most.
The present revaluation comes at a time when the Shelter neighbourhood action project undertaken in an area of Liverpool, called "Another Chance for Cities", has made it clear that a vast new urban programme is required. If that programme is not undertaken, there will be an inevitable and possibly irreversible decline in the inner city areas.
My own borough is an example, perhaps almost a prime example, of the problem that such areas face. It is an area of massive deprivation. Hackney has more than its fair share of housing problems, of over-crowding, of all the difficulties that confront such areas. We were castigated by Shelter quite recently, I think somewhat unfairly, for not having dealt with the problem of homelessness by providing more accommodation for the homeless immediately. But it just is not possible without immediate Government help. Because Hackney has adopted perhaps one of the most liberal policies in London for dealing with the homeless, people have drifted there to take advantage of that policy. They expect to be rehoused, but there is not the accommodation available. The local authority cannot acquire enough to deal with the situation.
We find that more children have to be taken into care and more bed and breakfast accommodation has to be provided. The local authority is utterly bewildered about what it can do next without immediate Government assistance, which, unhappily, has not been forthcoming. We need a vast programme of increased expenditure if we are to cope with the problem of increasing homelessness alone. The problem is attributable to a whole variety of reasons, not least the difficulty confronted by furnished tenants who are deprived of security, and there is a growing incidence of homelessness because of the conduct of irresponsible landlords.
Hackney is an area where welfare and social expenditure needs to be increased and not held constant. People in that area are deprived of basic amenities.
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There is little industry and the average wage is less than in most other areas of London. There are more adults who, faced by the difficulties of overcrowding and all the other housing problems to which I have referred, suffer from mental ill-health, and more children who are classified as educationally subnormal than in many other areas of London. There are more physically handicapped people in the East End of London, and in Hackney, than in many other parts of London. That is why some sociologists have used the term "multiple deprivation" when describing such areas.
These problems lead directly to a poor educational background being provided for people who grow up in these areas—for example, the "sink" schools, and the rest, that have demanded the attention of councillors and London hon. Members. Unhappily, when people find that their problems cannot be resolved, when they have been on housing lists for years, and when people, who are relatively new to the housing lists become homeless and get accommodation more rapidly than those who have been on the lists for a number of years, there is bred, unfortunately, and perhaps unfairly, an enormous amount of cynicism about democratic institutions within our society, about Parliament and local government. That is a dangerous situation which must be grappled with by the Government. It makes it imperative that the Government should increase their scale of spending in areas such as mine.
The situation has not been helped by the three years during which the Labour Party lost control of Hackney. There was unquestionable neglect—I am not trying to make a party point—in many vital spheres of the social services that had been built up. That neglect has accentuated the problems that we face. The increased burdens which the White Paper recommends should be met by improvements in the social services and in the environment, which are in themselves desirable, involve extra expenditure by local authorities—and this is something of an understatement. However, the burdens that are being accepted are being increased as a result of the present Government's policies.
Mention has been made of the impact of the Housing Finance Act and rent rebates in the furnished and unfurnished

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sectors, which may be desirable in themselves—I will not argue that point now—but which will increase the tasks of local authorities. More people will be required to administer the schemes. How will that be done within the limited scope, which is provided in the White Paper, of increasing the rates. Of course, the Government say that they have increased the rate support grant from 58 per cent. to 60 per cent. That is woefully inadequate in the present circumstances.
This is a time when, speaking from the point of view of a stress area within inner London, we must not curtail essential expenditure. We must embark upon a substantially increased scale of expenditure. Hackney and many other areas of a similar character within inner London need special help and need it now. So far that call has gone unanswered. One can only hope that the Minister, and in particular the Prime Minister in the discussions which he will be having tomorrow, will recognise that need and will ensure that some help is brought to those areas where hope is declining in the same way as the economic situation is deteriorating.
4.56 p.m.
Mr. Geoffrey Finsberg: I shall not follow the hon. Member for Hackney, Central (Mr. Clinton Davis), except to say that we are all much impressed with his extremely good constituency tour de force. He has shown that he understands, as do the rest of us who have been in local government and in this House, the real problem of the inter-relationship between local government and national politics.
I chide the hon. Gentleman on one point. He mentioned that there had been an interruption for three years when Hackney was under Conservative control and when things had not gone so well. It is right to say, if he is talking of the three years, there had been more than 30 years of Labour control. There was massive deprivation during that period, even allowing for the fact that a war had intervened.
Mr. Clinton Davis: I was making the point that the three years of Conservative control exacerbated the situation by curtailing social and welfare expenditure.
Mr. Finsberg: I cannot agree, but I shall not go into a detailed discussion as it might bore the House. The problems of Hackney are well left in the hon. Gentleman's hands so long as he speaks from the Opposition side of the Chamber.
The hon. Member for Derby, North (Mr. Whitehead), in one of his interjections, spoke of the extra burden being placed on council tenants as a result of the Housing Finance Act. I hope that he will not omit, as do so many of his hon. Friends, to point out that those in real need will get an increase in the needs allowance of £3·50. That is an important point. The hon. Gentleman is usually so fair that I am sure he would not wish that to go by.
It is worth noting that the party of involvement in community politics, the Liberal Party, is noteworthy by its absence. I hope that the country will take note of this when it has the sham fçcade put forward by the Liberals at by-elections. When there is a vital debate on a matter concerning the localities the Liberal Party does not bother to attend.
Mr. Clinton Davis: Is the hon. Gentleman aware that when we debated London housing the Liberal spokesman on housing was not present? When we debated housing only the other day the Liberal spokesman for housing was not present. Is it not remarkable that there should be a silent spokesman for the Liberal Party?
Mr. Finsberg: I am sure that on occasions spokesmen who do not speak are welcomed.
I cannot be as charitable as some of my hon. Friends about the motion which we are debating. It is an opportunist motion which is designed to try to make political capital out of the problems that people will face as a result of rate increases this year. It seeks to lay the blame—wrongly, in my judgment—upon the Government, and ignores the basic responsibility for this problem of the last Labour Government. It will not do for the hon. Member for Willesden, East (Mr. Freeson) to say that other Governments have postponed revaluations. No one has denied that. However, the last Labour Government did it for two reasons: first, because they wished to

1013
plough on with their ill-fated Land Commission, which did nothing to solve the housing problem, and, secondly, for blatant political advantage. The hon. Gentleman knows that full well in spite of all the quotations he might draw together from Transport House documents.
It is because of the postponement of the quinquennial on the last occasion that people will suffer double this time. That happens every time the decision is put off.
Mr. Freeson: Childish.
Mr. Finsberg: The hon. Member for Willesden, East says "childish". Doubtless we shall judge his contribution later. Judging by what has been said so far, it seems, when examining the burden that will fall upon local government expenditure this year, that people are tending to forget all too easily the massive wage settlements which are now beginning to work themselves through into the pounds and pence which have to be met by the ratepayer. Those massive settlements were warmly supported by the Opposition, however massive and unreasonable they were.
Now the bill is coming home, and we are told that the Government must give more help. The Opposition have supported every unreasonable wage demand, and when it comes to paying the bill they are the first to scream that something must be done to help out. I hope the House will recognise that once the piper has played the tune someone else has to pay the bill. It is to live in cloud-cuckoo-land to suggest that these increases can be paid by the local authorities without their having to be met by the long-suffering ratepayers in the end.
Mr. David Stoddart: Will the hon. Gentleman mention some of the unreasonable demands made by local authority employees and granted?
Mr. Finsberg: I will. Over the past two years, a mass of wage demands have had to be met by the local authorities, and many of them held local government to ransom. The public know them full well. It is right to place on record that the bills are now having to be met.
What can be and is being done to try to contain unreasonable expenditure?
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Last year the Conservative Greater London Council was able to hold its rate steady. But the ratepayers did not appreciate it because the Inner London Education Authority, that non-elected body, put up its rate by over 20 per cent. Whatever ILEA wants, no one can say "No" to it because it is a precepting authority over which there is no control. It will be interesting to note what happens this year, because, if there is any rate increase in London by the GLC, it will almost certainly be overwhelmingly the result of higher demands from ILEA, over which, as I have said, there is no democratic control.
Mr. Clinton Davis: There should be.
Mr. Finsberg: I agree, and I am grateful to the hon. Gentleman for saying that there should be. I hope that at some stage in future the Government will decide to make ILEA either a committee of the GLC or give education powers to the inner London boroughs, as has been done elsewhere.
It is right to look at what would happen if there were to be any Government grant to specific, selected local authorities. Would this be fair in the context, let us say, of the GLC, which has managed to hold its growth in rate fund expenditure within a limit consistent with the policy for control of inflation? If other local authorities have not kept within that growth rate and are asking for help from the Government, is it fair to the ratepayers of Greater London, having an authority which has kept down its expenditure, that they should be deprived of assistance whereas other areas which have done nothing to help reduce the growth get Government help? This should be borne in mind if conversations take place with the Government about extra help.
We have heard about the rate support grant negotiations. As one of the few hon. Members who have taken part in such negotiations, I can say that no local authority association ever goes away from them satisfied, whatever Government are in office. On that if nothing else I am sure the hon. Member for Willesden, East will agree. But I believe that on this occasion an attempt was made to meet the justifiable needs and requests of the associations.

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It is not unfair to say, although it will not happen this year, that, if there were to be the catastrophe of a Labour win of the GLC, the cost of implementing Labour's election manifesto would increase the rates not by pence but by tens of pence. I hope the London electors realise this.
One question which perhaps has not been looked at is that of value added tax and the local authorities. I want to read two paragraphs from a report from the borough treasurer of Camden on the financial implications of VAT. They are significant. He says:
"It is not possible to calculate the indirect benefit that the Council will obtain by the ending of Selective Employment Tax. The saving on purchase tax can be roughly gauged at £75,000 per annum.
It has been estimated that the amount of input tax which the Council will be able to reclaim is in the region of £440,000. Against this must be offset the amount due to Customs and Excise in respect of activities of the Council which, for the purpose of VAT, are regarded as business activities. This figure is estimated at £36,500."
It seems to be that Camden, which in terms of current rateable value is the fourth wealthiest local authority in England and Wales, will be able to have an input credit of approximately £400,000. This is more than a penny rate. Can we be given any information about the sort of input credits to be received as a result of VAT by the six major cities whose leaders saw my right hon. Friend the Prime Minister last week? How much will they save on purchase tax? These are important figures which the House is entitled to have if we are told that these major cities are presenting problems to my right hon. Friend, as is the Association of Municipal Corporations. What credits are they getting as a result of VAT and the ending of purchase tax?
I agree with what my hon. Friend the Member for Northamptonshire, South (Mr. Arthur Jones) said about the need for higher deductions from gross values for ratepayers. This is something which will penalise house owners, in particular the owners of small and in many cases older houses. Although it may not be possible to do anything about this year's revaluation, I hope that any Bill we get to deal with local government finance will increase the figure substantially so that the deduction is more realistic.
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When looking at the expenditure which local authorities are demanding this year from the ratepayers, it is necessary for the House also to analyse the new services on which they are embarking, and the new capital expenditure which has been committed in the past and which is now falling, perhaps for the first time, on the revenue estimates. It will be interesting to know how many and how much of the programmes which the six big cities whose leaders saw my right hon. Friend last week are not an expansion of existing commitments but are brand new schemes started since those cities changed from Conservative to Labour control. If local authorities want to introduce new policies and new schemes, they have a duty to tell the Government and their ratepayers "This is not an expansion of existing services but something new." It is not right for them to say to the Government or the ratepayers that they must pay some proportion of these new services.
Mr. Clinton Davis: The hon. Gentleman has given way three times to me and I am grateful to him. Are there not new problems in areas such as his and mine in London? The increasing incidence of homelessness and the "sink" schools present new problems. How does he relate that to his general proposition?
Mr. Finsberg: The hon. Gentleman raises a fair point. I tried to draw a distinction because the "sink" schools have been with us for two or three decades. The problem of the homeless has always been with us; it may be growing, but it is always there. I said that I was not singling out expenditure on existing services but was dealing with the introduction of expenditure on brand-new services. This is the distinction I draw. I do not propose to argue with the hon. Member for Hackney, Central about the expansion of existing services. That is not part of my argument. I confine myself to the new services.
In conclusion, may I say that there is a fundamental difference between the thinking and the philosphy of the two sides of the House and the two sides of local government. They are summed up simply by saying that the Conservatives in local government spend ratepayers' money with one test, and one

1017
test only. It is the test of how the ratepayers want us, their elected representatives, to spend their money. The Labour Party has a much simpler test. The test is: "This is a scheme which our dogma says we must have. Let the ratepayers pay for it."
5.12 p.m.
Mr. David Madel: In raising this important matter the hon. Member for Derby, North (Mr. Whitehead) has given us an opportunity not only to raise local rating problems but also to give our views on the various reforms which might take place in local government financing.
I welcome the fact that my right hon. Friend the Prime Minister is having discussions with local authorities, and particularly that he is to see the County Councils Association tomorrow afternoon. The county councils have particular problems, and indeed grave problems, as have all areas of the country. My own county of Bedfordshire has a very large education problem. Its school population is going up by double the national average, and last year alone, following increases in teachers' salaries £600,000 of extra money had to be provided by the ratepayers. It cannot be overlooked that the postponement of the school meals increase—though I welcome it—has added another £65,000 to the ratepayers' bill in that county. We have almost what can be called a swinging-door system in which, although people think they will avoid paying for the increase in school meal charges, it will come back upon them in increased expenditure on the rates.
The estimates in Bedfordshire for the coming year show an increase of 34 percent. on last year's social services bill. It is inevitable that if a county is rapidly industrialised, as is happening in Bedfordshire, there will be a demand for more personal, and indeed increased, social service provision. I and many other hon Members could use many more social and medical-social workers in helping people to overcome the problems that arise with rapid industrialisation of a county. Given the present system of finance—that is to say, that Government grant plus rates equals local authority revenue—in my view the crisis over rates will recur. We have a finite number of
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houses and factories, but we have an infinite rise in population and in the demand for better and improved local authority services.
The Green Paper on local government finance, which was published in July 1971, put up all the alternative methods of raising local revenue and then proceeded, with relish, to knock them all down. The Green Paper is littered with phrases such as
"This would be difficult …"; "… extra staff would be required"; "… this might conflict with central Government plans"; "… this is not as simple as it sounds"
That Green Paper was written before the Prime Minister's speech to the Conservative Party Conference last October when he said that it was no good going on saying that, because something had been done in one way before, it must always go on being done in that way in the future. We must look at these matters with urgency. We must look in depth at the problem of rates and of raising local government finance by other methods.
Paragraph 2(10) of the Green Paper puts the argument succinctly on the question of supplementary sources of local revenue. It says
"It is clearly not worth considering a supplementary source of revenue unless it could make a significant contribution to meeting local government expenditure and thus to reducing government grants."
Then in paragraph 2(11) it talks of the "potential for growth" "built-in buoyancy" and "scope for increases in that rate." I think that was partly written with a disregard for the fact that both parties are now committed to faster economic growth and rising living standards and that not sufficient attention was paid to buoyancy of local taxes being levied in the correct way. In the past year we have seen that revaluation cannot keep pace with the rise in population and the rising demands for better social services.
The Green Paper goes on to deal with local income tax. I am not a great believer in such a tax. The Green Paper wisely makes the point in paragraph 2(22), when it points out
"The first question would be whether a company should pay tax to the authority in whose area its central management and control is carried on, or to that where it earns its profits."

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It goes on to say that the former alternative would produce serious distortions in favour of London and the South East. Every Government since the war has grappled with the problem of reducing the drift to the South East and in countering the financial prosperity of the South East, compared with elsewhere, and what the Green Paper said on that subject is quite accurate. We are far too small as a country to operate a local income tax without producing considerable distortions.
However, the Green Paper goes on to talk about a local sales tax. This idea is much more appealing since it would have less distortions than a local income tax and those who spend would pay the local tax to the authority—and at any rate they would probably be local electors in the area. I appreciate that there is a problem involving the administrative complexities. For instance, in paragraph 2(34) the Green Paper says
"Different levels of local sales tax in different areas would add to the complications. Those complications would be most severe for businesses such as chain stores which operate in a number of different local taxation areas …"
I hope that the Government, if they have not already done so, will look carefully at what has been done in the United States where local State sales taxes are great local revenue raisers. The United States are a great chain store nation, and since they have overcome the problem mentioned in the Green Paper I hope that we can do the same.
The Green Paper goes on to deal with motor fuel duty. Here I must stress a note of caution. The Government already do very well out of revenues from motor fuel. The current rate of duty is 22½p per gallon and this yielded £1,250 million in 1970–71. The Government almost regard the motor industry as an Aladdin's cave and will never cease to raise as much taxation as they can from it. What we should do in terms of motor fuel duty is not to let local authorities put on an increase which is already taken in tax but that there should be a scheme in which money collected is remitted to the local authority, from where it was first paid. There is a very obvious reason for that. One of the big items in local government expenditure is that for roads.
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Where there is heavy traffic there is a constant demand for improved roads.
It seems to me that we could tie the motor tax so that it would be taken by a local authority, given to the Government, and then remitted back. We could devise a system whereby areas where there is heavy traffic could benefit from the duty which the Government raise. I accept that there are difficulties which can be put forward, particularly in relation to business cars. I often wonder whether some of the vehicle duty on lorries could not be remitted to the local authorities. In no way am I anti-lorry. Lorries play a vital part in the life of our country and the lorry industry is an important employer in my constituency, but where there are concentrations of lorries making great use of the roads one wonders whether part of the money which the Government receive in duty from them should not be remitted to specific areas which have a large number of lorries on the roads.
There is another natural candidate for raising local revenue—lotteries. I do not see why we could not move quickly to that. I know that there are objections from football pools, and so on, but many people would be prepared to have a small flutter if at the same time they were contributing to pay for local services they felt to be necessary. There are many examples of lotteries being used for constructive purposes—for example, charities raise money to pay for improvements to hospitals, or schools or to pay for the provision of swimming-pools, and so on. This means of raising revenue could be instituted as a local government revenue raiser. One wonders whether there could not be some local tax on gambling in certain areas.
I am not a London Member but I gather that the GLC has considered in detail the possibility of a tourist tax to be levied in the Greater London area. A good many countries in Western Europe have a tourist tax, and so does the United States. Such a tax would help to solve the problem of raising a sufficient amount of local revenue in London.
I do not want to speak for too long but there is one other point I should mention on the scope for improvement of the rating system. My hon. Friend the Member for Northants, South (Mr. Arthur

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Jones) went into great detail on this. In paragraph 3.10 under this heading, "The Scope for Improvement", the Green Paper says:
"It may well be possible to remedy any anomalies in the rating of plant and machinery. The Government are setting up a small expert committee to examine this question."
That was said in July 1971. Perhaps the Minister, not necessarily now, could tell us how that committee is getting on.
Rates are unpopular. No tax is particularly popular, but rates are one of the most unpopular of taxes, basically because they are unresponsive to changing circumstances. If women are widowed, if people are bereaved, if there is a drastic change in a family's circumstances—say, through unemployment—rates do not seem to adjust quickly in favour of those who really need help. At this stage we are trying to expand a pint into a quart from the domestic ratepayer. It simply cannot be done. If all earners in a locality were to pay through a local sales tax for local services we would increase interest in local government. If people know they are paying specific taxes for specific local projects and services, especially if they are the ones they want, they will be less resentful. It is better than just slapping on to the rates the costs of those things.
Given that the Government are committed to a policy of growth of 5 per cent. a year and are committed to raising living standards rapidly we would have a spin-off from that, and the buoyancy of a local sales tax, which could provide sufficient revenue at least to stabilise the present system. Basically the existing equation will not work. There is a missing link. Government grant plus rates equal local government revenue. That equation does not work any more. There has to be an addition to the equation. We should have Government grant plus some form of rates plus some form of local taxation. It would ameliorate the present position which cannot be solved as things are when we have rising populations and great demands for improved services.
5.26 p.m.
Mr. Julius Silverman: The hon. Member for Bedfordshire, South (Mr. Madel) has gone through the various alternative forms of finance suitable to local authorities. They have been debated time and time again.
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It has been pointed out on many occasions that many alternative forms of taxation which on the surface may seem feasible present very great difficulties. Even the sales tax which the hon. Member mentioned poses quite a number of problems, one of which is how far it would fit in with the taxation system under the European Economic Community. That is now one of the problems.
My view is that, while admittedly the rating system is to some extent regressive, the means to deal with it, for the domestic ratepayer anyway, is a more substantial contribution by the Exchequer.
If at the present time that we fix the annual increase of the domestic rate at any rate no higher than, say, 5 per cent., which the Government contemplate as part of their incomes policy, then the difference for the domestic ratepayer should be met by increased Government grant. There are two objections to that. The Government say that they give 60 per cent. and that that is more than has ever been given before. In view of the rate inflation at present, local authorities have increased costs and domestic ratepayers have special burdens. This means grant would have to be substantially increased and would have to be directed primarily to the domestic ratepayers. Apart from rates, the Government are the best taxing agent in the sense that they arrange taxes and, in doing so, they consider, or ought to consider, the whole economic equation of their taxes, and they decide what a tax should be and how it should he paid to local authorities.
Although the rating system has been condemned time and time again as regressive and unfair, unfortunately no clear alternative to it has been put forward. I would not reject out of hand the suggestion that revenue—from motor taxation, for instance—should go to local authorities, but the total effect of that would not be sufficient to meet the bill which local authorities have to meet at present.
The present year is a very unusual one, and very exceptional burdens are being cast on the domestic ratepayers. This is due to one or two reasons. One is the rise of inflation and the increased costs of local authorities. The hon. Member for Hampstead (Mr. Geoffrey Finsberg) said he was not going to oppose present

