Commons Sitting of 1 April 1974

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

    Bread
    Mr. Jannerasked the Secretary of State for Prices and Consumer Protection what steps she proposes to take to keep to a minimum further rises in the cost of bread to consumers.
    Mr. Tuckasked the Secretary of State for Prices and Consumer Protection what steps she proposes to take to arrest the projected rise in the price of bread.
    Mr. Huckfieldasked the Secretary of State for Prices and Consumer Protection what is her policy towards preventing further bread price increases.
    The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams): As I announced on 20th March, I have made arrangements with the bakers to avoid the increase, which would have occurred on 25th March, in the price of loaves of 14 oz. and more.
    Mr. Janner: I thank my right hon. Friend for that answer and I assure her how welcome her efforts are. Can she indicates how long she reasonably hopes to be able to hold down the price of bread and what further steps may be necessary in that direction in the immediate future?
    Mrs. Williams: I understand that there may be further cost increases in the pipeline, but if so these would have to be referred to the Price Commission in the normal way. I would be prepared to hold further discussions on such matters if that were to happen.
    Mrs. Oppenheim: As the Prime Minister has designated the right hon. Lady as the focal point on all prices, will she say whether she was associated with am actions of her right hon. Friend the Chancellor of the Exchequer in putting up the prices of electricity, petrol, coal and postage rates, which have more than wiped out any help in subsidies which may have been given to families—not only to the average family, but pensioners and poorer families?
    Mrs. Williams: The hon. Lady's supplementary question goes very much wider than the Question. There is a later Question on this matter.
    Mr. Tuck: Although the companies concerned have not made a profit on bread, does my right hon. Friend realise that, for example, Associated Foods made nearly £42 million profit in 1973, an increase of 27 per cent., and that Rank-Hovis-McDougall made a profit of nearly £28 million, an increase of nearly 18 per cent.? Is it necessary for the companies to make a profit in each separate department, or can the stronger carry the weaker? If not the latter, is it not about time that the whole thing was brought into public ownership?
    Mrs. Williams: My hon. Friend will agree that it is my responsibility to satisfy myself that no exceptional profits are being made on any goods which are subsidised, and I think that this is true about bread. With regard to the whole profits position, this is a matter for the Price Commission. My hon. Friend will be aware that we are considerably strengthening the code under which the Price Commission operates.
    Mr. Ridsdale: Is the right hon. Lady aware of the anxiety of many pensioners who live alone that the 14-oz. loaf is too big for them? Will she ensure that the subsidy operates on smaller loaves, since it is to the pensioners that the help should go?
    Mrs. Williams: It is my impression that the 14-oz loaf is the normal standard cheapest-for-value loaf and that smaller loaves are almost all of a specialist kind. If the hon. Gentleman will give me information on this matter, I shall be glad to look at it. Bread is a very important item in pensioners' diets and that is one reason why we have subsidised it.
    Mr. Channon: Does not the right hon. Lady agree that, apart from the help she has given on bread, the total effect of the Government's measures in this respect has been to raise prices? As she has been designated by the Prime Minister with the focal responsibility of being in charge of prices generally, what will she do about the increase in prices that is the direct result of her right hon. Friend's Budget?
    Mrs. Williams: It is rather unfair to Members of Parliament who have tabled Questions much more relevant to this matter later on the Order Paper to try to take that question on bread subsidies.
    Mr. Edwin Wainwrightasked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the price of bread since June 1970 to the latest available date.
    Mrs. Shirley Williams: On the basis of information collected for the purposes of the Index of Retail Food Prices, the price of bread rose by about 65 per cent. between 16th June 1970 and 19th February 1974.
    Mr. Wainwright: Does my right hon. Friend think it disgraceful that the previous Government should allow bread to increase in such a fashion? Is not bread still one of the basic foods of the lower income group, and especially of old-age pensioners? Will my right hon. Friend do her best to ensure that the price of bread does not rise as it has done in the past? If we are short of money for subsidies, let us have a tax on wealth to make sure that we get it.
    Mrs. Williams: I am pleased to be able to give my hon. Friend that assurance.
    Mr. Kilfedder: As a loaf costs more in Northern Ireland than in England, even with the subsidy which the right hon. Lady has announced, will she do something to help the people of Northern Ireland, whose wages are lower than the average wages in England?
    Mrs. Williams: The hon. Gentleman will appreciate that millers in Northern Ireland get exactly the same subsidy as millers in any other part of the United
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    Kingdom. That is the purpose of the bread subsidy. It will be of assistance to low wage earners such as those in parts of Northern Ireland. Under the terms of the bread subsidy we cannot consider the additional cost of transport, which the hon Gentleman will recognise is a different matter.
    Mr. Brocklebank-Fowler: By what percentage did the world price of wheat rise during the same period?
    Mrs. Williams: I do not have the figure in front of me. I have no doubt that the world price of wheat increased rapidly during that time. I have never denied this. The difference between the present administration and the previous one is that we believe, for that very reason, that those of our people who depend upon bread for a substantial element of their diet should be subsidised.

    Price Monitoring
    Mr. Gwilym Robertsasked the Secretary of State for Prices and Consumer Protection if she will take steps to encourage local authorities to introduce retail price monitoring services; and if she will make a statement.
    The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): I want to encourage local authorities to undertake retail price monitoring. I hope to discuss this with the local authority association shortly.
    Mr. Roberts: Does my hon. Friend accept that the one or two local authorities which have already set up committees or done some work in price monitoring believe that this has a useful marginal effect on prices in their areas? Does he accept that, thanks to the useful generative work carried out by him and by his right hon. Friend and the resulting competition to reduce prices, this is now more necessary than ever?
    Mr. Maclennan: I agree with my hon. Friend. A number of local authorities have given very useful help in this area, and we hope that this may be extended.

    Supply of Goods (Implied Terms) Act
    Mr. Davidsonasked the Secretary of State for Prices and Consumer Protection is she is satisfied with the working

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    of the Supply of Goods (Implied Terms) Act.
    The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams): I am keeping a close watch on the working of the Act. The Director General of Fair Trading has announced that he is considering making a reference to the Consumer Protection Advisory Committee with proposals to strengthen the protection given by the Act to consumers.
    Mr. Davidson: Is my hon. Friend satisfied that the motor trade is operating the Act fairly and conscientiously? In particular, is he satisfied that motor traders are paying compensation down to the point of accepting financial responsibility for the hire of a car, if necessary, where a person has been deprived of transport?
    Mr. Williams: I am very concerned if there is any evidence that the spirit of the Act is not being fully carried out. If my hon. Friend has any information which he cares to give me, I shall be glad to consider it.
    Mr. Janner: Is my hon. Friend aware that this useful Act unfortunately has no effect on the scandalous exclusion clauses commonly inserted in contracts for the supply of services, such as for car parking? When may we hope to have legislation to deal with that side of the matter?
    Mr. Williams: As early as possible. When in opposition, I constantly drew the attention of the House and the then Minister to this area of scandal. However, my hon. and learned Friend is a lawyer and he will be aware that the Law Commissions for England and Wales and for Scotland are due to produce a report.
    Mr. Janner: When?
    Mr. Williams: It was on the basis of their last report that the present Act was passed. We shall implement as soon as possible any new report which they bring forward.
    Mr. Cryer: Is my hon. Friend aware that holiday camps are still operating exclusion clauses, that there was a particularly grievous accident last year when a person was killed and the husband of that person was unable to obtain compensation because of the exclusion clause
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    in the contract, and that this is not covered by the Act?
    Mr. Williams: I gave my previous answer for that very reason.

    Food Subsidies
    Mr. Michael Lathamasked the Secretary of State for Prices and Consumer Protection whether she will announce her detailed proposals for food subsidies; and whether she will make a statement.
    Mrs. Shirley Williams: The Government have already announced decisions on milk and bread, and I am making an announcement about the financial arrangements for butter later this afternoon. I am considering the scope for further subsidies and will let the House have details of our proposals as soon as possible.
    Mr. Latham: Has the right hon. Lady calculated the proportion of the £500 million subsidy which is going to those with above-average incomes and to those who eat in hotels and restaurants?
    Mrs. Williams: The proportion of the subsidy which goes to those with low incomes and to pensioner households is far more substantial than any proportion which goes to those earning more than £60 a week. To be precise, the elements which we are already subsidising rate far more heavily in the index for pensioners than they do for average earners and for all households.
    Mr. Gwilym Roberts: In view of what she said in the debate on the Gracious Speech, may we be assured that my right hon. Friend will not confine her study of subsidies to the food sector but will consider perhaps vital subsidies in other sectors?
    Mrs. Williams: My hon. Friend will recognise that this is a matter for other Ministers as well as myself. I ask him to await further announcements on the matter.
    Mr. Biffen: In view of what she has just said, will the right hon. Lady bear in mind that there are many of us who have a deep-rooted opposition to the whole idea of subsidies on the scale proposed by the Government? What are the mechanics whereby the subsidy shall be paid, and how will one know whether

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    it has been paid only on flour used for baking the 14oz. or heavier loaf?
    Mrs. Williams: On the second part of his supplementary question, I ask the hon. Gentleman to look at the machinery set out in the paper which has been laid in the Library, which gives details of how we shall ensure that the flour which is subsidised is used for bread manufacture only. In response to the first part of the question, I must point out that the previous administration, which the hon. Member supported, subsidised nationalised industries to the extent of many hundreds of millions of pounds, and it does not lie in the Opposition's mouth to accuse us of using subsidies wildly.
    Mr. Ridleyasked the Secretary of State for Prices and Consumer Protection what is the expected cost of the bread subsidy this year, and in 1975, on the assumption that the price of bread does not rise during the period.
    Mrs. Shirley Williams: The cost of offsetting the price rises which would otherwise have taken place on 25th March is estimated at £16 million for the remainder of this year and £21 million in a full year.
    Mr. Ridley: Is it not the case that the cost of keeping the price of bread level for a year or two would be enormously more? What is the point of giving a bread subsidy which amounts to about 40p per head per year in view of the rapid inflation that is taking place and the much better use that could be made of the funds?
    Mrs. Williams: I have a feeling that the hon. Member and I would disagree about the better use of the funds. We can think of few better uses of the funds than to concentrate on foodstuffs such as bread which loom extremely large in the diets of large families and pensioners.
    Mr. Gorst: Does the right hon. Lady agree that it makes no sense to give an indiscriminate subsidy to all sections of the community when her right hon. Friend the Chancellor of the Exchequer has been trying to take away such crumbs of comfort from the very rich? Would it not make more sense to be more selective in the way that the subsidy is handed out?
    Mrs. Williams: The previous administration subsidised milk and a wide range
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    of the products of nationalised industries without discriminating in any way. We are entitled to concentrate above all on the essential foodstuffs which loom largest among the poor. If anything, our subsidy is more concentrated on the low income group than was that of the previous administration.
    Mr. William Hamilton: Will my right hon. Friend consider appearing before the Expenditure Committee so that she can explain in great detail, and in greater detail than is possible in the House, why she is spending so much on certain food subsidies and why, as she has suggested. the previous Government gave indiscriminate subsidies? Does she agree that it would be valuable to get such matters on the record?
    Mrs. Williams: I should be more than pleased to accept my hon. Friend's invitation in view of the intelligence of the questions he asks.
    Mr. Channon: As the right hon. Lady indicated earlier that it was not then a convenient moment for me to put my question, will she now tell the House, as she is being discriminating, what the net effect of her budget will be on every working family in the United Kingdom? Will she tell the House that as a direct result of that budget the retail price index will go up by over 3 per cent. and ordinary families will be worse off and not better off?
    Mrs. Williams: The figure has been given to the House by my right hon. Friend the Paymaster-General. In our estimate, the effect on the retail price index will be approximately 1½ per cent. I cannot accept the argument of the Leader of the Opposition that price rises which were otherwise inevitable and were then avoided as a result of the Government's action, with a consequent effect on the retail price index—such as rent increases and increased bread prices—should not be attributed to the action of the present Government.

    Price Variations
    Mr. Loydenasked the Secretary of State for Prices and Consumer Protection what steps she intends to take, in view of the price discrepancies on a range of branded household goods on sale in the shops and supermarkets, including price

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    variations on such goods by up to 40p in £4, to end the practice of sales gimmicks and special offers.
    Mr. Alan Williams: Immediate steps to restrain prices and protect consumers have already been announced. I am not convinced that price variations on branded goods and sales promotion offers are necessarily against the consumer's interest, but I shall keep the position under review.
    Mr. Loyden: Will my hon. Friend look also at some of the practices obtaining in some of the larger supermarkets, where multiple pricing takes place, which leads to a great deal of confusion and, in my view, is designed so to do, and will he ensure that arrangements are made so that at such places as check points sufficient time is provided for shoppers to check the number and prices of items which are bought, since the problem of ensuring accuracy in this respect often creates difficulty for shoppers before they leave the premises?
    Mr. Williams: I shall be glad to hear from my hon. Friend if either he or his constituents have information about abuses.

    Retail Margins
    Mr. Dykesasked the Secretary of State for Prices and Consumer Protection what conclusions she has drawn from the Price Commission's examination of retailers' percentage margins.
    Mrs. Shirley Williams: I welcome the Price Commission's action on food retailers' margins. I have made my own proposals in the consultative document on the price code, published on 25th March.
    Mr. Dykes: Does the right hon. Lady agree that it will now be much more difficult for retailers operating efficiently to maintain their own price disciplines as a result of the huge and swingeing increases in costs of all sorts of essential materials which will arise from the Chancellor's Budget decisions last week?
    Mrs. Williams: I am not sure what huge and swingeing costs the hon. Gentleman is referring to. [HON. MEMBERS: "Crisps."] If he is referring to nationalised industry prices, I remind him that his right hon. Friend the Member for
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    Carshalton (Mr. Carr) made quite clear that the previous Chancellor had in mind a reduction in the subsidy to nationalised industries as long ago as last December. If lie is referring to crisps, I can only say that, in a situation of national emergency, one would have expected him to think of something a little more serious.
    Mr. Tebbit: Ought not the right hon. Lady to ensure that her Department is as efficient as the Price Commission? I put down 17 Questions about prices to her last week. The day after I put them down, her Department had eight transferred to other Ministers, and the day after that it wrote to me to say that they had been transferred back to the right hon. Lady's Department. Who is responsible for prices in this Government?
    Mrs. Williams: The answer is clear. Nationalised industry-sponsoring Ministers are responsible for the prices which they themselves are in a position to determine. I am responsible for prices which are not determined by an individual Department and which come under the control of the Price Commission. The hon. Gentleman, therefore, asked a number of his Questions of the wrong Ministry.
    Mr. Skinner: Does my right hon. Friend recall that, not many months ago, the Tory Government actually stopped the Price Commission publishing price increases?
    Mrs. Williams: I remember very well, and I hope that my hon. Friend will continue to keep his memory as good as that.
    Mr. Channon: How does the Secretary of State square her answer to my hon. Friend the Member for Chingford (Mr. Tebbit) with the fact that the Prime Minister has clearly said that she is responsible and her Department is the focal point of measures to deal with prices generally? Is it not fair she should take responsibility for price increases and not try to shuffle it off to her right hon. Friends? Is not the proof of the pudding in the fact that all my hon. Friend's Questions have in fact been transferred back to her for answer?
    Mrs. Williams: The hon. Gentleman knows better than that. It is a principle of constitutional doctrine that responsibility for Questions rests with the

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    Minister responsible for the decisions. Therefore, when decisions rest with another Department, as they do, for example, in respect of a nationalised industry such as steel, it would be most inappropriate for me to answer Questions on them. I am very happy to answer Questions, and will continue to answer, on matters within my field of responsibility.
    Mr. Tebbit: On a point of order, Mr. Speaker. May I ask for your advice—
    Mr. Speaker: Order. I do not approve of points of order during Question Time. If the hon. Gentleman has a point of order, perhaps he will be good enough to raise it at the end of Questions.

    Price Comparisons (EFTA Countries)
    Mr. Martenasked the Secretary of State for Prices and Consumer Protection by how much food prices in the United Kingdom have risen since our joining the Common Market, compared with those Continental countries which were full members of EFTA and which did not join.
    Mr. Maclennan: As the answer contains a number of figures, I shall, with permission, circulate the information in the OFFICIAL REPORT.
    Mr. Marten: I asked for only one figure. However, having looked at the list of figures which he proposes to cir-

    CHANGES IN CONSUMERS' PRICE INDICES FOR FOOD IN THE UNITED KINGDOM AND EFTA MEMBER COUNTRIES

    Period of measurement

    Percentage increase between months

    United Kingdom

    …

    January 1973 to February 1974

    …

    …

    +21·2

    Austria

    …

    January 1973 to January 1974

    …

    …

    +7·4

    Finland

    …

    January 1973 to December 1973

    …

    …

    +10·7

    Iceland (Quarterly Index)

    …

    February 1973 to November 1973

    …

    …

    +34·2

    Norway

    …

    January 1973 to January 1974

    …

    …

    +6·1

    Portugal

    …

    January 1973 to December 1973

    …

    …

    +17·0

    Sweden

    …

    January 1973 to December 1973

    …

    …

    +4·9

    Switzerland

    …

    January 1973 to January 1974

    …

    …

    +7·0

    Sources:

    UN Monthly Bulletin of Statistics.

    Department of Employment National Publications.

    Food Prices.
    Mrs Renée Shortasked the Secretary of State for Prices and Consumer Protection how many food prices have increased since 28th February.
    Mr. Maclennan: The food index is the official measure of movements in retail
    culate in the OFFICIAL REPORT, does not the hon. Gentleman conclude that food prices in Britain since we joined the Common Market rose five times as much as food prices in those EFTA countries which did not join with us? Does he agree, therefore, that it would be better for prices and for consumers in this country if we were members of the European Free Trade Area rather than the Common Market?
    Mr. Maclennan: In reply to the first part of the question, the hon. Member has asked for a number of figures, which is why they will be circulated in the OFFICIAL REPORT. They show that the percentage increase in the United Kingdom was exceeded only by Iceland. The hon. Member draws the wrong conclusion, however, if he argues that the increases are due to membership of the EEC. This country was more seriously affected by the rise in world commodity prices in the last 18 months than were some other countries which already paid more for their food.
    Mr. Body: Does the Minister realise that in proportion Norway and Switzerland import just as much food as we do?
    Mr. Maclennan: The prices in those countries were higher than in Britain before we entered the Common Market.
    Following is the information:
    food prices. Information for the period since 28th February is not yet available.
    Mrs. Short: If my hon. Friend would read The Grocer, which his predecessors never would when we asked the same questions of them, we could be given the figure. Is he aware that in the first quarter of this year more than 6,500

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    separate food price rises have occurred, all of which were in the pipeline during the period of the previous administration': Is he aware that not only retailers and wholesalers have a responsibility to make their contribution to the reduction of food prices? So, too, have manufacturers, as my hon. Friend the Member for Watford (Mr. Tuck) has indicated. Will my hon. Friend ensure that they play their part and ensure also that retailers display the maximum prices for foods so that housewives will know exactly where they stand? Does he not think that an across-the-board moratorium on all increases for the next quarter would help the housewife considerably?
    Mr. Maclennan: I study The Grocer with interest. However, the number of increases notified to it tends to distort the true position since each quality or weight of the same product is counted as a separate increase. As for the other points my hon. Friend has raised, I ask her to await publication of my right hon. Friend's Bill.
    Mr. Rost: How many food prices will increase as a result of the imposition of VAT on food?
    Mr. Maclennan: That is a separate question.
    Mr. Skinnerasked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in food prices since June 1970 to the latest available date.
    Mr. Maclennan: Between 16th June 1970 and 19th February 1974, the latest date for which information is available, the food index rose by 54·4 per cent.
    Mr. Skinner: In view of those extortionate figures, which are the responsibility of the last administration, will my hon. Friend tell my right hon. Friend the Secretary of State that when she meets the former Tory Chief Whip, Lord Redmayne, and his colleagues tomorrow she should not take too much notice of their sad stories about the profit margins that wholesalers and retailers are having to suffer? Will my hon. Friend say whether food subsidies are more progressive than subsidies for private education and private hospital beds?
    Mr. Maclennan: My right hon. Friend the Secretary of State will have heard my hon. Friend's remarks about the meeting with Lord Redmayne. The second point my hon. Friend makes is a fair one and I accept it.
    Mr. Gordon Wilson: Will the hon. Gentleman comment on the fact that dried milk for babies has gone up in price recently by 25 per cent. and will he indicate what action is intended either to reduce the price or to keep it in check?
    Mr. Maclennan: The hon. Member has asked a totally separate question which I must ask him to table.
    Mr. Tom Boardman: Will the Minister say by how much comparable world food prices rose during the same period?
    Mr. Maclennan: The hon. Member has asked a separate question. The original Question related to the percentage increase in food prices from July 1970 to the present day. If he wants detailed information beyond that, he must table a separate Question. On the general point, my right hon. Friend has never for one moment sought to conceal, and repeatedly made clear during the recent election which the hon. Member appears still to be fighting, the extent of the increase in world prices. The previous Government could have done substantially more to lessen the impact of those higher prices to consumers.

    Milk (Motorway Service Areas)
    Mr. Whiteheadasked the Secretary of State for Prices and Consumer Protection if she will investigate retail prices for milk charged in motorway service areas.
    Mr. Alan Williams: I have seen my hon. Friend's correspondence. If he has any further information he wishes to bring to my attention, I will gladly consider it.
    Mr. Whitehead: I am most grateful for the action the Department took about a particular motorway caterer who was charging well over twice the recommended retail price for a pint of milk, as will be my constituents who raised the matter. Will my hon. Friend keep under continuous review the pricing policy of motorway caterers since they

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    are operating in monopoly conditions of public franchise?
    Mr. Williams: My Department will certainly keep a review of prices where that is possible. However, it is a physical impossibility for the Department to see every individual price movement throughout the country and, therefore, we are most grateful to hon. Members who, like my hon. Friend, bring these extortionate prices to our attention.
    Mr. Watkins: Is my hon. Friend aware that both the prices and the services provided in motorway service areas vary enormously throughout the country? Should there not be a full-scale investigation of what is often a most unsatisfactory service?
    Mr. Williams: As one who uses these service areas when travelling with my family, I share my hon. Friend's concern. If he has evidence to put before me, I shall be glad to see it.

    Prices (Marking-Up)
    Mr. Adleyasked the Secretary of State for Prices and Consumer Protection if she will take steps to prohibit the practice of supermarkets whereby marked prices of goods already in stock are increased whilst they remain in stock; and if she will make a statement.
    Mr. Huntasked the Secretary of State for Prices and Consumer Protection what steps she proposes to take to prohibit the practice of marking-up the prices of retail goods already in stock.
    Mrs. Shirley Williams: I intend to introduce an amendment to the price code. This will restrict the extent to which goods displayed for retail sale can be repriced because the cost of replacement stocks has increased.
    Mr. Adley: May I express my gratitude to the Secretary of State for attempting to deal with this infuriating problem? Will she look at the whole question of supermarkets? Is she aware that the increase in the number of supermarkets has gone hand in hand with the increase in shoplifting? A lot of supermarkets means a lot of large lorries trying to get into small places in small towns. In towns like Christchurch supermarkets are beginning entirely to change the shape
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    of the area. Will the right hon. Lady consider an interdepartmental inquiry to examine the whole question of the effect of supermarkets on towns?
    Mrs. Williams: The hon. Member has raised a very wide question. I know that he has been interested in the question of shoplifting for a long time. I am prepared certainly to discuss with the trade ways in which goods may be laid out so as to discourage shoplifting. Shoplifting is often a tragedy for a family and shops sometimes lend themselves to the commission of the crime.
    Mr. Lipton: Will my right hon. Friend ensure that supermarkets abandon the nasty habit of putting little stick-on labels on goods and instead mark the price on the package in indelible ink?
    Mrs. Williams: This will be part of our proposal for legislation. It is against exactly such practices that we intend to introduce legislation.
    Mr. Hunt: I welcome the right hon. Lady's proposed action in the matter. Is she aware, however, that some retailers are unhappy about the amount of time she has allowed for consultation on her document? In fairness to all concerned, would she be prepared to extend the deadline a little after 9th April?
    Mrs. Williams: I understand that the hon. Gentleman called for urgent action on the matter. He will appreciate, therefore, that there must be a term to consultation, but we can discuss the mechanics, as distinct from the principles, for a longer period.
    Mr. Channon: Are the remarks attributed to the right hon. Lady's Department accurately reported? It is said that the plan to stop the overstamping of grocery price labels will make no difference to prices, as the new rule would merely force grocers to pull off the first label before sticking on a new one. That statement is attributed to her Department. Is that correct?
    Mrs. Williams: It is not strictly correct. We are talking about goods on display, because in some cases, of which I think the wine trade is the best example, goods are kept in stock for a long period and increase in value while in stock. That is the sort of thing we have to

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    discuss, and intend to discuss, with the trade.