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expenditure being extended. Indeed, it is inevitable that it should be. However, he said that he would be opposed to any new and expensive scheme. I look around local authorities and I see very little in the way of new and expensive schemes. One may find certain trivialities—peanuts of expenditure; one mentioned was the brochure issued by Liverpool. These are but small change in local government expenditure, but from the major items of local government expenditure there is no escape.
There are the additional burdens imposed by the Government in the extension of the school leaving age and the expansion of education, of which hon. Members on both sides of the House approved. There is the increased pressure for expenditure on the social services resulting from Government legislation.
Mr. Geoffrey Finsberg: Does not the hon. Gentleman agree that special allowance is made in the rate support grant for the raising of the school leaving age?
Mr. Silverman: Yes, but it does not begin to be enough to cover it.
Mr. Freeson: That is not correct. The element in the rate support grant for improvements in education has been reduced. Last year it ran at 3½ per cent. whereas this year it is coming down to 3 per cent.
Mr. Silverman: In any event, the grant is insufficient to cover the expenditure. There are additional burdens imposed by the Chronically Sick and Disabled Persons Act, and other duties which have been imposed on local authorities by the Government. With all these additional burdens, local authorities have little scope for cutting expenditure.
Birmingham has calculated that to comply with the Government's norm of 5 per cent. would mean cutting staff in many departments and would result in about 2,500 redundancies. That is not on. It would be a worse disaster than an increase in the rates.
An additional factor which arises this year is revaluation. Before embarking upon revaluation the Government should have considered the economic consequences to the domestic ratepayer.
Mr. Temple: I know that the hon. Gentleman is always extremely fair, and
1024
I have no disagreement with anything he has said so far, but he must admit that the decision on revaluation was taken by the previous Labour Government.
Mr. Silverman: There is no hard and fast decision upon revaluation. Since the period of the last Labour Government the situation has changed drastically. There has been an increase in the value of houses amounting to 30, 40 or 50 per cent. The whole basis of revaluation has been altered by what has happened since 1970. Before the Government come to a final decision on revaluation they should consider its consequences upon the domestic ratepayer.
In Birmingham, in addition to increased expenditure caused by inflation and the cost of increased wages to which the authority is already committed, revaluation may make a difference of about 15 per cent. The incidence of the burden falling on the domestic ratepayer is different from that which falls upon the industrial and commercial ratepayer. The industrial ratepayer benefits, whereas the domestic ratepayer suffers.
The assistant editor of my local newspaper made a survey. He supposed that Birmingham, by the most stringent and ruthless economies, could keep its rate for the coming year at the exact equivalent of the rate levied in the current year. He assumed that there would be practically no increase in the present rate, and gave a few examples of what would happen as a result of revaluation.
A luxury department store in the centre of the city would pay £47,000 less in rates, a cut of nearly 20 per cent. The owner of a three-bedroomed semidetached house in Selly Oak would have to pay another £13 a year, an increase of nearly 20 per cent. A flourishing insurance company with offices in the heart of the city would pay £4,700 a year less, a reduction of 33 per cent. The tenant of a modest three-bedroomed terraced house in Yardley would pay £24 a year more, an increase of about 30 per cent. A major motor car manufacturer would pay £15,000 a year less for its parts warehouse in the city, a reduction of about 14 per cent. The owner of a four-year-old semidetached house in Bartley Green would pay £22 a year more, an increase of 30 per cent. That takes no account of inflation which affects industrial, commercial and domestic ratepayers alike, or the cost of increased services.

1025
In substance, this means that a young couple who have just bought a house at an inflated price will be faced not merely with increased mortgage repayments but with increased rates. That is unjust and does not make economic sense.
It has been said that local authorities could cut their services, but, as I have said, that is not on. There are no major reductions or economies that local authorities could make which would not result in disaster to the local ratepayers. Certain minor economies might be made, but basically there is little scope for economy, certainly in Birmingham, which has already cut its estimates by about £3 million. Nothing more can be done without damaging the services. There must, therefore, be additional assistance by the Government to meet the domestic rate bill; in short, an acceleration of the two-tier system between the domestic and industrial ratepayer.
The Labour Government introduced a measure which provided for an annual reduction of the domestic ratepayer's bill against that of the industrial ratepayer. That reduction has been halved by the Conservative Government. We need to go far beyond this. The Government must stabilise the domestic ratepayer's bill by providing for an annual increase equivalent to their prices and incomes policy of not more than 5 per cent., and meet the rest themselves. That means selective assistance to domestic ratepayers.
Mr. J. R. Kinsey: The hon. Gentleman is dismissing what local authorities could do as peanuts. His suggestion would allow local authorities to have a bonanza against the Government, and there would be no control on the rates levied.
Mr. Silverman: It is to be a bonanza because it allows a limited increase. Local authorities may save a few thousand pounds here and there, but if that is all added up it amounts to peanuts. For instance, would the hon. Gentleman reduce Birmingham's educational services, its police service, its refuse collection service—
Mrs. Doris Fisher (Birmingham, Lady-wood): The rent rebates?
Mr. Silverman:—the rent rebates and all the other services which Birmingham administers?
Mr. Kinsey: I should make them efficient, but I should not have this compulsion under the system which the hon. Gentleman is suggesting. At the same time, I should not allow free contraception on the rates as they do in Birmingham, nor should I support a direct labour department.
Mr. Silverman: I assure the hon. Gentleman that if there were a direct labour department in Birmingham not only would the city be building 1,000 more houses than it is now, but it would be saving money. The direct labour scheme was non-profit making and it reduced the cost of houses by at least 5 per cent. below the price tendered by outside contractors at the time. Purely for political dogma the direct labour department was disbanded by the Tories, and Birmingham is now at the mercy of local contractors as to whether or not they tender. The wiping out of the direct labour scheme in Birmingham was not only a loss to the rates but it resulted in a reduction in the number of houses that Birmingham was able to build.
My reply to the hon. Gentleman's comment about free contraception on the rates is that unless this service is provided more children are likely to be put into care in the next year or two.
But in any event the savings to be made in that way amount to peanuts. There is very little to be saved on the major items of expenditure. The idea that large sums of money can be saved by local authorities is not on, and when the Government introduce their monitoring system they will find that there is very little that they can monitor.
I suggest that the best method of providing additional finance for local authorities is for the Government to increase their contribution. The Government impose taxes, and they are the people best able to decide how the increased provision can be fitted into their general economic progress. I have never taken the view that an increased Government contribution affects the independence of local government. The independence of local authorities is already restricted.
I hope that the Government will respond favourably to the approaches that have been made by the six large local authorities, and which I have no doubt will be repeated tomorrow by the local

1027
councils and the AMC. I hope that a larger Government contribution will be forthcoming to meet the great burden that is being imposed upon the local domestic ratepayer. Council house tenants and other houses of low rateable value will bear the largest percentage increase because of the shape of the revaluation. As an article in The Times said, revaluation does not take into consideration in assessing the difference between gross value and rateable value the expense which a landlord now has to bear in terms of repairs, management and insurance, and therefore the burden upon this domestic ratepayer is greater.
The House should be grateful to my hon. Friend the Member for Derby, North (Mr. Whitehead) for raising this issue, and I hope that we shall get a favourable response from the Government.
6.44 p.m.
Mr. James Allason: I agree with the hon. Member for Birmingham, Aston (Mr. Julius Silverman) that there are few possibilities of saving expenditure in the short term. Usually when it is necessary for the nation to call upon local authorities to economise it is because the construction industry or the availability of capital is under pressure, and such things as the construction of new town halls and swimming pools can be deferred, but that is not relevant to the current problem which is that of a huge and continuing increase in local government expenditure, and I congratulate the hon. Member for Derby, North (Mr. Whitehead) on enabling us to debate the issue this afternoon. I commiserate with the hon. Gentleman on having such little support from his side of the House, and I regret the absence of the Liberal Party from this debate.
My hon. Friend the Member for Harwich (Mr. Ridsdale) gave particulars of the huge increase in local authority spending and instanced the fact that education expenditure had doubled in five years. What is clear is that the proportion of expenditure falling on the rates must be reduced. It cannot continue to increase with the expansion of local government services.
My hon. Friend the Member for Bedfordshire, South (Mr. Madel) spoke about alternative methods of obtaining revenue.
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He instanced the difficulties of having a local income tax. I do not believe that that is a starter. He also mentioned a fuel tax, and I draw the attention of my right hon. Friend to the fact that in Germany the revenue from fuel tax is allocated to local authorities. They have that source of revenue in addition to Government grants and rating.
It is said that taxes are paid in sorrow, and that rates are paid in anger. It seems to me that rates have risen much too high, and whilst the increase from 58 per cent. to 60 per cent. in the Government's contribution is most welcome, it does not reverse the process of calling on ratepayers to meet an ever-increasing burden.
When revaluation comes along it produces hard cases, and this is especially so when there has not been a revaluation for some time. We all remember the situation in 1958, after a long period without a revaluation. Happily, there was a revaluation in 1963. We missed the 1968 revaluation, for reasons that have been discussed, and so after 10 years we have a revaluation which bears harshly on domestic ratepayers.
The hon. Member for Willesden, East (Mr. Freeson) has given notice that he will show that it is Tory Governments who carry out revaluations. If the hon. Gentleman is going to blame the Tories for the 1953 revaluation, I hope he will remember that the decision to revalue is taken three years before the process is carried out. It follows, therefore, that the 1953 revaluation was based on a decision taken in 1950.
Mr. Freeson: In view of what has been said today, and also in view of the Prime Minister's statement, I shall raise the question of revaluations, but I shall do so not with a view to saying that Tory Governments were worse than Labour Governments but to make the point that the revaluation is an irrelevant red herring and has nothing to do with the immediate issue. I shall raise the matter for that reason and not for the purpose of saying that the Tories are worse than Labour or vice versa.
Mr. Allason: I still feel that the Labour Party must accept the blame for the fact that 10 years passed without a revaluation, and the hard cases are made much harder for that very reason.

1029
Let me instance the situation in the Berkhamsted rural district, which is a collection of villages and an area with virtually no industry. There are a few shops in the villages. Otherwise it is a rural area with a large number of residents. The council's resources element this current year is £11,800. It is being reduced next year to £1,250. That is the equivalent of a 3½p rate. The council has no large balance in the rate fund that it can fall back on, which means that, just as is happening in the great cities, there is a very serious crisis for domestic ratepayers. Even in this small rural district council the same problem has arisen.
I have no doubt that we shall hear about some long-term solution to the problem. But that is not the present issue. Short-term relief is needed now. We are glad that my right hon. Friend the Prime Minister is discussing this, and it is to be hoped that something will eventuate because the need for the domestic ratepayer to be shielded against severe rate increases is self-evident.
5.50 p.m.
Mr. Richard Luce: I am glad to be called immediately after my hon. Friend the Member for Hemel Hempstead (Mr. Allason) as I welcome his view that we should consider some supplementary form of local government finance. I am sure that all right hon. and hon. Members agree that at a time when we are reforming local government and revaluing properties for rating purposes, we should be discussing the rating system as such.
It was right for the Government to produce their Green Paper on Local Government Finance some 18 months ago. But it is regrettable that we have not had a full-scale debate on that Green Paper before now. For that reason I welcome the fact that the hon. Member for Derby, North (Mr. Whitehead) has introduced this motion today. At the same time I regret that there are so few hon. Members present, especially on the Opposition benches. I am especially sorry not to see a single Liberal Member present since the Liberal Party professes to care so much for local issues.
Like my hon. Friend the Member for Bedfordshire, South (Mr. Madel) I think
1030
that the Green Paper is disappointing. It fails to analyse objectively all the options open to us. Probably the majority of hon. Members will come to the conclusion that the rating system is the best one for this country. But in my view the arguments put forward in the Green Paper were poor, and to that extent it was disappointing.
I assume that, given certain changes, the rating system must continue in some form. In that context I make a few brief points. The first concerns the present grant-making formula. I welcome the fact that this Government are ready to give extra support to local authorities and to cushion ratepayers against the general inflation that we face. But it is also true that grants supply something like 60 per cent. of all resources as opposed to the 40 per cent. coming from rates. I agree with the hon. Member who said that the more that we give in grants the less there will be in terms of local autonomy. A country like Sweden, for example, depends on central resources to the tune of only 25 per cent.
It is right also to look at other ways by which local authorities can supplement their finance. However, there is one aspect of the grant-making formula which needs looking at carefully. It is the formula for grant-giving based on the needs element which appears in some cases to produce unfairness. To illustrate what I say, I take the county of West Sussex which has one of the highest levels of rates paid per person as a percentage of the ratepayer's income, with one in five of the population retired whereas the national average is more like one in eight. Under the present formula system, which is highly complicated and difficult to understand, for virtually every newcomer moving into West Sussex there is a significant reduction in the grant. It appears to be based on a very complicated formula which takes into account what are called "education units". It has the effect of penalising a county which has a heavy and important burden in terms of elderly people in its community. We must find a way of overcoming this. The Green Paper suggests a possible solution. Paragraph 48 of Appendix 4 says:
"The right objective would seem to be the distribution of grant in such a way that the cost for each local authority of providing a standard level of service should be a standard amount per head."

1031
I hope that the Government will look carefully at that possibility.
My hon. Friend the Member for Harwich (Mr. Ridsdale) raised the very important question of education and its costs. There is no doubt that there is a great deal of resentment at a local level about the fact that a large sum of our education costs come out of the rates. People argue, quite fairly, that education covers only a small portion of the ratepaying population. We all pay for police services, for part of our roads services and for refuse collection. But education is a different problem. There is a strong argument for saying that the cost of education should be borne either by a 100 per cent. grant from the Exchequer or by some other method, and my hon. Friend the Member for Harwich has advocated for some time the interesting idea of an education tax.
I mention thirdly the rating of flats. There is a good deal of evidence in my area along the coast from Littlehampton to Shoreham—and I have no doubt that the same could be said of other areas—that many people on relatively low incomes who live in flats suffer from exorbitant levels in rates. It appears to be due to the present system of valuing on the basis of rental levels. There is more than one case in my area where a flat with a capital value of £8,000 is next door to a house with a capital value of about £12,000 but where those living in the flat have to pay substantially higher rates. This seems to be quite wrong.
One suggestion for mitigating this is to go over to the capital system of valuation, although in my view that has certain defects. Another possibility would be to examine the present methods of assessing rental evidence. We might even consider introducing the fair rent principle right across the board in terms of considering rental evidence. This might have the effect of alleviating the heavy rate burden on those living in flats.
Then there is the question of improvements. We still do not seem to have overcome the problem of the disincentive to those who wish to improve their houses by building garages or installing heating systems. The Government must endeavour to tackle the problem. Consideration might be given to the idea put forward by the Conservative Party in the 1960s that there ought to be a
1032
five-year lapse between the time when an improvement is made and the time when account should be taken of it for the purposes of assessing a new level of rates.
I deal finally with the important point made by my hon. Friend the Member for Bedfordshire, South about new sources of tax. I am convinced that we have to find ways in which local authorities can supplement the resources which they already raise through the grants system and the rating system by other means in order to give them greater flexibility. They need to have greater freedom financially to overcome the problem of the rating system which is virtually a non-buoyant tax. I hope that the Government will carefully consider the idea of some form of local tax whether it be the motor fuel tax suggested by my hon. Friend the Member for Bedfordshire, South, which is fairly attractive, or a lottery. I do not mind. However, we must enable local authorities to supplement their rates in this way.
There is enormous scope for improvement in reforming the present system. We must make the rate support grant system more equitable, we must supplement local authority finances, and we must find a fairer system of evaluating local rates. I think that the whole House will agree that the time for reform is overdue.
6.1 p.m.
Mr. John M. Temple: I cannot claim to be exactly a new boy in rating debates. I recall the remarks of the very much respected former Member for Widnes, the late Mr. James MacColl, when he said that he welcomed me to the "old boys' reunion." I think that we could do with an accretion of support for this club. We seem to have been a little thin on the benches on both sides of the House on this important subject. I advocate the issue of a ratepayers supporters' club tie. I think that my right hon. Friend the Minister for Local Government and Development should be the first holder of this particular tie, because for so many years he has been such a magnificent supporter of the ratepayers supporters' club.
I cannot hand out bouquets to any particular Government in recent years, because they have all run away from the

1033
almost intractable problem of local government finance. I have always advocated an absolutely thorough reform of local government finance. I am afraid that I must dismiss all these facile ideas of raising supplementary revenue. They just do not exist. All we can do is either to take away some substantial and costly service from local government or to give more grants from the centre if we desire the standard of services which are provided today by local authorities to continue.
I recall the way that the right hon. Member for Coventry, East (Mr. Crossman) strode on to the scene when he became Minister of Housing and Local Government. He has not taken much interest in local government debates for a considerable time since then. However, when he came in he was going to reform local government. He started by abolishing the Boundary Commission which the Conservative Government had set up, and he made generalised noises about finance. I also recall the quiet exit that he made from the scene. Local government was still to be reorganized! We were still awaiting the reorganisation of local government finance when the right hon. Gentleman moved out of the hot seat of Minister of Housing and Local Government. This has happened all too frequently.
This Government have reorganised local government, and I commend what has been done; but at the same time local government finance should have been reorganised.
Almost a week ago in this Chamber I spoke on the Water Bill, which will reorganise the whole of our water services. We have the reorganisation of the water services, but we are still waiting for the Government to tell us how it will be paid for. If I were responsible for these matters—which I never have been—I should insist that at the same time as these different services were reorganised their finances should be carefully thought through.
The rating system is complicated and sophisticated and is understood by very few people. However, I do not blame the system for that. It is not a bad system, but it is being asked to carry too heavy a load.
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If we overload any kind of machine it is apt to break down. That is what has happened with our rating system. It is extraordinary how, year after year, hon. Members on both sides of the House dream up special extra social services and the like that have to be provided for the community. Recently I discovered that my local authority had appointed an officer to look after stray dogs. It is an excellent thing to have an officer to look after stray dogs, but who pays for that officer? The local government services. I give an absurd example, because that is the only way that one can draw attention to the multitude of small services which must be carried out by local Government.
I ask my hon. Friend the Member for Northants, South (Mr. Arthur Jones) about the rating of the nationalised industries. I believe that we should look most carefully at the rating contribution made by the nationalised industries. It is an extraordinarily difficult subject.
We should also consider the rating of plant and machinery. At present, fixed plant is rateable. Who is to differentiate today between fixed and movable plant? With modern moving equipment almost any plant can be moved. Plant which is deemed to be movable is non rateable. That, in my opinion, is a complete nonsense in our rating system today.
The rating system can be criticised, but I believe that it works reasonably well. Unfortunately, we are asking it to carry far too heavy a load. That is why anomalies are creeping in. I do not blame revaluation for the problems which will emerge. Strange to relate, only the other day I picked out from my action tray at home a note from the insurance company demanding my new insurance premiums for the next year. They had gone up considerably because there had been a revaluation of the houses and farm properties which I own. I carry out a revaluation each year for insurance purposes. In the same way, if it were possible, there should be a revaluation for rating purposes every year. Values do move. If revaluation is left for ten years, the anomalies thrown up are quite appalling. Therefore, I should not blame revaluation. It is merely bringing matters up to date.

1035
A strange and unknown sector of the rating system which is being blamed is the factor of statutory deductions. Only those who might be called old members of the club about which I spoke earlier know much about statutory deductions. Very few people know what a statutory deduction is. It was mentioned by one hon. Gentleman opposite. A statutory deduction is a theoretical deduction for repairs and insurance. It is being said at present that the statutory deduction factor is not sufficient for small properties. I beg to differ, because it costs almost as much to put a slate on the roof of a council house as it does to put a slate on the roof of a castle. If we are talking about the repairs element when referring to statutory deductions, I dismiss that criticism as facile, but not capable of substantiation.
Now I should like to make one or two suggestions. I have worked on this subject for a considerable number of years and have produced one or two reports on how we should tackle local government finance, but any recommendations I have made have always been turned down flat by the Treasury. The Treasury dislikes its revenues being taken away and objects to hypothecated revenues. I hope the Minister in his reply will say—though I very much doubt it—that he has overcome all kinds of Treasury objections and will be able to announce additional help for the individual domestic ratepayer.
I believe that we should move away from the mystique of a rating system which involves assessing everything on hypothetical rental values. Who knows what the rental value of a property is, let alone the hypothetical rental value of a property that has never been rented? It is even more difficult when considering the hypothetical rental of a water undertaking and other abstruse matters. We are getting into the stratosphere of hypotheses which have little connection with reality. On the other hand, everybody knows more or less what is the capital value of a flat or a house, and indeed they may even know what is the capital value of a water undertaking. Therefore, I personally would move to a system of capital values.
I should now like to make a somewhat heretical suggestion about local government finance. I should like to take the
1036
whole of educational expenditure right out of local government. I believe that education is a national matter, and I believe that educational standards should be the same all over the country.
I believe the only way to tackle this intractable subject is to make a major shift in the responsibility for finding the money. I believe that this would not be such anathema to those who work in local government as is often alleged. Education makes up more than half local government expenditure and is the fastest growing sector. Therefore, we must make a major shift in tackling this intractable problem.
I am sorry to say that I did not agree with my hon. Friend the Member for Arundel and Shoreham (Mr. Luce) when he said that there are viable sources of locally-raised revenue. I should like to toy with the idea of whether it would be possible to put a surcharge on VAT in place of a sales tax, but I believe this to be impracticable in terms of VAT as an international tax. Therefore I have even denied myself that little flight of fancy as a relatively easy way of obtaining further revenue for local government.
I am afraid that we now face a stopgap situation, and it is rather sad that this has occurred. Delays by successive Governments in tackling this job in a root-and-branch manner have forced my right hon. Friend the Prime Minister into a difficult situation. Emergency action must be taken in current circumstances. I hope the Prime Minister will take such action to meet a very difficult, but transient, situation. We must buy a little time to help the domestic ratepayer over the immediate situation, but we must not delay in seeking to tackle the major reforms which are long overdue.
6.16 p.m.
Mr. Dennis Skinner: I intend to be brief, in view of the fact that the usual arrangements are no doubt in operation to allow my hon. Friend the Member for Willesden, East (Mr. Freeson) sufficient time to conclude the debate from the Opposition Front Bench.
This debate is remarkable in that Liberal Members have decided once again to absent themselves from a very important debate. I have no doubt that they are all up in Chester-le-Street, taking round questionnaires to all the households in

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that community and asking people to note their grievances, so that the Liberal Party, in the kind of community politics it likes to play, can forward those documents to the local authorities to try to remedy all those wrongs. However, it is important to note that in carrying out that exercise the Liberals have taken no part whatever in today's important debate.
It has been made abundantly clear in past weeks that in many speeches from the Government Front Bench on the question of revaluation and the massive rate increases that will face most local authorities in the next financial year the Government defence has been "We are not to blame". It is almost as if they are suggesting that it is all an act of God. But the opposite is the case. Although some technical arguments can be deployed on whether there should have been a revaluation as early as five years after the last one, that sort of argument does not matter very much. What is important is that the Government are responsible, because when they came to office in 1970 they put into operation certain measures which have partially, though not totally, resulted in the inflationary rate increases we are seeing this year.
One of the first actions they took was to cut the rate support grant which at that time had increased by as much as 1 per cent. for every year of Labour Government. The domestic element also had increased by 5d. in the old pound. The Conservative Government in 1970 reduced the increase in the domestic element by half the amount of the previous three years. The Government say that, as a result of the massive rate increases which are in prospect, they now seek to restore the rate support grant to its former level so that local authorities—they say—will be just as well off. But this is just not true. The money that was lost in the years 1970 to 1972 has gone for ever. Because the rate support grant went up only to 57½ per cent. instead of to 58 per cent. that massive sum of money was lost to local authorities. The same argument can be applied to domestic and commercial hereditaments which would have received the money due to them under the existing system. It is one thing to restore parity, but what is being done to take account of the money lost in preceding financial years? Will the Prime Minister
1038
tell the local authorities tomorrow that the money which has already been lost will be restored?
I suggest that the Prime Minister ought to say to the local authorities tomorrow "I appreciate that you have a difficult problem. Since it is a problem of our making, we shall put into the hands of local authorities the amount of money lost over the two previous years". I repeat that what has happened is not by act of God but is the Government's responsibility.
The other important factor which must be considered is the effect of the Housing Finance Act. The net result of that Act has been that rent assessments in the private sector have increased astronomically since that legislation became law. Whereas previously the rent assessments in my constituency for a 3-bedroomed National Coal Board house were £2·50, they have now increased to £4. There has been a chain reaction in the private sector.
The fact that local authority houses and private houses have been revalued not at two and a half times but at as much as three or three and a half times in some cases, is mainly because of the Housing Finance Act, which has increased rents in both sectors. It is not enough for the Minister to suggest that the Government have restored parity and brought the rate support grant back to its former level. What local authorities need is the money which was lost in the two previous years and a fresh look at the workings of the Housing Finance Act.
6.21 p.m.
Mr. Reginald Freeson: We must all be grateful to my hon. Friend the Member for Derby, North (Mr. Whitehead) for introducing this topic today. I suppose it is inevitably to some extent a preliminary run over certain ground in local government finance which we wish to see traversed more thoroughly very shortly if the Government will indicate, perhaps not today but very soon, when their White Paper on local government is to be presented to the House before the introduction of legislation on the subject.
This debate also gives us an opportunity to consider some thoughts on the immediate situation, whether in a party spirit or a non-party spirit, or a mixture

1039
of both, which we hope the Government will tackle very soon.
During the discussion a number of hon. Members opposite have spoken about spendthrift local authorities and unnecessary services. Even when they have been illustrating a genuine point, one or two of those hon. Members have introduced far-fetched examples. They suggested that a large part of the situation with which we are faced in rate-borne expenditure is the result of undue spending by local authorities. That I do not accept. Naturally, any organisation—a Government Department, a local government department, a business organisation, a trade union or a constituency party—can always be urged to make itself more efficient, but I do not accept, and nor did the Minister say when he spoke in a debate last December, that local authorities are wasting money. They provide very good services for the rates which they impose.
I recall the order which was placed before the House in December last in connection with the rate support grant. It showed that before any expenditure was considered by a finance committee in readiness for the next year's rate levying there had been an inflation during 1972 on current spending over the last year's budget of about £400 million. On the rate support grant levels adopted by the Government in the previous year—that would be 58 per cent., leaving 42 per cent. to be carried by local authorities—it means a spending by virtue of inflation of about £172 million before any expenditure embarked upon by the authorities for 1973.
It is absolute nonsense for the Prime Minister or anyone else in such a situation to exhort local authorities to restrain any increases to about 5 per cent. Even before any expansion of services or the introduction of new services, whether on the initiative of local authorities or that initiative plus support by the Government, there is well in excess of 5 per cent. inflation on current expenditure. It was misleading the country for the Government in the weeks which led up to the present situation and the days before the valuation lists were made known to the public to give the impression that, although things were a little difficult, they were not too bad and that local authorities should be able to hold
1040
increases to about 5 per cent. The truth has come out, at least in certain major areas of the country over which discussions are proceedings this week.
Inevitably the debate today has had two or three different strands which have intertwined. I do not question the desirability of that happening. There have been those who concentrated for the most part on the medium-and long-term view of local government finance; for instance, the hon. Member for City of Chester (Mr. Temple); those who concentrated on the rate support grant as a means of helping in this situation; and those who concentrated on the question of revaluation. In remarks about revaluation a number of hon. Members have referred to the deferment under the previous administration. I intervened because I thought it right to prevent this matter being turned into a party shuttlecock. We have enough problems on our hands and there are enough problems in town halls without that kind of thing happening.
I have with me a summary of the number of deferments which have taken place under the Act of 1925. There was one in 1938 and 1939, another under the Local Government Act 1948, others under the Rating Act 1955, the Rating Act 1959 and again under the Local Government Act 1966. Let us stop this silly nonsense which has nothing to do with the subject we are discussing.
All that could be argued is that if there had been no deferment and a revaluation was effective in 1968 and on previous occasions, there would have been a softening of the blow of recasting of the incidence of the burden on rateable values. It cannot be argued that the incidence would not have been there. That is why I say this is a political red herring introduced to divert public attention from the realities.
Mr. Arthur Jones: Does not the hon. Gentleman think that if we had had a look at the statutory deductions by a revaluation in 1968 we might have been able to avoid the position we now find which is detrimental to lower rated properties? Does he not also think it would probably have encouraged a greater effective reallocation of funds from the rate support grant procedures because of updating of values?
Mr. Freeson: I doubt that very much. The effect would have been very marginal indeed, particularly on the first point mentioned by the hon. Member—statutory deductions. The point I make is not whether or not there would have been a marked difference at the time, but that there has been a series of deferments and this argument could have been raised on any of those occasions. To raise the argument now is to attempt to turn attention away from the concern which people in the country display about revaluation and does not meet the problem.
This matter has a long history. I believe that only once in all the years since 1925 was the original five-yearly review actually adhered to. That was in 1929. I have not checked the actual details, but I think it occurred only once. On each other occasion, certainly since the war, special Acts have had to be introduced by successive Governments to avoid an immediate revaluation at that time.
Turning to the immediate situation, I want to outline a number of thoughts which have occurred to me during the course of the debate, as well as earlier, rather than go into a general review of the impact of revaluation on various authorities. Sufficient figures have been quoted in the House on previous occasions, and doubtless sufficient information is being quoted to the Government by the Association of Municipal Corporations and the County Councils Association to make it unnecessary for me to go over that ground.
What can be done? The rate support grant is not just a support grant which must be treated once every year. It does not mean that, once it has been discussed and passed, no further action is open to the Government. Powers are available to the Government under Sections 1 and 2 of the Local Government Act 1966. Under Section 3, if the Government find that
"an unforeseen increase has taken place in the level of prices, costs and remuneration"
the Minister may by order approved by resolution of this House increase the amount of the grant and its elements—the needs element, the resources element and the domestic element.
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Therefore, it does not require any special legislation or any great intellectual exercise. It requires only that the Government accept the facts and act upon them within the economic constraints by which they wish the country to abide. The powers are there. The Government could at any time ask the House to approve the necessary order.
Therefore, my first proposal is that the Government use their powers. Were they to seek to do so, my right hon. and hon. Friends and I might have occasion to argue about the detailed figures, but the fact that the Government were taking such action would receive the support of all hon. Members. In so far as we were able to facilitate such action, we would certainly undertake to do so.
As there has been much reference by the Government and by hon. Members on both sides to the various percentages of local authority expenditure which the Government cover by rate support grant, may I remind the House that there is nothing specially kind about a Government who take such action. When the Labour Government introduced the rate support grant in the 1966 Act, although they did not spell it out in terms, it was known to be the intention that the Government of the day should take financial responsibility for a steadily rising proportion of local authority total rate-borne expenditure. Therefore, if the Government increase the percentage they are only carrying out the intention of the Act. If they do not like the intention of the Act, they should introduce appropriate legislation.
As my hon. Friend the Member for Bolsover (Mr. Skinner) has reminded us, two years ago in that great year 1970, when all questions of public expenditure were to be knocked on the head by the incoming Tory Government, the Government reduced the percentage increase. That ran contrary to the intentions of the Act. We welcome the Government's reconversion and hope that they will continue along this path; but let not the Government take great credit for merely deciding to get back on to a road which they previously decided to abandon. They are carrying out the intentions of the Act, and that we welcome. They could carry out the intentions of the Act even more effectively were they to use

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their powers under the 1966 Act along the lines I have suggested.
Another field of immediate action was put to the Minister by hon. Members on this side in December, a day before the valuation lists were to be made known throughout the country and when the Rate Support Grant Order was under discussion. It was then suggested that power should be taken, which we would help to facilitate, to derate domestic property if it were shown, as it was beginning to be shown in that debate, that there had been too great a shift in values from industrial and commercial property to domestic property. No answer was given by the Government to that specific request by the Opposition.
My hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) said in that debate:
"There is one practical solution available to the Government. This solution was provided in 1963 when we last had a revaluation."—[OFFICIAL REPORT, 20th December 1972; Vol. 848, c. 1454.]
My hon. Friend went on to quote from Cmnd. 1663, "Revaluation for Rates in 1963", which states in paragraph 15:
"It is within the Minister's powers to make an Order derating houses solely in those few areas where the increase in the householder's share is greatest."
That is our second proposal for immediate action. We undertook in December, and we undertake again today, to facilitate the Government's action if they decide to bring forward legislative proposals to derate domestic properties where there has been an undue shift of burden. The details of particular levels of increase are for the Government to consider and put to the House. We urge the Government to take one or both of those proposals back to the Department and to return to the House with proposals.
In case it should be argued that the second suggestion—that about derating—is unreasonable, I remind the House of the long history of derating. It has relevance to present circumstances in a number of areas where there has been a shift of rate burden to householders.
There has been a 100 per cent. subsidy to agriculture since 1929. From 1929 to 1958 there was a subsidy of 75 per cent. derating to industry. From 1958 to 1963 there was a 50 per cent. derating
1044
subsidy to industry. For those 30 years householders bore the bigger burden of rate expenditure, apart from the then forms of Government grant. As a result of the 1958 revaluation, and under pressure from various interests, the Conservative Government introduced derating of 20 per cent. of shops. That lasted till 1963. If it was possible and reasonable for those Conservative administrations to have such a level of derating subsidy for industry, commerce and shops, it is not unreasonable to say that they should take the same steps today on behalf of those domestic ratepayers who will carry an undue burden in various parts of the country as a result of the recent revaluation.
I had some further notes on future ideas for local government finance and rating but I will not deal with them now as I want to give the Minister proper time to reply. In particular, I should like him to reply to my one request and two specific suggestions. The request is for publication at an early date of a White Paper on the Government's intentions. One of my questions deals with increasing grant aid under the rate support grant system. My second question deals with the introduction of legislation to allow derating in the hardest-hit areas.
6.41 p.m.
The Minister for Local Government and Development (Mr. Graham Page): I thank the hon. Member for Willesden, East (Mr. Freeson) for those constructive suggestions and will try to come back to them.
I congratulate the hon. Member for Derby, North (Mr. Whitehead), as others have done, on his most informative speech and on his timing of the motion. The timing is unfortunate for me but most fortunate for him because in the last few days there has, in the Press, been a build-up for his motion and for his debate.
Unfortunately, that build-up has been all one way. Most of the Press headlines and comments have given the impression that all over the country there will be a massive increase in rates; that nowhere will anyone benefit by any grants which the Government have already given, or by revaluation. My hon. Friend the

1045
Member for Northants, South (Mr. Arthur Jones) and the hon. Member for Derby, North referred to a statement issued by the Institute of Municipal Treasurers and Accountants where it had taken 87 major authorities and had found that the expected new rates ranged from a 30 per cent. increase to a 25 per cent. decrease. This is not unusual; we have seen it in previous years.
Looking a little closer at these figures, one gets an average non-domestic increase of less than 10 per cent. and an average domestic increase of less than 5 per cent., and since that 5 per cent. emerges from that calculation let me make it clear that the Government have not said that they expect every individual local authority to keep its increase to below 5 per cent. As the hon. Member for Willesden, East said, to do so would have been totally unrealistic. What the Government said—this was at the time of the rate support grant discussions—was that the aim was to keep the average rise in rates to a level compatible with the Government's prices and incomes policy, although it was recognised that local variations would be inevitable.
But in those words we are dealing with averages, and, as I have shown in referring to the figures of the Institute of Municipal Treasurers and Accountants, when one is talking of averages there are extremes at either end. But the extremes this year are not very different from those of previous years. In 1972–73 the range was from 38p up to 14p down—an average increase of 9·4p. In 1971–72 the range was from 28p up to 9p down—with an average of 10·3p So, on that basis, this year is not exceptional.
There are, of course, the exceptional cases; to some extent a band across the country. In other cases there are small pockets where revaluation has had some hardship effects on the individual ratepayers there. But even the big cities, whose representatives sought the interview with the Prime Minister, have not all come badly out of revaluation and Sheffield—get an increase in the resources the recalculation of the resources element. Three out of the six—Bristol, Leeds and element; in fact Bristol gets that element for the first time in its life.
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So there is this variety in the effects of revaluation, in the effects of inflation and in the effects of the expansion of local authority services. There should be a variation of this sort. The discretion should be with the local authorities. It is certainly disappointing to me that we have had to ask for monitoring of local authority rates. This is brought about not as a matter of long-term policy, but because central Government must, in view of their counter-inflation policy, keep a close watch on rate poundages this year. But in the normal way the local authority answers to the electorate and not to the central Government for the rate poundage it fixes. The variations I have quoted are a healthy sign and a measure of the discretion of local authorities.
If because of different total rateable values in different areas a balancing is needed, that is provided in the rate support grant by the needs element and the resources element. My hon. Friend the Member for Arundel and Shoreham (Mr. Luce) referred to this matter, and I say quite definitely that we shall be revising the formula in order to try to overcome some of the distortions, so to speak, that have obtained, particularly this year, in rate revaluations. I hope that we shall be able to put this revised formula in detail before the House later.
We can divide the reasons for increase into three. In some cases, revaluation is a reason for increase. In all cases inflation is a reason for increase—prices and pay, which have gone up over past months, and which one expects may, even with the counter-inflation policy, at some time increase again. In most cases, expansion of services is the third cause.
Let me deal first with revaluation. While we have a property tax, as I think the right hon. Member for Grimsby (Mr. Crosland) referred to it over the weekend, we must have a fair valuation of that property. Here perhaps I may be permitted to quote what I understand the right hon. Gentleman said over the weekend to the Labour Party annual local government conference at Newcastle-upon-Tyne. He said that there was
"… no possibility of the rating system being abolished. At a time of high taxation—and taxation should be higher under a Labour Government if we are to carry out our social programmes—we shall never find another source of as much money as accrues

1047
through the rating system. Every country in the world has some of local property tax."
If I may say so without causing the right hon. Gentleman embarrassment, those were wise words, but local authorities will not necessarily have to rely entirely on rates in future. It may be right to give them some flexibility in the revenue which they collect.
My hon. Friend the Member for Northants, South referred to the absence of the quinquennial revaluation in 1968. Since the issue has cropped up in our discussion it would be as well to put on record just when the revaluations occurred. The first was in 1929 and the next came in 1934, in due time after the five years. The next was due in 1939 and was postponed because of the war. The Local Government Act 1948 made valuation the responsibility of the Inland Revenue, and under that Act the first list was due and came into effect in 1956. The 1961 valuation was postponed by the Conservative Government for two years, and that was how we arrived at the 1963 revaluation. I think that all that my hon. Friend was pointing out was that the longer the period between revaluations the bigger the jump in the value of property and the bigger the shock to the ratepayer when he sees the new valuation. It has been a fairly substantial shock this time.
However, revaluation is fair and we are trying to aim at fair rates. It may be the same situation which applies to fair rents, where we should phase the increase out. Phasing it out over all ratepayers would certainly not please those who will benefit under revaluation—and remember that there are many towns and many individual ratepayers who are pleased with revaluation. Whether or not there should be a transition stage is a matter which the Prime Minister is discussing with local authorities tomorrow. I am sure that all proposals, including the sort put forward by the hon. Member for Willesden, East and by my hon. Friends, will be considered, such as whether the Government should go to the aid of local authorities at this stage with increased grants, and whether industry should subsidise the domestic ratepayer by the derating of the domestic ratepayer.
The scheme put forward by my hon. Friend the Member for Northants, South,
1048
which, as I understood it, sought to deal more with the individual ratepayer and give him relief, was a more appealing form of relief than handing out substantial grants or derating across the board. I think the House would prefer, if relief is to be given, that it should be seen to be given to the individual ratepayer to prevent an increase due to revaluation in certain places. These are the sort of things which are traditionally discussed with the local authority associations before any decision is reached.
Of course, the rating system has always taken inflation into account. That has been done by means of the rate support grant increase orders, and this year the order to take account of inflation for the 1972–73 period resulted in a payment to local authorities of £237 million. Normally inflation is taken into account after it has occurred. No doubt in November next, had the matter gone on as normal, we should have had a rate support grant increase order which would have taken account of inflation during this year.
In fixing the rate support grant for 1973–74 the Government took inflation into account by increasing the amount by about £400 million. In that way we have sought to deal with inflation, first that which has occurred during this financial year by the increase of the grant by £237 million and, secondly, on the forecast of what inflation might cost during 1973–74 by increasing the total rate support grant by £400 million. That is no small sum. There are 16,500,000 ratepayers. It works out at about £24 each per year deducted from the rate bill. It is difficult to think of these matters when dealing in terms of thousands of millions of pounds but when we think of it in terms of £24 for each ratepayer it can be seen to be a definite help not only to the local authorities but to the individual ratepayer.
The true reason for the increase is the extension of services. We have asked local authorities to delay making desirable improvements but the last thing we want is to reduce the services provided by local authorities. My hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) summed it up correctly when he spoke of the inter-relationship of central Government and local government. We are anxious to give freedom to local government and to work in partnership with

1049
them as far as expenditure is concerned. After all, the taxpayer contributes 60 per cent. to local government expenditure, and, although there must be freedom in carrying out the services of local government by local government, which is a democratically elected body, there is nevertheless, a partnership with central Government.
Therefore, to sum up what is being done and what is contemplated for the future, the immediate action being taken is the discussion with the local authority associations. This is a transitional matter, between central Government and local government, before the reforms are to take place. The steps already taken to meet inflation and the rate revaluation is the allocation by the Government of £237 million for this year's inflation, a £400 million increase in the rate support grant for next year, a 50 per cent. increase in the domestic element and an updating of rate rebates.
The future policies, which I have already indicated at this box, are improved rate rebates to help ratepayers on lower incomes, a revision of the formula for distribution of the rate support grant, and a reduction of nearly £350 million in local government expenditure
1050
by removing two major services—the local health services and the sewage disposal service—into other spheres. This amounts to a substantial removal of expenditure for local government. There will be savings resulting from the introduction of value added tax, as my hon. Friend the Member for Hampstead explained, and there will be a block grant for transport, which will give local authorities far more freedom of expenditure in that area.
These are not the full reforms. We shall announce our full reforms by means of a local government finance Bill or by a White Paper at an early date. In all these reforms we are anxious to preserve and enhance local government financial responsibility. In these circumstances I ask the House to reject the motion.
Question put:—
The House proceeded to a Division; but no Member being willing to act as Teller for the Ayes, Mr. SPEAKER declared that the Noes had it.
Mr. Skinner: There is one Teller for the Ayes.
Mr. Speaker: There have to be two Tellers.
Question accordingly negatived.