    Fair Prices List
    Mr. Moonmanasked the Secretary of State for Prices and Consumer Protection when retail grocery stores may expect to receive their fair prices list; and what steps she will take to ensure that they are displayed and adhered to.
    Mr. Alan Williams: Legislation is required to enable us to fulfil our pledge to introduce maximum fair prices for certain key foods. My right hon. Friend will put this before the House in the very near future.
    Mr. Moonman: Will my hon. Friend also bear in mind when preparing the legislation that there should be a clear definition of the rôle of the local authority as well as of his Department, and what advice he might give to hon. Members who are already receiving complaints in this respect?
    Mr. Williams: I shall bear that point in mind. The consultations include consultations with the local authorities.
    Mr. Silvester: Will the Minister bear in mind that maximum fair prices can often be taken as the prices which a store will charge, and that many stores are cutting back below the prices now recommended by manufacturers?
    Mr. Williams: I am aware of that. We are having consultations with the trade and industry on all aspects of this policy.

    Imported Food
    Mr. Pardoeasked the Secretary of State for Prices and Consumer Protection by what percentage imported food prices have risen in the past 12 months; and if she will estimate what proportion of this was due to Great Britain's membership of the EEC.
    Mrs. Shirley Williams: Over the most recent period of 12 months for which figures are available—December 1972 to December 1973—prices of imported food and feeding stuffs rose on average by 42 per cent. It is not possible to estimate precisely the proportion of this due to membership of the EEC, but the overall effect of membership on United Kingdom food prices is currently estimated at between ½ and 1 per cent.
    Mr. Pardoe: Is the right hon. Lady aware that that answer will be deeply unsatisfactory to her right hon. and hon. Friends? Would she care to estimate, within the facts available to her Department, whether the rise in the cost of imported foodstuffs is likely to be greater in the next 12 months than in the past 12 months?
    Mrs. Williams: With regard to the first part of his question the hon. Gentleman has got it wrong, because the statistics I have given can in no way give an indication of what would happen if world prices were to fall. The hon. Gentleman knows my views on the Common Market, but I am bound to say that if there were any fall in world prices it would not be reflected in the Common Market, because of the curious ratchet mechanism involved in the common agricultural policy. With regard to the second part of the hon. Gentleman's question, I do not pretend to be able to predict the course of world prices over the next year. I do not intend to share the over-optimism of the previous Government in expecting them each week to fall the week after.
    Mr. Marten: Has the right hon. Lady checked the figures and checked how they were arrived at for part of her answer? It seems singularly similar to the one given by her predecessor. Is she aware that the previous Government refused to disclose to Parliament how they arrived at that figure? Can she do better than that and tell us how the figure is arrived at?
    Mrs. Williams: It is arrived at by taking the difference between port and farm-gate prices in the United Kingdom and then comparing it with world prices, after taking account of the effect of EEC membership. What no one can calculate, however objective he tries to be, is the effect of the diversion to other markets of the foodstuffs of certain of our traditional suppliers. I cannot settle that argument, which is likely to continue between hon. Members on both sides of the House.

    Wine
    Mr. McCrindleasked the Secretary of State for Prices and Consumer Protection if she will make regulations as to

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    the content of a carafe of wine, in view of present disparities.
    Mr. Alan Williams: It is our intention to lay an order before the House in the very near future which will provide that wine when sold in carafes for consumption on the premises should be sold only by capacity measurement.
    Mr. McCrindle: In the interests of consumer protection for the downtrodden rich, who since last Tuesday include all hon. Members on both sides of the House, may I extend to the hon. Gentleman my gratitude, because in the recent past a small carafe has ranged from one and a half to two and a half glasses?
    Mr. Williams: I am grateful to the hon. Gentleman for his complimentary remarks. It is noticeable how much more of a welcome there is from the Opposition for action to protect the wine drinker than to protect the person who eats bread.

    Canned Foods
    Mr. Watkinsasked the Secretary of State for Prices and Consumer Protection if she will introduce legislation to make it compulsory for the drained weight of foods canned in liquid to be marked on the cans.
    Mr. Alan Williams: We are taking a close look at the need for such legislation.
    Mr. Watkins: I am grateful to my hon. Friend. Is he aware that compulsory drained weight marking already exists, apparently with success, in a number of other countries, and that there is widespread consumer demand for it in this country too?
    Mr. Williams: I am aware of that. I know the campaign which my hon. Friend has vigorously fought. There are complications over whether one uses minimum weights or average weights. That is a matter which I am considering. In view of my hon. Friend's longstanding campaign, if he would care to discuss the matter with me at the Department I should be glad to go into the details with him.

    Unsolicited Goods
    Mr. MacFarlaneasked the Secretary of State for Prices and Consumer Protection if she will introduce legisla-
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    tion to curb the mailing of unsolicited material.
    Mr. Alan Williams: The Younger Committee on Privacy reported in 1972 that legislation was not, in its view, necessary. However, I am willing to consider whether steps should be taken to curb posting of unsolicited material if there is substantial evidence of annoyance or distress.
    Mr. MacFarlane: I remind the Minister that there is a continued bombardment of such material, certainly in my constituency, and, I believe, elsewhere. It is confusing to older people, who receive many official-looking documents which are no more than lottery or credit card reminders. May I suggest that the Department takes urgent notice of the matter? I can provide the hon. Gentleman with a great deal of material.
    Mr. Williams: If the hon. Gentleman would provide material, that would be welcomed. In the past year we had only about 40 representations from the public on the matter. Less than half complained about the principle of being sent the material, but they complained about such things as lottery tickets. If the hon. Gentleman has a great deal of material, it will be welcome to me.

    Director General of Fair Trading
    Mrs. Oppenheimasked the Secretary of State for Prices and Consumer Protection if she proposes to seek to amend Section 2 of the Fair Trading Act.
    Mr. Alan Williams: I shall be prepared to consider possible changes in the Act in the light of experience of its working.
    Mrs. Oppenheim: I welcome the fact that the hon. Gentleman is consulting colleagues in the Home Office about transferring responsibility for consumer product safety. As evidence must be collected for that, however, will he either amend Section 2 of the Act to allow the Director General to do it or set up a consumer commission on product safety?
    Mr. Williams: I am discussing with the Director General the whole field of operation of the Act. From our amicable experience on the Act during its passage through Parliament—if I may say that without embarrassing her—the hon. Lady well knows my views on consumer health

    867
    and safety. It is our intention, as I believe it was the previous Government's, to see the Act work as effectively as possible.
    Mr. Janner: Can my hon. Friend give an indication of the abuses the Government intend to attack by using the powers in the Act, and when they will do so?
    Mr. Williams: My hon. and learned Friend must allow for the fact that I have been in office only a very short time and that I am in the middle of preparing legislation. I am having discussions with the Director General to see where action by the Government is needed. The Director General is already urgently considering measures that he would wish to put before the public and the Consumer Protection Advisory Committee.

    Metrication
    Mr. Teddy Taylorasked the Secretary of State for Prices and Consumer Protection if she will make a statement on the implications of metrication for the consumer.
    Mr. Alan Williams: I have the programme of metric change, and of course its likely effects on the consumer, very much in mind. I have stressed to the Metrication Board the need to ensure that consumers are prepared for the continuing extension of metric weights and measures.
    Mr. Taylor: Is it the Government's policy to extend metrication and especially to apply it to foodstuffs in the shops? If so, will the Minister bear in mind that most consumers regarded decimalisation as a total disaster for shoppers?
    Mr. Williams: I shall bear in mind what the hon. Gentleman says. I must remind him that he was twice a member of a Government which had an active metrication policy. As the point of no return was passed during that Government's term of office, it is our job to see that the matter is carried through in an orderly manner.

    Scottish Daily Express
    Mr. Dalyellasked the Secretary of State for Prices and Consumer Protection if she will make a statement on her discussions with representatives of workers at the Scottish Daily Express, in relation to the operation of the Fair Trading Act.
    Mrs. Shirley Williams: I have nothing to add to the statement which was made by my right hon. Friend the Secretary of State for Trade on 27th March.—[Vol. 871, c. 467–75.]
    Mr. Dalyell: Has there been any approach to my right hon. Friend's Department about the Glasgow Evening Citizen?
    Mrs. Williams: There was an approach about the Glasgow Evening Citizen from Beaverbrook Newspapers Limited and from the trade unions. My hon. Friend will recognise that the powers which I have under the Act are extremely narrow. They require me to give permission, without any form of report from the Monopolies Commission, if I am satisfied that a newspaper is not financially viable and that it cannot be run as a separate enterprise. I made careful inquiries and I was obliged to say that I was satisfied on both points.

    Cross-Channel Ferries
    Mr. Costainasked the Secretary of State for Prices and Consumer Protection when she expects to publish the findings of the Monopolies Commission cn cross-Channel ferry fares.
    Mr. Alan Williams: I hope to publish the report shortly.
    Mr. Costain: Will the report be made public as soon as it is made available to the Minister?
    Mr. Williams: It will be made public at the earliest possible date.

    Price Increases
    Mr. Ioan Evansasked the Secretary of State for Prices and Consumer Protection how many price increases were recorded between 18th June 1970 and 28th February 1974.
    Mr. Maclennan: I regret I am unable to supply a figure as statutory price controls were not introduced until November 1972, and not all price increases since then are recorded centrally.
    Mr. Evans: Can my hon. Friend give an approximate figure? The figures which were released earlier indicated that approximately 30,000 price increases had been brought about in the early years of the previous Government. Bearing

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    in mind that staggering figure, will my hon. Friend ensure that the Government continue as they have started by maintaining food subsidies and using other means to ensure that housewives get a better deal?
    Mr. Maclennan: I should like to be able to help my hon. Friend. As I have explained, the fact that we have not recorded the price scales means that any figure which we gave would necessarily be an approximation and not very helpful. My right hon. Friend has my hon. Friend's latter point much in mind and will act on his suggestion.
    Mr. Burden: Will the hon. Gentleman tell the House how much the price of petrol has gone up today as a direct consequence of the Government's action?
    Mr. Maclennan: As my right hon. Friend has explained, that question should be addressed to my right hon. Friend the Secretary of State for Energy.

  TRADE

    Travel Industry
    Mr. Moonmanasked the Secretary of State for Trade if he will give urgent consideration to the establishment of a Government inquiry into the travel industry, with particular reference to its economic and operational structure, bonding and consumer protection.
    The Under-Secretary of State for Trade (Mr. Eric Deakins): I share my hon. Friend's concern that there should be adequate protection of travellers and others in the tourist industry. Action is already in hand by the Association of British Travel Agents to provide new codes of conduct for tour operators and retail agents. In these circumstances I should prefer to await the outcome before considering the case for a major inquiry.
    Mr. Moonman: I remind my hon. Friend that the travel industry is highly vulnerable and that the closures and anxieties of 1973 left considerable scars. I hope that he will consider compiling the findings of all these reports and ultimately agree to an inquiry.
    Mr. Deakins: I assure my hon. Friend that we shall keep a close watch on developments, especially following the action which is currently being taken.
    Mr. Milne: Is my hon. Friend aware that that is the type of answer we have had from the Front Bench by successive Governments and that his answer does not go nearly far enough? Does he realise that the time has now arrived for the Government to look for a solution of the problem with a view to introducing legislation?
    Mr. Deakins: There is a new factor. We now have the Fair Trading Act and the Director General of Fair Trading. He is in consultation with the trade about measures which may be needed to tighten up the precautions to protect the travelling public against the sort of things which have been going on for the past year or two. We should give these new arrangements a chance to work before considering further action.
    Mr. Emery: When considering the action of the travel industry to try to encourage more people to have holidays at home, and particularly in the South-West, will the hon. Gentleman bear in mind that one of the problems facing smaller hoteliers when trying to keep down their prices is the cost which they are having to bear over a short period in meeting the requirements of the fire regulations? Will he consider the possibility of extending the period over another two years?
    Mr. Deakins: I am prepared to look at that issue, although it does not arise directly out of the Question on the Order Paper.

    Waste Paper Exports
    Mr. Edwin Wainwrightasked the Secretary of State for Trade if he will give the number of tons of waste paper that has been exported for the years 1969. 1970, 1971, 1972 and 1973, and if he will take immediate action to reduce the exporting of waste paper in view of the needs of the United Kingdom paper industry.
    Mr. Deakins: The figures, which are published in the Overseas Trade Statistics, are 94,000, 100,000, 77,000, 74,000 and 102,000 metric tonnes respectively, including a small amount of mechanical wood pulp in 1969. The second part of the Question is a matter for my right hon. Friend the Secretary of State for Industry.
    Mr. Wainwright: I thank my hon. Friend for that reply. Can he tell the

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    House why the Government allow the export of waste paper, which is so very important to the country? Cannot we have a restriction of such exports, similar to the restriction imposed on the nationalised industries, which have been prevented from exporting at times when they could have made a profit out of doing so? Are we to continue to allow exporters to sell materials abroad which are short in this country simply because they will get higher prices by doing so?
    Mr. Deakins: I am aware of the concern on this matter but the primary responsibility is for my right hon. Friend the Secretary of State for Industry. If export controls were decided upon, I would be responsible for their administration through my Department's export licensing branch.
    Mr. Rost: Will the hon. Gentleman take steps to increase the collection of waste paper, which would save a great deal of money? A great deal of paper is at present wasted.
    Mr. Deakins: This matter is coming very much to the fore and I assure the hon. Gentleman that I have as great an interest as anyone in the House in saving imports, which is one of the factors in improving the collection arrangements for waste paper. However, there is a limit to what can be done, partly because of the cost burden on the local rates and partly because waste paper often has to undergo expensive processing before it can be properly recycled.
    Mrs. Renée Short: Does not my hon. Friend think it nonsense from the point of view of the national economy that we should be exporting waste paper, not collecting our own and at the same time importing precious timber, for which his Department is certainly responsible, in order to make more waste paper available?
    Mr. Deakins: I confess that I do not always understand the economics of either the paper industry or, indeed, any other industry, but I assure my hon. Friend that we share her concern, as I am sure the whole House does, that we should do what we can to improve the balance of payments position by saving imports where possible as well as by expanding exports. That is the task of my.
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    Department and the Government as a whole.

    Concorde
    Mr. Copeasked the Secretary of of State for Trade if he will specify the range of assumptions British Airways made about key factors in the profitability of Concorde in service.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): I am discussing with the British Airways Board what further information could be made available to the House about its estimates of the effect on its financial results of introducing Concorde services.
    Mr. Cope: I thank the hon. Gentleman for that reply. Will he bear in mind that the Secretary of State for Industry has been encouraging people to criticise the figures he gave in his statement and that it is very difficult for us to do that unless we are given the information we need? Why, therefore, did not the Secretary of State for Trade answer the Question I put to him for Written Answer, which was designed to draw out these assumptions?
    Mr. Davis: My right hon. Friend the Secretary of State for Trade tabled a very long answer on the hon. Gentleman's problems. If he has any grumbles about matters relating to the Department of Industry, he is entitled to table further Questions to that Department.

  ENERGY

    Electricity Prices
    Mr. Rostasked the Secretary of State for Energy what consultations have been held with the electricity industry with regard to pending price increases to the consumer.
    The Under-Secretary of State for Energy (Mr. Alex Eadie): My right hon. Friend discussed with the Chairman of the Electricity Council the electricity price increases announced by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement.
    Mr. Rost: By how much are electricity prices going up now, and by how much further will they have to rise later in the year to allow for the increased price of coal? Is the hon. Gentleman satisfied that more economies and greater

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    efficiency could not be introduced by the industry to avoid part of these increased charges?
    Mr. Eadie: My right hon. Friend is satisfied that the industry is efficient and economical. As far as the effect on consumers' bills is concerned, the small domestic consumer may expect to pay only about 10 per cent. more—for example, 3p per week; the average domestic consumer may expect to pay 30 per cent. more, which is just over 25p per week; and the large domestic consumer with a high proportion of off-peak and night use may expect to pay nearly 50 per cent. more in some cases—for example, 75p per week.
    Mr. Dalyell: What about the skeleton in this particular cupboard? For how many months were the price increases that the right hon. Member for Worcester (Mr. Walker) and other Conservative Ministers knew ought to take place delayed for political reasons?
    Mr. Eadie: My hon. Friend is on the ball. [HON. MEMBERS: "Oh!"] Right hon. and hon. Members on the Opposition Front Bench may jeer, but they should honestly admit to the House and the country that decisions which should have been taken were not taken by them and had to be taken by the present Government.
    Mr. Pardoe: Can the hon. Gentleman say a little more about his statement that the small domestic consumer will have his bill increased by only 10 per cent.? What does the hon. Gentleman mean by "small domestic consumer"? How certain is he that 10 per cent. represents the maximum increase that the small domestic consumer can expect during the next 12 monhs?
    Mr. Eadie: It is quite clear what a small domestic consumer is. He is someone who does not consume as much electricity as other people.
    Mr. Skinner: Does my hon. Friend agree that the truth lies in the fact that the Leader of the Opposition and his colleagues when in government were responsible for these price increases through the three-day working week, the confrontation with the miners and other actions? Does he also agree that the Leader of the Opposition behaved like an IRA terrorist in planting an economic time bomb and then running away?
    Mr. Eadie: My hon. Friend is right, and confession would be good for the soul in this case. Of course, we may hear some confession from the Opposition Front Bench later today.
    Mr. Patrick Jenkin: How can the Prime Minister claim that he did not know what was in the pipeline concerning electricity when my colleagues and I in the last Government spelled out in the starkest possible terms in the proceedings on the Statutory Corporations (Financial Provisions) Act 1974 exactly what was required? It is ludicrous for the Prime Minister to try to pretend that all this came as a stupendous shock to him.
    Mr. Eadie: The right hon. Gentleman will recall that we took part in the proceedings on that Act as well. His comment is probably the comment of the week. The nation has indeed been confronted in the starkest possible terms with the bill it is having to pay now because of the bungling incompetence of the last Government.

    Nuclear Power Stations
    Mr. Gryllsasked the Secretary of State for Energy when he expects to announce his decision on the continuing programme for the nuclear power stations.
    Mr. Eadie: We expect to announce decisions on the nuclear power programme as soon as all the relevant factors have been fully considered.
    Mr. Grylls: In the light of critical concern and doubt about the American light water reactor, will the hon. Gentleman publish a Green Paper before making the final decision?
    Mr. Eadie: I will bear that suggestion in mind.
    Mr. Palmer: Has my hon. Friend any advance information about when the promised debate on the report of the Select Committee on Science and Technology on nuclear reactor choices will be held?
    Mr. Eadie: I understand that my right hon. Friend the Leader of the House has promised that there will be a debate, and it is a matter for him.
    Mr. Cryer: Is it not the case that if we bought nuclear reactors from abroad

    875
    we would be selling our British technology down the river, as the last Government appeared to be ready to do?
    Mr. Eadie: Six choices are being considered at present, and I have to tell my hon. Friend that the light water reactor is only one of the possible choices being examined by the Nuclear Power Advisory Board. No decision has been taken to install light water reactors in this country.

  QUESTIONS TO MINISTERS
  Mr. Tebbit: On a point of order, Mr. Speaker. I am aware that it is not for the Chair to rule which Ministers answer which Questions, but can you rule whether it is in order for a Minister to stand at the Dispatch Box and deny departmental responsibility for the answering of Questions when her Department has written to an hon. Member accepting departmental responsibility for answering those Questions and has, in fact, had them transferred back to her Department after having had them transferred away on the first occasion?
  Mr. Speaker: That is not a matter for the Chair. However, I shall look into the matter to see whether there is any useful contribution which I can make.
  Mr. Wiggin: Further to that point of order, Mr. Speaker, on a slightly different matter. My hon. Friend the Member for Chingford (Mr. Tebbit) made clear that he would raise this matter with you. Is it not a gross discourtesy that not one Minister from the Department concerned has seen fit to stay to listen when the point was raised?
  Mr. Speaker: That is certainly not a matter for me.

CONCORDE AIRCRAFT
Mr. Adley(By Private Notice) asked the Secretary of State for Industry whether he will make a statement on the Concorde aircraft project following his meeting with the French Minister of Transport on Friday.
The Secretary of State for Industry and Minister of Posts and Telecommunications (Mr. Anthony Wedgwood Benn):
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I met my French colleague on Friday, 29th March, in Paris within the framework of consultations on the project. We had a wide-ranging and friendly discussion of the options, and agreed to meet again soon. The Government will be taking these discussions into account before any decisions are reached.
Mr. Palmer: Will my right hon. Friend given an assurance that the report in yesterday's Observer—a newspaper which is a notorious enemy of the Concorde project—to the effect that the British were to cancel the project within a matter of months has no foundation in fact?
Mr. Benn: I am grateful for that question. I saw that newspaper report and I thought it right to make known to my colleagues in France that the British Government were entering into and maintaining discussions with them in good faith and that no decisions had been reached.
Mr. Adley: Will the right hon. Gentleman confirm that there has been no change in the legal obligations between ourselves and the French Government since the previous Labour Government sought to cancel the project and failed to do so in 1969? Would he also give a clear assurance that he personally stands four square behind the project, and will he take this opportunity to repudiate the remarks of his right hon. Friend the Leader of the House who called Concorde a skeleton in the previous Government's cupboard, which is a direct insult to the thousands of British and French workers on the project?
Mr. Benn: My consultation with the French Minister was in good faith. I made that clear in answer to a previous question.
We have received from the previous Government a legacy of concealment, which has been condemned repeatedly by the Public Accounts Committee. Many of the difficult problems which we now face could have been handled much more effectively had there not been that concealment. The hon. Gentleman knows full well that during discussion on the Concorde production Bill, in which I spoke for the Opposition, the Opposition gave support to the Bill but at that time called for publication of more information.
Mr. Biffen: Now that it is openly acknowledged that Concorde can fly only by means of a substantial operating subsidy, did the right hon. Gentleman discuss with M. Achille Fould what would be the political repercussions of that in obtaining landing rights in countries whose own air lines provide a first-class service which might be adversely affected by subsidised Concorde operations?
Mr. Benn: We did not discuss it in the political context which the hon. Gentleman suggests. We looked at the figures, which are common to both countries, and which have been made available to us by officials, we recognised that serious problems were posed, and we agreed to look at the options and to meet again soon. That was the basis of our discussions.
Mr. Moonman: I appreciate that my right hon. Friend is in a dilemma in present circumstances, but would it not be helpful if he could this afternoon spell out a timetable for discussions and the time when a decision might ultimately be made?
Mr. Benn: I recognise the desire for speedy resolution of these matters, and French Ministers fully agree about that. For that reason we have arranged that the next meeting should take place in London as soon as officials have done the work which we set them on examining the options open to us. It is our desire that uncertainty should be removed.
Mr. Faulds: Will my right hon. Friend bear in mind, if Britain wishes to keep in the forefront of work in advanced technologies, the damage that could be done in this regard if there were a cancellation of Concorde?
Mr. Benn: That point is already known to me, for every sort of reason, and was put forward not only by my French colleagues but also by people who have been making representations here. I wish to reassure everyone that the Government are anxious to listen to the representations before reaching a view on the matter.
Mr. Michael McNair-Wilson: Can the right hon. Gentleman say how we would be able to get out of the Anglo-French Treaty, since there is no escape clause? Should we have to renegotiate the Treaty? Have we some idea of what compensation would be required, or are we committed
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to the aircraft if the French refuse to follow what the right hon. Gentleman seems to want—to cancel the project?
Mr. Benn: That question did not arise in the discussions. We are working with the French on the Concorde project. Given the situation which I have made known to the House, it seemed right to sit down and discuss with the French how the problem should be handled. That was the basis of my discussions with my French colleagues.
Mr. Edwin Wainwright: Does my right hon. Friend realise that there would be a tinge of sadness throughout the House and the country if we rapidly arrived at a decision to cancel the Concorde project? On the other hand, does he not appreciate that it is not much use continually to produce something which will be a terrific loss to the nation? Will my right hon. Friend comment on statements by experts that sufficient know-how has been obtained from the Concorde project and that it is not worth spending much more money on it?
Mr. Benn: My hon. Friend has identified some of the issues which the Government have to consider before reaching a view. The whole House is well aware of the difficulty attached to this decision and is, I am sure, pleased to think that there is time to reflect on this and other considerations.
Mr. Chataway: The right hon. Gentleman has protested today that the Government have not decided to cancel Concorde and that he is looking for means to continue the project. However, does he not realise that his earlier actions were totally inconsistent with that objective? Does he not agree that by rushing out figures which were damaging to Concorde, without making any attempt to check the basis of his calculations with the manufacturers, and by encouraging British Airways to produce even more damaging figures about operating costs, without any attempt to check the basis of the calculations, he was dealing the project an instant, deadly blow?
Mr. Benn: I do not accept that argument at all. The position was not changed by publication of the figures. The position was known to right hon. Gentlemen sitting on the Opposition Front Bench. If they believed that a

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project of this magnitude could survive only by concealment, that throws much light on their attitude of responsibility in this matter.
Mr. Chataway: Before publishing figures we would at least have attempted to have discussions with the manufacturers and with British Airways. How does the right hon. Gentleman justify publishing figures without attempting to check their accuracy?
Mr. Benn: The right hon. Gentleman knows very well that the Government and Ministers are in continual contact with the manufacturers. I am not prepared to accept from him that there was any intent by the Opposition to publish the figures. Indeed, that position relates to the nature of the problem we inherited—a problem of concealment. This means that in reaching the difficult decision there are now elements of shock which would not have been present if the facts had been made available more generally, as the Public Accounts Committee wished.

NORTHERN IRELAND
The Secretary of State for Northern Ireland (Mr. Merlyn Rees): With permission, Mr. Speaker, I will make a statement about events in Northern Ireland in the last few days. I do so in the full realisation of the weight of my responsibility to this House.
On Thursday 28th March a bomb of between 500 and 600 lb. exploded outside a hotel in the centre of Belfast which is at present an Army headquarters. On the following day there were more bombs outside Catholic bars in Belfast, and on Saturday 30th March the level of violence was further stepped up, with bomb and incendiary attacks in Armagh, Lisburn and Bangor as well as more incidents in Belfast, and the violence continued on Sunday 31st March.
In these four days six civilians were killed and 65 injured. The Army had eight casualties and the RUC two, fortunately not serious. The pattern of these incidents shows a succession of acts of retaliation and revenge between one community and another.
On Friday morning I visited the city centre and in the afternoon had an urgent
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discussion on the security situation with the GOC and the chief constable. On Saturday I visited other areas of Belfast in company with the brigade commander, meeting some of his local commanders and troops responsible for security in the area. My hon. Friend the Minister of State had discussions in Belfast on Sunday morning with the GOC and the deputy chief constable. Later on Sunday afternoon, in company with local representatives, he visited Lisburn and Bangor. He reported to the Prime Minister and to me last night by telephone. After further consultation this morning, he returned to Northern Ireland.
In the course of our visits, both my hon. Friend and myself have talked to many members of the public and are in no doubt about the strength of their feelings at these latest outrages. I am sure that the whole House will join me in condemning these senseless and vicious attacks which cause so much distress and damage and, I say again, will achieve nothing. I find it impossible to understand the motivation of those, from whichever side they come, who believe that political ends can be achieved by violence or who seek to destroy the Constitution Act and power sharing not by political action but by bombing and killing.
It was a bad weekend, and it has led—and I fully understand this—to demands for increased action by the security forces. If violence on this scale occurred in cities in Great Britain hon. Members would rightly be demanding that all available resources should be thrown against those responsible. As hon. Members will know, I have since I came into office four weeks ago been reviewing with the GOC and the chief constable the security situation. I can already say quite clearly that no increase in the number of troops in Northern Ireland would eliminate the sorts of incident which happened last weekend. For example, I was told on Saturday in Belfast by Army commanders that the security forces are making about 100,000 searches a day at the Segment.
The small incendiary bombs which wrecked the stores in Bangor are easily made from commonplace materials, secreted in books or cornflake packets, and placed by apparently innocent shoppers. They cannot always be detected by security forces; their placing

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can be prevented only by the vigilance of other shoppers, and by effective security arrangements for which the stores them selves must be responsible.
Much the same is true of city centre car bombs. Hon. Members will probably have heard that a huge but selective anti-terrorist operation involving sealing off a complete area near the city centre and conducting a thorough search began this morning. It would be feasible completely to close off city centres to cars and lorries; it would cause massive congestion and bring the commercial life of the Province to a virtual standstill. It would not prevent the placing of devices of the type which were used in Bangor.
I want to make it absolutely clear that, important as the role of the security forces is and will continue to be, much of the sort of violence which happened last weekend can effectively be prevented only by the actions of ordinary citizens, who have a plain duty to report to the police suspicious activities which they see or information they have about those who plan or carry out destruction and violence. I know that the terrorists try to prevent this by intimidation; the more people who come forward to help the security forces, the more difficult it will be for them. The security forces will continue to do their utmost to arrest them from whichever section of the community they come, and to remove them from the society which they are poisoning. Some of them are even prepared to give interviews to the Press about their crimes.
There is no question whatsoever of the security forces being prevented by political directives from taking any necessary action against terrorists; the forces have always to bear in mind the consequences of their actions on the commercial and social life of the community which they are protecting. At the end of the day, it is for the community and the police in close co-operation to bear the main responsibility for law and order in Northern Ireland. I can assure the House that I will do everything practicable to support them in this; and to any of the terrorist organisations who, as I have heard suggested, have increased their acts of violence recently to test the present Government I can say quite clearly that I pledge this Government to act resolutely to deal with the terrorists from wherever they
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come. Nor will they deflect us from those political decisions and actions which this House has supported.
Mr. Pym: The House will be grateful to the Secretary of State for his statement It is certainly horrified by the events in Northern Ireland over the weekend. I am sure that every hon. Member will join with the right hon. Gentleman in condemning what happened. It was, as he said, a very bad weekend.
What is the extent of the increase in violence? It has by no means been at a particularly low level recently. Has it doubled? Has the right hon. Gentleman any view about the underlying cause of the increased violence in recent days? Can he say whether there is any connection between the increase and the characters who, for one reason or another, have been released from detention in recent months.
There is a myth in Northern Ireland which needs to be dealt with very firmly. Therefore, can the Secretary of State confirm that political constraints are not hindering the work of the security forces? I believe that they are not. I am sure that the right hon. Gentleman and the House will agree that the security forces are doing a superb job in very difficult circumstances. Is it not essential for all people in Northern Ireland to pay the maximum possible regard to their own security, and, in the case of businesses, to undertake regular inspections? That would contribute to preventing a repetition of the sort of event which occurred in Bangor.
Regrettably, is not intimidation more rife than it was before? To what extent do those who have been forced to leave bombs at the behest of terrorists feel able to co-operate and provide information? What advice would or does the right hon. Gentleman give to people who may be threatened by intimidation? What action should they take? Whom should they telephone? What steps should they take to try to get out of being put in that position?
I am sure that the House will agree that the Secretary of State is right to continue the anti-violence campaign to the maximum, and that the elimination of violence is the top priority. I agree with the right hon. Gentleman that ending violence is a responsibility shared by

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everyone in Northern Ireland and is not a responsibility only of the security forces. Does the right hon. Gentleman agree that the co-operation of everyone in Northern Ireland in giving active and positive support and help to security forces is a crucial factor in ending the violence, which is the desire of the whole House?
Mr. Rees: I agree with the right hon. Gentleman that, outside the political aspect, this will be dealt with only with the co-operation of the community. We shall discuss the political aspect later.
The right hon. Gentleman asked whether there had been an increase in the number of acts of violence. Although there has been an increase in bombing, the increase overall is not substantial. But that reply, taken out of context, might make the people who have been injured this weekend feel angry. The figures over the last two or three years show that more than £1 million-worth of damage has been done. But that answer does not help someone who lives in the middle of Belfast—in Royal Avenue—for example. These comparisons matter, I suppose, in a statistical survey, but a small bomb that kills is far worse than a big bomb that simply damages property.
I mentioned one cause of terrorism, which is to test the Government. Other causes have been put to me, for example, that terrorism is a means of bringing down the Northern Ireland Constitution Act and the Sunningdale Agreement. It has also been put to me that this is the spring offensive by members of the IRA to bomb themselves to the conference table. On behalf of the Government, I say that we talk with those who act politically, because that is why the House is in business.
With regard to those who have been released, I simply say that I signed ICOs for some people who were released at Christmas. There is evidence that some who were released are going back to do what they were doing before. I leave it at that. We must return to that matter on Thursday. I emphasise that if a man who has been released returns to the same trade of violence as before, he will be dealt with by the security forces in exactly the same way as will anyone else.
I said that there are no political constraints, but there are constraints known
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to the Army that the Army does not need to be told about. For example, what is to be done in an area that is being searched? Does the Army just go in indiscriminately, as some people seem to want? Some people seem to think that it is a matter of going in and showing who is boss, but that is not the way in which the Army wants to behave.
I have not—and the right hon. Gentleman said that he had not—put any political constraints on the use of the Army. There are regular inspections. Shop owners, particularly in areas where there has been little trouble in recent years, will have to engage and train guards. That is the only way to deal with small bombs.
There is a temptation for those who are well away from the trouble to utter platitudes about intimidation. It is easy for me, as it is for the right hon. Gentleman. cosseted and protected as we are, to say what people should do. While some intimidation can be dealt with by the public using the confidential telephone system, what happens in proxy bombing is that large bombs are made from nitrogenous substances which come from agricultural products. The Conservative Government did much to control the use of gelignite. The procedure now is that the bombers hold up a vehicle, put the material in the back, put in a charge and tell the man to drive the vehicle down to town. They tell him that if he does anything else he and his family will be dead. I would be a fool to offer advice to that man. He may be able to find a means of not doing what he is asked to do and he may want protection afterwards. For the IRA to bomb by proxy is cowardly when one sees the results.
Mr. West: I am grateful to the Minister for his assurances. Although I appreciate that we shall have a greater opportunity to examine this problem on Thursday afternoon, I stress the urgency of a remedy for the problem. Policy in Northern Ireland seems to have been a failure over the last four years. Terrorism has continued, and the IRA has never been stronger than it is now. It was significant that the Minister did not mention the IRA in his statement. Lest the House should be misled, the right hon. Gentleman said that a bomb was placed outside a Roman Catholic public house,

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but bombs were also placed outside Protestant public houses this weekend. I should like to inform the House that we believe—
Hon. Members: Ask a question.
Mr. Speaker: Order. There is to be a debate on Northern Ireland later this week. This is the time for supplementary questions.
Mr. West: Does the right hon. Gentleman agree that the main imports of explosives are from Southern Ireland and that there is a strong case for tighter security on the border, which is now wide open? This has been going on for four years. I ask the Minister, on behalf of the people of Northern Ireland, to tighten up security along the border and to man the main crossing points on the border with security forces for 24 hours of the day. That seems to be a sensible way of doing it. I ask the right hon. Gentleman not to push the anger of the much-strained community in Northern Ireland any further. It would be dangerous so to do.
Mr. Rees: I have no wish to push any part of the community in Northern Ireland. Like all administrations here. we are conscious of our deficiencies in a part of the United Kingdom that has a history of violence going back for many years. There is no simple answer. The hon. Gentleman says that he has a remedy, and I should be pleased to meet him to find out what it is. My reading of the subject is that the violence has gone on for longer than five years.
I referred to the IRA in my statement. The hon. Gentleman referred to Protestant and Catholic public houses. He may well have seen an article which appeared in the Sun newspaper today in which the UFF gave details of its bloody assassinations.
I know that the hon. Gentleman feels strongly about this and that on Thursday he will stand up and say that men who say "None of us will rest until every Catholic in Ulster is dead or out of the country" are men of violence who should be dealt with. Both sides of the House are against violence. I look forward to hearing the hon. Gentleman and other members of his party saying what they really think about the UFF.
Mr. McNamara: I thank my right hon. Friend for his statement. Will he indicate to the House, as he has so rightly done in the past, that this is a matter which requires both a political and a military solution before we reach the stage of a final settlement between all parties to the Sunningdale agreement? Until we have that sort of situation, does my right hon. Friend agree that we shall remain in a state of indecision, and that it is in a state of indecision that the men of violence on both sides are able to play such a terrible part?
Mr. Rees: My hon. Friend is absolutely right that all administrations have to find the balance between the political and the security approach. There will be a chance later this week to develop that argument.
The Government have firmly supported the Sunningdale approach of the previous administration. There is no alteration from that. There are certain steps that must be taken by the Government in the South and the Executive in the North and we are still awaiting reports which are necessary before any steps forward are taken.
Mr. Beith: Will the right hon. Gentleman accept the thanks of the Liberal bench—and I suspect of many other hon. Members—for the frankness of his statement and his answers? Does he realise that he continues to enjoy support from the Liberals and that hon. Members and the people in Ulster and the United Kingdom look forward to Thursday's debate in the hope that, having had more time, he will be able to offer further assurances on the security situation, without which the political developments to which we are all looking are so difficult to achieve?
Mr. Rees: I am grateful to the hon. Gentleman. He is right in saying that security is an important part of a political move forward. The people who are bombed get angry. I noticed a report in one newspaper that the hon. Member for Antrim, North (Rev. Ian Paisley) shouted at me. That is not true. People were angry with me, but I understood their feelings. To achieve a move forward something must be done about security. The two go together, and that is the search in which the House has been engaged for some time.
Mr. Fitt: Although my right hon. Friend referred specifically to the tragic events of last weekend, does he agree that the events of the previous weekend in which more people died were just as tragic? This has been happening for the past four years.
Does the Secretary of State not agree that the violence in Northern Ireland and its escalation is a determined effort by men of violence to try to defeat agreements which were freely arrived at in Sunningdale? Does he also agree that as well as the men of violence on both sides of the religious and political divide, there are also certain elected representatives of the Northern Ireland people who, by their efforts and demeanour, are almost inciting these people to continue their acts of violence?
Will he give a firm undertaking that the Labour Government will stand, as did the Conservative Government, fully and firmly behind the Sunningdale agreement and the power-sharing executive duly arrived at by the Northern Ireland people, and that he will give it his full support? Will he further accept that the SDLP is totally opposed to all men of violence in Northern Ireland and believes that its supporters should show the same courage as our leaders are showing at present in an effort to prevent violence?
Mr. Rees: When my hon. Friend spoke of the events of the previous weekend, I am sure that it struck a chord in the minds of those right hon. Gentlemen opposite who had responsibility for Northern Ireland. The events of last weekend were very bad, but it is remarkable how soon we forget the events of the weekend before that, the weekend before that and indeed the weekend before that. But the people of Northern Ireland do not forget these events. If we are looking for political freedom, we must not forget that these events are eating into people's hearts to such an extent that they find it difficult to act politically.
We must give encouragement to those in Northern Ireland who act politically. This we shall do, and the Labour Government will support the general policy of their Conservative predecessors. We have said this before, we say it today, and no doubt we shall say it again during the full day's debate on Northern Ire-
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land on Thursday. That is, and will continue to be, our policy.
Mr. Kilfedder: I join the Secretary of State for Northern Ireland in condemning the terrorism over the weekend which led to the destruction of many premises in my constituency in Bangor, which up to now has been a relatively peaceful part of Northern Ireland. I wish to express sympathy to the relatives of those who died during the past week and to the injured, including the gallant policeman who was badly burned on Saturday. I condemn violence from whatever side it comes, but would not the right hon. Gentleman agree that the IRA has claimed responsibility for tearing the heart out of the towns and cities of Northern Ireland in the past few weeks?
On the question of the UFF, the Secretary of State referred to an article in the Sun newspaper. Is it not possible that those who gave the interview were impostors—[Interruption.] I am not prejudging the issue—just as a Captain Wilson alleged that the UFF was responsible for the murder of Senator Fox, when in fact the Provisional IRA was responsible for that act? Why was action not taken immediately after the Bangor bombing to seal off and search thoroughly the notorious safe houses used by the IRA in Bangor and Donaghadee?
Is the right hon. Gentleman aware that the Ulster people are angry at the words used by the Minister of State, Northern Ireland Office, who told the people of Northern Ireland, in the midst of their anguish, that violence would end only when the communities so decided? Does he not realise that the IRA has no interest in peace but is interested only in capitulation—and that the Minister of State's advice to the Ulster people is like telling Londoners to make peace with the criminal underworld, to leave their houses open and to let them steal and murder? This is not the answer. Finally—[HON. MEMBERS: "Too long."] Hon. Gentlemen opposite do a great deal of talking. Finally, will he not agree that if the people are to give their judgment on Sunningdale, there should be an election for the Northern Ireland Assembly?
Mr. Rees: On the last point, which was a very good point, I must tell the House that there will be elections, but not

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yet. They will be held in the fullness of time under the Constitution Act, and the Executive of Northern Ireland—the power-sharing Executive—will be given the time which the United Kingdom Parliament, to which the hon. Gentleman is loyal, said that it would have. The Constitution Act envisaged a period of four years. It is the aim of the Labour Government to give the people the chance to show that power sharing will work.
With regard to the UFF, I am interested in the suggestion that this is all being done by imposters. There are a number of people who always find wrong on one side of the question but not the other. The UFF, whether they are in the picture or not, are a bunch of murderers who murder on a sectarian basis. They are evil, and the Provisional IRA members are evil as well; it comes equally from both sides.
In regard to Bangor and the question of a search, I have not yet had a full report, but I understand that the bombs were small ones made out of readily available material. It is not a question of searching for a large bomb factory. It is extremely difficult to find these stores; indeed one could not find the factory if one searched for it. We must remember that one unit in one segment of Belfast has been there for three weeks; it has searched a million people in three weeks. The terrorists went to Bangor because it had been a quiet area; they went to that Protestant area to whip up feeling against Sunningdale and the Constitution Act. They know what they are doing. We ought to know what they are doing and stand firm for political action.
Several Hon. Members rose—
Mr. Speaker: Order. I must ask for the assistance of the House. This is the last day of the Budget debate, and I must remind hon. Members that a whole day has been allowed for a debate on Northern Ireland later in the week.

ORDERS OF THE DAY
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [26th March].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed.
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of amendment with respect to value added tax so as to provide—

    (a) for zero-rating or exempting any supply;

    (b) for refunding any amount of tax;

    (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

    (d) for any relief other than relief applicable to goods of whatever description or services of whatever description.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION
Question again proposed
3.55 p.m.
The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): This is the last day of the Budget debates. I appreciate that in opening the debates last week my right hon. Friend the Chancellor of the Exchequer said that he spoke with great humility and trepidation. My right hon. Friend is surely among the least spectacular examples of trepidation the House has seen on such an occasion. But perhaps his nervousness would have been more in evidence if he had known of the strange reception that was about to be given to some of his measures as well as some of the strange criticisms made of them.
I propose to discuss three aspects of the Budget at home: investment, prices and—oddly enough—the Stock Exchange. I hope to find time, without being too tedious, to deal with some of the international aspects of our affairs.
On the question of investment, my right hon. Friend the Chancellor of the Exchequer has been accused of perpetrating a Budget which is anti-industry

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in that it does not encourage investment but positively discourages it. It seems to me to be a strange charge which fails to take into account either the rôle of the Budget in our affairs at this time or the background against which the Budget was produced. The Budget does not pretend to be the exclusive means of influencing the direction of our economy. It was a Budget prepared, at three weeks' notice, against a crisis background that was not of our making, against the background of a three-day week which had to be removed, and of a nation that had to be brought back to full five-day-week production. The rôle of the Budget was to assist in the urgent task of getting the nation back to full production.
It would have been very strange if in the Budget, at this delicate point in the operation of moving from a three-day working week back to a five-day week and full production, my right hon. Friend had produced some sort of gimmicky rabbit from the hat to inspire confidence that he was keen on investment. He did a good deal better. He said quite plainly and unambiguously that his Budget was intended to initiate a policy of full employment and maximum growth. If his policy can live up to those words, that means that my right hon. Friend is favouring investment.
What is crucial for investment, as opposed to sudden budgetary appliances produced for newspaper effect, is the creation of the expectation among industrialists of a sustained and rising profitable demand. It is that which produces investment in the long run. It is that which in unambiguous terms my right hon. Friend outlined as being his policy.
If anyone has any sense of balance, looking at our kind of society and our mixed economy, it is plain that a Chancellor of the Exchequer who commits himself to a successful economic policy—which is to produce sustained growth—is committing himself to a necessary and profitable rôle, not only for public enterprise, but also for private enterprise; more particularly as there is in this programme some diversion of production to more profitable areas of exports. My right hon. Friend laid stress on the profitable opportunities which will be available to businesses in the export trade.
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That is what my right hon. Friend is aiming for. He stated his position in terms which could not be faulted and which, if we are able to carry out our programme, will result for the first time in that sustained and expanding profitable demand which our industry needs so sorely.
If there is one ill from which British industry has suffered since the war it is from the series of "stop-go's" that we have seen. The "go's" were well intentioned and the "stops" became inevitable because of the lack of strategy and system behind the original goal.
I commend the position of my right hon. Friend which in plain terms says that he has had enough of bursts of unsupportable and unsustainable growth and that now the nation needs, and will get, a carefully-thought-out strategy for sustained and sustainable growth which is precisely what is required to produce the improvement in our investment performance that we need.
I do not claim that the previous administration were wicked men. I think that they were foolish men with good intentions unsupported by serious strategy. My right hon. Friend the Chancellor of the Exchequer has good intentions. He intends to support them with a careful strategy, and that cannot be a ground for complaint.
In the past these bursts of rapid unsustainable increases in production have produced immense rises in industry's intentions to invest. Instead, we want rises in actual investment. It is not spurts followed by uncertainty and then by a "stop" which produce real investment, as opposed to the paper intentions in the Financial Times. What produces real investment is sustained growth. That is what my right hon. Friend has aimed at, and that will be our target throughout our period in Government.
I can deal briefly with the criticism on some other grounds. The leaders of industry tell us that even at this moment bottlenecks are developing because of the speed and anxiety with which industry is seeking to get back to full production. What a moment to offer a gimmicky attraction to investment when there is the greatest difficulty in coping with the sudden spurt in demand now that we have

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released industry to get back to its full-time tasks. It would be a grave error to inject sudden extra demand, whether on the investment account or on any other account. We have still to get over this delicate period of recovery from the three-day working week and the bottlenecks which are occurring.
Other complaints have been made. My right hon. Friend is being told that he has ignored the liquidity problems of companies. We believe that there is no general shortage or difficulty of liquidity which would interfere with investment intentions. No one can be certain about this, and, if we are proved wrong, nothing could be more easy than to adjust as we went along. We must not have this naïve charade in which the Chancellor of the Exchequer is said to be decreeing for all time the level of liquidity to companies.
Although the GECs and ICIs have ample liquidity, I accept that, because of the astronomical rise in commodity prices and the difficulties of a three-day week, some companies may suffer from liquidity difficulties of a special kind. Here, the Governor of the Bank of England and the banks have been doing splendid, flexible work, and they will continue to do so to save these smaller industries from the damaging consequences of the three-day week and to help in the difficulties which may arise because they are in trades where cash flow is urgently required because of spectacular rises in the prices of commodities which may be their raw materials. That is hardly an anti-industry position which has been adopted by my right hon. Friend in enforcing and reinforcing the banks' active and flexible achievements to deal with uneven liquidity requirements.
There is another factor which militates against investment in the long run. I do not like to score party dialectical points, but the previous administration have many records to their credit—or perhaps the word should be "discredit". I am bound to mention another record. They achieved record interest rates. Nothing could be more inimical to the sound allocation of investment resources than the high interest rates that we have, and my right hon. Friend has said that it
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will be our intention to bring down those interest rates.
Sir John Hall: How?
Mr. Lever: If the hon. Gentleman will be patient, he will hear.
Interest rates are partly an international phenomenon. But the Conservative Government must not ride off on that, as they sought to ride off other matters with a better case like commodities, which are an international phenomenon. I cannot say that they helped commodity prices by their sterling parity policies. But when our interest rate is almost double that in the rest of the world, we are entitled to question the enthusiasm of the gentlemen who allowed this to happen. I could wish that some of those who have been so vocal about my right hon. Friend's inability in three weeks to produce some contrivance to spur investment at the wrong time would have had something to say as vocal about the Conservatives' performance on interest rates at the right time, because high interest rates of this character have nothing to recommend them.
Sir J. Hall: Will the right hon. Gentleman say how he proposes to drive down interest rates?
Mr. Lever: I have asked the hon. Member for Wycombe (Sir J. Hall) to contain himself. I shall he dealing with that, necessarily briefly—unless he wishes me to continue for the rest of the afternoon—[Interruption.] I should be happy to do that. I am encouraged by the reaction to my suggestion from the Liberal benches. I shall deal copiously with interest rates later.
What must be kept in mind is that the Budget is only the beginning of the economic management. It is not the be-all and end-all of modern investment management. It has a certain ritual panache which I suspect my right hon. Friend enjoyed to the full judging by the photographs in the newspapers. Frankly, it ceased to be the key action in the management of the economy.
Day by day, week by week, and month by month the Chancellor will be watching, standing at a whole host of controls available to him to keep pointed at his target. It is difficult to guarantee, but his target is the full employment of our

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people and the creation of added wealth for our society.
The next point that I want to make concerns prices. I do not know what, in the record of right hon. Gentlemen opposite, should give grounds for merriment. It would not be hard to improve on the record that they left as an inheritance for us. Indeed, it would be difficult not to improve upon it.
The second point on which the Chancellor has been criticised by the Opposition concerns the increase in nationalised industry prices. I will not waste a lot of time on this political charade. I know that this point has not been made by the right hon. Member for Altrincham and Sale (Mr. Barber) because the former Chancellor of the Exchequer indicated his intention to increase these prices. I am glad that right hon. Gentlemen on the Opposition Front Bench nod acceptance of this point. I want to put it publicly on record, with their assent, that these price rises were inevitable within our system. Whichever party took office, these price rises would have occurred. We may find a better way of running our nationalised industries so that we are not automatically enslaved to these price rises without having to undermine the commercial efficiency of the enterprises. That is another matter that will require time and thought.
All I want to say on prices is that what the Chancellor has done of great importance is, for the first time, to initiate an attack from the other end of the equation on inflation. In other words, instead of always looking at wage increases as the source of inflation, he has started—we have had a new initiative, the first since the war or the immediate post-war period of a substantial size—to tackle the problems of prices and to try subsidising food and the like.
Mr. Nicholas Ridley: What is the point of making food marginally cheaper and at the same time making electricity equally more expensive? Surely, in that whole operation they will cancel each other out?
Mr. Lever: The hon. Gentleman, not for the first time, is at odds with his own Front Bench. His right hon. Friends have accepted the inevitability of an electricity price rise. A moment ago they were all
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nodding in encouraging agreement. Therefore, he must go to his right hon. Friends who are nearer to him for the instruction. [HON. MEMBERS: "What is the answer?"] The answer is simple. The electricity price rise has been made inevitable by the previous Government. What was not inevitable was the holding back of food prices by my right hon. Friend's initiative. It is for that that I claim credit. We cannot avoid inheriting an electricity price rise. However, we were able to bring forward a new initiative which, for reasons to which I shall come later if I can get over some of the interruptions, has special importance at this time. In passing, it seems to me that all attempts to solve the inflation problem by assaults on real wages are foredoomed to failure, and rightly so, in our modern society.
Mr. Robert Carr: The right hon. Gentleman will no doubt remember—he seems temporarily to have forgotten—that the point I made last week on behalf of the Opposition both in this House and outside was not about nationalised industry prices. I said that if we were to do that it would be folly and wrong at the same time to increase other prices by indirect taxation. The Chancellor admitted that the increases in prices as a result of VAT and excise duty have a bigger upwards effect on the cost-of-living than food subsidies have a downward effect.
Mr. Lever: Not if we include the rent freeze. That is a different point from that that was eagerly being made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
I turn now to a subject rarely discussed in the House—the stock market, the Stock Exchange. However, I confess that a few hon. Members have been interested in this area at one time or another.
One cannot fail to notice that since we were elected the stock market has been moving quite sharply downwards, though not as sharply as it moved downwards, immediately before we were elected, under the Conservative Government and the three-day week. The impetus was there, it is part of our inheritance, and it has continued downwards. I confess that the election of a Labour Government is not regarded on the Stock Exchange immediately as a bull point and