ORDERS OF THE DAY

  EDUCATION BILL [Lords]
  Order for Second Reading read.
  7.3 p.m.
  The Under-Secretary of State for Education and Science (Mr. Norman St. JohnStevas): I beg to move, That the Bill be now read a Second time.
  I hope that the Bill will be non-controversial—[Interruption.]
  Mr. Speaker: Order. I ask right hon. and hon. Members to conduct their conversations outside the Chamber.
  Mr. St. John-Stevas: The Bill deals with two distinct topics. Clauses 1 and 2 and the two schedules are concerned with the powers of the Secretary of State for Education and Science and the Secretary of State for Wales relating to educational trusts, whereas Clauses 3 and 4 refer to the powers of the Secretary of State for Education and Science relating to student awards.
  The provisions dealing with educational trusts are new. The provisions dealing with awards reproduce, almost verbatim, clauses in a Bill which was passed by the other place in 1970. The two clauses passed by the other place are concerned with the powers first conferred upon the Secretary of State by the Education Act 1962. However, the Department's powers to deal with educational trusts are of a much greater antiquity. It inherited them from the Ministry of Education and the Ministry, in its turn, inherited them from the Board of Education, upon which they were conferred when the board was brought into existence as long ago as 1900. But the powers themselves are even older than that, for they were first created by the Statutes enacted in the middle of the nineteenth century, which revolutionised the administration of charitable trusts and, in particular, of trusts for education.
  Before the statutory system of education was brought into being by the Elementary Education Act 1870 the provision of education was almost entirely in the hands of people who were, in law, trustees administering charitable trusts. In
  1052
  the context of the Bill it is sufficient to mention only the endowed schools—the majority of which were founded by gifts of money to provide teaching in grammar, Latin and such subjects—and those schools, most of which would now be known as primary voluntary schools, provided by the religious denominations in the second half of the last century.
  The nineteenth century Statutes to which I have referred did two things. They provided for the establishment of Charity Commissioners, on whom were conferred the powers of the old Chancery Court over all charitable trusts, whether educational or not. In the Endowed Schools Acts they created a system for the reorganisation of endowed schools, establishing for that purpose commissioners with powers even wider than those of the Charity Commissioners who were subject to the Committee of Council on Education, which is the historical predecessor of the Department of Education and Science.
  To complete this historical background, mention should be made of the provision in the Elementary Education Act 1870 which enabled the managers of the schools that we now know as voluntary to comply with the statutory requirements governing the provision of education, notwithstanding anything in the trust deeds or schemes which regulated their endowments.
  When the Board of Education was created in 1900 all the powers I have mentioned were transferred to it. It acquired from the Charity Commissioners their powers under the Charitable Trusts Acts in so far as they applied to trusts for education. It acquired from the commissioners the powers conferred by the Endowed Schools Acts to frame schemes for endowed schools, and from the Committee of Council on Education power to approve those schemes. It also acquired a power to modify the trust deeds of the denominational schools within the statutory system so far as that was necessary to enable the managers to comply with the relevant statutory requirements.
  Basically, the powers of the board remain the same today. They have been modified from time to time, but broadly speaking the nature of the powers and the manner of their exercise has remained unchanged. The board and then the

  1053
  Minister exercised—and now the Secretary of State exercises—the charity powers in accordance with the principles of the law of charity. The powers to modify the trusts of the endowed schools and the voluntary schools in accordance with the interests of education, unhampered by the more stringent requirements of the law of charity, also fall to be exercised by my right hon. Friend.
  When the Government took office in 1970 there was a comprehensive review of departmental responsibilities, which included a review of the powers exercised under the Charities Act by the two Secretaries of State. As a result, the Government concluded that those functions, being essentially judicial in nature, were not appropriate to the rôle of central Government. The decisions which fall to be taken under the Act must be taken without regard to the kind of policy considerations with which Ministers are concerned. Because they are judicial it is not appropriate for Ministers to take them, and because policy considerations must be ignored Ministers are from time to time placed in an embarrassing position in taking them.
  Furthermore, there are anomalies. The bulk of charitable trusts—about twothirds—are subject to the jurisdiction of the Charity Commissioners, who do not constitute a Department of the central Government in the same way as do the Department of Education and Science and the Welsh Office. The question whether a trust falls under the jurisdiction of the Department or the commissioners will, however, depend on factors which have nothing to do with the fact that the Departments are in charge of Ministers and the commissioners are not. Therefore, in principle there can be no question but that these functions are more appropriately exercised by a body such as the commissioners.
  What goes in principle also applies in practice. I take the opportunity to make it clear that there is no question of the power under Clause 1(2) being exercised without the consent of the trustees to modify any provision in a trust deed relating to the provision of religious education. In practice it is in the highest degree unlikely that this question would ever arise, but it has been pointed out
  1054
  to us that it is theoretically possible, and I am glad to have the opportunity of giving a categorical undertaking that if it does arise we shall not exercise our powers so as to override the wishes of the trustees, whose duty it is to represent the interests of the denomination concerned.
  Clause 2 deals with a different aspect. Many of the schools provided by the denominations in the nineteenth century are now in the process of being replaced by new schools, and as they close their endowments and, in particular, their premises become available for application to other purposes. Section 86 of the Education Act 1944 made provision to enable the diocesan authority concerned to apply those endowments for the purposes of other voluntary schools within the area of the diocese. It should be remembered that we are almost exclusively concerned here with the schools in England provided by the Church of England and in Wales by the Church in Wales.
  Section 86 did that by applying the Endowed Schools Acts to these endowments. Those Acts have two distinct features. The powers they confer are very wide—much wider than is necessary for these limited purposes—and the procedure they prescribe is both elaborate and time-consuming. Clause 2 replaces the wide general powers of the Endowed Schools Acts with narrow, specific powers in the terms in which, in practice, those wider powers have been exercised. It streamlines the procedure so as to make it more efficient and more expeditious, but without derogating from the rights of those affected to know what is proposed and to make representations about it. As they have that knowledge they will be able to make representations about it. That is the purpose of the first part of the Bill.
  I pass now to the second part of the Bill and, first, Clause 3, which is an enabling one, giving the Secretary of State power to supplement the grants of students holding awards from local education authorities by paying them dependants' allowances in circumstances where the family might otherwise suffer hardship. At present such students may receive discretionary allowances either from their local education authorities or from the Supplementary Benefits Commission. The intention of the clause is to centralise this

  1055
  provision and, at the same time, to ensure a uniformity of treatment which cannot be guaranteed under present arrangements.
  Nearly all students who attend a first degree or comparable course, or a course of training as a teacher, receive an award from their local education authority. These awards are mandatory under the Education Act 1962 and are paid subject to conditions set out in regulations made by the Secretary of State or in arrangements approved by her. Some of these students can qualify for a dependants' allowance as part of their award, but the conditions under which they can do so are narrowly defined. Only if a student marries before his course begins and is either 25 or over at that time or has supported himself for three years, can he claim a dependents' allowance as of right. If he cannot satisfy these conditions—that is, if he is single when his course begins, or, having married before it begins, he is neither 25 nor has supported himself for three years—he has no entitlement to such an allowance. These rules have been made to ensure that the awards system provides no financial incentive to students to marry while they are undertaking courses with assistance from public funds.
  If, however, a student does subsequently marry and is likely to suffer hardship either because his wife has a disability which prevents her from earning or because they have a child, the present arrangements are that he can go to his local education authority, which has discretionary powers to grant a dependants' allowance, which it will normally exercise within certain limits. If, however, it is not prepared to help him, he can go to the Supplementary Benefits Commission which, if it is satisfied that his is a genuine case of hardship, will normally provide assistance.
  The Government feel that these arrangements are in many ways unsatisfactory and that they should be replaced by a systematic scheme which will ensure fair treatment for everyone. Local authorities who were given this discretionary power in 1965—following pressure from both major parties that something should be done to enable a student who is in difficulties of this sort to complete his course without hardship—are anxious to relinquish these powers. They are conscious
  1056
  of the fact that they have no satisfactory machinery for measuring hardship, and each authority applies its own standards, so that there is a considerable variation of treatment in similar cases across the country as a whole.
  Mr. R. C. Mitchell: The whole House will welcome this clause, which goes a long way to help, but why is it restricted to awards for first degree university courses and comparable courses? Many people marry and have a child after starting various courses in colleges of technology or art. As I understand it, they will still not be covered by the clause because it is limited to first degree courses or comparable courses. Can the clause be extended to include other courses?
  Mr. St. John-Stevas: It is the intention of the Bill not to change the present system but merely to centralise it. I will, however, look into the point which the hon. Gentleman has raised.
  The Supplementary Benefits Commission, too, is anxious to withdraw. Its normal function is to give benefit in hardship cases only where the people concerned are registered for employment. It has been continuing what was originally intended as a temporary measure which was initiated in the days of its predecessor, the National Assistance Board.
  Clause 3 will enable the Secretary of State to establish in place of these somewhat unsatisfactory arrangements, with which neither the local authorities nor the Supplementary Benefits Commission are happy, a properly designed scheme, with common standards, which will be based on regulations to be laid before Parliament. The scheme will be administered on behalf of the Secretary of State by the Department of Health and Social Security, which has both the machinery and the experience for dealing with these sorts of problems. The allowances will, as now, be discretionary and will be designed so that they do not exceed those paid to students who are fully entitled to dependants' allowances.
  It should not be assumed that all students who apply for assistance either under the present arrangements or when the new scheme comes into operation are irresponsible. This is by no means so. Some students may be nearly 25 when they start a long undergraduate course,

  1057
  and are thus in their late twenties when they finish. No one, I think, would consider it unreasonable if, say, a person of this age had married and started a family during a period of employment which might not have extended to the full three-year period to give him an allowance by right. I am sure that it is vitally important that such young people should not be precluded by hardship from taking a course from which they can benefit, or forced for the same reason to give up a course part way through on which they have spent much time and effort and on which perhaps a considerable amount of public money has already been spent.
  A Bill on somewhat similar lines was introduced by the last administration in 1970, but failed because of the Dissolution. In that Bill it was proposed to include provision in such a scheme not only for wives and husbands but also for a person living with but not married to a student. This gave rise to a great deal of controversy at the time. There were accusations that mistresses would be kept on the rates, and so on. Some hon. Members may recall that controversy. We have therefore decided on this occasion not to include such a provision, although we propose that allowances shall be payable in respect of a student's children. I think that this is a reasonable distinction to make. The allowance will be paid whether these children be legitimate or illegitimate, whether they be blood members of the family, adopted, or step-children. We shall make no differentiation. I think that is right, since the sins of the father should no longer be visited upon the children.
  A person living with a student who is unable to work because of disability or a young family will still be able to apply to the Supplementary Benefits Commission if there is a real need. Such cases are extremely rare, and I estimate that they will amount to no more than 10 a year. So I hope we shall not have any more fuss about that.
  I emphasise that Clause 3 does not extend or enlarge the overall provisions made at present to relieve hardship to students. It simply rationalises the arrangements whereby provision is made and ensures that students in similar cir-
  1058
  cumstances, in whatever part of the country they find themselves, will receive the same standards of help.
  Clause 4 removes, for certain categories of courses, the power that local education authorities at present have, under Section 2(1) of the Education Act 1962, to make awards to students attending post-graduate courses. Courses for which local education authorities will no longer be able to make awards will be designated in regulations to be made by my right hon. Friend the Secretary of State.
  The background to this is that prior to 1969 both central Government and local education authorities were free to make post-graduate awards in any field they wished. This not unnaturally led to a considerable degree of uncertainty and confusion about their respective responsibilities. It was therefore decided, in 1969, in consultation with the local authority associations, to define the areas of post-graduate study which should be the sole responsibility of the central Government agencies, thus leaving the local education authorities with responsibility for all other post-graduate courses.
  This arrangement has worked reasonably well, but local authorities now feel that as long as the power remains to make post-graduate awards in areas which are the responsibility of central Government agencies, they will be subject from time to time to pressures to support courses which are not properly theirs. Clause 4 will remove this power from them.
  Those are the main provisions of the Bill. I do not think that it is controversial, and I hope, therefore, that the House will give it a Second Reading.
  7.23 p.m.
  Mr. Roland Moyle: I think that the House need not be detained long by the Bill. As the Under-Secretary of State has said, it broadly transfers the administration of policies which have been currently agreed from one agency of Government to another. The first part transfers functions from the Department of Education and Science to the Charity Commissioners, and the second part transfers responsibilities from the local education authorities to the Department.

  1059
  The Government, if we are to believe them, have done this in the interest of efficiency. They have undertaken a study and are convinced that efficiency will result from these new arrangements. No representations have been made to us by members of the public to the contrary and, therefore, I am disposed to take the Government's word in this matter and look forward to the increased educational efficiency.
  However, if things go wrong, the Government have been warned, because the Nathan Committee's report in 1950 said:
  "… the educational endowments which would he affected …"
  by a transfer of this sort—
  "… are so essential a part of a single system of national education that their removal from the jurisdiction of the Minister of Education would create chaos".
  Confidence has come with time, and we hope that the Government know the course upon which they are embarking.
  I wish first, indicating that I have read the Bill, to draw the hon. Gentleman's attention to Clause 1(2)(a). The first word in my copy of the Bill is "made", whereas I think that it should be "make".
  In transferring functions from the Secretary of State to the Charity Commissioners under Clauses 1 and 2, the Secretary of State is reserving to herself several powers which seem to us to be sensible in that they make it easier to adapt the trusts which are the subject of the clauses to incorporation into the State system of education. Probably the most important power is the one which makes it easier for religious schools to become part of the State system. We, of course, welcome this positively.
  We on this side have a disposition to believe that the State system of education can cater for all forms of religious education, but we appreciate that a number of people not only want specific religious education for their children but believe that it can best be given in denominational schools. We would try to persuade them to the contrary but we certainly would exercise no pressures to provide that they should adopt a contrary attitude. We welcome the provision which makes an easy transition from the endowed schools to the State system.
  1060
  Indeed, I think that this is an indication of the fact that the comprehensive State system is gathering ground. It is a confirmation of the thesis which my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) argued in a recent debate—that hon. Members opposite have really surrendered on the essential issue that comprehensive schools are the schools for the future and that a sentence of slow death has been pronounced on the grammar-only schools. Sometimes the death appears to be agonisingly slow but it is there all the same.
  Clauses 3 and 4 relate to arrangements for student grants. One thing surprised me about the hon. Gentleman's speech. One would not realise from it that the National Union of Students submitted a claim to the Department that discretionary grants should be done away with. I can understand that the Government have decided that they are not going to listen to the NUS on any of the points which it has urged upon them. That is quite understandable, given the attitude of the Government. But I would have thought that at least the hon. Gentleman would have felt that the NUS was sufficiently worthy a body for its case to be given some recognition.
  Mr. St. John-Stevas: The hon. Gentleman is under a misapprehension. We are listening to the representations of the NUS. Later this month I shall meet its representatives to hear its representations in full. Far from having rejected or accepted its representations, we shall listen to them, and after we have heard the union's case and the cases of other representative bodies we shall take our decision.
  Mr. Moyle: I am grateful for that intervention and I am sure that that occasion will provide interesting listening. But had I not made this point no one would have realised from the speech of the hon. Gentleman that the Government were taking any notice of the NUS at all. This is very important, because the NUS, although it relates most of its observations with regard to discretionary awards to those taking courses, is also interested in discretionary awards made to dependants.
  After listening to the Under-Secretary I understand that, although the Government intend to produce a centralised

  1061
  scheme dealing with awards for dependants in the form of regulations, the discretionary element, as he specifically stated, will remain as a central feature of the scheme and, therefore, a point of issue between the Government and the National Union of Students. The success of this clause will depend to a large extent on the new regulations to be set out, and we look forward to studying them in due course. If anything, it has to be conceded that the principle of the scheme contained in the clause improves the lot of the recipient, however marginally, and we would not object to the clause for that reason.
  We welcome Clause 4, centralising the payment of a number of postgraduate research grants in the Department of Education and Science, under the control of the Secretary of State. This is not only because local authorities have felt themselves to be in an invidious position and requested this it is because a more careful watch can be kept on the Department of Education and Science and on the development of the postgraduate situation. This is beginning to cause a little concern in the higher educational system. The Under-Secretary would agree that under the next quinquennium the percentage of university places devoted to postgraduate research particularly will be cut back to 17 per cent. from the current level of 19 per cent. That will be a lower proportion than in 1967–68.
  There is some concern about this in our university system. The Chancellor of Southampton University has drawn attention to it, as has the Chairman of the Vice-Chancellors and Principals Committee. Both have expressed their unhappiness about the situation which seems to be developing.
  This is not the only move that the Government have made in research. They have adopted the Rothschild proposals for Government research, and as a result the customer-contractor principle will he applied. That will means a much tighter and a much more managerial approach to the funds available for scientific research. I appreciate that a 10 per cent. margin for general research surcharge will be included in any funds made available, even for research specifically contracted out for what Dainton called basic research.
  1062
  A number of our leading scientists are still not entirely confident that this will lead to a sufficient flexibility to maintain a core of basic research scientists in the universities in particular. I suppose that in an experiment there must always be an element of "wait and see", and in this case we shall be waiting and watching. This provision will marginally enable us to wait and watch a little more closely than would otherwise have been the case. The eminent sources who have expressed their worries are not to be ignored.
  Apart from commenting on these points, I am able to say that the Opposition have decided that the Bill will receive an unopposed Second Reading. Having given the Under-Secretary that degree of encouragement, I conclude.
  7.33 p.m.
  Mr. R. C. Mitchell: I wish to make a few brief comments to emphasise the point I tried to make in an earlier intervention. I can best do so by giving two examples.
  A year or so ago a young lad was attending the Southampton College of Technology taking an HND course. It was a familiar story. He got a girl into trouble, a child was expected and he married her. She had the child. Had he not married her it would have been all right. She would have gone and claimed all sorts of social security benefits. Having married her, he applied for social security for himself, wife and child. He was refused on the familiar argument that because he was taking a full-time course in a technical college he was not available for work and, therefore, could not claim social security. We went to the local authority, which gave him the single person's grant. It was reluctant to increase that grant to cover a wife and child. We took the case to appeal before the commissioners and won it on a technicality.
  The second case is one which I am conducting at the moment. It concerns a man in his twenties taking a course at Southampton College of Art with a view to getting sufficient O-levels to enable him to go on to teacher training college. He married and his wife had a child. Again we applied for social security and were told by the Chairman of the Supplementary Benefits Commission "Sorry. He is not available for work; therefore he