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that it causes a certain amount of dismay, but those who are normally participants on a large scale professionally in that area are rarely among the avant-garde in politics.
It is being said in some quarters that the reason for the stock market's slide is not only that the Chancellor and the Government are anti-industry, but that they are against the private enterprise sector and will not allow it to function prosperously. It seems difficult to know how we can hope to have any economic success if our aim is to cause the private sector to collapse in under-nourished dismay. [Interruption.] It is said that we are doing it not by accident but by conscious design, and that dislike of the private enterprise sector is motivating my right hon. Friend. If he is intent on doing that, he would surely be designing his own electoral downfall.
My right hon. Friend is intelligent enough to know that if he were designing the downfall of the private enterprise system in our society and the consequent damage to our standard of life, our exports, our services and innumerable other aspects, it would be right to attribute to him, to be coherent, the motive of intending a political coup. If I were persuaded that my right hon. Friend was out to bring about the collapse of the private enterprise system, it would be right to believe that he saw himself in the rôle of dictator—a genial but firm dictator—who had not troubled to go to the electorate in the usual manner. However, until I am persuaded of that as a second proposition, I shall not be persuaded of the first.
It is, and has been, said of every Labour Government since 1945—I realise how ancient as well as delapidated I am because I can recollect vividly the clichés of the 1945 Labour Government—that to them "profit" is a dirty word. If so, I must point out that my right hon. Friend had it on his lips several times and that his taxation arrangements relate closely to the success of that dirty word in industry and in private affairs.
At all times of a Labour Government we seem to have a kind of amnesia in which we forget that this is a party not of wreckers but of responsible government which has been in Government for 11 of the post-war years and had a
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responsible record of achievement in those years.
It is also true that not all people favour the particular adjustments and advances in social justice advocated by my party and by my right hon. Friends. But it is not possible for our society to remain wholesome and sound if we attempt to stay still. It is the neglect to bring up to date the relationship between our fiscal and economic management to the moral concepts of our society that endangers private enterprise. It is the adjustment that protects it or protects its rôle. The clearer it is that private enterprise is operating within a framework which broadly accords with our concepts of social needs and justice, the more extensive and durable will be the rôle of private enterprise in modern society.
I can state my own position without any diffidence. I have a quotation which I readily give to the House because it expresses my own views:
"It is clear to the serious student of modern politics that a mixed economy is what most people of the West would prefer. The victory of Socialism need not be universal to be decisive. I have no patience with those socialists, so-called, who in practice would socialise nothing while in theory they threaten the whole of private property. They are purists and therefore barren. It is neither prudent nor does it accord with our conception of the future that all forms of private property should live under perpetual threat. In almost all types of human society different forms of property have lived side by side. Where the frontier between the public and the private sector should be fixed is a question that will be answered differently in different nations."
That exactly states my own position; the gentleman who wrote it, of course, was the late and much respected Aneurin Bevan. I am happy to find myself after his death in the complete identity with his views that I had on personal terms when he was alive.
As we move to a better economic climate, after the trials and tribulations of the confrontations, the three-day weeks and the strikes, we will hope to make improvements in the standard of life of everybody who is able to make a contribution to our economic achievements. I sometimes think that some private enterprises—I have great respect for them—ask too much. They sometimes ask that every member of this party, whenever he speaks, should always speak of them in affectionate and admiring terms

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in every aspect of their achievement. My advice to them would be that it is enough to be useful, reputable and properly rewarded in modern society and that they should not waste too much time in seeking to be loved as well.
All this is a preamble to my comment about the decline in the stock market. We are not directly concerned, but we are indirectly concerned. First, I should like to make it clear that we find it unwelcome that so many small savers should be adversely affected in this way. We are by no means indifferent to this fact. We get no joy out of anyone's losses, but least of all out of those of the many small savers and pension funds and the like who have invested in equities in the modern world. We are not unaware of this, and we greatly regret it.
But there is another, more fundamental reason that troubles us for the decline in the stock market. It is that at the moment, because of the quite unjustified nervous fears, not to mention the unhappy bruising experiences with the previous Government, the stock market is at a level at which capital assets are in effect on offer at a fraction of their replacement cost. I do not want to go into this at length, but so long as this position prevails there cannot be successful industrial investment. If existing capital assets can be bought for a fraction of their replacement cost, few people will be eager to bring into being new investment assets or even to replace the existing ones.
For this reason, although we are not directly concerned with the stock market, I have no doubt that it will in the end reflect the economic success at which we are aiming and which we are determined to achieve.
Mr. Ian Lloyd: The right hon. Gentleman poses the question of the reaction of the stock market. Surely it assesses two things—not only capital assets but a discounted flow of future income. Is it not its great scepticism about the discounted flow of future income that is resulting in the present position?
Mr. Lever: The Stock Exchange is a remarkable institution and assesses many different things. If I had time, I would tell the hon. Gentleman some of the
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things that it assessed when his own Government were in office. Most of its fall occurred under the previous Government. All the various things assessed cannot be comprehended in one speech, even if I take up the rest of the afternoon as I have been encouraged by the Liberal Party to do.
I should like to move briefly to the international background against which our affairs have to be regulated. At the moment the world is in a curious state in international monetary affairs. We are between two systems—the one we used to have and the one we hope to have. This is a rather inconvenient time at which to be conducting the affairs of a great trading nation like Britain. Bretton Woods died finally in August 1971 when America officially declared the dollar unconvertible, but the system had been ailing for some time and the reason for its demise instead of its restoration in an adapted form was that European countries and the Japanese, who had made so remarkable a recovery under the stable financial system which had been brought about by Bretton Woods, were quite rightly readier to claim their new and growing rights to voice their opinions as their strength increased. But this claim was more swift than was the readiness to accept the new responsibilities which came with that recovery and with that growing monetary power.
However, whatever the reasons, which I cannot go into in massive detail this afternoon, that system collapsed. The floaters and the unreluctant adjusters took over. I have always been a reluctant adjuster. When one adjusts a parity downwards, the real wages of one's work-people go down. That is the object of the operation. So, of course, as I am reluctant to drive down the real wages of the people, I have always been a reluctant adjuster, which has been thought to be an offence under the old Bretton Woods system.
But the unreluctant adjusters and the floaters, so-called, took over, and, at a period when we needed desperately a higher level of international co-operation in monetary and trading affairs, we got a lower level of co-operation in monetary and trading affairs and even in politics as a consequence. What we needed was not the abandonment of international co-operation in favour of all sorts of

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unilateral mechanisms of managed floats and the like but a new co-operation, more subtle in operation than the previous one. in monetary and economic affairs.
For example, the somewhat simpliste liberalism of GATT, although it was useful in the immediate post-war period, had serious weaknesses which made themselves manifest as Western Europe and Japan recovered and the necessity for some new self-disciplines, unthought of in the early GATT enthusiasms, started to become evident.
We needed, in the monetary field particularly, subtler mechanisms of parity change when they had to occur, but above all we needed in the monetary field a more fundamental recognition of our interdependence as countries than on the absurd and naive parrot cries for equilibrium which have dominated the last quarter of a century.
A modern monetary system has to be one which organises a prosperous disequilibrium, not one which seeks to put a straitjacket of accounting equilibrium on the affairs between nations. I have preached this doctrine ever since I have been in this House, and I am sorry to have to record that the OPEC countries managed to be more convincing in one month behind this thesis than I have been able to be in 20 years. Everyone has now come to see that there is no choice but to be in current account disequilibrium of a major character.
Unhappily, of course, the commodity price changes, even before the oil price changes, have exposed the bankruptcy of 25 years of nonsense that has been preached about parity changes as the cure-all for the so-called non-problem of the balance of payments.
On this issue, I could have wished that we had present Mr. Enoch Powell, who has left our counsels. He was always a touching spectacle preaching to the recidivist flock around him who long ago abandoned the doctrine to which he was so patiently calling them. There he was, a kind of optimistic muezzin, calling the faithless to prayer, and they, oddly enough, showed a strong disinclination to join him in his nineteenth century temple. Alas, he is no longer with us to argue for parity as the cure-all. I should love to hear from him how one can allow free market forces to deal with the
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oil deficit by competitive parity devaluations.
The old theology is dead and a new theology is liable to rear its head. It is the theology which distinguishes between the oil deficit and the non-oil deficit as being the fundamental matter of great concern to us all. The true distinction is between that part of the deficit that one can cover without self-injury, and hence without injury to one's interdependent friends and trading partners, and that which must be financed. The oil deficit merely highlights the old problems that we are facing, because it presents them in a more sharply defined form.
I want to say something about the grave problems which the oil price rise presents; and to a lesser extent commodity price rises have a similar effect. The previous Chancellor rightly said that the oil price rise was both inflationary and deflationary, a matter which seemed to puzzle our departed muezzin.
The oil price rise is both inflationary and deflationary because it is demand deflationary and price inflationary. This presents real problems, because in a situation in which prices go up wages have to keep chasing prices in order merely to keep demand at its proper level, and it is demand deflationary because the OPEC countries cannot consume the purchasing power that has been transferred to them by the rising prices paid by our people. We would be faced with a slump were it not for the fact that wages rise to cope with rising prices.
But is this the wisest way of solving the problem? If we get into a chronic situation in which commodity price rises force a shortage of demand, that can be remedied only by wages chasing prices. Wages will catch up, but they will always be a little behind, and there will always not be quite enough demand, and always at the price of catching up to renew the problem by a further price rise. This is not the best solution that we can find, and it is in that context that I welcome my right hon. Friend's courageous attempt to do something at the beginning of the cycle; that is, to try to keep prices down and sustain demand other than by relying upon a wage chase.
How do we organise the orderly pricing of oil, without further addition to the international price spiral, in which the

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ventures concerned shift their prices upwards to cope with the eroding currency which in part is caused by their price rise and was adding another dangerous inflationary factor to our problems?
The second problem is what to do about the orderly reflux of balances that accrue to the oil-selling nations? Incidentally, the reaction of the previous Government was extremely ambiguous to the Kissinger initiative which called for international co-operation by consumers on this question. Their lurches into bilateral dealings were exceedingly dangerous, because if we ended up with $50 billion to $90 billion a year flowing from currency to currency and swirling around markets of the world it would distort one currency by forcing revaluation, and distort the value of another currency by forcing an unnecessary devaluation of money as that money flowed from currency to currency.
What is more, the political consequences would not be to the advantage of the oil producers—or the consumers—because the former would be tempted to exercise the kind of political power that would go with these financial holdings. There is evidence of that temptation having occurred. In the end, it could only poison relations between the oil-producing countries and their consumer customers if this kind of political power were to develop. The nightmare fantasies, as they largely are in relation to the American multinational companies, would be a reality in the hands of the oil-producing countries if we did not organise some orderly reflux of the balances. We have to deal also with the price inflationary consequences in the terms that I have mentioned, and we have to avoid the dangers of a slump which the demand deflationary consequences of oil prices would bring about.
Everybody pays lip-service to the case. Everybody says that we cannot possibly engage in a rat race of exports to cover the oil deficit, that we have to finance it, but as long as it remains lip-service to international co-operation not only shall we not be protected against a rat race but a rat race is inevitable.
Already round the world every nation is showing signs of joining in this bilateral dealing which can only result
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in disaster for us in the long run. I was disappointed in the former Leader of the Opposition, because towards the end of his period in office he appeared to lurch into a kind of Gaullist position in its worse sense, not in the sense of the great general's genius but in his more narrow and vulgarly anti-American postures and his unwillingness to take part in large-scale international co-operation.
I am sorry that the country in Europe which, apart from my own, I admire most, and whose culture, institutions, and lauguage I love most, France, is pursuing such a dangerous, foolish, and, indeed, suicidal course of seeking to prevent international co-operation to deal with the problems that I have outlined. They must be dealt with urgently if we are to avoid major disasters.
Mr. J. Bruce-Gardyne: The right hon. Gentleman promised to explain how the Government plan to bring down interest rates. Will he say something about that?
Mr. Lever: I thought that everybody was getting a little restive, but, if the House is anxious to hear me, let me tell hon. Members the following about interest rates. The present interest rates are outrageous, dangerous and destructive, and they have been brought about by the mismanagement of our international position, largely by the previous Government. World rates are high, but our rates are nearly double those, and it is that that I wish to deal with now.
We cannot cope with all the world rates, but the Chancellor can close the gap between our rates and the prevailing world rates. The first thing that he will do is to pursue economic policies that will tend to bring about the parity and stability that was woefully missing under the previous Government.
One reason for our high rates of interest was the absurd and naïve position adopted by the former Chancellor of the Exchequer. He took the view that Government borrowing was a shameful, guilt-ridden thing but if money oozed into the country as deposits in merchant banks, and so on, nobody was doing anything shameful. Billions of pounds sterling came into the country, and to keep it here we had to damage our own investment prospects, our home owners and our business. We had to do that to lure £6 billion at extortionate rates of interest.

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The hon. Gentleman wants to know how I would bring down interest rates. The answer is that when we have a deficit such as the previous Government had, and no doubt we shall have, I take the view that it has to be financed. The previous Government should have had to finance it. I shall finance it sensibly and unashamedly. I shall do what the right hon. Gentleman once did; namely, borrow $2,500 million at proper rates of interest, not at anything like the rate that was paid by the previous Government. The rates when they were in office were 15 per cent., 16 per cent., 18 per cent., and even 20 per cent. It is no good the hon. Member for South Angus (Mr. Bruce-Gardyne) shaking his head. I am not used to talking nonsense in this area. I am telling him facts from knowledge. Under the Conservative Government this country has been paying to bring in sterling 15 per cent., 16 per cent., 18 per cent., and 20 per cent. interest.
On top of that, to our shame and cost, we have even paid a further sum, as has been recently announced, of £140 million insurance as well on the sterling balances which we have encouraged to be accumulated. So the hon. Gentleman must not shake his head, and he must not imagine that it is a task beyond human ingenuity to bring down rates of interest to those which are probably enjoyed by Hottentots. It does not need a singularly ingenious and constructive Government to bring this about. It needs just a reasonably sensible Government—not the kind of frivolous Government of parity changes that we had in the former Government, to my sorrow.
I do not want to run down the previous Government in many respects. The former Chancellor of the Exchequer was a courageous and purposeful man on the question of the economy, but he completely lacked strategy for handling our balance of payments, currency and parity problems. I drew his attention to this more than once, before we came to office, but he did not heed. I can only say that this country has suffered greatly, and one of the few advantages that have come about is the replacement of the former Government by the present Government.
In conclusion, clearly we are in a uniquely dangerous world situation in monetary and economic affairs. Clearly,
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in the modern world the tasks of Government in a country such as ours in that situation are very great. We have to ask ourselves, in all honesty, some serious questions. I do not attribute bad motives to any right hon. or hon. Members of the Opposition. They know that. As the right hon. Gentleman the Leader of the Liberal Party knows, I have never attributed malignity to the Conservatives when what is more obviously to be sought as the explanation for something is folly. It is always fair in the case of the Conservative Party to assume that if something is badly done it is done not from evil intention but simply from stupidity.
We are in a period of exceedingly great difficulty. I say that because any right hon. Members present are entitled to say it. Let him not boast who is putting on his armour like him who is taking it off. When we have achieved something of a solution to our problems I shall, perhaps, allow myself some vainglorious tribute. I recognise that there was no light task on the part of the Government in dealing with the complex industrial, social and monetary problems of the last few years. I recognise that we have a very difficult and complex task. One thing that I am sure of is that my right hon. Friend was absolutely right in recognising that our standards of social justice must be moved forward if we are to harness our people's efforts behind our economic attempts. This has been recognised by leading industrialists who have welcomed many of the things which my right hon. Friend has proposed. It is not only Left-wing Members of the Labour Party or of the Government who have recognised this; it is also leading industrialists.
The truth of the matter is that none of us has a ready-made, cut-and-dried solution for the problems of achieving full employment, of raising the standard of life and of holding our own in the world. But I am certain that there is no solution in attempts to dictate wages in the way attempted under the previous Government. There is no solution in the reduction of real wages in the modern society to our problems of inflation or the balance of payments, or to any other problem. Working people have recognised—certainly their leaders have recognised—that real wages are not merely the reward in modern society for their

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work and to support their standard of life, but are the propellant to industry itself, and that if a man is asked to accept an unnecessary reduction in his real wages he is not merely suffering a temporary reduction in his standard of living but threatening his job prospects because he is taking away the propellant in industrial life.
Mr. Peter Rost: Would the right hon. Gentleman also apply that argument to real savings?
Mr. Lever: Of course real savings are necessary. But even I cannot be tempted into a new sidetrack at this point. I was about to wind up my speech.
We are dealing with these complex problems. The question is: which way should they be dealt with? We have tried confrontation, which has not worked. I do not say that it was evilly intended, or that right hon. Members of the Opposition sought confrontation. They did not. What they did, however, was to prepare their relationships with the trade union movement and our working people on a basis which could mean only confrontation and which led inevitably to confrontation, with all its disasters.
We shall try something different. I shall not boast of our success before we have achieved it, but I firmly believe that my right hon. Friend's Budget is a first step and that his performance and pledges are the right ones, as announced in his Budget, and I give it my warmest support in the House.
4.55 p.m.
Mr. Peter Walker: Right hon. and hon. Members on both sides of the House would wish me to say, first, how pleased they are that the health of the right hon. Gentleman the Chancellor of the Duchy has so recovered that he was able to take office, and, secondly, to see him at the Dispatch Box in such very good form. As he has done this at a sacrifice to his proper salary as a Minister, we owe him, perhaps, an even greater debt, although in fairness, the degree of the sacrifice was swiftly diminished by the actions of the Chancellor of the Exchequer.
But we also very much enjoyed the right hon. Gentleman's lecture on the importance of the Stock Exchange and of
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the free enterprise sector of the mixed economy. We think that it was a very good lecture to deliver to the Chancellor of the Exchequer. Our only regret is that he did not deliver it to the Chancellor of the Exchequer before the Budget instead of afterwards, or, if he did deliver it to the Chancellor of the Exchequer before the Budget, it is a great tragedy that the Chancellor of the Exchequer did not take notice of it.
I start by apologising to the Chancellor of the Exchequer and to other Ministers for not being present during their speeches last week That was due to 'flu, from which hon. Members will notice that my voice will suffer throughout my remarks.
The Budget was obviously of some interest to me from my television set as the various proposals came through and the discussions took place giving immediate reactions to the Budget. Those, I suppose, most in sympathy with the Government argued that the main strategy was in order to provide sufficient to please the trade unions enough to enter a social contract with the Government. This was given as the reason—to some extent, the excuse—for some of the proposals which were criticised on other grounds. Therefore, I presume that the Chancellor of the Exchequer will put as a very high test of the success of his Budget strategy the reaction and the degree to which he now obtains this voluntary restraint on wages that he is seeking in this particular way. The Chancellor of the Exchequer must already be aware that unless he puts something voluntary in the place of what we were endeavouring to do by statutory means, certainly his economic strategy will be in very serious difficulty.
Listening to the Chancellor's Budget proposals as they came through and having studied them since, I find it hard to believe that, for example, the Secretary of State for Employment, whose duty it is to deal with the trade unions during this difficult period, really went to the Chancellor and said One of the important things to provide is a food subsidy on bread, and the lads will not mind if you do this by increasing the price of their cigarettes." I find it hard to believe that the Secretary of State for Employment said "The important thing, a vital foodstuff, is milk. Therefore, if you can reduce the price of milk by 1p a pint

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the unions will not mind if you raise the price of beer by 1p a pint", or, "Council rent increases must be stopped, and the cost of that can be met by raising the price of sweets and ice-cream and the betting tax."
The real disappointment to many trade unionists must be that the myth created very much by the Chancellor of the Exchequer himself in the months before the General Election, that all this could be achieved by taxing the rich, has been so swiftly exploded. Even during the election campaign the story was the same. I remember being on a programme with the present Chancellor on the Sunday before polling day. I heard him explain how he would pay for it all. First, he said, there would be a tax on North Sea oil, which the Tories were letting the companies get away with. Of course, we know how much a tax on North Sea oil will contribute to the solution of his problems this year. The right hon. Gentleman knew before the election that there would be no contribution from that source for several years to come. Then he spoke of capital gains and of taking back from the rich what the Tories had given them.
At no stage during the election campaign—I have studied with interest the election addresses in Huyton, Leeds, East and Bristol, South-East—did either the present Chancellor or his right hon. Friends, in their election addresses or in their speeches, say that these important social ends would be achieved by taxing such things as beer, cigarettes, sweets, ice-cream, betting and petrol. They gave the impression that that was not needed.
Admittedly, the Prime Minister did express his views on the petrol tax when he spoke to an Eastern Region Labour Party rally after oil prices had risen last October. This is how he was reported:
"Mr. Wilson said that higher petrol and oil prices would give a further twist to the inflationary spiral, but the Government had 'a ready weapon' to meet this threat—tax cuts and subsidies. The aim must be to keep down the cost of oil, whether as a motive power or as a fuel, to the present level."
As far as I know, those were the last expressed views of the Prime Minister upon the petrol tax. But, in fairness to him, since he has always taught us that a week in politics is a long time, one can only suppose that from last October to
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the present must be a very considerable period indeed.
However, the Prime Minister has been backed up in more recent times. During the election campaign the right hon Gentleman the Deputy Leader of the Labour Party, the present Leader of the House, said at Stockport:
"Of the 47½p you pay now for four-star petrol, 22½p goes straight to Mr. Heath in tax. A sensible Government who really wanted to restrain rises would reduce the tax."
It cannot be surprising to the Chancellor, therefore, to see the reaction to his Budget increases of ordinary people who buy certain basic commodiites and see themselves subsidising other commodities which, equally, they have to buy in their personal or household budgets. There has been no great enthusiasm from a large range of trade union leaders. Indeed, last weekend was hardly noteworthy for trade union leaders saying how marvellous the Budget was.
One thinks of the difficulty in which certain trade union leaders are placed. One can imagine the problem facing Mr. Scanlon, perhaps genuinely trying to persuade some of his more militant supporters of the importance of entering into a sensible arrangement with the present Government. Does he say "It is important to try to stabilise the price of bread. The Government have done this by arranging that you will have to pay a bit more for your tobacco. Likewise for milk, they have done it by putting up the price of your beer. Similarly for rents, they have done it by the betting tax and a tax on sweets." Might not those militant union leaders say that they could have done all that themselves?
It is not a social contract which the Government have sought with the unions. They are imposing a new household management contract which works on the basis of taxing the husband on his expenditure to give subsidies to his wife on some of hers. This is not the basis on which, before the election, the unions expected help to be given.
Mr. Tam Dalyell: Before the right hon. Gentleman leaves that part of his speech, will he answer one question? Why was it that for months, knowing perfectly well that certain prices in the electricity industry had to be put up, he failed to take the action which he knew was necessary?
Mr. Walker: The biggest increase for the electricity industry has been the recent rise in fuel costs, and part of it, of course, is the substantial increase in pay costs. If one statement is proved true by the nationalised industry deficit, it is the statement of the present Prime Minister that one man's wage increase is another man's price increase.
The Labour Party's programme was quite specific on the social contract:
"Workers can only be expected to moderate their expectations on money wages if firm action is being taken to hold down the cost of living."
Yet, on the Treasury's own admission, this Budget is itself inflationary. The Chancellor expects prices to rise faster as a result of his Budget than they would have done without it. Therefore, the minimal condition of the so-called social contract has already not been met by the Government. But, what is worse, the Treasury does not even know what the effects of the Budget will be upon the inflationary situation.
A remarkable reply was given by the Paymaster-General on Friday to my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont), who put down two Questions about the retail price index. My hon. Friend asked the Chancellor of the Exchequer
"what he estimates will be the effect of the increases in nationalised industry prices announced in his Budget speech on the retail price index by July, October and December 1974 and April 1975."
The Paymaster-General replied:
"I will let the hon. Member have a reply as soon as possible".
Surely, that was a fairly basic question to ask. It is all part of the Budget strategy. Next, my hon. Friend asked the Chancellor of the Exchequer
"what he estimates the effect of all the changes mentioned in his Budget speech will be on the retail price index by July, October and December 1974 and April 1975".
Again, the Paymaster-General replied:
"I will let the hon. Member have a reply as soon as possible".—[OFFICIAL REPORT, 29th March 1974; Vol. 871, c. 228.]
I hope that he will let the Chancellor of the Exchequer have a reply as soon as possible, too. He ought to have considered it before framing his Budget.
The Budget falls down, first, if it will make the task of the Secretary of State
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for Employment not more easy but more difficult.
I come then to the problems of the Secretary of State for Trade, and I apologise again to him for not having been present to hear his speech. As someone who preceded him in certain of his responsibilities, I took a natural and somewhat detailed interest in what he said. My impression from reading his speech is that he almost felt that all that was needed was to have him as Secretary of State for Trade. Some of us would argue that much more was needed because he was Secretary of State.
I have strong criticism of the basic line of argument which the Secretary of State for Trade took in his speech. First, there was the method by which he tried to underestimate the impact upon our balance of payments of the considerable rise in commodity prices. He used the somewhat phoney argument—"Yes, but part of it is due to the devaluation of the pound". The Chancellor of the Exchequer knows full well that, if the terms of trade go considerably against him in the coming months, this will add to the devaluation of the pound. He knows that the two are closely interconnected. Certainly, the Chancellor of the Duchy of Lancaster knows it.
Mr. Lever: Could the right hon. Gentleman say why, since devaluation turns the terms of trade against one, a turning of the terms of trade against one is helped by a further turning of the terms of trade against one by devaluation?
Mr. Walker: The right hon. Gentleman is well versed in these matters. He knows that, whether one has a pegged pound or a floating pound, if the terms of trade go seriously against this country, either one has a weakening of the currency—
Mr. Lever: indicated dissent.
Mr. Walker: Certainly. Second—
The Chancellor of the Exchequer (Mr. Denis Healey): The right hon. Gentleman will be aware that precisely the same commodities went up to precisely the same extent against the deutschemark, but, because the Germans manage their economy sensibly, the value of the deutschemark went up and the West Germans had a balance of payments

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surplus last year amounting to £4,000 million.
Mr. Walker: West Germany has a totally different pattern of trade from that of Great Britain. The right hon. Gentleman knows that perfectly well. It is not a reasonable argument to try to compare two economies with totally different reserve positions.
In his second argument, the Secretary of State for Trade was quite irresponsible, if I may say so, from the Chancellor of the Duchy's point of view. If the Chancellor of the Duchy is to have responsibility in advising or actually negotiating future borrowing arrangements for this country, he does not want other Ministers to give a distorted account of what the balance of trade and balance of payments are all about. Yet the Secretary of State for Trade went out of his way to give the world the impression that the deterioration of our balance of payments and balance of trade was primarily caused by the import of consumer goods. He did it first by quoting the overall adverse balance for last year as being £1,468 million. A couple of paragraphs later he said,
"Of the trade deterioration of the past two years, £1,000 million was contributed by the increase in consumer goods."—[OFFICIAL REPORT, 27th March 1974; Vol. 871, c. 502.]
What the right hon. Gentleman did not say was that £458 million was contributed by fuel, £1,562 million was contributed by machinery and £2,395 million was contributed by additional imported industrial materials. Therefore, while consumer goods imports went up by £1,000 million in that period, our industrial materials, fuel and machinery went up by £4,435 million.
We can see from those figures how dishonest is that particular argument. I hope that the Chancellor will explain what the Budget does to reduce the import of consumer goods. Does he believe that as a result of it British Leyland will be better able to compete with all the foreign motor manufacturers who are exporting to Britain? He should have a word with British Leyland, which will leave him in no doubt about how the Budget has worsened the competitiveness of our consumer goods manufacturers compared with those abroad.
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The right hon. Gentleman made one remark which I objected to most strongly. He said that the Department of Trade and Industry had not given priority to trade. I do not mind criticism of myself, but I mind criticism of a Department which, compared with its counterparts in other countries, or even with the best performance in this country, has had a remarkable record over exports in recent years. The British Overseas Trade Board has been an outstanding success. ECGD is probably the strongest organisation of its type in the world. Our trade with Europe last year went up by more than £1,000 million, an increase of 37 per cent. In the last two years we have changed our trading relationship with China very much to our advantage. Exports to Iran increased by 44 per cent. last year, and already it is fairly certain that they will increase by at least 100 per cent. this year. By a massive effort by my old Department we created a new commercially-oriented department which resulted in a 71 per cent. increase in exports to Japan last year alone.
If the new Secretary of State for Trade is able, as we were in the first half of 1973 for the first time since the war, to increase Britain's proportion of world trade it will be an achievement for which he may rightly claim some credit. I am very sorry that he used his speech to suggest that the officials of my Department, all those involved in this enormous export effort with its considerable success, did not give proper priority to trade. Perhaps the best summary of our success in exports is to say that this February on a three-day week our exports were almost twice as much as the last February of the Labour Government on a five-day week. That goes to show what an enormous improvement has taken place in this sphere.
In fairness, however, the right hon. Gentleman, after condemning the lack of priority that we had given to trade, came to the conclusion that Britain had a very fine export order book. It is remarkable to have achieved by far the best order book in our history while having not given much piority to trade.
The right hon. Gentleman is perhaps right in saying that there is scope for putting up prices. I think that the Chancellor may count on prices being increased by our exporters for two

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reasons. First, their margins can afford to be increased in competition with others. Secondly, however, the increased costs imposed by the Chancellor will necessitate increasing prices.
However, I am worried about the broad strategy. The Chancellor has pursued a totally negative policy towards trade and investment overseas. General exports will suffer the burdens of considerably increased costs There must be considerable uncertainty about our future trade relationships with Europe while the present negotiations continue, and that uncertainty may well come at a very expensive price in the months ahead. As for the potentialities of new partnerships, I ask the Chancellor of the Duchy to direct his attention to the problem because he may succeed where I never could in persuading his colleagues to take the matter seriously.
There are new partnerships to be made with the oil-producing countries. For example, countries like Iran desperately want to become major industrial nations and, with goodwill and a lack of that patronising attitude which was so apparent on the Labour benches when I negotiated the recent agreements with the Shah of Persia, there is no doubt that massive advantages in the flow of money across the exchanges in trade and in investment can take place.
Mr. Lever: What my hon. Friends and I objected to about the right hon. Gentleman's dealings in Persia was not that we sold goods to that country, but that we were engaged in dealing with them in a kind of panic bilateralism instead of against a background of international cooperation which was absolutely essential in the handling of the problem.
Mr. Walker: The right hon. Gentleman completely misunderstood and did not bother to find out what the negotiations were all about. They started in July long before the oil crisis. We had been working hard to build up a totally new economic relationship with Iran for nine months. Already we had announced £260 million of projects for British industry, and, in addition, we announced the recent arrangements.
The real problem is that the Budget has a tendency to discourage outward investment, and that could be a serious
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mistake. One of the things I did in the Department of Trade and Industry was positively to try to encourage British retailers to buy retail outlets in Europe in order to sell British goods there. It may be very much to the advantage of the balance of payments for that to be encouraged and continued in every possible way. Likewise, it is very much to our advantage for British firms to invest in assembly plants throughout the world, sending British products out to them. It is also important to have access to new markets. That may well result in outward investment.
The Chancellor also fails in any way to encourage inward investment. The Budget does just the opposite. Its whole negative attitude towards investment is in complete contrast to the approach of the Tory Government. The Chancellor's attitude to Europe is the same. It might give him some delight to see additional tax paid by foreigners in London, but the delight is shortlived if those foreigners move their offices abroad, taking their business connections and purchasing power to foreign centres.
In recent years we have succeeded in building and improving the City of London as a financial centre and measures of this sort put it at a grave disadvantage. The Chancellor says that he is sorry about the poor chaps on the Stock Exchange losing their money and about the pension funds. He fits in with the new tone of The Guardian editorials which say that when the Stock Exchange slides like that it is not very good for ordinary people and that it is not just the few big investors who are adversely affected. But what a remarkable thing, when the Stock Exchange was already at low level, to impose the sort of measures on industry which the Chancellor imposed and, specifically for the Stock Exchange, to increase stamp duty from 1 per cent. to 2 per cent.! What a way to boost investment, and what a way of demonstrating that he is serious about trying to improve the state of the equity market!
Once again, there are disadvantages to this country with regard to our foreign earnings. We shall now be the only financial centre in Europe with a stamp duty. Does the Chancellor of the Exchequer think that that is an advantage to the City of London as a financial

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centre? All those Commonwealth companies registered in the United Kingdom will be well advised to consider registering elsewhere and saving the stamp duty.
I hope that the Chancellor of the Exchequer will take my next suggestion seriously. I think that the increased stamp duty is a mistake, but it may be part of the right hon. Gentleman's Socialist policy. However, if the right hon. Gentleman wants to impose it as a further tax on capital, I hope that in Committee on the Finance Bill he will consider, for international reasons and in the interests of the country, the possibility of exempting overseas investors. If he does not, he will find that a number of other markets in the world will thrive at the expense of London. He should also consider the possibility of exemption for life assurance and pensions investment.
The real criticism of the Budget is of the Chancellor of the Exchequer's attitude to the mixed economy. The Chancellor of the Duchy of Lancaster went out of his way this afternoon to say how he loved private enterprise, how Nye Bevan loved it, and how the Government had no hostility towards it. I was reminded of the last time I debated with the right hon. Gentleman, on the Companies Bill. The two main speakers for the then Opposition were the right hon. Gentleman and the present Secretary of State for Industry. The right hon. Gentleman will admit that his winding-up speech was much more of a reply to his right hon. Friend than was the winding-up speech for the Government. The two main Opposition speeches could not have been more diametrically opposed in their affections for the investor.
I have a feeling that we have been witnessing a similar occurrence today, that the right hon. Gentleman is put up to speak for the Government to utter pleasing sounds to the free enterprise system—"They all know Harold. Let him say that we love the Stock Exchange". In fact, the present Chancellor of the Exchequer has succeeded in putting down the Financial Times ordinary share index by a greater amount in one week, as a result of his Budget, than any Chancellor in history. Something needed to be said today. I gather that the fall has continued today, and that another firm was
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hammered on the Stock Exchange. Those are serious consequences, as the right hon. Gentleman understands, but nothing in the Budget did anything other than aggravate the situation.
When it comes to our attitudes to the mixed economy, whatever other criticisms can be made of the previous Government, it cannot be said that we treated the nationalised industries in a way that did other than to encourage their expansion through the whole range. The airlines went through a massive period of expansion under us. The railway investment programme was approved, and electricity power station programmes were approved and went ahead. We gave sanction for the Gas Corporation to buy the Frigg gas field from the Norwegians. I announced the biggest investment programme in our history for the steel industry, and the Coal Industry Act was passed to give a new future for the coal industry.
We may not like nationalisation. On occasions we may try to get rid of such concerns as Thomas Cook and Son. But we accept the mixed economy. We accept the nationalised industries in major parts of our economy and try to run them as well as possible and give them the finance for expansion.
The Labour Party's attitude towards the private sector is different. The House should note the contrast between the Government's treatment of the public sector and the private sector. For all sorts of reasons, the public sector is allowed price increases of 15 per cent. to 30 per cent. in the Budget. I wonder what price increases the Government will allow the private sector over the next few months. Already there are regulations which suggest delays of three months in approving them, and no applications may be made, no matter what extra costs are sustained. There is a very different atmosphere towards price control.
The overall Budget strategy withdraws £500 million from savings, almost certainly primarily in the private sector. There are positive threats towards the equity market for the future, and positive measures, such as the increased stamp duty, to deteriorate it. Already industry was facing rising raw material and fuel costs unparalleled in our history. It will face substantial rising wage costs.

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It is no wonder the Chancellor of the Exchequer refuses to make any predictions for the first half of next year when he talks about encouraging investment. Asked why the Treasury is not giving the figures for the first half of 1975, figures that have been given since the present Home Secretary agreed to their being given, the Financial Secretary to the Treasury replied to my hon. Friend the Member for Worthing (Mr. Higgins) today:
"the omission of figures for the first half of next year both mark the greater than usual uncertainties in the economic outlook."
If the Government are unwilling to predict what will happen in investment and exports and expansion of the economy, they cannot expect industry to be very confident.
Let the House consider the impositions the Government have put on industry, the extra bills for the coming year. Industry's fuel bill for oil and other fuels will be up by £500 million—an increase that is not all created by Government action. National insurance payments this year will be £430 million, and I believe that in a full year they will be £700 million, although that has not been confirmed. There will be increases in the cost of steel of £300 million, postage £75 million, telecommunications £35 million, rail freight £35 million and corporation tax £130 million, plus the speeding up of corporation tax payments for the coming year. They constitute a total imposition of between £1,600 million and £1,800 million, at a time when the Chancellor of the Duchy of Lancaster has told us that industry is facing great problems of liquidity, and that the Government wish to encourage industry and people in the private sector.
Mr. Lever: I hate to intervene again, but I said the very opposite. I said that we were satisfied that, in general industry did not face great problems of liquidity, but that should we be proved wrong we should take appropriate action.
Mr. Walker: The right hon. Gentleman says that the Government do not consider that industry faces great problems of liquidity, and that, therefore, they consider it reasonable to impose on industry the burden of extra cost that I
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have described. That will prove a disastrous judgment for many small and big businesses.
The Chancellor of the Exchequer says that he will introduce a second Budget. I hope that he will not be there to introduce one, but, if he is, I hope that it will come very soon, because the strategy for the Budget we are debating was totally wrong in its effect upon our industrial position. It will result in bankruptcies and rising unemployment unless it is altered.
The terrifying thing is that the country now has a Government in which the Secretary of State for Employment seeks to obey the wishes—indeed, it seems, almost the commands—of the strongest of the unions: the Secretary of State for Trade is noted for being anti-European and in every respect a Little Englander; and the Secretary of State for Industry seeks every possible opportunity to extend public ownership at the expense of free enterprise. Judging by his Budget, we have a Chancellor of the Exchequer who encourages all three.
That is a bleak prospect, except for one thing. I do not believe that any Government who pursue such policies can, should or will survive for long.
5.28 p.m.
Mr. Terry Walker: It is with great pleasure that I make my maiden speech in this Budget debate.
I should like first to say something about the constituency for which I am the Member. A new constituency on the eastern fringe of the large city of Bristol, it is made up of what were until today three local government areas, all three in a different parliamentary constituency. Therefore, in a way, I have three predecessors in the House, two of whom are still here. One is my right hon. Friend the Member for Bristol, South-East (Mr. Benn) and the other is the hon. Member for Christchurch and Lymington (Mr. Adley). The third of my predecessors is Sir Frederick Corfield, who for 19 years represented the constituency of Gloucestershire, South. He was a Minister, and will be well remembered on the Conservative benches.
Kingswood was mainly a highly industrial area. It was the place where Methodism was born. There are landmarks in the constituency to show where

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John Wesley and other leaders of the early Methodist movement spoke. In the latter part of the last century it had many coal mines, but many of them were closed in the 1920s and 1930s. There is none left now. It is also the birthplace of the boot and shoe industry. Over the past two decades that industry has been racked by take-overs. There is now only one factory in the area which is engaged in the boot and shoe industry.
My constituents are greatly concerned that local industry has been taken from the place where it has always been. Conservative Members would have us believe, and have said so in debate, that workers are worried about public ownership. My constituents are more concerned about private enterprise, which has condoned asset stripping. They have seen good local industries taken over and closed down without good reason being given. That is why so many of my constituents who are employed in the aircraft industry are concerned about their prospects.
The Concorde programme is of great concern to many of my constituents. They welcome Her Majesty's Government's discussions with managements, unions and our French partners. There would be great unemployment and hardship in the area, and in the great city of Bristol, should Concorde be cancelled. That is why it is most welcome that we should take all means possible to explore what can be done to save the project.
My constituents welcome the increased pensions, which are long overdue, and the action which has been taken to subsidise food. Those are matters which we promised in the election campaign. I am delighted to see that action has been taken.
The freeze of council house rents is most welcome. I hope that encouragement will be given to local authorities to increase their building programmes. That is a matter which must be given definite priority. In my constituency there are 1,200 families on the housing waiting list who need accommodation now. My right hon. Friend the Chancellor of the Duchy of Lancaster has said that moves will be made soon to help those with mortgages. That is a matter of great concern to many of my constituents. Now that we have helped those in rented accommodation by our plans to repeal
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the Housing Finance Act, it is necessary that we should assist those who need help with mortgages. That must be given great priority.
In three weeks of Government we have come a long way. The Chancellor must be congratulated on what he has done and the measures which he has proposed. Once again we have inherited an appalling mess from the previous Government. While I was listening to the right hon. Member for Worcester (Mr. Peter Walker), I wondered whether his message was that everything was all right until 28th February 1974. I understood that that was his message. If that is so, the country will decide that issue in due course. Everybody knows that matters were far from right before 28th February and that, in fact, the country was grinding to a halt.
It is regrettable that in our first Budget we have not been able to restore the savage cuts which were made to public spending by the previous Chancellor of the Exchequer. It must be hoped that in the Budget which the Chancellor has promised to introduce towards the end of the year some measures can be introduced to help redress the savage cuts which were made last year. In my constituency, as a result of those cuts, at least two schools and a hospital were axed. Those are facilities which are needed urgently.
Any money which is available must he spent on education and social services in areas of real need throughout the country. It is to be hoped that in our next Budget we can introduce a wealth tax on the rich. I feel that that is necessary if we are to bring about a fairer society. It is to be hoped that at the same time the Chancellor will take the opportunity to prune defence expenditure. We spend substantially more of our gross national product on defence than any of our Common Market partners. That must be rectified soon so that the money can be released for social purposes about which my right hon. and hon. Friends feel very strongly.
When the crisis faced the nation the Conservative Party chose to fight on fictitious issues. It chose to fight the miners. When that fight became too much it decided to run away. The present Government have met the crisis head-on. We have brought Britain back

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to work. In this Budget and the next one we shall redistribute wealth to the benefit of the people who need help in the new spirit of co-operation which is now abroad. I am sure that the House will accept the Budget proposals as a further step along the road to realism and to a united Britain.
5.38 p.m.
Mr. Ian Gow: Maiden speakers, like Chancellors of the Exchequer, do not lack advice. I have been told to speak about my constituency, about my predecessor and about non-controversial matters, and, above all, to speak briefly. The first two pieces of advice are comparatively easy to follow. In a Budget debate in which there are real differences of view on both sides of the House it is more difficult to follow the third piece of advice.
I arrive in this place after my third attempt. On the first occasion I fought a most distinguished former Member of the House, Mr. Richard Crossman to, whom we would all want to send our best wishes.
Hon. Members: Hear, hear.
Mr. Gow: When I arrived at Coventry, East the Labour majority was 7,000. After the election it rose to 13,000. On my second attempt I fought Clapham. When I arrived there the Labour majority was a mere 500. After the election it rose to more than 4,000. The House may wonder how, with that track record, I managed to arrive here at all. At Eastbourne in 1974, despite a reduction in the size of the electorate of more than 10,000 people since 1970, the Tory majority increased, and, for the first time since 1918, the Labour Party candidate lost his deposit, and handsomely at that.
The constituency which I have the honour to represent comprises not only the town of Eastbourne but some of the most beautiful and historic villages in the country—Pevensey with its famous castle, Westham, East Dean, West Dean—and the spectacular scenery of Beachy Head and the Seven Sisters.
In Eastbourne we have as high a concentration of senior citizens as anywhere else in the country, and there is real need to rectify the present population imbalance, to provide more local employ-
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ment and to improve both the stock and the quantity of housing. To these matters I shall seek to return on another occasion, if I should have the good fortune to catch your eye, Mr. Speaker.
Because of its splendid situation, climate and amenities, my constituency has always attracted the retired. Among my constituents is the former Secretary of State for Foreign Affairs, now Lord George-Brown. The House will recall that he resigned from the previous Labour Government because he did not like the way in which it was run. He then came to live in my constituency, and I can assure the Government that when they can stand it no longer a warm welcome and happy retirement will await them in my constituency.
My predecessor was Sir Charles Taylor. He served in this House for 39 years, a record of service rarely equalled. It was a record of service recognised by the county borough when it conferred upon him the honour of freeman. He loved this House and his work in this House, and I believe that the House will miss him.
There are two proposals in the Budget which I warmly welcome. The first is the increase in pensions. For too long those who have been members of the working population have enriched themselves at the expense of the retired. One of the marks of a civilised and just society is how we treat those who have retired, and I welcome the Government's proposals unreservedly. But I have just one comment to make to the right hon. Lady the Secretary of State for Social Services. Last Wednesday she announced that in future pensions will be increased annually in proportion to the increase in national earnings. I believe that we want to make it clear that what worries retired people today is not so much increased earnings but the rate of inflation which is in prospect under the present Government.
I also welcome the decision to disallow non-business interest for tax purposes. I was in respectful agreement with the present Home Secretary in 1969 when, as Chancellor, he first disallowed such interest, and I was in respectful disagreement with my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) when he restored the allowance in 1972.

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I am afraid that here the limited bouquets I offer to the Chancellor must end, but I will try not to be provocative. I believe that the whole philosophy of a £500 million food subsidy is grossly misconceived. If that amount of money is available to relieve hardship, the purpose would have been achieved much more effectively by increasing family allowances, by increasing the family income supplement, or by increasing the rate of supplementary benefit.
What is needed above all today is economic and financial realism. The introduction of food subsidies at this stage and on this scale will be a positive encouragement to the British people to believe that somehow they and the Government can opt out of the real world. Indiscriminate subsidies, whether on food or on housing or in the nationalised industries, encourage a retreat from reality and conceal the true costs involved.
For too long there has been a tendency by both Governments to hide from the British people the harsh truths of economic reality. Until that trend is reversed, I do not believe that the really serious economic problems which face our country will be overcome.
I want to recall with approval what was said by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) in the House on 21st November 1967 in the debate on the devaluation of the pound. He described the Labour Party—I do not believe that hon. Members will dissent from this—as being based on "interventionists, centralisers and subsidisers". I was uneasy at the extent to which the Conservative Party when in Government followed the very course which my right hon. Friend warned against in 1967. There is a danger for politicians, particularly when in Government, to succumb to the temptation to intervene, to centralise and to subsidise, and it is very much easier to subsidise than it is to withdraw the subsidy, as I believe the Government will discover to their cost.
Finally, I want to say something about the underlying strategy of the Budget. The House is entitled to assume that the Chancellor thinks that the Budget will solve, or at any rate will go a long way to solving, the grave economic dangers which our country is facing. Because of
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the widespread expectation that we are all entitled to a steady and regular improvement in our standard of living, it is particularly difficult for politicians, who have frequently encouraged that expectation, to disappoint it. But what was needed above all in this Budget was to secure a genuine switch of resources from domestic consumption into exports, to reduce the borrowing requirement and, perhaps most important of all, to secure real incentives for further investment in British industry.
None of these objectives has been achieved by the Budget. I wish the Chancellor and the Government well, but I fear that the Budget has only postponed that solution to the nations' problems which the people, with some degree of encouragement from the Labour Party, were entitled to expect.
5.48 p.m.
Mr. Douglas Jay: I am happy to congratulate both my right hon. Friend the Chancellor of the Duchy of Lancaster and the right hon. Member for Worcester (Mr. Walker) today on their return to health, even though I cannot say the same of the Stock Exchange. I am also happy to congratulate the two maiden speakers who have preceded me on their extremely fluent and not wholly uncontroversial speeches.
My hon. Friend the Member for Kingswood (Mr. Walker) has two other even more distinguished predecessors whom he did not mention—Sir Stafford Cripps and Edmund Burke. The hon. Member for Eastbourne (Mr. Gow) has shown a capacity to disagree with his own party which I am sure will endear him to both sides of the House.
The speech of the right hon. Member for Worcester, in which he prophesied all sorts of dire results of the Budget, would have been more convincing if he had not consistently misled the country throughout the last year by giving the impression that, because there had been, as there was, a large increase in imports in value, both of raw materials and of machinery, we were not therefore facing a huge and dangerous increase in our total trade deficit. But we finished the year with an enormous deficit, at a rate which could not possibly have been sustained. The right hon. Gentleman must bear some responsibility for that.