  1063
  is not entitled to social security benefit." The commission added a little note saying that it was not for it to judge whether the young man should carry on with his course. It did not pretend to be educationally competent to make that sort of decision. At the moment I have written to the local education authority in the hope that it will increase the grant. If it does not the young man will have to leave the college unless he can beg, borrow or steal the money to carry on.
  We have had several cases like this. Sometimes in the last resort we have managed to fall back on local educational charities, which in most cases were set up for other purposes many years ago but which have a bit of money to spare. All of this is totally unsatisfactory.
  As I read the Bill, none of the circumstances I have mentioned will be covered by Clause 3 because they do not concern awards for first degree university courses or comparable courses. Someone taking O-levels to get to training college does not come under that heading, nor, I suspect, does an HND course at a college of technology. I would like the Minister to look again at this, as he promised he would, to see whether it is possible to extend this to a wider range of courses than are covered in the clause.
  7.36 p.m.
  Mr. St. John-Stevas: With the permission of the House I will reply briefly to some of the points that have been raised. The hon. Member for Lewisham, North (Mr. Moyle) quoted the Nathan Committee of 1950—nearly a quarter of a century ago. Times have changed and those conclusions are not necessarily applicable in the conditions of today.
  I am grateful to him for pointing out the error in Clause 1(2)(a) on page 2. Since it is unthinkable that any Bill coming from the Department of Education and Science could contain a grammatical error this must clearly be a printer's error and will no doubt we corrected at the appropriate moment.
  The hon. Gentleman welcomed the provisions of Clause 2 incorporating religious endowments into the State system. I should point out that although these endowments are incorporated into the State system they will be used for religious purposes within the State system
  1064
  of education. It is not a question of secularising these trusts. I appreciate that the hon. Gentleman was making the distinction, but perhaps it was not clear to everyone listening.
  Clause 3 was also welcomed by the hon. Gentleman and it was only on Clause 4 that he became in any way contentious and then over a matter which really had nothing very much to do with the clause, except that it is the setting in which we are considering the subject. He said that the White Paper envisages that in the new quinquennium postgraduate students will represent 17 per cent. of the total of full-time students instead of 19 per cent. they represented in 1971–72. That is true, but as with all statistics, unless all the relevant statistics are quoted a misleading impression is given, and the hon. Gentleman ignored the fact that the provision for postgraduate students in the new quinquennium, viewed in absolute terms, is increasing. It is being increased by 7,000 places from the present 45,000 places to 52,000 places. That, I think, puts it in a more reasonable perspective.
  The number of postgraduate students is not being cut back; it is merely not increasing as fast as the number of full-time students who are not postgraduate students. To get this matter into perspective we must remember that about one-quarter of the postgraduate students in any case are from overseas.
  As to research, although funds for research have been transferred from the Department of Education and Science to individual Departments—for example, Agriculture—there is certainly no reason to suppose that those Departments will not contract with the research councils, and there is no reason why research expenditure should be reduced.
  On the points made by the hon. Member for Southampton, Itchen (Mr. R. C. Mitchell), if he has any particular difficulty with any constituent's case, of course I shall be only too glad to offer the assistance of my Department. Within the range of our powers we will do all we can to help in cases of hardship. The Supplementary Benefits Commission tries to deal with these cases reasonably and compassionately. With regard to students who are above O and A levels, the commission will normally make dependants'

  1065
  allowances available to full-time students even though it usually deals only with people who are available for employment.
  Under the scheme that we shall be issuing in due course we shall take over jurisdiction. But one must always remember that in the last resort there is a right to go to the Supplementary Benefits Commission, even where particular cases are covered by the scheme. I do not think that would in fact be very productive, but perhaps more important in practice is the fact that in those cases not covered by the scheme there is still a residual right to go to the commission.
  If there are further points on the Bill they, no doubt, will be probed and elucidated in Committee. I am grateful to the hon. Gentleman for facilitating the passage of this small but necessary Bill on its Second Reading, and I recommend it to the House.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  EDUCATION [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to make provision for supplementing awards under section 1 of the Education Act 1962, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred by the Secretary of State in the payment, to persons on whom such awards have been bestowed, of allowances under the said Act of this Session.—[Mr. Morton.]

  MEDICINES ACT 1968 (ANTIBIOTICS)
  7.44 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Michael Alison): I beg to move,
  That the Medicines (Extension to Antimicrobial Substances) Order 1973, a draft of which was laid before this House on 5th February, be approved.
  The primary purpose of the order is to make provisions whereby the existing controls of non-medicinal antibiotics under the Therapeutic Substances Act 1956 may be continued to be carried on under the Medicines Act 1968. The Medicines Act provides for the repeal of the Therapeutic Substances Act on a date to be appointed, and in this respect the order is part of a formal change. In addition, however, under the Medicines Act a more flexible system of control becomes possible, and the way is paved for implementation of certain recommendations of the Joint Committee on the Use of Antibiotics in Animal Husbandry and Veterinary Medicine under the chairmanship of Sir Michael Swann.
  Section 105(1)(b) of the Medicines Act under which the order is to be made provides powers to bring substances which are not medicinal products as defined in the Act but are substances which if used without proper safeguards are capable of causing danger to the health of the community or of animals generally or of one or more species of animals within the ambit of the licensing system and other provisions of the Act as if they were medicinal products. The substances in question are antibiotics, substances which possess antigenic properties similiar to those of antibiotics, sulphanilamide and its derivatives and the nitrofurans.
  These substances are invaluable as a means of combating and treating the effect of bacterial infections in man; they have, however, also been found to be of use in animals both for therapeutic purposes and for the stimulation of growth, and serve various other useful functions in agriculture as well as in horticulture and for the preservation of food.
  The special properties of antibiotics have, however, brought with them peculiar dangers. They can give rise to the development of resistant strains of

  1067
  infectious organisms, and through the phenomenon of cross-resistance this can apply not merely to the particular antibiotic the use of which has given rise to resistance but to a wide range of other antibiotics. Where antibiotics are used for purposes other than human medicine one possible consequence is that through the food chain and in other ways resistant organisms may infect man and thereby prevent the successful use of antibiotics in treatment of human illnesses. Furthermore, exposure to an antibiotic may sensitise individuals so that the same or a related antibiotic cannot be used in their treatment. Similarly, the use of antibiotics in various ways can endanger the health of livestock and wildlife and generally affect the environment.
  At the present time most antibiotics, sulphanilamide, its derivatives and certain nitrofurans, are controlled by regulations made under Part II of the Therapeutic Substances Act 1956 and their sale and supply is restricted to the prescription of a doctor, dentist or veterinarian. Relaxing regulations made under this Act permit the use without prescription of certain controlled substances, at specified levels and subject to conditions, as growth promoters for livestock production, in food preservation and in horticulture. This method of control of restriction to prescription of non-medicinal antibiotics is not ideal, and the Medicines Act provides a more flexible system of control.
  Bringing these non-medicinal substances within the scope of the Medicines Act will enable the responsible Ministers, by the making of further orders or regulations, to exercise control of the substances concerned when the Therapeutic Substances Act is repealed, thereby continuing to safeguard the health of the public and of animals.
  By approving the order the House will enable the appropriate measures to be undertaken and, by so doing, will continue the safeguards to public and animal health.
  Question put and agreed to.
  Resolved,
  That the Medicines (Extension to Antimicrobial Substances) Order 1973, a draft of which was laid before this House on 5th February, be approved.

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

  HOUSING (IMPROVEMENT GRANTS)
  7.50 p.m.
  Mr. Alec Jones: I am grateful for the opportunity to raise this important debate at a reasonable hour. I am sure it is not the intention of the Minister to be absent. It is a quirk of fate which will be corrected if I speak at sufficient length to enable him to arrive.
  My subject is house improvement grants under the 1969 and 1971 Acts. Hon. Members on both sides of the House I am sure equally appreciate that house improvement grants are a most valuable means of improving our housing stock, improving houses which are structurally sound but lack amenities. We realise that the alternative to improvement grants—the replacement of houses—is costly in money and time, and is often completely unacceptable to the people who live in them.
  I take the 1971 figures, accepting that they will have improved since then but that the overall pattern remains the same. At the end of 1971 in Wales 250,000 houses, 27 per cent. of our housing stock, were built before 1891, a further 200,000, representing 20 per cent., were built between 1891 and 1918 and a further 150,000, 16 per cent., were built between 1919 and 1944. The age of the houses suggests that in December 1971 about 16 per cent. of the houses in Wales were likely to need improvements, and a large proportion were likely to need major improvements, to meet the needs of the families living in them.
  When I compare the improved houses in 1972–73 with the house in which I lived as a boy—with no hot water, with the toilet at the top end of the garden, involving mysterious journeys late at night in cold weather—I appreciate the value, to the families, of the improvements which have been carried out in Rhondda. I use the figures for Rhondda because it is easier for me to get those figures than any others, but what I have

  1069
  to say is equally true of industrial South Wales and probably of most of Wales.
  In Rhondda 5,000 grants have been made. This means that 5,000 homes have been modernised and saved and that the lives of 5,000 families have been considerably enhanced. That is why we welcome the 50 per cent. grant and why those who live in the assisted areas welcome the 75 per cent. grant. The provision of the 75 per cent. grant has resulted in a considerable acceleration, almost an artificial acceleration, in the number of applications submitted to Welsh local authorities. Applications for the 75 per cent. improvement grants are pouring into the council office at Pentre, in Rhondda, at the rate of 105 each week, and this represents a massive increase. For the first time older people and those on relatively small incomes are able to improve the living standards in their homes. That is of importance in Wales, which has a high proportion of owner-occupiers, and of especial importance in my constituency, in which 70 per cent. of the people own their own homes.
  Having painted the background of the picture I refer the Minister to the real purpose of this debate. Two defects in the present arrangements threaten the success of the scheme and lead to unfairness between one owner and another. The first defect arises from the time limit, whereby the 75 per cent. grant is payable only to those who are able to find a builder to complete the work by 23rd June 1974. The second defect is that local authorities have no power to increase the grant to cover cost increases which arise between the date of final approval and the completion of the work.
  These two defects can be dealt with separately, but they are inter-related. The existence of a rigid time limit artifically accelerates the rate at which applications pour into local authorities. Everyone is anxious to get in his application before the time limit expires. With a constant building force available this means that there is bound to be an ever-increasing delay between the time the grant is approved and the start of the physical work. This delay leads to higher costs. I have here estimates based on the Rhondda figures. If the Minister says that my figures are wrong I shall be delighted to hear it, but I am sure he will appreciate that although I cannot be absolutely
  1070
  precise I have tried to paint an accurate overall picture.
  If the time limit of June 1974 is adhered to it will mean that at least 2,500 people in Rhondda whose applications are in will be denied the advantages of the 75 per cent. grant. That is the figure for Rhondda and there must be many thousands in the other industrial valleys of South Wales who will be similarly affected.
  I have looked with some concern at the figures appertaining to my constituency. About 2,500 claimants are awaiting final approval or commencement of the work.
  Mr. Raymond Gower: Does the hon. Gentleman mean that a number of applications will lapse owing to the physical limitations of the department that has dealt with them?
  Mr. Jones: I shall not dodge the point raised by the hon. Gentleman. I shall develop it as I go along, because I am sure that there is no disagreement between us on this issue.
  The 2,500 in the pipeline are applications which have received final approval by the council but are awaiting commencement of the work. In other words, the builders are not able to take on the work. In addition, there are 1,500 applications at various stages of being serviced. Of these 1,500 applications, I assume that about 500 may not be proceeded with; that for various reasons the applicants will withdraw. I have selected that figure in order to be as generous as I know how. That means that there are about 3,500 live applications in the pipeline.
  Without building forces working at full stretch we have been able to complete about 250 improvements per annum. Even if we were to double the rate of completions to 500 a year there would still be enough work in the pipeline for seven years, but the time limit of June 1974 gives us only 16 months.
  There are two factors which underline the seriousness of the problem. First, I have assumed the ability of the building force to double its rate of completions, and that is a generous estimate. Secondly, I have ignored the fact that from now until 1974 there will be further applications. It seems that in Rhondda, anyway, all those who have applied for the 75 per cent. grant will not be able to get it.

  1071
  There is enough work to keep the building industry busy for seven years, but all the work must be completed within 16 months.
  In Rhondda it is extremely difficult to get a builder to do minor repairs—or even major repairs—because of the heavy concentration on doing work under the improvement grant system. We are using the building force not only within the boundaries of Rhondda, but also outside. The trouble is, of course, that by doing that we deplete the availability of builders in those areas. They suffer, though we may gain.
  There are certain unfortunate byproducts of the long waiting lists—and I use that phrase with a certain amount of latitude. First there is a tendency on the part of certain builders—I put it no higher than that—to be selective in the jobs that they undertake. They are more likely to accept a job if the would-be improver is able to pay his 25 per cent. in cash rather than have to get the money by some other means. The builder has a chance to pick and choose, with the result that certain people are left behind.
  Secondly, because of the pressure on builders—and I am not criticising them for this—there is some danger of defective work creeping in. If the claimant, the council and everyone concerned is badgering a builder to get on with the job, and complete it so that the grant can be made available, the emphasis on speed tends to lead to less sound and less satisfactory workmanship.
  Thirdly, a study of the people being left behind shows that it is not the young and active, who are able to look for a builder and badger him to start work, but the old, the infirm and those who are not able, for one reason or another, to chase around looking for builders who are affected. I have here a letter from a constituent, an old lady who has struggled to buy her home. Her grant has been approved and I have been trying for some months to find a builder who is willing to do the job for her. She says:
  "Thanks for your letter. No, I have not had a builder yet. I am daunted now."—
  "daunted" is a very good valley expression—
  "I went without so much to buy a house. I have had the grant now but it seems to me
  1072
  that all the young ones are getting theirs done. I cannot find a builder to help me."
  That is the kind of person who is being left out.
  The fourth by-product of the long waiting lists is that this increasing gap between the date of final approval and commencement of the work means that the estimate originally submitted to the authority, and on which it gave final approval, is out of date, and in many cases useless. In the hands of some unscrupulous person the difference can be boosted considerably. I have three examples to illustrate what I mean. I could have brought many more, but there is no point because these three make the case.
  Early in 1972 approval was given for an improvement grant of £1,890. The builder now says that the total cost will be £2,713. In the middle of last year final approval was given, in another case, for £2,800. The present cost is £3,200. In a third case final approval was given, in June 1972, for £2,300. The present estimated cost is £2,900. Those are round figures. The actual increases are £400, £600 and £820. In each case there is no doubt that part of the increase is due to the fact that there was a pay award in the building industry. Another part is due to the rising cost of building materials. However, the very size of the increases suggests that the time limit is forcing certain applicants to pay more than the normal reasonable cost in order to qualify for the 75 per cent. grant. If they say "No" to a builder, that is the end, and they have to start back again in the pipeline. It means that the builder is in a favoured position if he cares to exploit it by increasing his estimate and people tend to say, "We must pay. If we do not we will not qualify and benefit from the 75 per cent. grant."
  Local authorities should have some discretion to revise the amount of grant. By that I do not mean to cover everything. However they should be allowed to revise the amount after the date of final approval so as to lift the grant at least to a figure which will meet genuine increases in labour and material costs. Some formula on these lines is desirable and it should not be beyond the capacity of the Government to agree to it. If it is not done, many applicants will be forced to forfeit improvements to which they have been

  1073
  looking forward. Morally there is no reason why applicants should be made to bear considerable additional expense without the aid of supplementary grant, having regard to the fact that as applicants they have no control over events which may lead to increases in costs.
  My own council has been in consultation with the Welsh Office on this very point. Reference has been made to Section 4(3) of the Housing Act 1969. But that is not a real solution to the problem that I describe. The section allows grants to be revised only to take account of works unforeseen at the time of the approval. I am not talking about that. I am talking just about cost increases. What is more, if it meant grants being withdrawn and applications resubmitted they would have to go through the pipeline again and be revalued. They would end up so far behind that there would never be any hope of the people concerned having their work completed.
  The Government announced the 75 per cent. scheme with a great flourish. I make no complaint about that. People throughout South Wales responded to it with enthusiasm and, in common with my own, most authorities in South Wales acted promptly and in accordance with the advice that they were given by the Welsh Office. Paragraph 3 of the Welsh Office Circular 126–71 said:
  "The Council are asked to do all they can to ensure that full advantage is taken of the higher grants by private house owners …"
  The circular went on in paragraph 12:
  "Local authorities will need to ensure that their administrative arrangements are adequate to deal speedily with the number of applications for grant which may be expected to arise under the new provisions."
  But it does not matter how speedily the local authorities can deal with applications for grant if builders cannot physically do the work. That is where the problem arises at present.
  We in Rhondda have acted in accordance with the advice contained in the Welsh Office circular. Practically the whole of our existing public health inspectorate and technical staff in the surveyor's department are fully engaged on improvement grants. That means that other work needing to be carried out by these people tends to be forgotten, and the day will come when it cannot be put off any longer.
  1074
  However, the local authority engaged additional staff for the purpose. It took on an extra quantity surveyor, two more building inspectors and a clerk. All the work done by the authority, all the money spent on new staff and all the time spent by the staff, old and new, will be abortive and a complete waste of time and money unless we can get some reappraisal of the scheme itself.
  In my view additional discretionary powers should be given to local authorities to review grants so as to cover genuine increases in cost. Secondly, we ought now to be asking the Government to extend the time limit, or to remove it altogether. As long as it remains we shall run up against these problems again and again.
  Without the two changes that I have described, or something like them, many people in South Wales needing to carry out improvements and being in a financial position to do so will face considerably increased costs. They will represent an added burden for many years if loans have to be paid off. Many of them, such as the lady who has written to me, are among the most needy in the community and will never be able to afford the improvements that they require. If this happens the quality of our housing stock in areas like Rhondda inevitably will deteriorate. Housing stock does not stand still. Either it is improved or it deteriorates. If it cannot be improved with the aid of the 75 per cent. grant there will be a marked deterioration in housing conditions.
  Basically this was and still is a good scheme. It would be a pity if it foundered in the tremendous discontent that I see building up in my constituency. In Wales the improvement grants were the one bright spot in a dismal housing picture. It would be a pity if that one bright spot were to be darkened by the Government's reluctance to act as I have suggested.
  8.19 p.m.
  Mr. Raymond Gower: I can largely support what the hon. Member for Rhondda, West (Mr. Alec Jones) has said, though naturally he has selected for most of his illustrations the difficulties in his own constituency. However, I am sure that the hon. Gentleman will agree that the subject has a fairly general application throughout the rest of Wales and the United Kingdom.