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We have now had almost a week to think over the Budget, and I believe that my right hon. Friend the Chancellor of the Exchequer did a remarkably good job in producing this Budget within only three weeks. He cannot, in present circumstances, be criticised for raising taxes.
Although it is probably harder than ever this year to make the Budget judgment, I suspect that it may not be disinflationary enough. After a year in which we ended with a Budget deficit running at over £4,000 million a year and a balance of payments deficit of nearly £3,000 million; a year in which bank credit was vastly inflated; in which we borrowed abroad on a huge scale; and prices rose more steeply than ever before —the most profligate finance in our history, producing all the classic symptoms of self-inflicted inflation—I cannot believe that any honest Chancellor would not have substantially cut back the deficit and held back excessive demand.
A new doctrine—my right hon. Friend the Member for Manchester, Central (Mr. Lever) called it a new theology—is now springing up apparently, to the effect that as a nation we are entitled to run a large balance of payments deficit almost indefinitely and borrow abroad as much as we can, thereby building up a still larger interest bill against us. Like my right hon. Friend I do not accept this new and, apparently for some people, rather comforting doctrine. We should not, I agree, try to extinguish the oil deficit quickly, but we ought to try to wipe out the non-oil deficit within a period of, say, two years from now. By then we ought to have set in motion a real major expansion of our capacity for home-produced coal and oil, in which we are better placed than almost any other European country.
Meanwhile, I suggest to my right hon. Friend that, on the problem of the huge Arab and OPEC balances, he should pursue the possibility of contriving that these, or a part of them, should be invested in the IMF and the World Bank, which could then lend on these funds to those countries, both developed and developing, which are most in need. If we can do that, many beneficial results, which it would take too long now to
928
enumerate, could be achieved I hope that the Government pursue this practical suggestion.
There is no substance, in my view, in the Opposition attack, which we have now had all over again from the right hon. Member for Worcester today, on my right hon. Friend the Chancellor for raising some indirect taxes on items which are less essential. If we subsidise, as I think rightly, essentials like standard foodstuffs and rent we are, of course, creating even more excess purchasing power, unless we raise corresponding revenue from elsewhere. That has been obvious in every Budget since the war. If the Opposition object to the taxes on drink and tobacco and the rise in prices in nationalised industries, they are simply demanding still steeper rises in income tax and corporation tax. In any case, I noticed the right hon. Member for Leeds, North-East (Sir K. Joseph) nodding when my right hon. Friend said earlier that had the Conservative Government been returned they would have had to raise prices of nationalised industries' products to much the same extent as has now been done.
Meanwhile, every credit is due to my right hon. Friend the Chancellor—here I agree with the hon. Member for Eastbourne—for ending the scandal of indiscriminate tax relief for overdraft interest, one of the worst features of the previous Chancellor's rather unhappy record. I also congratulate my right hon. Friend on imposing a ceiling on mortgage interest relief—which was not mentioned by the hon. Member for Eastbourne. But I do not understand—perhaps we can have it explained this evening—why reform of the law relating to existing overdraft interest has to wait a further year and reform on existing bank loans for a further six years. I hope that when the Finance Bill is considered in Committee there will be an examination of whether these delays are necessary.
I also welcome the proposals for a gift tax to reinforce estate duty, and the so-called wealth tax. In general, I believe—I probably differ here from many hon. Members—that estate duty is one of the best taxes we have, and that it is both better fiscal policy and more acceptable to public opinion to levy taxation on capital gains and on inheritance at death

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than savings actually accumulated by the individual being taxed. There is an important distinction here.
I therefore wish that the Chancellor had forthwith raised the rate of capital gains on real property, as opposed to securities, and had cancelled the ridiculous and indefensible special relief on estate duty for agricultural land in the United Kingdom. This has continued for a generation—and far too long. Everyone knows that the rise in the value of agricultural land in the United Kingdom ever since it looked likely that we were to adopt the common agricultural policy is one of the scandals of the past few years; but this item gets away scot-free in the Budget. We should also have restored capital gains tax as well as estate duty at death, as was done when capital gains tax was first introduced.
It is perhaps a slightly odd feature of the Budget that it raises virtually no new revenue for the moment from three obvious sources—capital gains on real property, North Sea oil, and bank profits during the past year. I realise that proposals for diverting profits from land development and from home-produced oil are being prepared by the Government, and I hope that they are brought forward speedily. But I see no good reason for not having introduced a special tax on bank profits. The staggering total of over £600 million in bank profits last year was obviously, and flagrantly, produced by creating new money and should just as much accrue to the Exchequer as the profit on the fiduciary issue of the Bank of England has done for the past 100 years.
There ought to be a special surcharge on bank profits, perhaps proportionate to the expansion in credit in the year in question. The increase in bank profits last year, in no way due to special merit or efficiency by the banks, would go a long way to solving the mortgage interest problem, which is tormenting so many people.
My advice to the Chancellor on the wealth tax, which I have advocated since 1938, is that he should avoid, if he can, all the valuation difficulties by assessing the tax on investment income, and not worry about elaborate annual valuations of jewellery, works of art and the rest, which do not matter sufficiently to justify the bureaucratic effort involved. That is my
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first piece of advice. Secondly, if we are to have the other capital taxes which I have mentioned, we should put the minimum level for the wealth tax, considering present money values, at nearer £75,000 than the £50,000 which I advocated 30 years ago.
My only real quarrel with the Budget, at any rate in a brief speech—it is a minor one—is the imposition of value added tax on less essential foods such as confectionery and potato crisps. Certainly these are not a major element in living costs. But the Government should, as a principle, abolish taxes on food altogether. Nothing is gained by extending VAT in the way proposed. Indeed, on a day when my right hon. Friend the Foreign Secretary is, I gather, addressing the EEC Council of Ministers across the Channel, the House should realise that the decision to subsidise essential foods, which I heartily applaud and which resulted from the recent visit of my right hon. Friend the Minister of Agriculture, Fisheries and Food to Brussels, only touches the fringe of the evils of the common agricultural policy.
We are still, despite any decisions taken, imposing heavy EEC taxes on imported foods and subsidising them at the same time. That is an absurd and contradictory policy. The subsidy helps the consumer and contributes to the problem of an incomes policy, but in no way alters the damage done to our balance of payments by the high imported food prices inflicted on us.
Nor do the Government, as far as I know, propose to cancel this month's increases in food prices—for instance, for butter and cheese—imposed on us not by recent decisions of the Council of Ministers but by the Treaty of Accession signed in 1972. Perhaps we can be told whether I am correct in supposing that those increases are going ahead. I do not believe that this steady further rise in food prices enforced by the EEC should be allowed to continue, even though it is due to decisions taken by the Conservative Government. We cannot wait till the end of the renegotiation now starting to remove the present very heavy EEC food taxes or stop the indefensible practice of hoarding by the Intervention Board to keep prices up. I do not think the Government would be wise to continue, or could reasonably

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continue, these policies introduced by the Conservative Government and ask for a social contract with organised labour.
However, with that exception, I believe that the Government have done so much and promised so much in the matter of rents, pensions, food subsidies, industrial relations and property taxation that the obligation is now on organised labour to respond to the Government's extremely forthcoming gesture. If it responds, it will have been proved that conciliation is better than confrontation. If it does not, I do not see any other practical alternative policy which will get this country out of the lamentable plight into which the Conservative Government's policies have plunged it.
6.3 p.m.
Mr. Cyril Smith: I join the right hon. Member for Battersea, North (Mr. Jay) in complimenting the hon. Members for Kingswood (Mr. Walker) and Eastbourne (Mr. Gow) on their maiden speeches. It was not long ago that I made my maiden speech, but I cannot remember it. I am sure that the House looks forward to hearing future speeches from both hon. Members.
One or two speakers in this debate have said that they are not economists. I am not an economist. I do not even claim to be an academic. But, although economists may have something to offer, I do not apologise for not being one, because I do not think that the economists have done a great deal of good for the country in the past 50 years. We seem to stagger from one crisis to another, and all the crises are planned, plotted, conceived or objected to by so-called professional economists. Therefore, it is not improper for a non-economist to take part in a Budget debate. It one should take notice of the views of economists at a time like this, the problem is which economist to take notice of because in all the advice given there seems to be six of one and half a dozen of the other.
I hope that in the second instalment of the Budget the Chancellor of the Exchequer will find it possible to be more visionary and more experimental than he has found it possible to be in this Budget and will implement new ideas. That is not a criticism of the Chancellor, simply a statement of my view of the Budget,
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but it is tempered by the fact that one accepts that he had only three weeks in which to prepare it and, therefore, the trying out of new ideas may have proved to be extremely difficult.
I wish to deal with one or two of the good things in the Budget. First, the Chancellor has given priority to taxing overseas loans, with which my party very much agrees. Secondly, there is to be a second Budget, which we in the Liberal Party welcome because we believe that it shows a flexible approach rather than the stiff approach indicated by the view that there should be one Budget a year, like it or lump it. Thirdly, I am told that the Budget is neutral. I am prepared to accept that as being a statement of fact because I am not in a position to challenge it. Fourthly, pensioners are greatly helped by the Budget, and that help is much overdue and much welcomed. Fifthly, there is some action on prices in the Budget.
I wish to qualify the latter two compliments which I pay to the Budget. First pensioner couples will still fall short of receiving the equivalent of one-third of average earnings, which the Liberal Party would like to see introduced. None the less, the Budget is a substantial step forward, and to that extent we compliment the Government on taking steps in the right direction.
On the question of action on food prices my party considers that food subsidies are a clumsy way of helping poorer members of the community because they are available to all, irrespective of wealth or economic standing. Therefore, we are not keen on the principle of food subsidies. At best, we see them as a very short-term remedy. We much prefer the giving of direct help to the needy. I much agree with what the hon. Member for Eastbourne said about that. We would have preferred to see family allowances increased and, if possible, payment made for the first child in a family, with the claw-back principle on tax. That is a much better way of assisting the poor than by giving direct food subsidies. In short, we prefer to subsidise people rather than things, and that basically determines the Liberal Party's approach to food subsidies.
I turn to my criticisms of the Budget. First, it fails to deal with the need to economise on energy use. In my party's

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view, the Secretary of State for Energy should be seriously involved in the need to economise on energy use. It is true that there is a change in the value of energy and that increased charges for coal and electricity and, indeed, domestic petrol may reduce consumption. But I suspect—and this is my criticism—that the prime object of the Budget in raising prices is simply to try to balance the books rather than effect a change in the uses of energy.
My second criticism relates to the increased burdens that are placed on industry. There is a limit to how far we can milk industry and continue to clobber the goose that lays the golden eggs. I am not saying that the present measures are intolerable. I am only sounding a warning note in terms of future policy. Increased burdens in the way of national insurance contributions, corporation tax, energy fuel, postage, and, outside the Budget, the increased rates applicable to industry levied by many local authorities means less incentive to industry and less ability to invest in capital development. That in turn may have a detrimental effect on exports and full employment. I hope that that does not prove to be so, but the danger is there.
Sir Keith Joseph: The hon. Gentleman said that his party's policy is to go even further than the Government in increasing pensions. The Government have decided to pay for most of the pension increase through an increase in the employer's contribution, about which the hon. Gentleman has complained. Will he reconcile his desire for bigger rises in pensions with his complaint, with which I thoroughly agree, about the burden on industry?
Mr. Smith: There are many other ways of raising taxes besides placing burdens on industry. A social security tax is one possibility.
Sir K. Joseph: The hon. Gentleman cannot say that, because that is precisely the way in which the Government, following the previous Government, are raising the money. While I sympathise with what the hon. Gentleman says about the burdens on industry, I hope that he will reconcile his arguments.
Mr. Smith: One accepts that there has to be increased taxation to pay for
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increased pensions. I have said in every speech I made during the General Election campaign and earlier that we must understand that we can take out of the system only what we put into it. Of course increased pensions mean increased taxes. My party believes that there are different ways of raising those taxes and that the whole spectrum of the tax system needs to be revised. I invite the right hon. Member for Leeds, North-East (Sir K. Joseph) to read the Liberal Party manifesto, which deals with the various ways in which taxes can be raised.
Mr. Ridley rose—
Mr. Smith: I will give way when I have finished the part of my speech dealing with business and incentive.
Small businesses—and here I declare an interest as managing director of a small company employing 50 people—will be faced with heavy increased expenditure. I am involved in engineering, and the price of steel to the engineering industry has increased, in addition to the increases to which I have referred. We were told in the Budget Statement that the increase in the price of steel would be 25 per cent., but I have had telephone calls from as far afield as Scotland to the House of Commons telling me that steel price increases have been notified to industry today of over 50 per cent., not 25 per cent. My own firm has suffered in this way within the last 12 hours. I should be interested to know whether the increase in the price of steel to which the Chancellor of the Exchequer referred is an average increase or a basic increase. I suspect, from some of the increases which have been quoted to me in the last two or three hours, that it is an average increase.
If one adds the increase in the price of steel to the burdens to which I referred it is obvious that if small companies are to survive they will have to increase their prices. There is no other way open to them. Therefore, one of my criticisms of the Budget in terms of industry is that it will increase prices.
One suspects that much of the Budget was devised to buy off the TUC. Whilst the people of the country, as a consequence of the Budget, will have to pay the price because they have no option in law, it remains to be seen whether or not the

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TUC will deliver the goods. My view is that the TUC, however willing, is constitutionally incapable of delivering the goods and that we shall achieve a balanced and controlled economy only by a statutory prices and incomes policy, which my party has supported under successive Governments of both political complexions. None the less, we wish the Government well in trying to obtain a voluntary prices and incomes policy, although we doubt whether it will be successful. All those are burdens which are added to industry which industry will have to face.
Mr. Ridley: I was trying to help the hon. Member for Rochdale (Mr. Smith) against my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). In the Liberal manifesto, which I have read, there is a proposal for increasing the national insurance contributions of those who settle a wage claim at too high a figure. As the miners have had an increase of more than 30 per cent., could not the hon. Gentleman suggest a swingeing increase in the miners' national insurance contributions as a means of raising the necessary revenue? That is, after all, Liberal policy.
Mr. Smith: With great respect, that is not Liberal policy. Liberal policy is that there should be increases in wages but that there should be increased national insurance contributions where wage increases are outside the norm allowed by the Government. Exceptions can be made within the Liberal prices and incomes policy because of abnormal circumstances. The shift in the relativity of coal in the economy and its importance to the economy which has become apparent in the last six months would, presumably, he an exceptional circumstance that would be taken into account in Liberal policy.
My third criticism of the Budget concerns the redistribution of wealth. Having spent 16 years in the Labour Party—indeed, as a Labour councillor—I wonder what would have been the Labour reaction if a Tory Chancellor of the Exchequer had dared at a stroke to put 30 per cent. on electricity, 15p on a bag of coal, 5p on 20 cigarettes, 1p on a pint of beer, 4p or 5p a gallon on petrol for domestic users only—which, incidentally, include many working people—3p on income tax and 10 per cent. on confectionery, sweets, potato crisps and the like.
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The poor of this country fall into two categories, on the one hand the elderly, the sick, the disabled and those who are in receipt of social benefits, and, on the other hand, those with families and low earnings. The Budget helps the former category, but it is extremely debatable whether it does much for the low-earner family man, especially if he does not live in a council house.
The immediate way to tackle poverty is by family allowances. A longer-term way is by the introduction of a minimum wage in industry, a policy which the Liberals over the years have always advocated. That policy is fully supported by no less a union than the Transport and General Workers' Union, which only last week published a pamphlet on the need for a minimum wage in industry. Longterm solutions, such as the tax credit system, are in our view the answer.
In passing, one is entitled to ask what the Government are doing to reduce their own expenditure in these serious times. We know that there is to be a cut of £50 million on defence, but what are the other possibilities open to the Government?
I welcome the Chancellor of the Exchequer's reference to an attack on waste, since I referred to this subject many times in my election speeches. I am interested to see how this is to be done, because I have been advised by many eminent men that substantial financial savings could be made if the Government, whatever their political complexion, were to make a real attack on waste. I am not saying that those advisers are necessarily correct, but I shall be interested to see the Government's proposals.
The Liberal Party welcomes the withdrawal of tax relief on second mortgages, although we doubt whether the £25,000 ceiling on tax set-off for a first mortgage is high enough. We very much hope that ways will be found to contain the interest charges of building societies and that they will not be allowed to increase interest to a disgusting rate of 13 per cent. Housing is of concern to all hon. Members and I believe that the Government will have to give much more financial help to local authorities to maintain a sustained building programme.
In short, I very much hope that the second Budget will be better than the

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first; that there will be a serious attempt to tackle inflation; that property and land speculators will get their proper reward as promised by the Labour Party when in opposition—and that "proper reward" is a 100 per cent. tax on profits made from exploitation and speculation.
I hope that the second Budget will tax to the hilt luxuries such as fur coats, jewellery, and so on. I hope that it will look at those individuals who escape the effects of inflation by purchasing works of art, antiques and the like. I also hope that it will aim at a fairer and fuller redistribution. I hope that in the second Budget the wealth tax will be on the recipient and not on the donor, and thus will encourage a further spread of wealth.
The present Budget, in my view, is not pro-poor; it is not helpful to exports or employment; and it gives the small shopkeeper a very poor deal. It may be a technically correct Budget in economic terms, but it does not tackle long-term problems and makes little impact on the real priorities. The Government as a consequence of this Budget, can no longer pose as a Robin Hood. Their election ideas of robbing the rich and giving to the poor appear in all their nakedness in this Budget, which, although it is tolerable as a Budget, is not far-seeing or visionary. We await the second chapter with interest; we wait to see whether the Labour Government see their rôle as adopting a new approach or as merely continuing the old, outdated approach in a better way.
6.24 p.m.
Mr. Julian Amery: The hon. Member for Rochdale (Mr. Cyril Smith) spoke with approval of the Government decision to bring in a second Budget. I was not sure whether that approval signified support for the idea of flexibility in budgetary presentation or represented a decision by the Liberal Party to keep the Government in office beyond the autumn.
Mr. Cyril Smith: Both.
Mr. Amery: No doubt we shall learn as time goes by.
The right hon. Gentleman the Chancellor of the Duchy of Lancaster did not allow the prospect of a wealth tax to mar the even tenor of his paean of
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praise for the capitalist system and the mixed economy, but we have it on high authority from the Labour Party—a view endorsed in his' speech today by the right hon. Member for Battersea, North (Mr. Jay)—that the question of a wealth tax is not a question of whether but a question of how it will be introduced. I am not sure whether the difference between "whether" and "how" is as great as one might assume.
Mrs. Beeton, in her cookery book, in her recipe for jugged hare, said "first catch your hare". I think that sometimes there is a tendency to think that wealth should be measured as a tangible asset. In fact wealth is not wholly, or even mainly, a tangible asset. The value of ICI is to be measured not by its laboratories or premises but by its scientific formulae, its management skill, its experience, its goodwill and the confidence its commands. When we look at the equity market today we see that wealth, even when not yet subject to a wealth tax, can disappear almost overnight. I am not sure that the pursuit of a wealth tax may not be a little like the "Hunting of the Snark"—somewhat illusory—and that the wealth will be found, just like the Cheshire Cat in "Alice", to have disappeared.
I want to consider the problem of the balance of payments. I agree entirely with the Chancellor of the Duchy that it is false theology to separate the oil deficit from the non-oil deficit; although in so doing there is some convenience from the point of view of discussing the matter. However, the general considerations applying to the non-oil deficit apply equally to the oil deficit.
It is fair to say that although last summer we knew that there would be a large deficit in 1974, there was good reason to think that it could correct itself by the end of 1974 or the early part of 1975. But the consequences of the October war, the miners' strike and the three-day week have made a shipwreck of our balance of payments. The problem is how to bridge the gap of £3,000 million to £4,000 million that will confront us at the end of the coming year. It can be done partly by exports and partly by loans from institutions like the IMF, or through the banks; it can be done in

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part by encouraging private deposits and investment in this country.
On the subject of exports, I appreciate that the Government believe that the Budget, by some of the deflationary measures undertaken at home, should encourage exports or, rather, force industry to send more goods abroad. Industry takes a different view and regards itself as not being encouraged to expand but, indeed, as being "clobbered". It seems just possible that in the short term there might be an increase in exports, but I do not see how there can be a sustained increase in exports following a Budget that limits and discourages expansion in industry.
On the subject of loans, whoever has the key to No. 11 Downing Street is in a position to borrow a lot of money, but I regard our financial position in terms of borrowing as dangerous. The official sterling balances are subject to dollar guarantee. The new loan is a dollar loan. Further institutional loans are likely to be subject to dollar guarantees as well. We are getting pretty deeply into debt, and this with no great prospect of any substantial improvement in the position of sterling.
Interest rates play a great part in encouraging private deposits, but we know —as the Chancellor of the Duchy pointed out—the great disadvantages that flow from high interest rates, although I did not think that the right hon. Gentleman was very convincing in explaining how he would reverse this situation. Encouragement of foreign investment as distinct from deposits, depends on confidence in the projects in which foreign money would be invested. If home industry regards itself as clobbered, the prospect of foreign investment seems to be discouraging.
These general observations apply to the oil deficit just as much as they do to the non-oil deficit, but the significant thing about the oil deficit is that it is different in kind and in size. It is different in kind because a large number of oil producers, if not all, are unable to spend on buying goods and services from the United Kingdom all the money which they have accumulated through selling their oil. It is different in size, because if the oil producers switched their holdings of sterling overnight, for either specula-
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tive or political reasons, they could wreck our currency and almost any other, except perhaps the dollar.
I see little prospect of achieving a solution of this problem on a purely national basis. Like the Chancellor of the Duchy, I recognise the importance of Dr. Kissinger's initiative to bring together the principal industrial countries to try to consider how they should organise and regulate their consumption of oil. Certainly broad co-operation with the United States and Japan will be of great importance. But we have to remember that there is a considerable element of competition between the European countries, on the one hand, and the Americans and Japanese, on the other. The American time scale in approaching the oil crisis is very different from our own. For us, the oil crisis is an immediate problem. The oil embargo was a mortal threat while it lasted. The increase in the price of oil to countries whose economic stability is as much in danger as our own is also an immediate problem. For the Americans, it is not a matter of such urgency.
In these problems the best can sometimes be the enemy of the good. That is why, when the Conservative Party was in office, it was argued that we should obtain, if we could, a European agreement in advance on how Europe should regulate its relations with the oil producers. That is why we attached great importance to the European statement on Middle Eastern policy at the Summit meeting in Copenhagen. It is why we believed that it was important to go ahead with the French proposal for a Europe-Arab conference, and it is why I believe that it is essential to work for the creation of a European payments unit—a monetary union.
No single European currency—not even the deutschemark—is strong enough to give sufficient confidence to the oil producers to leave their money for any length of time in that currency. A European unit would be very different. It would be backed by the reserves of Germany and Holland. It would be backed by the gold of France—that held by the Bank of France and the very much larger amount of gold in private hands in France. It would also be backed by the massive prospects of this country in oil and nuclear energy.

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If we could bring about a European monetary union of this kind, we should find a completely different situation. In the early stages it could be limited to external transactions, not to trade between members of the European Community or investment between them, but to trade between them and the outside world and investment from them outside Europe, or from outside into Europe. To begin with, it might be a floating currency. Alternatively, it could pool its reserves with perhaps a revaluation of gold.
A little more than a year ago, it seemed that my right hon. Friend the Leader of the Opposition and the Chancellor were on the brink of achieving something of this kind. The experts got at it, and it did not go ahead. But that was before the October war. It was also before the full extent of British oil resources had been recognised—pace Lord Rothschild—and before the full extent of the energy crisis facing Europe had been recognised.
It is my belief that this Government—indeed, any British Government—could make a great contribution to solving the world oil crisis if they could take the initiative in setting up a European payments union not hostile or antagonistic to the United States or Japan but strong enough to do business with them as a valid and viable partner. In the process, we might even extract concessions of the kind that the Government have been seeking from our partners in the European Community.
I do not know as yet what the Foreign Secretary has said in Brussels. Before I rose to speak. I inquired whether copies of the right hon. Gentleman's speech were available. They had not come through from Brussels. However, I see great dangers to our ability to solve the oil deficit if we deliberately turn our backs on the goals of monetary and political union. If the fears which are held in Bonn and Brussels today about the Foreign Secretary's real intentions prove true, that is the direction in which we are heading. I beg the Government, before they turn their backs on an historic opportunity, to think again on that vital subject.
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In most respects I share the rather pessimistic assessment of the Budget which the hon. Member for Rochdale gave us just now. Like him, I doubt whether "the social contract" will be ratified. But I think that the Government recognise that unless it is ratified and unless it is supported by the bulk of the trade unions, the whole Budget strategy to which they are committed will fall apart.
At the General Election, my right hon. Friend the Leader of the Opposition asked who was to govern the country—Parliament or the trade unions? On an analysis of the vote it could be argued that 18 million people who supported the Conservative and Liberal Parties voted by implication for a statutory incomes policy. But the result that we have is a minority Government who appear already to be controlled by the Trades Union Congress.
The Chancellor of the Exchequer has left himself very little room for manoeuvre and to negotiate. During the coal dispute before the election, Labour Party supporters were frequently telling the then Government that they must negotiate. It was often implied that we had made a mistake in putting our cards on the table too soon in the National Coal Board's negotiations with the National Union of Mineworkers. But I am not sure that this Government have not done exactly the same. They have put all their cards on the table. They have no room to negotiate with the TUC or with individual unions.
This Government were elected in February. Many people think that the administration may come to an end in October. February to October: there is a rather ominous comparison which may have occurred to Labour Party supporters. In 1917, the Duma was called into existence in February. The conservative Prince Lvov and the liberal Mr. Miliukov failed to pull off their coalition. Mr. Kerensky took over. The Duma postured and debated, but all power had really passed to the Soviets.
The basic weakness of the Government is that the Chancellor of the Exchequer and his colleagues have put their heads into a noose. But the other end of the rope is in the hands of Mr. Scanlon and his friends. The parallel is one that

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politicians of all parties, including the Labour Party, might well ponder.
6.29 p.m.
Mr. John Evans: I have watched with fascination over the past three weeks to see how tempestuous the sea can be in this Chamber from time to time, but hon. Members on both sides of the House have assured me that in my maiden voyage the parliamentary seas will remain calm and I shall eventually reach safe harbour.
It is a nerve-racking experience to make a maiden speech. I feel rather like the bride before the consummation of her marriage. I have no idea what it will be like, but I hope that it will be good.
As most hon. Members will know, I have been given the onerous and difficult task of following a great parliamentarian into this House. I refer to my predecessor, Mr. Fred Lee. Fred served his country, this House, and the people of the Newton division with tremendous ability for over a quarter of a century. He held some of the highest offices in the land. He walked with monarchs; he walked with statesmen. But the finest tribute that can be paid to Fred Lee is that when he left this House the people of Newton still knew him as Fred Lee. He still retained the common touch.
The Newton constituency is very large, with 96,000 voters. It represents a large area of South Lancashire and now, because of local government reorganisation, a substantial area of North Cheshire. By one of the oddities of local government reorganisation, which many people regard unhappily and which comes into operation today, I have more local government units than my predecessor had. He had six units of local government—one county council, four urban districts and a rural district. I now have three county councils, three metropolitan districts and one county district—seven units in all. So to those responsible for drawing the new local government boundaries of the Newton constituency I say, "Thank you for nothing."
Newton is an ancient constituency, which can trace its parliamentary history back to 1559. Today its people—basically working people—who work in various industries—coalmining, steel.
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engineering and textiles—look to a Labour Government to usher in a fairer, a better, and a more just society, where the fruits of the people's labour are more equitably distributed.
I believe that my right hon. Friend the Chancellor of the Exchequer, in his first Budget, has set this country on the right road to achieving that fairer and better society, but that we have taken only a very small step on a very long road.
My right hon. Friend has done a truly magnificent job in the three weeks that have been at his disposal. In the normal course of events the Chancellor has about six months in which to frame his Budget. My right hon. Friend has introduced an extremely complex Budget—and the most significant point was his stated intention of bringing in an autumn Budget. I regard this Budget as a first-aid measure —a necessary binding up of the wounds in our bleeding economy, and I do not think that anyone can deny that the British economy was indeed bleeding to death.
I have had a recurring nightmare since the Budget Statement. I have wondered what on earth the Opposition would have done if, by some mischance, they had won the election. What measures would they have taken to get us out of the mess into which they undoubtedly plunged us during the past three and a half years?
I assure my right hon. Friend that I am grateful to him for dealing with three items which figure prominently in the Labour Party's manifesto.
First—pensions. Hon. Members on the Government benches are delighted that my right hon. Friend has not only honoured our pledge to raise pensions in the first Session of the new Parliament but—equally important—has decided to bring the pensions increases forward from October to 22nd July. It has long been a source of irritation and anger to millions of pensioners that Parliament has announced pensions increases in the first two or three months of the year, but they have had to wait until almost the end of the year before receiving them. Indeed, thousands of those pensioners never got the increases, because they had died in the meantime.
Second—prices. Again, it gives considerable pleasure to hon. Members on

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the Government side that the Chancellor has honoured our election pledge to take action on prices. It must be realised by now that, to the housewife, simply holding prices is a blessing, so used has she become to an ever-increasing spiral of price rises. Indeed, the housewife must find it scarcely credible that last weekend many supermarket chains announced substantial cuts in the prices of hundreds of items. The housewife must have wondered what on earth had been going on during the past few months. I assure hon. Gentlemen opposite, who may sneer at subsidies, that the housewife will not sneer at aid from whatever source it comes. She will be pleased that this Government are taking action on prices.
Third—housing. I believe that housing is the very first social service and that it is the right of every family in this land to have the benefit of a decent home. Indeed, if it is accepted that the basic foundation of the British way of life is a happy family life, if we deny many hundreds of thousands of our citizens the right to that decent home I suggest that we are denying them access to the British way of life.
It is true that the house building programme had virtually collapsed over the past 12 months in both the public and the private sectors. I am delighted that the Chancellor has taken action to improve the situation in the public sector. We still need hundreds of thousands of local authority houses. I heartily endorse the Government's action in giving back to local authorities the freedom to use their direct labour organisations to build houses for sale. This is not new or revolutionary. Ten years ago Hebburn Urban District Council, of which I was leader, built houses for sale at far cheaper prices than any private builder. I warmly welcome local authorities being given that freedom again.
Turning to housing in the private sector, the situation is more sombre. Indeed, in some respects it is threatening. I welcome the Chancellor's announcement that local authorities are now free to buy the many thousands of houses which are standing empty for lack of buyers. What worries me are the hundreds of thousands of homes occupied by working-class families, who are threatened, indeed, terrified, by the
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thought of mortgage interest rates rising to a scandalous 13 per cent. They are already far far too high, at 11 per cent. Many couples, particularly those with young children, are already at breaking point. They have just received notices of substantial increases in their rates which have virtually dealt them a stunning blow. Now they are dreading the thought of mortgage interest rates rising to an astronomical 13 per cent.
We must recognise that many of these people entered the private market in the first place because of the hopelessness of ever getting a local authority house, thereby helping not only themselves but poorer people, because their names were removed from local authority housing lists. It is now their turn to look to us for help.
I recognise that the longer-term job is to get general interest rates down to more reasonable levels, but I appeal to the Chancellor to take immediate action by looking again at the composite rate of tax paid by societies on investors' interest. I suggest that this would be the quickest and easiest method of bringing short-term relief for the owner-occupier and give us a breathing space for the longer-term job of bringing interest rates down permanently.
I said that the most significant thing about the Budget is the Chancellor's intention of bringing in another in the autumn. I have always been puzzled by the mystique which has surrounded an annual Budget. I agree with the hon. Member for Rochdale (Mr. Smith) that we should introduce as many Budgets or Finance Bills as are necessary to ensure that the economy runs smoothly and well. The Chancellor may be horrified at the thought of four or five Budgets a year, but if we are to manage the economy in an up-to-date way in the 1970s we should get away from the mystique of an annual Budget.
The second Budget will be the important one. We shall then see many of the things that we on this side want implemented as quickly as possible. A wealth tax is urgently needed if we are ever to start building a more equitable society. I look forward to my right hon. Friend introducing a stringent and far-reaching wealth tax in his autumn Budget.

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There is a need for substantial cuts in defence expenditure. At the very most, we should spend on defence only that proportion of our gross national product that our European allies spend of theirs. It is in the interests of the British people that we should aim at that mark. If we are ever to introduce the social policies for which we in the Labour movement have argued for so many years—if we are to improve education, the social services and the hospitals—it is essential to swing a very big axe at the defence budget.
My right hon. Friend the Chancellor of the Duchy referred today to an illustrious predecessor of ours in the Labour movement, and I want to end also by quoting him. Nye Bevan said that the language of priorities is the religion of Socialism. Those words are even more relevant today than they were when he uttered them. I believe that this Government have got their priorities right.
6.54 p.m.
Mrs. Winifred Ewing: This is the second time that I have made a maiden speech, with a long gap between them. It is pleasant to be back again, particularly in view of one of the outstanding contrasts which hon. Members will have noticed. I was not even a party when I was here before. According to Mr. Crossman, then the Leader of the House, there had to be two to be a party, so I did not qualify for a desk or a filing cabinet, and only the kindness of a Labour MP gave me a locker. Times have changed; I now have six colleagues. This is a pleasant contrast.
Another contrast is that I now represent a very different kind of constituency. Before, I represented an industrial constituency and I now represent the fair land of Moray and Nairn. I, too, will boast about the weather in my constituency, as did the hon. Member for Eastbourne (Mr. Gow). Hon. Members may be sceptical, but I can tell them that we have the highest rate of sunshine in Scotland. We have very fair towns and a mediaeval cathedral city, as well as the best farming land in Britain and mine is the second most afforested constituency in the United Kingdom. I recommend all hon. Members to visit it for their summer holidays.
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I hope that the House will forgive me if I get on to the subject of Scotland as quickly as possible. The third contrast is that when I was last advancing my case for self-government for my country, the argument always was, "Scotland is too poor; you need us." Now, the argument is turned on its head. This is the most striking contrast of the lot. It is now said, "Scotland is too rich; we need you."
There is a clue to this in the Chancellor's Budget Statement:
"We have at least one advantage to look forward to. Before too long, we shall have our own oil supplies from the North and Celtic Seas."
The sources of this oil are described in a variety of ways.
"We must not imagine that this oil will be the answer to all our problems. At present, we cannot put a figure on the benefits it will offer, since we cannot predict the pattern of world energy supply and demand when it becomes available. But, provided the nation takes its rightful share of the profits, it is hound to bring substantial advantage to our balance of payments."—[OFFICIAL. REPORT, 26th March 1974 Vol 871, c. 288–9.]
My group have no doubt that we are the underwriters of this Budget—that the huge loan of $2,500 million has been negotiated with what we choose to call Scotland's oil. This is no secret. If it is then it is one that is shared by many leading newspaper columnists.
I want to make a series of pleas to the Chancellor to give us some consideration—as long as we are part of the United Kingdom against the background of our neglect by successive Governments, and bearing in mind that we were first in the industrial revolution, we need special consideration.
Our first problem in Scotland is that this is the opposite kind of Budget that we need. It is a misfit Budget. It is deflationary when, basically, we do not suffer from the disease of inflation. We have not had the chance to suffer from luxury living and overspending. We have been told for a long time that Scotland was about to go forward with its expansion, so we need the opposite to this Budget. We are now being stopped in that process. As we have a branch factory economy, hon. Members can imagine that if this is an austerity Budget in the United Kingdom, it is a high austerity Budget when translated to Scotland.

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I know that REP is to be retained. I believe that a Conservative Government would have continued it as well. But it is an inefficient arrangement because it tends to help those industries which pay low wages.
I should like the Chancellor to reflect on a few facts about Scotland, none of which will be of any surprise to him. I received an answer today which showed that, across the board, the average wage of males and females in Scotland is consistently lower than in the rest of the United Kingdom. But, perhaps more significant, the most up-to-date Abstract of Regional Statistics shows that the average family income in Scotland is lower by £5·50 a week. Food prices are 5 per cent. higher and a ton of coal costs £1 extra. That is the kind of area which particularly hits the low paid and the old people.
Perhaps more alarming is the fact that if one relates unemployment to vacancies, the position in Scotland is seven times as bad as in England. There are parts of England with this problem, but I think that I am entitled to put these points to a House which is managing to achieve its Budget on the oil which is not yet even flowing from the North Sea.
The housing situation is no new matter. The Cullingworth Report, which was introduced when I was last a Member of this House, showed the shocking lack of a stock of homes, not just in the industrial belt but in the rural areas, and made the point that the slums of today would be with us until 1994. The Socialist Government have a better house building record than their predecessors, but even what they have done has never been enough.
We are told that there will be an oil boom in my constituency, but the fact is that local people cannot afford to buy houses. The only people who can afford them are incomers and those related to the two important bases in my constituency. The situation is getting worse, and I therefore welcome any move to assist those who are seeking mortgages.
Emigration is not often mentioned, but it is a serious problem. The situation has been improved, but it cannot be denied that Scotland has lost 1 million of her best people during the last 20 years.
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That is the kind of issue which makes people in Scotland feel that there is not sufficient machinery available in this House to cope with their problems.
The Minister of State for Agriculture, Fisheries and Food (Mr. Norman Buchan): I thank the hon. Lady for giving way and apologise for not having heard the beginning of her speech. I have a great deal of sympathy with what the hon. Lady has been saying—what she has said is true of many other regions of Britain—but it is worth bearing in mind that if one removes the four main categories of worker—male and female non-manual and male and female manual —and if one removes also London and the South-East, one finds that Scotland is better off in three out of those four categories than is the rest of England and Wales. This is not exclusively a Scottish problem. Scotland is better off once one removes the high salary areas of London and the South-East.
Mrs. Ewing: I do not accept the point made by the hon. Gentleman or the method by which the statistics are prepared. The answer that I received today depends, for the information that it gives, on the basis on which the counting is done—full-time or overtime. I stick to my point, and base it on the most up-to-date information that I have from the Abstract of Regional Statistics, which shows that a household in Scotland has £5·50 a week less than in England, and that incomes are 12 per cent. less. Perhaps the explanation is that not so many of us in Scotland need a lecture on the Stock Exchange, there not being so many of us who need that kind of advice.
The infrastructure in Scotland is in a chronic situation. I should like the Chancellor of the Exchequer to spare a few moments considering the A9. I should like him to come to my constituency via that road, so that he can appreciate the dangers and frustrations that abound. I protest against any proposal to make the A9 into a three-lane road, because that would lead to untold numbers of accidents. The road is often heavily covered with snow, and it would be impossible to see a white line down the middle. Not only my constituency but the whole of the north of Scotland is eager to know about this so-called motorway.

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We welcome all the aspects of the Budget which advance social justice, and I do not propose to rehearse all the things that have been said. We accept that social justice involves levies on a progressive basis, which means that the higher the income the higher the tax, but there are certain ways in which the levies are regressive as they affect Scotland. We are affected in three respects, because we have different patterns of house ownership, different patterns—perhaps not to our credit—of consumption, and a different population balance, which is a fact of history.
Perhaps it is not to our credit that we spend 20 per cent. more per capita on tobacco and 11 per cent. more on alcohol and because we drink more whisky than beer, it appears that we end up by contributing 25 per cent. per capita to the revenue. If I call that the vice section of my speech, I have to admit that the situation is made worse by the fact that we bet and gamble more, and eat more sweets and carbohydrates, than do our English counterparts. In all, to make a serious point, that all adds up to a severe factor. Although the average household income is 12 per cent. lower in Scotland than in England. we pay almost the average tax.
I now come to the pattern of house ownership. It is no secret that, rightly or wrongly, fewer people in Scotland own their own homes than is the case in England. That is a pity, but that is how things are. The figure is about 30 per cent. for Scotland, compared with about 50 per cent. for England. That brings tax relief, but although our population share is one-tenth, we get only one-third. Could a way not be found of putting that shortfall into dealing with our housing situation, because there is an imbalance, and it is the opposite of what I call the progressive theory of taxation?
Mr. Bruce-Gardyne: Increase home ownership.
Mrs. Ewing: There are not many people with £25,000 mortgages. Few people could afford that kind of mortgage, even if they could find anyone who was willing to lend them the money.
The third regressive factor is the population imbalance. In sparsely populated areas, there is often no public transport.
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Lord Beeching is not regard as a pin-up boy in Scotland. We remember that our train services were cut, on the promise that there would be just as good a bus service instead. In my constituency there are few, if any, buses, and in many parts housewives are cut off from the towns. It is difficult for them to get into town in a reasonable way and be back in time to meet their children coming home from school. A car is not a luxury; it is a necessity. Although we total one-seventh less than the national average for car owners, we pay about the same percentage of tax per capita on petrol.
This is an area in which a little cushioning could be of advantage. Cushioning is not unprecedented. I remember the Secretary of State for Scotland who was the Secretary of State when I was last in the House introducing stop measures at a time when Scotland was not suffering from inflation. The right hon. Member for Kilmarnock (Mr. Ross) called those measures a silver lining for Scotland. There are a few measures which the Chancellor of the Exchequer could introduce as a silver lining to cushion Scotland so long as we are part of the United Kingdom.
The right hon. Gentleman should consider setting up a Scottish industrial development corporation with funds to be used for encouraging indigenous Scottish enterprises and industries. Funds are available for this purpose, because £40 million was received by way of licences for companies to start operations for oil. Incidentally, that is a farcical sum, and it is to the eternal disgrace of the main Opposition party that it dealt so ineptly with the oil companies. The House does not need to take that from me; it can read it in the report of the Public Accounts Committee.
I agree that the oil has not started flowing, but there was nothing in the Budget to spell out some principles which would alter the basis on which the inept negotiations were carried out by the previous Government. I suggest that that omission could lead to uncertainty. I assume that the matter will be dealt with in the second Budget, but before then the Chancellor should spell out principles of guidance and let it be known that there will be an entirely different approach in dealing with companies which make such large profits.

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I said that funds were available for the Scottish development corporation from the sale of licences. If that money were used for that purpose the Government would show their good faith to the people of Scotland. It would show a good declaration of intent. Again, this is not entirely unprecedented. The noble Lord, Lord Crowther-Hunt, who is in charge of the investigations into devolution, suggested in his report that Scotland could have its own levy of value added tax. That was one of the proposals which he threw out for consideration. The oil has not started flowing, but my information is that in August or September one field will start to flow, probably on a very small basis to begin with, but within two years there should be enough flowing not only to cope with Scotland's 11 million tons annual demand but also to make Scotland an oil-exporting country.
I have mentioned the act of good faith which could be shown to the people of Scotland, who feel tired of not having a good situation and policies tailor-made to suit them. There is a case for different petrol duty in areas in which great distances have to be travelled with a sparsity or lack of public transport. There is a strong case for different old-age pensions. The very foods and fuels—gas and coal—which the old people need are higher in price. With the possible exception of Moray and Nairn, we have a cold climate. Being a tax across the board, VAT affects the higher prices that we are paying in addition, and it is an extra penalty.
With all these points, there is a case for a higher personal allowance. A new study produced by Glasgow University last week indicated that regional policy of United Kingdom Governments seemed to have worsened the problems in many ways over the years. I am looking forward to receiving a copy of that study, which I hope to refer to on another occasion should I catch the eye of Mr. Speaker.
I should welcome a proposal to require banks to lend at building society rates for house purchase, or to invest in building societies. The housing finance position is chronic in Scotland. It is slowing down building when houses are so badly needed all over Scotland.
I welcome the proposal about estate duty. No doubt others more intelligent on
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this subject than I could develop the point that there are small farmers in my constituency and in many other places who literally cannot afford to die. That means that there must be a radical reappraisal of the whole basis upon which they have farms. That is certainly a requirement of the Government, particularly of a Labour Government, if they really want to tackle the problem.
Mr. Peter Rees: The hon. Lady said that she welcomed the estate duty proposals and then, in the same breath, that it was likely to affect her farmers. We are conscious of this problem all over the United Kingdom. Perhaps the hon. Lady would reconcile those two aspects. Many of us who represent constituencies with agricultural interests are very concerned about estate duty measures and would be interested to hear her views on the proposals.
Mrs. Ewing: I have not come to a conclusion of a detailed solution on this matter, but I have the problem isolated. I can give a simple example. My election agent bought a farm a few years ago. The price of borrowing from the bank then was not too severe. The farm is now valued at a very high price—one could say that that is to my agent's advantage —but he is very concerned not to have all this capital, which he does not want to realise, but to pass his farm on to his children. There is the problem. It may be solved by altering the whole basis of land tenure, but I do not know whether the Labour Government will ever do it.
Mr. Buchan: Will the hon. Lady give way?
Mrs. Ewing: No, I must continue. I have given way once already to the hon. Gentleman and another hon. Gentleman on this point. I shall try to finish my speech quickly to allow other hon. Members more time.
The Diplomatic spending of the present Government and the previous Government is an area which could be cut back. It is my understanding that we are second in spending to the United States in this area. It seems incredible that we are still pretending that we are a great power, as in the Victorian age.
On defence spending I am disappointed that a Government who

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would claim to be much more radical than is the main Opposition party in this matter have added on only £50 million to the £185 million by which the Conservative Party announced that it intended to reduce expenditure. That is a fairly small addition to what would have happened anyway. As an opponent of nuclear weapons, with my party, I must say that we find it strange that the Labour Party conference can show its wishes and yet we are, by this Government, still committed to an independent nuclear deterrent. If that is defence, it is certainly not the defence of Scotland. It may be the suicide of Scotland, because in addition to the amount of money required for the base, we are also made into an armoury. I suggest that it is for the defence of America and not of Scotland. This is an area for much heavier reductions in the budget.
We should also stop trying to prop up Arab sheikdoms on the Persian Gulf as if, again, we were still a world Power. What is the sum of money spent on this? I can find no reference to it in any statistics.
I come lastly to the European Economic Community. I want to extract one figure from the Chancellor of the Exchequer's Budget Statement. He said:
"in the coming financial year we would be paying £210 million and getting back only about £120 million."—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 303.]
This does not seem to me to be very beneficial to Scotland. Again, my party is opposed to our involvement with the EEC. The farmers and fishermen of Scotland are opposed to it.
Mr. Bruce-Gardyne: The hon. Lady should talk to them.
Mrs. Ewing: I assure the hon. Gentleman that I have talked to them. The Scottish NFU welcomed the EEC's agricultural policy at the beginning, but the farmers have turned against it. I have met them in the constituencies in the North-East of Scotland and I have met hundreds of them in the marts, and so on. The fishermen are very concerned about and opposed to the EEC fisheries policy.
I cannot see, from the point of view of finance, that we are getting a very good Budget.
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Every time I attend Prayers in the House—which is not daily, I confess—a phrase in the Chaplain's prayer catches my attention—"Let the nations rejoice". The nation to which I belong cannot rejoice unless it gets some token that the social injustices from which it has suffered for generations will receive proper attention and time from the House of Commons. If the House of Commons does not have time to give these problems the attention that they merit—our losses of people and our other grievous problems—there is no doubt that, ultimately, my point of view will prevail and we shall have a self-governing Scotland.
7.18 p.m.
Dr. Keith Hampson: I thank you, Mr. Deputy Speaker, for calling me on the final day of this Budget debate. It is a great pleasure to be able to speak in this House for the first time, particularly for a historian, and all the more so if one is representing a historic constituency like mine.
The Ripon constituency has been represented down the centuries by men who have held virtually all the great offices of State. There is a certain poignancy in the fact that two of them were notable Chancellors of the Exchequer. Prosperity Robinson held the office for one of the longest periods in the country's history, and then became Prime Minister for the very shortest time in our history. Mr. Aislabie was notable for the fact that he created and then burst the South Sea Bubble. It is probably still too early to say whether the right hon. Gentleman the present Chancellor of the Exchequer will take after one or other of those.
The Ripon seat is also accustomed to having a fairly long tenure of its Members. But this year we have had a very unfortunate quick turnover. Less than a year ago Sir Malcolm Stoddart-Scott died tragically and we had a by-election, and then quickly after that came the General Election. In the short time that I knew him, I found Sir Malcolm to be one of the kindest and gentlest of men—in a genuine sense, one of the nicest men I have ever met. I know that his friendship and kindness will be missed on both sides of the House.
Hon. Members: Hear, hear.
Dr. Hampson: He was known and respected locally for the assiduous care

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which he devoted to his constituents' problems and for the sense of duty which he showed over many years.
I was chosen as Sir Malcolm's successor for the General Election, in anticipation of his retirement. But, alas, my appearance in this House was delayed somewhat, though briefly, and Ripon, for the second brief time in its history became Liberal territory. In the half-year during which he served as its Member, Mr. Austick established a reputation for hard work and involvement in the community, a reputation which I hope to live up to.
The constituency of Ripon covers a large area, stretching some 30 miles from the Wharfe Valley—from Ilkley to Otley—northwards to the city of Ripon itself. Most people imagine that sort of territory to be solidly rural in character. In fact, that picture is somewhat misleading, although there is a successful agricultural industry, to the problems of which I shall turn in more detail on other occasions. At this stage, I do no more than pass on to the House what I heard on my return there at the weekend, after the Budget.
There is concern about several aspects of the Budget. There is concern, for example, at the exclusion of tax relief on overdrafts, and how this will affect the farming community. There is continuing concern at the changes in estate duty—or, rather, the lack of change—and concern also about the way in which the capital gains tax will affect farmers during this period of spiralling land prices. There is pressing concern also, I should add, at the way in which the £127 million has been given to milk, being put on milk as a subsidy instead of being used in a more effective way to encourage agricultural production; for example, by the restoration of the fertiliser and lime subsidies. If the latter had been done, there would still have been something left over for improvements in family allowances. I agree with the hon. Member for Rochdale (Mr. Smith) in urging that help should be directed to people, not to things.
The nature of the Ripon constituency has changed fast since the war, and it is still changing. There has been a surge of population into the Wharfe Valley on
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the edges of Leeds and Bradford. There are many retired people, notably at Ilkley, and there are great numbers of what one might today call the anxiety generation, those people—young businessmen and professional people—who have been encouraged by successive Government since the war to aim for and achieve better material standards but have found their incomes just not meeting the growing bills which they have to pay.
These people are over the margin of the £54-a-week wage earner of whom the Chancellor spoke. Their incomes go beyond that level, and they are the people who have gained nothing so far out of the Government's proposals and, specifically, nothing out of the Budget. Their expenses are constantly rising, their coal, fuel, petrol and telephone charges are rising, the cost of credit is a constant problem, their taxes and now their rates are going up.
Ripon is an area in which rateable values are high, and some of these people are having to pay £1 extra per week. Where is the sense in taking a penny off a pint of milk or a loaf and then putting an extra £1 a week on the rates? Then, if they have not been clobbered enough already, these people face substantial increases in their mortgage interest payments.
The folk of whom I am speaking took on heavy mortgages at a time when they expected their salaries to keep on rising at a good pace and when mortgage rates seemed likely to remain fairly stable. Now, however, at the same time as the international credit market has gone haywire, with the upward spiralling of interest rates, their salaries have been limited or frozen under the measures taken to meet our economic difficulties. Thus, these groups of professional and business people have had a difficult time trying to keep pace, and the situation now is such that within 18 months the average mortgage repayment has risen by about £2 a week, with another hefty increase in prospect.
As I have said, the Budget does nothing specifically for these people. It does nothing directly for the building societies. There is the promise of action on income bonds, which could help a bit, but apart from that there is nothing. The building societies still have to compete