  1075
  Support for the point of view expressed by the hon. Member for Rhondda, West is not confined to the Opposition benches. I agree most cordially with his views. Indeed, the matter has had the support of sucessive Governments, and the growth in the number of applications for these grants has been quite astonishing. Last week my hon. Friend the Minister of State answered a number of Questions about the increase in the number of houses improved. I thought that the figures given by my hon. Friend were remarkable. He said that in 1972 the number had risen to about 28,000. I am not sure what the figure was. My hon. Friend will correct me if I am incorrect.
  The Minister of State, Welsh Office (Mr. David Gibson-Watt): That is correct.
  Mr. Gower: About 28,000. Indeed, there are circumstances where a grant of this nature can be deemed—I hesitate to use the term—superior to the erection of a new house, whether a council or a private house. In most cases people like to move into new homes, whether private or council property, because they have all the latest equipment, are well appointed and recently built, and will be less expensive for maintenance, and so on. The paramount advantage of the improvement grant means that the owner-occupier or tenant will not need to leave the neighbourhood where he or she or the family have lived for a generation and where their friends are. In many ways this is of paramount advantage to them.
  The hon. Member for Rhondda, West referred, I think, to 100 applications per week.
  Mr. Alec Jones: 105.
  Mr. Gower: This is a formidable figure, as he intimated, in one constituency. The picture is not dissimilar in many other parts of the Principality. In my interviews with constituents I meet people who are engaged in improving their houses in this way.
  I sincerely hope that my hon. Friend will consider with great sympathy the main purport of the hon. Gentleman's argument. There is a strong argument for extending this time limit. That was the hon. Gentleman's main point,
  1076
  although he made others. It would be unfortunate if we stopped the grants now. Such grants are a formidable part of the provision for maintenance of homes. Indeed, adding together the total of new homes, private and council, and improvement grants of this kind, I understand that in 1968 the figure was about 26,000 houses. Last year that figure had risen to 41,000. If we took away the contribution of these grants it would be a sad blow to the total provisions of homes. I hope that this provision can go on and be extended. I believe that it is just as important as, if not more important than, building new houses. Therefore, it would be unfortunate if at this stage we discontinued the contribution which has been made by grants of this nature.
  In many parts of the Principality houses of fundamentally sound construction but built many years ago need only modest improvements to extend their usefulness for a considerable time. In the long run, the provision of grants is a better and economic way of providing houses for the next decade than building only new houses, which will cost more. So, although 75 per cent. grants may appear to be a formidable contribution from Government funds, balanced against the expense of providing new houses it would be a bad policy to discontinue them.
  I support the hon. Member for Rhondda, West, not necessarily in every detail, but broadly in his appeal to my hon. Friend. I should imagine that all parties support the provision and maintenance of good homes in buildings which need relatively small expenditure to conserve them. I hope that as a good Conservative my hon. Friend will accede to this request.
  8.27 p.m.
  Mr. Neil Kinnock: I congratulate my hon. Friend the Member for Rhondda, West (Mr. Alec Jones) not only on managing to get the Adjournment debate tonight but on persuading at least 625 Members of Parliament to pack up before eight o'clock and thereby provide us with a great opportunity to discuss this matter of such importance to thousands of people in Wales.
  It is in the nature of my hon. Friend and of Adjournment debates not to introduce too much contention, but it is only

  1077
  fair to try to analyse why there has been such a boom in the use of improvement grants in recent years.
  The first and obvious reason is that the supply of such grants creates demand, and the more they are provided, thankfully, the more they will be used. Consequently, we can look forward not to a diminishing use of these grants but to an increasing use until practically every house in Wales that was built before the Second World War has been the object of improvement of one kind or another.
  Although my hon. Friend drew attention mainly to pre-war housing and its deficiencies, many houses in Wales built since 1945 leave a great deal to be desired in the form of creature comforts which people in the better paid section of society accept as the normal attributes of housing while for many thousands of Welsh people they are still thought to be matters approaching luxuries. I speak simply of central heating, an adequate bathroom and an indoor toilet. These are not dramatic illustrations of the shortcomings of houses in Wales. For many people, even young people, it is a normal part of life that houses should be deficient in these important respects.
  Another reason for the boom in demand for and use of improvement grants is that in the modern housing sector—I use the word "modern" advisedly by "modern" I mean just about anything built after the First World War—there has been an unprecedented inflation in prices. Many young married and engaged couples are applying for these grants because they are the most direct publicly assisted form of house purchase that now exists. They can buy terraced houses in the valleys of South Wales for £3,000. It is a ridiculous figure, because most of these houses are an absolute shambles. Many have been uninhabited for many months, and even years, and when vacated the properties were inferior. A good deal of money needs to be spent on them, but because the general prices level is so high they provide some alternative for housing. Certainly the grants available make a notable contribution towards subsidising the purchase of these properties both by private individuals and by the councils with the good sense to buy them. This applies to many of the National Coal Board houses which are now on the market.
  1078
  The reason for the explosion of demand is twofold: first, that the grants exist, and, secondly, that for many thousands of people in Wales, especially young married couples, it is the only type of house that presents itself at a price which they can just afford.
  The shortage of builders is a nationwide problem and does not apply only in South Wales, and there appears to be no easy solution. With the high rate of unemployment among construction workers in Wales, which last year amounted to 9,000, I believe that the trade unions should set up agencies to make this labour available at market rates to be employed by those who wish them to carry out house building in South Wales. The only alternative will be to have further mushrooming of the labour-only sub-contracting system, commonly called "the lump", in which people often with inferior qualifications in terms of building skills make themselves available. Householders are only too glad to obtain the services of anybody to improve their houses, and often the labour-only system has led to inferior work.
  The whole system is unsatisfactory and arises because of the shortage of building skills. I believe that many of the men who at present are unemployed in the construction industry could be used to carry out housing improvements and could be given a very good wage in worthwhile employment in areas not too far from those in which they are living. This seems to me to be the only way to meet the situation. Even if the current scheme of improvement grants were extended, this would still leave a problem which would stretch many years ahead since we cannot contemplate the growth of a labour force with the requisite skills to cope with future work.
  Mr. Neil McBride: Is my hon. Friend aware that in my home town of Swansea there is a serious shortage of joinery craftsmen, and that many employers are not maintaining a proper craftsman-apprentice ratio? This has had a bad effect on the situation at present and is bound to have its effects in future. The situation has caused one highly-respected firm in my constituency, a firm with a superb standard of craftsmanship, to refuse a Crown contract

  1079
  worth £300,000. I submit that the Government are falling down on the job.
  Mr. Kinnock: I agree with my hon. Friend. The general depression in the building industry has led to a stagnation in the growth of building firms in terms of recruitment, and has led to a shortage of skilled building workers at a time when we most need them. One answer is to translate the would-be construction worker or the unskilled worker into a skilled grade by setting up a gigantic training programme directed specifically at the improvement of building skills. I appreciate that the Government have put forward additional training proposals, but they have yet to come into being.
  Mr. Gower: Can the hon. Member advise me whether the building trade unions would readily accept recruitment of steeplejacks and other workers he has mentioned to the building industry?
  Mr. Kinnock: In general, trade unions have long since extended their rules and introduced procedures to bring additional workers into this and other industries so long as they undertake Government training which the unions recognise to be first-class and which would not lead to dilution of the standards of skill which the unions demand. I do not think there is any difficulty in recruitment of this sort.
  Having proffered a rather hopeful answer to the difficulties of insufficient building firms and personnel in South Wales, I wish to move briefly to one or two points about the general problems which spawn from the improvement grants system as it exists. There is the obvious need to extend the date. I was fortunate, or unfortunate, enough to be on the Standing Committee on the Bill which extended the system by another 12 months. It would be unfortunate if the House had to spend time every 12 months renewing the powers under the Housing Acts to provide extensions of this measure. I hope that in the next 12 months the Government will introduce a Bill to extend the powers for three or four years, or will introduce a permanent Statute so that the industry and potential householders may have the assurance that there is no need to panic because there is some fixed date which affects the pric-
  1080
  ing of contracts and services in the improvement sector.
  We see three factors in the inflation of building costs. First, there is the general across-the-board pay award which has been reflected in higher prices. There have been many increased building costs which are not within our control because they are import costs. This has an effect on prices in contracts. There is a restricted supply and an intensity of demand. There is a deadline watch adds fuel to the flame, and the consequence is that builders feel freer to lump on another £200 or £300 to the contact in the knowledge that people are so desperate that they will pay that price.
  I do not say that the Government can legislate all this out of existence, but extension of the date would have an effect and would give people more choice. It would make the market less imperfect.
  There is a need to extend finances for other reasons. Obviously, the figure of £2,000 introduced by the Government in 1971 has now become unrealistic simply because of inflation. This week I received a letter from a constituent about this specific difficulty. I have sent it on to the Minister. With the fall in the value of money in the last two years, this limit would take us back to square one—the position we were in in 1971. For safety's sake a special allocation is needed for re-wiring premises. Frequently fairly extensive renovation has taken place but there has been only partial or inadequate re-wiring and that causes danger. If the Government stipulated that £250 should be set aside specifically for thorough re-wiring of a three-bedroomed house which was being improved, that would go a long way towards safer housing.
  The Minister knows that frequently ground landlords are found to be reluctant to give permission for their tenants to extend or to improve their property. The Government should bring the weight of their influence to bear on these ground landlords and insist that, if they have no reasonable excuse for withholding permission for improvements, improvements must be allowed to proceed with all haste.
  Recently in my constituency a ground landlord, by prevaricating, almost endangered a constituent's application for a grant to the point of disqualification. There was the possibility that unless the

  1081
  landlord's permission was forthcoming in the shortest possible time there would not be a builder available and the constituent, although full qualified and having full permission, would be unable to qualify in the specified period.
  For this large collection of fairly catholic reasons, there is need to extend the date, possibly to make it a permanent fixture, to increase the amount available, and generally to pay attention to the details whereby individuals can either take advantage of the scheme or delay its use so as to make it virtually useless.
  8.41 p.m.
  Mr. Michael Roberts: I have some sympathy with the arguments advanced by the hon. Members for Bedwellty (Mr. Kinnock) and Rhondda, West (Mr. Alec Jones) in favour of the extension of the period for applying to qualify for this grant. The hon. Member for Rhondda, West referred to the special case of young people about to marry. I declare an interest, because my son is in such a position and I know that he would welcome the possibility, next autumn, of applying for an improvement grant in the hope that it would be granted.
  I was delighted that the hon. Member for Bedwellty objected to the fact that the market forces were being distorted. I would not have expected that argument to emanate from him. However, the hon. Gentleman rightly asserted that if the market forces are interferred with to the extent that a time limit is imposed it will tend to lead to an increase in price. If a subsidy or grant is introduced into the house improvement field it distorts the market forces. Therefore, there are two factors—the distortion of the market forces, which the hon. Member defended, and the fact that the market forces would keep down the price of improvements.
  Mr. Kinnock: The hon. Gentleman is in faint danger of misrepresenting my general position on market forces and their effect. I said that their effect is worsened by the existence of a deadline. The hon. Gentleman's own experience in South Wales will convince him that if this business were left to the market forces there would not be any improvements or improvement grants.
  Mr. Roberts: The hon. Gentleman makes my point. I concede that if we
  1082
  had only market forces operating and no improvement grants, and therefore no time limit, many fewer jobs of house improvement would be done. The hon. Gentleman, by the very nature of his remarks, must agree that the introduction of non-market forces in terms of a grant and an extension of time means that the market forces, which at least have the advantage of reducing the price, do not operate effectively. I am therefore glad to find the hon. Gentleman for once seeing some virtue at any rate in the operation of market forces. The hon. Gentleman argued, and I was impresed with his argument, that at some point last year 9,000 construction workers were unemployed. He did not specify the time, but I took the point. The question is: at what point are they available today in the Rhondda?
  This debate, although it has spread over the whole principle of the money available for improvement grants and the time in which the work must be done, started and must rest with the situation in the Rhondda Valley. The hon. Member said that they had not only utilised the whole of the building resources of the Valley domestically within the Valley but had sucked in building resources from surrounding areas. Presumably the resources were also sucked in from the capital city of Wales, which is why I am now speaking.
  But I must ask the hon. Gentleman how many of those steeplejacks residing in the Rhondda, and how many of the riggers to whom the hon. Member for Bedwellty referred, could be brought in. Does the hon. Gentleman believe that a significant improvement could be made in the pace of house improvement work if those steeplejacks were brought into the jobbing building labour force?
  Mr. Alec Jones: The hon. Member started off by indicating some support for my general line, but he has now mixed my argument up consistently with that of my hon. Friend the Member for Bedwellty (Mr. Kinnock). If the hon. Member wants to put pressure on the Minister and agree with my line, the quicker he draws to a conclusion the better.
  Mr. Roberts: I am not surprised that any speech made by the hon. Member for Bedwellty should confuse the hon. Mem-

  1083
  ber for Rhondda, West. And it would indeed be odd if the hon. Member for Rhondda, West believed that my sole purpose was to support him. Whilst I am prepared to give him an occasional crumb of comfort by way of support I must look critically at some of the things he said, as well as some of the remarks of the hon. Member for Bedwellty.
  The hon. Gentleman spoke of the tremendous activity in the building trade in the Rhondda Valley. He referred to between 2,000 and 2,500 house improvement applications having had official approval. He referred to 1,500 new applications, of which he seriously thought about 1,000 would reach agreement and completion. That makes about 3,500 applications and approvals in all. I hope that he will bear that figure well in mind when next he criticises Government housing policy. He said—and how true it is—that housing does not stand still. In that respect it is like education: it either advances or it goes back. But part of the Government's case in terms of housing success has been that the grants have done a great deal to improve our housing stock. What is more certain is that houses thus improved will provide good homes in 10, 20 or 30 years' time, whereas they would otherwise have deteriorated into uninhabitable dwellings. It is no good saying that this is just a question of maintenance it is a question of improvement.
  I suggest to the right hon. Member for Cardiff, West (Mr. George Thomas) that the next time we talk about housing figures, council houses and the construction of new houses, we should have no charges from him and his hon. Friends about rigging the books.
  Mr. George Thomas (Cardiff, West): I am always ready for a party ding-dong, but is the hon. Member aware that my hon. Friend has initiated a debate on a grievous human problem? Hon. Members on both sides are eager to find an answer to it.
  Mr. Roberts: The right hon. Member for Cardiff, West should know—as the people of Cardiff know—that I am as concerned as he is with human problems. If I am as concerned with human problems as the right hon. Gentleman, that rates me highly. However human or however great the problem, it has never
  1084
  inhibited the right hon. Gentleman from bringing into the subject an element of what he calls "the party ding-dong". I am concerned tonight with human problems and also with the whole nature of the problem of building houses and of the use of improvement grants. One of the most significant things that the hon. Member for Rhondda, West said was that the whole of the building force of the Rhondda Valley was completely involved. Many people in my constituency tell me, and I hear throughout the city of Cardiff, that whereas improvement grants are an excellent thing and obviously meet with the approval of the people, there is the other side of the coin, which is that if the building industry is deeply occupied on improvement work in the Rhondda Valley and is sucking in resources from the adjacent areas it cannot build many new houses at the same time.
  I am attracted to the idea of extending improvement grants, but if they are extended is it not possible that in the period up to, say, 1976 or 1978 the building industry will be entirely absorbed on improvement grants work? Everyone knows that the building improvement grant and its extension were not entirely for making better homes, although that was a major point. Another aspect was that there was high unemployment in the regions, and therefore it was necessary to give them an incentive for employment.
  I support the hon. Member for Rhondda, West in saying that there is clearly a case for the extension of the period, but my hon. Friend must—because his is the responsibility—balance the need for new council housing and new construction to provide housing with the continuation of improvement grants. Therefore, it is not a matter that he can rush into. I urge my hon. Friend to give sympathetic consideration to the extension, but to bear in mind those factors which clearly militate against it.
  Mr. McBride: Never in my experience of economics have I heard a more distorted argument than the hon. Gentleman's argument about market forces. He cannot blame the success of the housing improvement grant system for the abysmally small numbers of council houses built for rent last year. He has said

  1085
  nothing about that which exacerbates the position, that which is a Welsh national disgrace, the price of land and the price of the traditional Welsh terraced house. In my constituency such a house with no inside toilet was sold last week for £2,800. The whole problem stems from the Government's inactivity in house building and the inflationary policy they have pursued. They should extend the time limit.
  Mr. Roberts: I should have known better than to give way to the hon. Gentleman. At this stage of the debate not to have mentioned land, when no one else has, is hardly a grave omission on my part. I do not see why the hon. Gentleman should make that invidious reference to me. And to be told that my remarks on market forces do not mean much to the lion. Gentleman hardly impresses me, when he did not say why they did not impress him. As to whether the resources of the building industry have been diverted from council house construction and private house construction, the fact that the hon. Member for Rhondda, West has said that the whole of the Rhondda building industry is absorbed in that way, and that it is sucking in the resources of other areas, is proof in itself.
  8.58 p.m.
  Mr. George Thomas: My hon. Friend the Member for Rhondda, West (Mr. Alec Jones) has served the House well both in the presentation of his case and by the very fact of drawing the attention of the House to what is a major anxiety in the Principality. The Minister of State must be thoroughly aware that a deep anxiety is building up among all those who will not be able to benefit by the improved 75 per cent. grant if it comes to an end next June.
  It was during my period as Secretary of State that we took the survey of our housing in Wales. I well recall that when I gave the House the figures recounted again by my hon. Friend I was appalled and ashamed at the number of families in Wales who have to live without a bathroom, without hot and cold water, and without indoor sanitation.
  I grew up and spent by early manhood in a home in Tonypandy which had no
  1086
  hot or cold water. We had no bathroom and no indoor toilet, but we had a wonderful Christian home. In my time the miners would come home black from work. They had no bathrooms. However, there is not a prouder people in the world than the Welsh people when it comes to the home. They keep their little cottages like palaces. Our women folk work so hard polishing, brushing and scrubbing in a way that is almost unnecessary, but the pride in the home is there.
  The aim of the improvement grant scheme is to give a fuller life to our people and to preserve in Wales a stock of good, solid houses that will fall into disuse if we do not continue with the scheme.
  I realise the difficulties of the Minister of State. I have been in his position in my time and I know the difficulties. It is probably impossible for the Minister to promise us the extension for which my hon. Friends have asked. However, I hope that he will convey within the Government a sense of urgency about the problem. It is only fair to local authorities in Wales to know whether the date is to be extended and whether they should continue to recruit staff to deal with the problem. Clearly, the Government would have no difficulty in getting the support of the House if they proposed to extend the period or to take the advice of my hon. Friend the Member for Bedwellty (Mr. Kinnock) and make it for an indefinite period, as I think we should do.
  This is not only a Welsh problem; it is a problem in industrial and rural England and Scotland. My hon. Friend the Member for Rhondda has presented the House with a serious picture of the building industry at full stretch. Work might already not be as good as it should be because of the rush to get the work done. Therefore, the Welsh Office has a responsibility to give serious consideration to the question of training for an expanded building force. As far ahead as we can see we shall need a larger army of qualified building workers in the Principality. No doubt urgent talks will be held both with the trade unions and with the employers to seek to expedite an increased stock of trained building workers in Wales. My hon. Friend the Member for Bedwellty made a constructive and useful suggestion in that regard.

  1087
  I know that the Minister of State will have to battle with the Treasury, but it is an issue for the Government and, indeed, for all of us who have the honour and the privilege to speak in this House on behalf of those people who make this country what it is. We should set out to ensure that the homes of the working people of Britain are brought up to the minimum standard of civilised living that is possible with the resources that are made available.
  9.5 p.m.
  Mr. J. R. Kinsey: I apologise for introducing a rather flat Midlands accent into the debate, which has so far been so well-tongued with lyrical and musical tones on this very pressing problem, which applies not only in Wales but, as the right hon. Member for Cardiff, West (Mr. George Thomas) rightly said, to England as well. I take part in the debate because I want to see that these grants are applied throughout the whole country, whether it be in Wales, England, or Birmingham in particular. I apologise to my hon. Friend the Minister of State, Welsh Office, but I ask him to look at this subject as an international concept.
  Mr. Gibson-Watt: I remind my hon. Friend that I, too, come from the West Midlands.
  Mr. Kinsey: We all recognise what an excellent qualification that is for my hon. Friend in carrying out his present job, because we have many Welsh people in the West Midlands. We also get our water from Wales, and we are grateful to the Principality for it.
  The improvement grants vary from area to area—from the Principality to England and even, to my surprise, within areas and within divisions of those areas. This is one of the reasons why I keep on bringing to the attention of the House the differentials which apply in what should be a fairly applied grant. After all, the money all comes from the same source and the grants are all for the same purpose—to improve the stock of housing in the country.
  The right hon. Member for Cardiff, West spoke about cottages without baths, without water and without other indoor facilities. I wish to speak in the context
  1088
  of houses built immediately before the war which have indoor hot water facilities, indoor sanitation and indoor baths but are still in need of improvement.
  Pre-war council houses in my constituency are being modernised very well indeed to create an equal modern standard for all residents in the city of Birmingham. For their modernisation, the local authority drew improvement grants from the Government. Houses built in the 1930s are very prolific in the Birmingham area and the grants are being used to bring standards up to one which I am certain many people in Wales would envy and admire and would like to have. Indeed, such houses are among the most popular in the Birmingham area.
  The improvement grants also apply to those houses which have been sold to sitting council tenants, who have thus become owner-occupiers in Birmingham. These people have similarly modernised their homes with the help of improvement grants. To bring in the toilet from outside and to improve the bathroom they get a grant equivalent to the one allocated to the local authority, and rightly so. But the other half of my constituency is owner-occupied, and I am surprised that these houses, with the same need to be brought up to modern standards, do not have the improvement grant available to them. It is good policy to keep our homes up to standard and only fair that the improvement grant should apply to all homes in similar areas and certainly in the same area, not only in Birmingham but throughout England and Wales.
  The need for such modernisation is apparent when we look, for example, at the electric wiring. It needs replacing. Often untorched roofs have snow blowing into them during the winter. Homes need to be brought up to the sort of standards that were not possible when they were originally built. Improvements to kitchens are particularly needed. The kitchens in many homes in my constituency are small and need considerable enlargement to bring them up to the standards of council houses. Yet these people are denied the grants.
  I find it amazing that we can give these grants to council house tenants and to those who have bought what were council houses and yet deny them to another class of constituent in the same division.

  1089
  The city council has recently discussed this and turned the proposal down. I have many times asked it to review the position and to be fair to all citizens. I must again ask the Minister to intervene and direct that there shall be fairness.
  This is a policy aimed at preserving a good stock of homes. I cannot think of any more worthwhile legislation than that which brought about the improvement grants for which hon. Members opposite, rightly, take credit. The system must be applied throughout because the grants are playing a vital part in preserving the housing stock and ensuring the future happiness of many. Let us see this system applied in Wales, Yorkshire, Scotland and Birmingham with fairness.
  9.12 p.m.
  Mr. Gwynoro Jones: I am grateful for the opportunity to take part in this Adjournment debate. I shall devote my remarks to a problem which is increasing in intensity in Wales, receiving a good deal of Press publicity, and causing local concern, certainly in the tourist and rural areas of Wales. I refer to the question of second homes, or holiday cottages, and the improvement grants provided for those purchasing these holiday cottages.
  The Minister will be aware that there is a group of people in Wales who believe that the way to change the system or to stop what is taking place in the Principality is to take direct action. I do not support that type of action taken by this group—the Welsh Language Society. The salient point is that we cannot pick and choose the laws with which we will agree. In a democracy we must be careful not to pick and choose the laws which we will obey and attempt to take direct action against those we detest. However, the Minister must be aware that there is a problem. I do not say that the purchasers of these homes are not entitled to buy them. Indeed, the great majority of these dwellings have been empty for as much as 30 years, as a result of rural depopulation, economic circumstances and lack of job opportunities. Those people in the Principality who say that the cottages must be kept for Welsh people are forgetting that they could have been bought 10 years ago for £200 or £300. Because they are now
  1090
  going at ridiculously high prices to English people and to English-speaking Welshmen we must not say that they must not go to them, although there are groups in the Principality who take that view.
  Nevertheless there is a problem, and the Minister should bear two points in mind in considering the argument about the extension of improvement grants. First, the prices which these cottages—and derelict cottages—are fetching at the moment is out of proportion when considering the condition of the cottages. I could quote figures from Carmarthen-shire; the prices are out of all proportion and are astronomically high. Certainly they are out of the reach of ordinary people in my constituency or anywhere else in Wales. People whose income is £20 to £30 a week cannot hope to buy one of these cottages or derelict houses. The land and house speculator has come with a vengeance. It is not, however, just a question of price. Where the system is absolutely wrong is that maximum improvement grant is given to a person who purchases one of these cottages for which the selling price a year afterwards escalates alarmingly, putting the house out of reach for lower paid and young married couples looking for a home.
  The Government have a clear choice. They can allow the system to operate as it now does, allowing speculators to put derelict cottages out of the reach of the ordinary person, even at the first purchasing price and even further out of the ordinary person's reach after improvement grant has been acquired and spent on the house. The Government can let that system continue or they can now say that, while they will not prevent payment of improvement grant the receiver of the improvement grant may not sell the cottage or the house for a given period.
  I am not talking of improvement grants to owner-occupiers or to a person in Carmarthenshire or anywhere else in Wales to improve his own home where he has lived for many years and has every intention of living for many years more. I am talking of grants being given to people who buy cottages in rural west Wales and make a rather fat profit out of public funds within a year or two.

  1091
  Clearly, the Government cannot allow the present profiteering system to continue if they are serious in their professed concern about rising house prices or about providing more housing stock. One thing which the Minister of State could convey to his colleagues in the Government is this that if a grant is given for the improvement of a holiday cottage or derelict house, that house or cottage must not be sold for a given number of years—say, five years. Alternatively, legislaion could be introduced empowering local authorities to purchase these cottages and houses and improve them, and then, either include them in the public sector and allocate them to people in their vicinity or sell them themselves. The Government could give lavish grants to local authorities prepared to do this.
  We cannot allow the present system to continue. It is not that we do not welcome the people who come to live in the cottages. I strongly disagree with those who do not welcome Englishmen who come to live in the Principality. Some of the cottages have been empty for a generation and the new occupants bring back activity to the community, especially those who live there for most of the time. It is those who bring activity for a month in the year about whom we are complanning most.
  The Government should not allow to continue a system whereby people get a fat cheque from public funds to improve a derelict country cottage for use as a second home and then sell it at an inordinate price that is out of reach of local people who want a first home in which to live. I ask the Government to consider the imposition of a time limit of five years before sale on the people who do not live in the houses or empowering local authorities to purchase the cottages and either include them in the public sector or sell them after they are improved.
  9.21 p.m.
  Mr. David Mudd: Not for the first time I find myself going a great deal of the way with the hon. Member for Carmarthen (Mr. Gwynoro Jones). He expressed similar thoughts when we dealt with mineral workings and mineral development, the depopulation of rural areas and the crea-
  1092
  tion of ghost villages. On that occasion, as now, we reached a point of agreement.
  The depopulation to which the hon. Gentleman referred as being two or three decades old in Wales is actually happening now in Cornwall. We are seeing the depopulation of many of our prettier rural villages with the result that what was even two years ago the dream tin miner's cottage, the dream fisherman's cottage or the dream farmworker's cottage at £500 is now the speculator's dream cottage at £5,500, it having been brought to a state of acceptability and respectability under the grants system.
  I do not decry the grants system, which is of vital importance to those of our less fortunate brothers and sisters who have as much right to a decent home as the rest of us who are able to afford it out of our own pockets. Therefore, I welcome the improvement grants system. The real danger, particularly in Cornwall, is that the grant goes not to the man from Bude but to the man from Birmingham, not to the man from Hayle but to the man from the other end of Britain.
  Mr. Kinsey: Does my hon. Friend realise that sometimes the Birmingham man does not get a grant when he should?
  Mr. Mudd: I hope the gentlemen in Birmingham are missing nothing that they feel they should be getting, but my argument relates to Cornwall.
  This policy encourages the erosion of the spirit of community life in some of our smaller villages. I listened carefully to the fair comments made by the right hon Member for Cardiff, West (Mr. George Thomas). In Cornwall we, too, have great pride in polishing our Cornish ranges and scrubbing our granite steps. We are increasingly worried by the way in which houses which we believe should be made available to Cornish people are being put beyond their reach, because these improvement grants are not providing cheap houses for the people who should get them. Instead, they are having the effect of putting lucrative bait on the market to encourage speculators into the area.
  In Cornwall we have the embarrassing situation of a young local family trying to get a first home of their own finding themselves competing against their own

  1093
  parents, because frequently it is the parents, with a lifetime of saving behind them, who can afford to put down a deposit on a new home. Let us have improvement grants, but do not let them be a disincentive to the rights of young families to live somewhere decent.
  The point has been made that the debate has not touched on the question of the availability of land, but the fact is that the whole kernel of improvement grant deals with the question of land availability because we are here creating habitable, decent, solid houses without taking an inch of additional building land. The improvement grants are working towards that end.
  A third important point that has struck me during the debate—and I apologise for not being here for the beginning of it—is that the grant should be extended for an indefinite period. I say that it should, for two basic reasons. First, there is such a terrific backlog on local authorities that many people are beginning to panic and despair of ever getting to the top of the queue and getting a grant.
  Secondly, because of the vast backlog of work many people with an eye on the mysterious termination date on the calendar are tending to accept a higher estimate from a builder in the hope of getting the work through in time rather than having a realistic cost and saving the Exchequer money in the knowledge that time is on their side.
  I hope, first, that we shall look into the question of making the grants indefinitely. Secondly, I hope that we shall consider the speculation aspect. Thirdly, I hope that consideration will be given to the point made by the hon. Member for Carmarthen, that if these modernised properties come on to the market they should go to the sector which needs them rather than to the over-full bank accounts of the speculators who hover over many of our rural areas waiting for a cheap and easy kill.
  Mr. Nicholas Winterton: In many areas it is the local authority that is preventing more people in humble homes, perhaps designated as redevelopment rather than improvement areas, from obtaining a grant. If only local authorities would redesignate these areas, which often lie in some of our less desirable cities and towns, houses which
  1094
  are basically sound would qualify for grant and people would live in them.
  Mr. Mudd: I am sorry, but I cannot go along with my hon. Friend in that premise, because in Cornwall our local authorities are becoming increasingly sensitive and embarrassed about what they are expected to do when their better knowledge and experience tells them that a contrary course would be far more worldly and equitable.
  9.29 p.m.
  The Minister of State, Welsh Office (Mr. David Gibson-Watt): I begin by congratulating the hon. Member for Rhondda, West (Mr. Alec Jones) on initiating this debate. It has turned out to be extremely interesting and wide-ranging, and a number of points have been made by various right hon. and hon. Members. It has been highly constructive. As has been said, this matter is of such concern and importance that there is not much division in the House about it. Few of what I call hard political points have been made during the debate—a point that was referred to by the hon. Member for Bedwellty (Mr. Kinnock).
  I shall try to answer some of the points raised by the hon. Member for Rhondda, West. As the right hon. Member for Cardiff, West (Mr. George Thomas), with his experience of housing in the Welsh Office, knows, in an Adjournment debate it is difficult for a Minister of State to give all the answers that an hon. Member may want.
  From the Opposition benches we have had speeches by the hon. Member for Rhondda, West, the hon. Member for Bedwellty, the right hon. Member for Cardiff, West and the hon. Member for Carmarthen (Mr. Gwynoro Jones). On this side of the House we have heard from my hon. Friends the Members for Barry (Mr. Gower) and Cardiff, North (Mr. Michael Roberts), both of whom apologised to me before leaving the debate. Then we had two excellent contributions from my hon. Friend for Birmingham, Perry Barr (Mr. Kinsey) and my hon. Friend the Member for Falmouth and Camborne (Mr. Mudd).
  It is not my responsibility to deal with housing matters in English constituencies. I am sure that my hon. Friends will realise that. But, equally, I am sure that their points will be read by my right

  1095
  hon. and hon. Friends who are responsible, and I have no doubt that some of my own remarks will apply as much in England as they do in Wales.
  Of course, the links between Cornwall and Wales are ancient and well known. The links between Birmingham and central Wales are fairly strong. For my part, they are very strong. In the area from which I come the Birmingham Corporation is very well known. If I do not deal with the English problems raised by my hon. Friends it is not because I do not want to but because I have no responsibility there.
  The hon. Member for Rhondda, West was clearly anxious, as were other hon. Members, to extend the period during which housing improvements may take place. I am aware of the keen interest that the hon. Gentleman and others are taking in the progress of this vitally important campaign of improvement which is being conducted in our various constituencies. It is an interest which is shared not only by hon. Members who have taken part in the debate but by many others who are not present. That campaign is a part of the successful action being taken in Wales to transform older housing into better homes. I am glad to acknowledge the impetus given by the Housing Act 1969 and I am happy to see the right hon. Member for Cardiff, West in his place, because at that time he was Secretary of State for Wales and undoubtedly played a great part in bringing this legislation to the Statute Book.
  Having said that, when the scheme first started, like others of this kind its impetus in the initial stages was limited not by the level of grant but by the proportion of cost which could be paid in grant, and when this was increased to 75 per cent. in the assisted areas—which means the whole of Wales—there was a swift reaction. The annual total number of grants before the 1969 Act had been running at about 7,000. The 1969 Act pushed that up to more than 10,000, and the 1971 Act took it to 28,000 in 1972.
  The Rhondda council deserves a tribute for the positive way that it has set out to improve its older houses. The number increased from 209 in 1970 to 726 in 1972. It is not surprising that such an upsurge in activity has brought its problems to these areas. I agree with the
  1096
  hon. Member for Rhondda, West that the difficulties in the Rhondda to which he rightly called attention are the more serious because of the great need for improvement and the council's determination to set about its provision. It underlines the fact that the council deserves great credit for the way in which it has used the Act for the benefit of its community.
  Both the building industry and the council's own administrative machinery are being stretched to the limit. The point that the hon. Gentleman has made tonight, as I see it, is that the deadline set on the completion of works qualifying for the 75 per cent. grant has so overloaded the building industry and the local authority machinery for handling grants that the full intentions of the legislation are not being realised, that delays and rising prices mean that the grant is less than 75 per cent. of the real cost, and that pressure on the building industry has meant that some improvements are not up to the standard they should be.
  The hon. Gentleman has expressed the opinion that the only solution is to abolish or further extend the deadline.
  I am in difficulty in answering that point, because this matter is being debated in another place during the course of a Bill. I can refer only to what administrative means there may be to help resolve the problems of the hon. Gentleman's constituency. Having said that, I am not oblivious to the real point at which he is driving. The fact that I cannot answer him does not mean that I have not heard him, or that what he said will not be passed on to my right hon. and hon. Friends. However, as the matter is being discussed in another place I am debarred from debating it with him tonight.
  The delays mentioned by the hon. Gentleman are in processing applications and in getting the work done after approval has been given. One way to cut down delays at the earlier stages of the process is to strengthen the local authority machinery for dealing with grants. The hon. Gentleman referred to this matter. The council has already taken steps to do this by taking on extra temporary staff and by putting out some of its work on grants to an independent quantity surveyor. I hope that this will go some way towards easing the problem.

  1097
  Another major factor in getting improvement work done quickly and well is the building industry. I have heard complaints of shoddy work not only from the hon. Gentleman's constituency but from other parts of Wales. However, in case anybody should belabour the building industry—hon. Members on both sides were generous in understanding this—it is fair to say that the industry has suffered considerable difficulties in the past. There have been times when restriction of credit at the bank has not only made it difficult for small builders but has put them out of business. It is the small builders to a large extent whom we want in this sphere, so I should not like it to be thought that the House is criticising the builders.
  As I shall show later, my officials have discussed these problems with representatives of the National Federation of Building Trades Employers, who are as concerned as the hon. Gentleman and I that the increase in improvement work has brought into the market casual builders whose standards are not up to those that the National Federation and the councils would like.
  My hon. Friend the Member for Cardiff, North made the point—it is reasonable and fair to repeat it—that if in places like the Rhondda a high proportion of the building industry is being used on improvement work it will obviously have an effect on the amount of work outside in other forms of building which it is able to take on. I do not want to pursue the point tonight. The right hon. Member for Cardiff, West and I may be able to pursue it on another occasion. It was a point well worth making, and I thank my hon. Friend the Member for Cardiff, North for raising it.
  Mr. Kinnock: The hon. Gentleman says that he will not pursue the matter, and I see his point, but I am sure that he does not wish to equate the use of building resources in improvements with the fall in the building of housing in the public sector. I am sure he does not blame the fall in council house building on the fact that workers are being employed in increasing numbers to carry out construction under improvement grants.
  Mr. Gibson-Watt: I would certainly say that both the building labour force
  1098
  and building materials—which, as the hon. Member for Swansea, East (Mr. McBride) knows, are in short supply—are affected. The total number of houses in both the public and private sectors is to some extent being affected by the number of people and the amount of materials employed in improvement grant work.
  Representatives of the National Federation of Building Trade Employers have had informal discussions with officials of the Rhondda Borough Council. I understand that they asked for some revision of the schedule of rates. For various reasons some builders are reluctant to take on improvement work, but I am sure that strengthening of the council's machinery, to which I have referred, will help to overcome some of their reluctance. There may be something to be gained by further discussions between councils and builders. If the builders wished, I am sure that the NFBTE would be willing to meet them. The same applies to my officials in the Welsh Office, who will give all the assistance they can to help councils to get on with the excellent job of improvements in their areas.
  The subject which we have discussed in this Adjournment debate is one in which the very success of housing improvement grants has created a problem.
  Before I conclude I want to reply to two points which were raised by the hon. Member for Carmarthen. On the question of grants for holiday cottages, I wish to underline the fact that whereas councils have to give standard grants they have discretion whether to give an improvement grant to second homes and holiday cottages. Although I hope to see as many houses as possible improved I would not wish to disagree with those councils who will not give discretionary grants for this purpose in certain areas.
  The hon. Gentleman also touched on the question of restricting the sale of a house after payment of grant. I do not wish to make a political point, but would remind him that this restriction was removed by the 1969 Act.
  Mr. Gwynoro Jones: I take the Minister's point, but surely he would agree that in the last three or four years there has been a growing momentum towards the purchase of these derelict cottages and country houses which have been empty

  1099
  for decades. We face a new situation in this respect. The hon. Member for Falmouth and Camborne (Mr. Mudd) spoke about speculators moving into rural areas. That is something which cannot be denied. Therefore, merely to hark back to the 1969 Act does not meet the point. On the question of the restriction of the sale of houses which have been awarded grant, I was not referring to the owner-occupier, or the person who lives in the house, but to somebody who comes there speculatively, obtains public funds and makes a whacking profit overnight out of the cottage which he has purchased. Surely common sense demands that there should be some limit on that sort of sale.
  Mr. Gibson-Watt: I am grateful to the hon. Gentleman, since what he has said allows me to underline what I said a little earlier, namely, that whereas I hoped to see as many houses as possible improved I would not wish to disagree with those councils who would not give discretionary grants for this purpose. We must leave it to the councils.
  The debate has ranged fairly widely and I am grateful to all those who have taken part. What began as a Welsh de bate became a far wider discussion, and I am grateful for the many interesting contributions.

  UNDERWATER TEST AND EVALUATION CENTRE
  9.45 p.m.
  Mr. Tam Dalyell: In seeking to raise a second Adjournment debate, I wish first to thank the Defence Department for having a Minister present at very short notice indeed. I understand that the Minister who has responsibility for the Navy therefore has responsibility for the British Underwater Test and Evaluation Centre in the Sound of Raasay in Scotland. I wish to put on record that I think it absolutely proper that he should not be tied to London on a day when normally there would not be a Parliamentary vote. Defence Ministers, like other Ministers, use every opportunity of getting out of Westminster and into the country. So there is no criticism of the hon. Member for Colchester (Mr. Buck) not being here, and I am grateful to the Under-Secretary of State
  1100
  for the Army for coming at short notice to reply to the debate.
  Perhaps I should have given more notice of raising this subject tonight but for one thing. That is that very soon decision will be made concerning the British Underwater Test and Evaluation Centre in the Sound of Raasay which will be irreversible. Therefore, if we are to have a discussion we have to have it now, rather than in a month's time.
  As I see it, there are three separate issues. First, there are local worries which surround the siting of the project. Secondly, there is the issue of whether we have an operational requirement at all for this kind of facility. Thirdly, there is—perhaps to me the most interesting of all the issues involved—the issue that if we are to have this sort of facility and if the Government and the Ministry of Defence persuade us that this sort of facility is really necessary, we ought to ask ourselves to what extent it should co-operate with the oil interests and the oil companies not only in the North Sea but, more important perhaps, in the possible oil find in the Western Approaches and the Celtic Sea.
  I am very glad that the hon. Member for Ross and Cromarty (Mr. Gray), a Government Whip, is present. I know that he is committed to silence, and no one regrets that more than I do, because I am sure that he would be itching—if that is a parliamentary expression—to put forward his point of view. I am sorry that arrangements could not be made for him to make his maiden speech, as he will soon do, from the Dispatch Box.
  On the local issue I ask first about restrictions on fishing. I understand that at the first public meeting held in Kyle the Government spokesman said that there would be no naval restrictions on fishing in the area, but he was questioned by fishermen and the matter was referred to a further meeting. At that meeting the true effect of the project was revealed to the fishermen and an offer of jobs was made to seamen. I understand that the number of jobs on offer ranges from 40 to 90. Notwithstanding that, I have the authority of Mr. Brian Wilson, the Editor of the West Highland Free Press, to say that in his opinion local feeling in the Sound of Raasay area is in total very much against the project.
  Mr. Hamish Gray: That is not so.
  Mr. Dalyell: So the hon. Member for Ross and Cromarty is not mute. He has made the point and broken his parliamentary duck, since becoming a Whip. He says that that is not so; but it is the information I have from the staff of the West Highland Free Press and from one or two individuals in the area whom I have taken the trouble to contact. What efforts has the Defence Department made to sound out local opinion and explain what is being done? The hon. Member for Ross and Cromarty has perhaps made his point.
  I turn now to the issue of aerial testing. No allusion to this was made by the naval spokesman until the information rather slipped out and at a subsequent public meeting in Portree a cursory reference was made to aerial testing by Sea King helicopters. Any of us who have had the good fortune, as I have, to visit the "Ark Royal" know what a marvellous instrument the Sea King helicopter is, but it is a major piece of equipment. To what extent might Sea Kings, and, indeed, Nimrod jets, be used in relation to this facility?
  Apparently the Navy men ruled out the possibility of local airstrips being used because of their inadequacy, but long before the Kyle plans were announced local belief was that the Army-built airstrip had been constructed and was capable of taking any weight of aircraft and was capable of extension. What are the plans? Will the Government tonight take the opportunity to explain their plans to the local people?
  I want to raise two other local issues without intruding too much in Highland affairs. The hon. Member for Ross and Cromarty will agree that the Kyle line is a matter of importance to Scotland, to tourism, and to development in his constituency. At the beginning I understand that one of the reasons for the siting of BUTEC was that it would help the Kyle line to be kept in being. I now understand that the Navy has hired some part of Kyle station, which seems to be the writing on the wall for the Kyle line. I see from the movements of the unfortunately muted hon. Member for Ross and Cromarty that this may not be so. However, that is my information. If I can
  1102
  be told that this establishment is more likely to keep the Kyle line in operation than if it were not taking place that would be a very useful piece of information.
  The second local point concerns ferry services. On 26th January I asked the Minister of State for Defence
  "what ferry services have been withdrawn as a result of the siting of BUTEC in the Sound of Raasay",
  to which the reply was:
  "No ferry services have been withdrawn as a result of the present use of the Inner Sound of Raasay for torpedo trials. Nor do we anticipate that the siting of the BUTEC there would necessitate their withdrawal".—[OFFICIAL REPORT, 26th January 1973; Vol. 849. c. 240.]
  I understand that the Kyle Ferry may go to Stornoway rather than to Ullapool. I gather that there are local rumours which this debate would give the opportunity of clearing up. The Minister may be able to give that information.
  The two other issues that I wish to raise are rather wider. The first concerns the question whether we have any need for such an establishment because, having in 1967 visited with a Select Committee the Central Underwater Research Centre at Portland, I am far from persuaded that the Royal Navy needs ever more effective and efficient torpedoes. I am very glad that the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) is here. In any defence scenario which involved the use of ever more sophisticated torpedoes certain other things would be happening in the world. By "certain other things" I refer to the use of anti-ballistic missiles.
  I should have thought it hardly conceivable that, given modern technology and given the sophisticated weapons that not only the large Powers but even the medium Powers now have, there could be a long drawn out naval struggle of the kind which demands ever more sophisticated torpedoes. I may be wrong, but it is up to the Defence Department to make the case. The burden of proof is on the Department and not on us. But I rather doubt whether it is worth—I will not say "despoiling"—creating a facility that not everyone wants in the West Highlands merely for this object of better torpedoes. If it is really about torpedoes I would have the gravest doubts whether the facility was worth while.

  1103
  Incidentally, it is one of the questions to which one gets the answer that every other place was considered and it was decided that only the Sound of Raasay met the limitations and the qualifications needed, but I still beg leave to doubt this. I do not particularly concentrate on the proposal to have it north of the Rathlin Islands: all I say is that there are those who are in a position to know who think it incredible, and are not persuaded that this was the only possible place off the coast of Britain for the requirements necessary.
  Be that as it may, there are some of us who take a serious interest in defence, and I have discussed this with the Parliamentary Labour Party Defence Group, of which I am Vice-Chairman, who doubt whether ever more sophisticated torpedoes are an operational requirement and a priority necessitating the establishment of this kind of facility at Wester Ross. I should like to hear the Department make the case.
  To me my final point is certainly the most constructive and most important part of this Adjournment debate. Let us suppose, as seems likely, that the facility on the Sound of Raasay goes ahead under naval auspices. There are those of us who would like to know what kind of co-operation there could be with the oil companies, the oil developers, the oil interests in using facilities that the Royal Navy has in considerable quantity, and using particularly the very skilful personnel resources that are at the command of the Navy. Anyone who has been to Alverstoke, for example, must understand the considerable technical competence now residing in the Royal Navy. The hon. and gallant Member for Winchester will be able to corroborate or deny this, but I am told by those whom I trust that our competence in deep water and related military engineering and submersibles is unsurpassed by even the Americans or the Russians.
  In this context I refer to a Written Answer given on 8th December 1972 to my hon. Friend the Member for Portsmouth, West (Mr. Judd) by the Under-Secretary of State for Defence for the Navy. The Minister stated:
  "Consultation over the establishment of the British Underwater Test and Evaluation Centre—BUTEC—started formally when the Ministry of Defence notified the Scottish De-
  1104
  velopment Department in November 1970 of its wish to establish in the Inner Sound of Raasay an underwater acoustic tracking range, including hydrophones placed on the sea-bed linked by cable to the land."
  I gather that the hydrophones are being used in an aerial capacity which is causing some local difficulty, but this kind of science is extremely valuable to the oil industry.
  "A variety of consultations then commenced which culminated in letters in March 1971 to the two county councils and to the Highlands and Islands Development Board—HIBB—in which the Scottish Development Department set out Ministry of Defence requirements. These were divided into two parts; in the short term, there would be interim ship-mounted range facilities; in the longer term, the bottom-mounted range was under consideration. These letters sought the views of those concerned."—[OFFICIAL REPORT, 8th December 1972; Vol. 847, c. 530–1.]
  It being Ten o'clock the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr John Stradling Thomas.]
  Mr. Dalyell: I want to be generous about time and I will, therefore, cease quoting answers, except that I wish to mention a Question in which the hon. Member for Bolton, East (Mr. Laurance Reed) asked the Minister of State for Defence:
  "whether the facilities at the British Underwater Test and Evaluation Centre will be made available for testing civil projects."
  The answer from the Under-Secretary of State for Defence for the Royal Navy was that
  "No plans exist for this at present"—[OFFICIAL REPORT, 30th November 1972; Vol. 847, c. 596.]
  I hope that the operative words here are "at present" because I have been in discussion with two of the major oil interests concerned. We have had lengthy briefings from both BP and Shell. I cannot speak officially on behalf of either company and they are very capable of doing that for themselves. Briefly, it is said that the North Sea has its problems with bad weather but that in the Auk Field, the Brent Field and other fields exploration has not been necessary yet at depths such as are found in the Western Approaches and west of Orkney. The point is that a number of operations, including the final sealing operations when oil is discovered, would have to be done

  1105
  by a submersible craft rather than by a drilling operation, as is done at the moment in shallower water. Exploration in deep water should have available the expertise which the Navy and perhaps only the Navy can develop.
  Therefore, my third point is: if it is necessary to go ahead at Raasay, would it not be a pity to miss the chance of making this establishment one of a new kind, a kind recommended by the Commons Select Committee in a report in 1969 on the defence research establishments? There a case was made, and heaven knows many developing countries have already seen the strength of the argument, that the forces should be used for a socio-economic purpose, just as the Army was used in Northern Ireland to provide military aid to the civil community under Sir Derek Lang—an operation known as OPMACC—so that principle could be extended to the Navy and its expertise could be put at the disposal of the oil companies and also at the disposal of, say, Aberdeen University or Heriot Watt, where money has been provided by Woolfson in order to carry out research and development not only on North Sea oil but on Celtic Sea and Atlantic oil.
  If I am told that this development is needed for the Navy, I shall add a rider that really serious thought would have to be given to how this establishment and Portland itself could be geared to the needs of the marine oil industry in the 1980s. That is the real purpose of the debate.
  10.4 p.m.
  Rear-Admiral Morgan-Giles: The House will be grateful to the hon. Member for West Lothian (Mr. Dalyell), who raises fascinating subjects from time to time and takes us all around the world into outlandish places. I remember when he concentrated our attention on a place called Aldabra; and now we are in a relatively little known part of the Western Isles.
  The hon. Member asked, in essence, whether there was an operational requirement for the sort of establishment which is proposed in this area—the British Underwater Test and Evaluation Centre. I hope I may offer a few remarks on this point because I was an underwater war-
  1106
  fare specialist for most of my time in the Royal Navy.
  It is of the utmost importance to the national interest that all underwater aspects of our defence effort should have high priority. I hope to prove in the next few minutes that it is an important national interest—certainly more important than the local interests with which the hon. Gentleman has compared it, although we all know in our constituencies that local interests are very important in every way, including the livelihood of the people who work there.
  I should like to put the matter into perspective. The work at the establishment is likely to come under five different headings. The first is experiments on and trials of submarine detection. Next is experiments and trials with homing torpedoes—accoustic torpedoes, as they mostly are. Third, there is the whole scope of mine warfare and minesweeping, an intensely important and topical subject. Then there is diving by humans under water or with submersible vehicles, something that is in a state of very rapid development. Last, but by not means least, there is basic research into the science of oceanology.
  We all know from our school days that the equipment for detecting submarines is called ASDIC. At least, that is what it used to be called, for it is now called "sonar". The word "ASDIC" comes from the initials "Allied Submarine Detection Investigation Committee", dating from 1923. In two world wars we were nearly brought to our knees—by which I mean that we were within a few weeks of starvation—because of the depredations of enemy U-boats on our trade routes, on war supplies and food being brought into the country. After the First World War the victorious allies got together and said "What shall we do if this threat should ever arise again?" The transmission of sound waves under water was suggested by an eminent professor. Each Ally said "We don't think there is anything in this", but then each went home and individually said, "We must concentrate on this."
  We are talking about a basic type of equipment that needs to be worked on in the establishment under discussion. During and since the war there has been ceaseless work on this technique to detect submarines under water. Great progress

  1107
  has been made, and the state of play now is that if one is in contact with an enemy U-boat one can hold and destroy it. But the range of detection is very short and very uncertain. It is much shorter than the range of the missiles that could be fired by the U-boats of our only possible enemy at our merchant shipping or warships.
  Therefore, there is a pressing need to increase the range and certainty of detection. The plain fact is that there is no absolutely reliable way of detecting U-boats even now. The whole philosophy of the Polaris submarine is that it has a second strike capability because it cannot be effectively traced in the oceans of the world. Its enemies do not know where to start looking for it, and there is no way to find out where it is.
  Our only potential enemy now has in commission, fully manned and in operation, 400 U-boats—10 times as many as Hitler started his war with. My right hon. Friend the Foreign and Commonwealth Secretary has said that the most important strategic fact of this decade is the enormous increase in Soviet naval shipbuilding end the Soviet naval presence right around the world. It now has a truly oceanic navy. They have concentrated particularly on these U-boats. A brand new nuclear-propelled submarine is launched and joins the Red Fleet every month. Britain, which is utterly dependant upon supplies from outside the country, needs effective anti-submarine weapons and equipment.
  This is not, as the hon. Member for West Lothian seemed to suggest, a static situation. He is right in suggesting that our expertise in the operational control and co-ordination of ships and aircraft is unique. Even the United States Navy pays a great deal of tribute to the Royal Navy and what it has developed in that sphere. It is a game of wits, where one must keep on and on all the time and remain just one jump ahead, just as in wartime it was vital to keep one jump ahead with the mining and countermining.
  We must maintain the expertise which we have in operational co-ordination. To look for a submarine now in the wastes of the Atlantic is like looking for a needle not in a haystack but in 20 hay-
  1108
  stacks. For that purpose we have frigates and Sea King helicopters and Nimrod aircraft. They all have to be co-ordinated in order to have any hope of tracking U-boats.
  I know that the hon. Member for West Lothian and the committee on which he sits is concerned whether this threat will ever arise. Having lived through both World Wars, I yield second place to no one in my wish to prevent war. We must have the whole focus and concentration of all three forces on the prevention of war.
  The world was taught a great lesson by President Kennedy at the time of Cuba. Because he was able to see where the Russian merchant ships with missiles on deck were going, because he was able to see when they were slowing down, and because it was reported to him when they had stopped and then turned back, he knew he could get on the hot line to Moscow and bring the world back from the brink of World War III.
  It is essential that we should have the information and the ability to track what our potential enemy may be doing on the trade routes. We must be able to exercise surveillance and prevent small incidents on the trade routes from turning into big incidents.
  We are immensely far behind in torpedo development. Many projects have been too complicated and have been scrapped. I was on a torpedo development desk at the Admiralty. I served a sentence there of two years and hated every moment of it. One of the reasons was that it was very far from the sea, and another was that we could never make any decent progress with torpedoes. The funds were insufficient and the technical development was extremely difficult and frustrating. One admiral described modern submarines with nuclear propulsion as having torpedoes so obsolete that the situation was rather like going into battle in a Chieftain tank waving a spear out of the front hatch…
  Special facilities are needed even to catch up with torpedo development. There are, of course, immensely sophisticated homing torpedoes which home on to the noise of a target or various other indications. Missile development work in the air is difficult enough, but it is possible to photograph what the missile

  1109
  does when it is launched. It is possible to photograph how it behaves, why it misses, or to what extent it misses. Torpedo development under the water, by comparison, is a glorious mystery. If the torpedo does not hit the target, or ends up in the wrong place, it involves an immense search in order to find out what went wrong. There is no doubt—we have often debated this—that British torpedo development is disastrously behind. This is not a political point. It happened under the previous Conservative Government and under the last Labour Government, and is still bad.
  Mining is the third main sector of activity on which an establishment like this may work. The magnetic mine was Hitler's secret weapon. Perhaps I may be permitted a short commercial. The first time I saw HMS "Belfast" was when she had had her back broken by a magnetic mine. She was lying in the Firth of Forth. She was then a brand new ship. If that is thought to be old-hat, what could be more topical than the mines dropped by the Americans off Haiphong, which had an extremely significant effect in the Vietnam war. I need hardly point out that the shallow estuaries of Britain, through which most of our ports are approached, involve the need for efficient mine-sweeping.
  The hon. Gentleman raised the question of the defence of oil installations, and so on. The Royal Navy has a unique world reputation in the development of diving. Diving is closely linked with oil installations and the various other commercial aspects of underwater work. I am glad to say that many retired naval divers are earning a fine living working for many of these commercial organisations and are widely sought after.
  The last point concerns basic oceanography. The sea is not homogeneous: there are wide areas of ignorance about the behaviour of sound waves in it. A lot of research is basic to the kind of weapons and equipment that I am talking about, and it needs to be done.
  The Services always lean over backwards to meet local difficulties. I have the Army Air Corps in my constituency, at Middle Wallop. It has an enormous map in its operations room with every neurotic woman, pregnant cow and chicken farm and so on marked so that
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  the corps can as much as possible avoid disturbance to ordinary life. The Army has a great reputation for this, and I am lire that the Royal Navy will do equally well in the area about which the hon. Gentleman has expressed concern.
  10.18 p.m.
  The Under-Secretary of State for Defence for the Army (Mr. Peter Blaker): I must apologise for the fact that I am answering the debate instead of my hon. Friend the Under-Secretary of State for the Royal Navy, who, as the hon. Member for West Lothian (Mr. Dalyell) said, is in Scotland, which is perhaps appropriate in view of the subject of the debate. I myself was very recently in Scotland, spending some time in the Hebrides and other places. This, too, confirms the interest which the Ministry of Defence takes in Scotland. I am grateful to the hon. Gentleman for raising this important subject and will do my best to answer some of the points he has made, although he will forgive me, I hope, if I do not do so in the depth my hon. Friend could have done.
  I am grateful to my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) for his speech, drawn from first-hand knowledge of the activities of an underwater test and evaluation centre and of how important they are to the country in modern times. I say "modern times" particularly, because one thing which is clear to any Minister at the Ministry of Defence is how sophisticated the research and testing arrangements have to be compared with those which used to exist. I visited a guided missile range for Army weapons in Scotland. I found that the precautions rightly taken there were immensely complex and the equipment required was extremely sophisticated. Great care was taken, and I have no doubt that the same care is, and will be, taken in relation to the project we are discussing tonight.
  I want to mention my hon. Friend the Member for Ross and Cromarty (Mr. Gray), who has taken a close interest in this subject, but, being a Whip, has with admirable forbearance remained remarkably silent during the speech of the hon. Member for West Lothian. I heard him mutter one or two words and I got the impression that he did not agree with a great deal of what the hon. Member

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  said about the matters affecting local interests.
  The BUTEC project is a scheme to provide a test facility for research and development of underwater equipment, mainly the practice firing of torpedoes. The facility in essence comprises a number of surface vessels and shore installations linked with a range instrumentation area on the seabed containing hydrophone installations whose readings are brought ashore by cable to a range terminal building. The remarks of my hon. and gallant Friend show how important is the subject of underwater testing.
  I want closely to examine one of the propositions of the hon. Member for West Lothian, that in these days of nuclear weapons it is unlikely that we shall need better torpedoes because by the time we fire them the hydrogen bombs will have gone off anyway. Coming from him, with his knowledge of military matters, that seems a surprising proposition. We have only to look back 25 years to find that people were forecasting that there would never again be conventional wars, that the day of the infantryman was past. We have but to look at what has happened ever since, at Vietnam or Northern Ireland for example, to see how wrong those forecasts were. It is demonstrable that the proposition to which I thought the hon. Member attached a great deal of importance in his argument is entirely fallacious.
  I come to the point about local interests. The hon. Member referred to some of the Questions answered by my hon. Friend the Under-Secretary of State for Defence for the Royal Navy on 26th January at ccs. 239–40 of the OFFICIAL REPORT. These show clearly that a great deal of trouble was taken by the Ministry of Defence to examine alternative sites. If BUTEC were not established we would have to fall back on our existing facilities. Those in the United Kingdom are simply not capable of coping with deep monitored firings required of today's complex weapons.
  The only other range which might be used is in the Bahamas. This is already overloaded, and its distance from our normal bases would involve an unacceptable loss of operational time in addition to the difficulty and expense of supporting such trials on a regular basis. It is clear that the establishment of BUTEC is an
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  essential facility in the evolution and support of the underwater aspects of our defence programme.
  As for the consultations with local interests, I am told that the planning committee of the Inverness County Council gave its approval to the proposal. The Ross and Cromarty Council gave qualified approval, subject to some recommendations. The vast majority of these have been carried out, as a result of meetings between the Ministry of Defence, the Department of Agriculture and Fisheries for Scotland and outside interests. There was a meeting on 26th January with some of the local fishermen in the area, and, having seen a report of what happened there, it seems to me that some of the remarks of the non. Member for West Lothian were out of tune with what actually occurred. At that meeting a great deal of acceptance was evident that alternative sites in the United Kingdom were not available.
  I would emphasise that at the meeting all the fishermen who were present were given a chance to speak individually, and some assurances were given by the official side. It was said, for example, that, except possibly during certain firings, there would be no objection to any sort of fishing in the acoustic buffer zones, which are approximately five miles by one mile either side of the actual range area. In order to keep interference with fishing to the minimum and to improve safety, the Ministry undertook to arrange for a suitable officer to discuss the mechanics of a good system of communication between the fishermen and the range staff. The fishermen were told that, while the Ministry could not restrict firing to the evenings or nights as had been suggested, the programme could be published in advance, and this, with radio communication, should greatly assist working arrangements between the range and the fishermen.
  On the question of jobs, I confirm that the estimate given was that there would be about 40 seagoing jobs, and, of course, it would be up to any individual in the area to decide whether he wanted to apply, but the Ministry is keen to recruit as many local people as possible. So there have been consultations.
  The hon. Member asked about oil and oil companies. I am sure that he will not

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  expect me to answer that question tonight, but it seems to me, speaking as a layman on this matter, that there is likely to be a certain incongruity in the needs of the oil industry and the testing of underwater sophisticated weapons.
  Mr. Dalyell: Torpedoes, perhaps, but not the submersibles.
  Mr. Blaker: As I say, I am not an expert on this subject and I would not want to venture further upon it.
  I think it has been shown that we need this facility. It has been shown that, in its traditional way, the Ministry has taken great trouble to consult and look after local interests. I can assure the hon. Member that my hon. Friend will carefully study his remarks and that the Ministry will continue to treat this matter with the seriousness which it deserves.

  HOUSING (FINANCIAL PROVISIONS) (SCOTLAND) ACT 1972
  10.27 p.m.
  Mr. Ian MacArthur: I am grateful to my hon. Friend the Under-Secretary of State for Development, the Scottish Office for being present to reply to this short debate on a very important matter indeed.
  The question which I raise is that of half a dozen local authorities in Scotland that have decided not to implement the Housing (Financial Provisions) (Scotland) Act 1972. The largest of these is the Clydebank local authority, in which a handful of councillors are leading their colleagues by the nose in an attempt to get their support for defiance of the Act.
  These councillors, clearly, have not understood how much better off many of their tenants would be under the Act. The Clydebank rent rebate scheme appears to me to be parsimonious compared with the Government's scheme, and withholds help from many families who need that help desperately and are not getting it now because of the defiance of the law by the councillors who claim to represent the tenants who are hard-up.
  Perhaps in the short time available my hon. Friend may be able to give some examples to show how much better the
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  Government's scheme is for those tenants in Clydebank who are hard pressed. Perhaps he may also be able to make some comment about the harm done to the reputation of Scotland by those few councillors who are defying the law and so taking a perilous step along the road to anarchy.
  10.28 p.m.
  The Under-Secretary of State for Development, Scottish Office (Mr. George Younger): I am grateful to my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) for giving me the opportunity to say two things on this important subject.
  There are two issues which matter. The first is that it would appear that there is a still a small number of local authorities in Scotland which are taking it into their heads to defy and disobey the law of the land, and I should like first to make it clear that, irrespective of the issues, irrespective of their views, we really cannot have anyone in this country, whether an individual person or a local authority, deciding to disobey the law just because either the one or the other does not happen to agree with it. I very much hope that in spite of the strongly held feelings of those who are doing this, they will see that it is a very dangerous threat to democracy and that they will decide, whatever they feel about the Act, to carry it out.
  Secondly, and of equal importance, it would be of the greatest benefit to the community if the local authorities, particularly Clydebank, were to implement the Act, because in most respects the Act is more generous to tenants than the schemes they are providing. I cannot see that it is in any sense in the interests of ratepayers for councillors to continue to defy the law, and I very much hope that, despite their feelings, they will understand—
  The Question having been proposed at Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at half-past Ten o'clock.