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for their funds with the local authorities, whose interest rates now are very high in comparison. There is incentive in the Budget also for other forms of saving, which adds to the building societies' problems.
Unless we have an easier and more assured flow of funds into housing, owner-occupiers and would-be house owners—especially those to whom I have just been referring—will have perpetually recurring difficulty. They will be hit more and more heavily by mortgage problems, and the house building crisis itself will never be solved.
Builders cannot build enough houses to meet demand. They have their problems already in the acquisition of land and the cost of materials, but what they need above all is a regular flow of funds to even out demand. No one can do instant building. By the time a builder, especially the small man with high risk operations, has set about house construction at a period of high demand, a mortgage famine overtakes him and, very likely, he will be left with houses on his hands. This is all too common an experience.
It is no real answer—certainly no longterm solution—for the Chancellor to pay large sums of money to local authorities to buy these houses. He would have been better advised to put those funds directly into helping the building societies in their current financial problems.
The present crisis is twofold. For the short term, it is essential that the interest rate be prevented from rising to 13 per cent. To adapt a well-known phrase, this will call for a lot of "cash on the table." I applaud the Secretary of State's decision to set up the emergency committee, proceeding forward from the action of the Conservative Government in setting up the joint advisory body with the building societies to try to find ways of making more stable the situation in which they have to work. Nevertheless, as I say, if we are to prevent the rate rising to 13 per cent. large sums of cash will be needed. That is the short-term problem. For the longer term, we must guarantee a steadier flow of funds in order to offset the problem that the building industry is not readily sensitive to the needs of supply and demand.
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More help should be given—I have a personal interest here—through a national scheme to assist house purchasers, especially young couples. In my own case, on a university salary, I found it impossible to meet the price of a house in my constituency, with mortgage repayments of about £100 a month. This is the constant worry facing a lot of professional and business people. There must be some system for making initial repayments easier for house purchasers, such as some builders have evolved for themselves, to guarantee a more stable demand for the builder.
Many of us would welcome it if the Chancellor eased the restrictions on the use of building society reserves. Also, the Government should establish a fund, to which the building societies could turn, fuelling this fund from the special deposits required of the clearing banks, and I for one would add the windfall profits which the banks inevitably make at a time of spiralling international interest rates. In other words, there should be a fund to which the building societies can turn for the supply of finance, at reduced rates of interest, as they need it when the problems they face are at their most acute.
I offer the further suggestion that the Chancellor should consider a scheme based upon the West German housing construction bonus Act. Under such a scheme we could develop a savings system specifically related to house purchase. Following the German model, everything a person saved directly for house purchase, through either the building societies or the national savings movement for example, would have an added bonus of 30 per cent, from the Government. Such a scheme could be developed in a flexible way so that people with larger families could have larger bonus payments of, say, 35 per cent., 40 per cent. or 45 per cent. In the same way, there could be supplementary payments for low-income purchasers to help them on the way to house buying.
In the present building crisis, and with the present demand problem, it makes sense to improve the existing housing stock. The Conservative Government switched substantial resources away from the sweeping demolition of town centres and into the rehabilitation and improvement of older housing. I hope that the

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Government will quickly re-establish and enact the provisions of the Housing Bill which fell with the election, which dealt particularly with this matter by strengthening the rôle of local authorities.
I should like to see tighter regulation of improvement grants, much as I applaud the improvement of older property. Like many Labour Members, I am sure, I have become more and more distressed at the way in which these grants have been misused. Tenants have been squeezed out, and there has been a perpetual running down of the private rented sector, which has now reached less than 12 per cent. of the housing stock. The profits derived from the sale of houses through improvement at the expense of public funds have then been pocketed by owners. We must stop the decline of the rented sector while at the same time improving the older housing stock. But I warn the Government that rent freezes and strict control of rents are not likely to encourage investment in this sector, and thus we risk it being perpetually run down.
I crave the indulgence of the House for not having followed the convention of being non-contentious. However, housing is a contentious matter, and it has not, I believe, been fully discussed in the debate. There is no dispute between the two sides of the House about the Chancellor's declared aim of increasing house building. On this side, however, we would certainly expect to see more done for the private sector, for the sort of people that I have been discussing and for the building societies than the Chancellor has so far put forward. There should be more help for the owner-occupier rather than the concentration on council house tenants and the public authorities, which at present seem to be his sole concern.
The right hon. Member for Manchester, Central (Mr. Lever) emphasised that we could not turn to the Budget for all the answers. The Chancellor has declared that housing is one of the Government's three top priorities for the first year. We welcome that, but while welcoming it we expect something soon, something more concrete than we have had so far.
7.33 p.m.
Mr. A. E. P. Duffy: I campaigned against the hon. Member for Ripon (Dr. Hampson) at the
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by-election last July but I now have no hesitation in congratulating him on an informed, elegantly-delivered and altogether impressive maiden speech. His composure, his knowledge of the problems of many of his constituents, his feeling for his beautiful Ripon constituency, and a very real grasp for the complex subject of housing must have commended him to hon. Members on both sides of the House. I was especially glad to hear his warm tribute to his predecessor, David Austick. Those of us who came to know David Austick became aware of his personal charm, his deep working knowledge of the Yorkshire economy and his conscientious application to his duties in the House. Most will agree that in a short span of time he made more than the average impact. The hon. Member must beat David Austick once more before he can regard the beautiful Ripon constituency as his own.
I pay tribute to my right hon. Friend the Chancellor of the Exchequer for his Budget. In construction and presentation it was admirable. In its social provisions it must surely appeal to most people in the country, irrespective of party. I think, however, that his fiscal measures will prove more controversial and I expect that hon. Members on both sides of the House are already looking forward to the Finance Bill, to the manner in which so many of those fiscal measures will be translated into law and will be defined. I shall say no more about its fiscal features. That subject belongs to a later stage. Instead, I wish to address myself to the broad strategy.
My right hon. Friend's neutral Budget judgment and bias on the side of caution was probably right. I would have preferred not to have seen the cautious bias. My right hon. Friend knew of my feelings—that I was anxious he should not be deceived by any illusion of buoyancy that the first flush of recovery from short-time working might have generated throughout the economy. I am especially concerned about a sag in demand during the course of the year. Given the hatch of statistics for the period that came to my right hon. Friend's hands during the week before Budget day, and realising the very unclear picture that they must have presented to him, I think that few can quarrel with his overall judgment.

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I want to deal more with his strategy and with what I presume were his four basic aims, certainly as reflected in his demand management. The first was his obvious anxiety to protect the exchange rate. The second was his equally obvious duty to eliminate at the earliest possible stage a balance of payments deficit arising out of factors other than the energy crisis, and especially the oil crisis. Thirdly, there was his wish to check domestic inflation and, fourthly. his wish to promote the highest possible level of business activity. At this stage we can properly make an assessment of the Budget only on these four counts. That does not mean that we are not entitled to go beyond that and look at its technicalities, but they belong to the Finance Bill.
Let us take the first of those four criteria—my right hon. Friend's anxiety to defend the exchange rate. We are bound to take early note of the steps he has taken to strengthen the exchange rate through a sizeable foreign loan as well as by increasing the United Kingdom swap facility with the federal reserve. I am struck by the way in which he has done that on terms that are acceptable, if public reaction is a guide. Furthermore, the pound has strengthened since Budget day, though I grant that the causal relationship might be slight. It has strengthened nevertheless, whatever other factors might be involved. So, on the first count of protecting the exchange rate, I think the Chancellor deserves a plus.
What steps has he taken to eliminate the truly appalling non-oil balance of payments deficit? We heard during the debate last week and this evening that the pound is competitive. Export opportunities undoubtedly exist. I presume that it is part of the Chancellor's strategy to persuade or perhaps even to force British firms into overseas markets, on the lines of the Japanese model. In so far as that is so we must acknowledge the Budget's relevance to it and also mark that up in the Chancellor's favour. I shall say no more in that direction, because any comment must lie largely in the realm of speculation.
The problem of domestic inflation is much more pressing and is therefore of much more immediate concern. Through
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food subsidies and other social provisions the Budget has tackled the wage-price spiral at its crucially explosive point. It attempts to check and, hopefully, destroy the expectation that prices must rise. It lays siege to the psychological dimension of inflation which I regard as the greatest threat that we face—the belief that prices will go on rising with people taking steps accordingly, and, in that way, inflation becoming built in.
I do not have to disturb the minds of hon. Members further by reminding them that that has to go on for only another three or four years for the present price levels to be as high again, and that at that point the fabric of our society would be seriously under strain. Therefore, urgent action was required. Whatever view one may take about the cost, notably, the £500 million for food subsidies, it will require a stronger argument to decry the Chancellor's purpose in setting on one side a sum of that size not just for food subsidies but with a view to checking price inflation, undermining the expectation that prices must go on rising.
Just how necessary that approach is can be seen when we look at the present high level of interest rates. Many of us must be aware that, however appalling it may seem to hon. Members who do not easily see the relationship between interest rates and the present extent of price inflation or the present force of price rises, the two go together. It would be unreal for anyone to believe that we could have price inflation of the present force and not have an interest rate structure that corresponded to it and had not assumed its present size, so inhibiting so many policies, not only in housing. Therefore, secondly, my right hon. Friend was bound to act here.
Thirdly, it is noteworthy that for the first time in some years there is a significant reduction in the Government's borrowing requirement. It is easy to rib my right hon. Friend, as some hon. Members have done today, about the price rises for which they suggest he must be responsible, because at long last he is putting the nationalised industries on a realistic pricing basis. It is a matter not only of realistic pricing policy but of getting the money supply under control and easing some of the upward pressure on prices.

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Although they have not spoken in the debate so far, some hon. Members have taken the view that perhaps the most significant item in the Budget is the reduction of the borrowing requirement by as much as £700 million. Thus, my right hon. Friend has taken positive steps towards easing the pressure on prices. He has in that way provided some of the essential conditions for a response.
It is no secret that the response for which many of us are looking—especially on the Labour benches, because we are looking to our own kind, to our colleagues in the industrial movement outside—is from the trade unions. Happily, those with whom I am in touch—my own union of the General and Municipal Workers—have been quick to acknowledge that we have a Government who are honouring their electoral pledges with unprecedented speed, thus fulfilling their side of the social contract. I make it seem easy when I put it like that, but time does not allow me to do anything else.
I do not wish to minimise the difficulties of the previous Government and, therefore, their performance. I recognise what they were up against. But when we set alongside their performance and achievement what the present Government have been able to do in less than a month, we see that we have made a tremendous start. We can look to those in the country who have put us here for a corresponding response.
We have already done all that we promised during the campaign, and more than some of us promised—certainly more than I promised. I was never more tentative than in the pledges I gave my constituents a month ago. I confined myself to one pledge—the increase in the old-age pension. Again and again I reminded my constituents that a Labour Government had no magic wand and that, therefore, no one was entitled to unreal expectations. Yet, when we reflect on what has been done during the past month all of us on the Government benches can say to our colleagues and comrades outside who put us here, "You must agree that we have done more than any of you could honestly have expected. We have gone most of the way towards fulfilling our side of the social contract and now we look to you."
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On those first three aims of my right hon. Friend the Chancellor—his protection of the exchange rate, his steps towards elimination of the non-oil balance of payments deficit and an easing of domestic inflation—we can mark him up; we can give him a plus. We can grant him that he has done more than some of us could reasonably have expected during the recent election campaign.
I am not unmindful of the difficulties of the situation as it continues to develop. I am not even uncritical of my right hon. Friend; I am a bit uneasy about his fourth aim. I am not sure that he has yet come through as convincingly here as he has on the other counts. When I consider the fourth aim—the promotion of the highest possible level of business activity—I am reminded of some of the Press comments of the past week, echoed in the debate today. The Budget has struck some people as anti-industry. I have heard that said in my constituency, and my agent repeated it to me at my surgery in Sheffield on Saturday morning. Therefore, I cannot discount it. There may well be something in it, and it must be examined.
When I look at the stock market, I have to admit that there is pessimism about the months to come—perhaps about the latter part of this year. I know that to a large extent that pessimism arises from the same source as the feeling in industry that businessmen's liquidity position may have been adversely affected by the Budget, that they will not find it as easy to replace present stock and to go forward with investment plans, that there will be a cash shortage and that, where they can get it, money will be on stiffer terms. Therefore, there may be a knock to confidence.
Although profitability must, quite rightly, be closely examined, we must acknowledge that it is not last year's profits that matter so much as this year's with regard to the replacement of stock or the renewal of plant or its replacement later this year. Will investment be undertaken in the right measure, in the right places? Press reaction in some quarters is doubtful.
When we recall the short-time working through which industry has just passed we must admit that industry must be

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feeling a good deal more cost-conscious than formerly. Some sections of industry, notably in my constituency, which is very industrial, have learnt the lessons of improvisation and innovation. I wonder whether some of those firms may even have discovered how to manage without as many workers as were employed before, and whether we may be about to enter a period of labour shedding.
My second concern under the heading of business activity is unemployment. When my right hon. Friend is considering his second Budget I hope that he will monitor the strength of demand. As soon as unemployment asserts itself I hope that he will bring into play those instruments which are available to him to stimulate demand. I hope that he will continue to consider investment and to ask himself continually whether he is satisfied with his investment policy. I hope that he will ask himself whether it is not as important to redistribute and to reform taxes as it is to provide for wealth creation, and whether that third factor is not a precondition of the first two.
Is my right hon. Friend satisfied that industry can provide the necessary growth? I hope that he will bear in mind all these matters in his second Budget. I recognise that every Budget is a compromise. I think that my right hon. Friend has gone further than most Chancellors in satisfying the various sectional claims that arise in our society. Further, I believe that he has satisfied the technical requirements of all the purists. I hope that he will satisfy himself about future investment and any possible rise in unemployment. I am bound to acknowledge that his Budget enshrines a greater measure of social justice than we have had from a Chancellor for some years. My right hon. Friend is to be congratulated on a Budget which undoubtedly will represent a milestone in Budget making.
7.52 p.m.
Mr. S. James A. Hill: I congratulate my hon. Friend the Member for Ripon (Mr. Hampson) on a succinct, clear, lucid, intelligent and forthright speech—a maiden speech of which anyone could be proud.
If I may refer to the observations from the Government benches, I give the Chan-
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cellor of the Exchequer not a plus but a large minus. There is an old French quotation which suggests that the art of taxation is similar to plucking geese, in that the aim is to obtain the maximum amount of feathers with the least amount of hissing. Perhaps the Chancellor is not such a clever fellow as he thinks. He has produced the minimum of results—indeed, it has been called a neutral Budget—with the greatest outcry from the taxpayer.
The speech which gave me most pleasure and impressed me most during our debates on the Budget was the speech of my right hon. Friend the Member for Carshalton (Mr. Carr). He made a fine maiden speech in his new appointment as Shadow Chancellor. We went right to the heart of the problem. He referred to two vital omissions which, unless replaced, will mean that the Chancellor has little idea where the country will end in its search for growth. It seems that no estimate has been made of gross domestic product during the first half of 1975. Further, there is no idea of the scale of income increases during the next 12 months.
During my right hon. Friend's speech the Chancellor was evasive. He did not attempt to refute the statement that the Treasury has said that his Budget will add 2½ per cent. to the retail price index. There can be no answer as we see an ever-increasing list of price increases radiating from the 25 per cent. increase in steel prices and the 30 per cent. increase in the price of electricity. Other items, too numerous to mention, will be affected.
When the Government were in Opposition prior to the General Election they castigated my party. In their comments about prices they were derisory. However, in their first Budget they have been the biggest factor in price increases since inflation started.
My right hon. Friend the Member for Carshalton mentioned a family consisting of man, wife and two children, the man earning £38 a week. He did his sums, as no doubt every family in the land has done in the past few days. He came to the conclusion that such a family will not be better off under this Budget but far worse off.
I can substantiate that. I have the figures from a typical family in my constituency. The man of the family is a

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forklift driver who is paid £1,600 a year. He has a wife and three children. Under this Budget his tax will be cut from £2 a week to just over £1·50. The family will get cheaper milk. It drinks a lot of milk—21 pints—and it will be 1p a pint cheaper. However, the Budget, and particularly the increased cost of electricity, will hit the family hard. The wife says that she cannot imagine how she will cope. I suppose the Chancellor will tell them to have the traditional English meal of bread and milk, or milk sop, as it is called.
Such families, which are hard working and not highly paid by any stretch of the imagination, will be those that suffer most from the increased charges that will radiate from the nationalised industries. One of the biggest complaints that I have heard during the past weekend has been about the penal VAT on the price of petrol.
We are all pleased that the pensioners have received a well-justified increase, but the Budget hits right at the heart of their basic spending. It will not be long before it becomes apparent that the pension increase will be swallowed up in additional charges long before the end of the year.
The right hon. Member for Stepney and Poplar (Mr. Shore), when speaking on the Budget, could not resist the temptation—indeed, he has been unable to resist it for the past 18 months—of blaming many of our problems on the EEC. He observed that last year our imports from the Common Market were running at £5,197,000,000, whereas our exports to the Community, were only just over £4,000 million. He complains that the trade balance with the Market has deteriorated by no less than £1,100 million in the past two years.
There was considerable resistance by minorities to the United Kingdom joining the Common Market. Since then there has been the constant chant by the right hon. Member for Stepney and Poplar, and by his right hon. Friend the Secretary of State for Employment that, come the day, the next Labour Government would pull out of Europe. That has been said many times. I must respect both right hon. Gentlemen in that they have never wavered in their claim. There is no room for doubt that such expres-
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sions have in many cases delayed commercial and industrial enterprises from putting all their eggs into the European basket.
It was clear from the Chancellor's statement, when he mentioned the EEC, that even under existing policies which the Government are attempting to renegotiate the cost to the United Kingdom in the coming financial year will be the difference between the payment of £210 million and the claw-back of about £120 million. Therefore, the cost in the next financial year to the United Kingdom to maintain its place in Europe will be £90 million. That is a favourable figure when compared with the total subsidies of milk, which are running in the region of £310 million. We may be building bonny babies, but we must ensure that they have a bonny future within the Community.
I am delighted with the thought of renegotiation. The European Community is not a static political body but a flexible market place. Renegotiations have been going on since the inception of the Treaty of Rome, over 10 years ago.
I make a small constituency point. We all know that there has been a cut-back of late in the expenditure on roads and motorway systems. There has been an excellent environmental lobby requesting that more freight should be carried by the railways, certainly until the time comes when our motorways are brought up to some sort of Community standards. However, it will be possible, under the new regulations, with the value added tax on fuel, for the road haulage industry to claw back its costs in the normal way, which will keep down the overall costs of road transport within some foreseeable limit.
The reverse side of the coin is that the Chancellor is allowing rail freight charges to rise by 15 per cent. It is obvious, therefore, that railways will become less competitive with roads and that there will be a tendency for more of our freight to be carried on what are in many cases unsuitable roads. Environmentally, there should be a cut in rail freight charges and not a massive increase of 15 per cent. Perhaps the right hon. Gentleman will consider this and delay these charges until

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such time as he is confident that the road programme can be increased.
Perhaps the most divisive policy within the Budget is on housing. The Chancellor has introduced a freeze on all residential rents until the end of the year, quite regardless of the question whether tenants can afford them. In the private sector there are tenants who are better off than their landlords. But all this appears to be part of the irrational plan for holding down prices. If that is so, I do not object to it on that score, but when the right hon. Gentleman makes no mention of any help for those in the private sector of housing either to buy their own homes or with their mortgage repayments problems, it is time for the Opposition to be critical of his policy.
The right hon. Gentleman was all too ready to say that he would be putting £350 million into the hands of the local authorities in order to make an immediate increase in their building programmes. Where he has become divisive is that he knows full well, as he admitted, that in the private sector about 30,000 houses which have been completed have not yet been sold. In providing help so that they can be sold, he has given the money to the local authorities as an emergency measure so that they may buy these houses, with two provisos—that the houses must be of the right standard and that they can be acquired at reasonable prices.
Of course they can be acquired at reasonable prices. The Government have set up a monopoly situation where the only hands which will have any money to purchase or, indeed, to build will be those of the local authorities. Housing in the public sector for renting has become a national necessity, but the thought of the whole of the future housing of the country being municipally owned, with vast concrete council housing estates stretching from one end of the country to the other, is too depressing to contemplate. The Chancellor has his divisive programme for housing and he is clearly not going to attempt to help the private sector in any way. This is something on which we shall attack him again and again on every suitable occasion.
I have had an interesting question from a constituent concerning the loss of facili-
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ties to use the overdraft interest as tax relief on second homes. What will be the flexibility within the Department on the question of second homes purchased for dependants who would otherwise have been a housing liability on the State? Perhaps we can be given some indication of the Government's thoughts on this matter when the right hon. Gentleman replies to the debate.
This Budget has been called many things by many people. Indeed, The Times called it a Budget for the TUC. It went so far as to say that it gave too great a priority to the TUC and too low a priority to the economic climate. I am certain that when they thoroughly analyse the way in which the Budget will stifle investment and industrial growth, the TUC and industry, will conclude that, although it may contain some small items at this stage, the long-term fear of high unemployment in the not too distant future will be realised.
Britain earns its bread and butter from industrial production, and, as the Secretary of State for Trade has pointed out, there is great need for further expansion in the European market. There must be both sufficient liquidity left in industry so that it may diversify and expand in Europe and sufficient rewards for commercial, calculated risk to offset that risk.
There are few benefits in the Budget. Most of them aim at the section of our people that the Conservative Party would have equally protected—the pensioners. But the warning is there for the British people. The Chancellor said that he had at one stage one hand tied behind his back. God help the British taxpayer when the time comes, if it ever does, when he has both hands free. If this is a supposedly neutral Budget, Heaven protect us from the Chancellor's full blooded Budget. I do not think that the Opposition will give him the opportunity to put forward another Budget this year.
8.7 p.m.
Mr. Edward Milne: The hon. Member for Southampton, Test (Mr. Hill) has raised the question of the replacement of the Chancellor of the Exchequer before the next Budget. The debate and the Budget itself have suffered to some extent from the fact that we are only some four weeks away from the clash and clamour of the General Election which

973
produced, for the first time in many years, a minority Government in the United Kingdom. Judging by the attendance in the House tonight, that clash and clamour has subsided very quickly.
All of us who listened to my right lion. Friend the Chancellor of the Duchy of Lancaster today were glad to see him back in his place and to some extent back to his old form and his old state of health again. He touched on a theme which my right hon. Friend the Chancellor of the Exchequer touched on earlier. He said that the job of the Budget was to harness our peoples efforts behind our economic aims, and my right hon. Friend the Chancellor of the Exchequer talked in terms of seeing that the benefits of the Budget were visited on the people who actually produced the wealth of the country.
If there is one overriding criticism of many of the speeches in the debate it is that the questions of speculation and investment, of finance and so on, important as they are, have superseded the real issues concerning wealth production. My right hon. Friend the Chancellor of the Exchequer, talking about the Budget judgment, said:
"in the last resort success or failure will depend on the efforts of every man and woman in the country. It is they who produce the goods, who spend and save the money. The social and, indeed, the human climate is as likely to influence their efforts as anything which is done in the strictly economic field."—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 289.]
I think that this is the pattern that has to be followed, not only in dealing with the question of the Budget but through all the stages of the Finance Bill to follow.
When we talk of the Stock Exchange and of monetary gambling going on behind the scenes and underlying wealth production, we have to realise that, through this gambling and investment, the money, which is so often put into wrong directions, arises from the efforts of our people in factory, mine and mill. Too often has it been argued that it is the other way round—that the rewards have to go to the investors, to the speculators, and that it is all right to do this because at some time by an adjustment of taxation, be it by capital gains tax or anything else, we are going to claw something back.
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My right hon. and hon. Friends in the Government must realise that it is not merely a question of taking rewards from people after they have gained benefits from the wealth production of the community. My right hon. Friend the Chancellor referred to land and property speculation, and spoke about measures which the Government will later introduce regarding public or social ownership of development land. At present some of that land is in private hands. There is an example in the new town of Cramlington, in my constituency. This town has grown and is prospering, to the benefit of all concerned in the North-East. In the last three or four months about £20,000 has been asked in annual rental for about three-quarters of an acre of land in that new town.
There are still social inequalities in areas which have been greatly assisted by investment of public money as part of the regional policies of successive Governments since the end of the Second World War. There remains tremendous wealth and income for the Chancellor to deal with. It has not been touched in the Budget. There is still much opportunity through taxation to reduce social inequalities and to aid the cost of running the social services and finding the money for pensions and other benefits. Sonic people profit from public expenditure and should be dealt with not only through taxation but by redistribution of assets, and, therefore, the social ownership of land must go well beyond the measures which have been discussed.
In the past few years speculators have taken great advantage of house improvement grants, which were introduced to help meet a basic housing problem by extending the life of older houses as well as increasing the range of housing available. But too often house improvement grants got into the hands of speculators. In the North-East, not far from my constituency, the National Coal Board sold houses at very low prices and improvement grants were given to speculators who became involved and reaped wide and vast rewards. I hope that the Government will look into such matters.
Often my right hon. Friend the Chancellor, in talking about capital gains tax or in dealing with increased profits arising from the sort of speculation which I have in mind, fails to realise that some

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of those builders who have benefited to the greatest extent—in my constituency and elsewhere—are now in the process of setting up subsidiary building companies in order to fend off the impact of the sort of taxation which the Chancellor is now considering.
We must bear in mind that this is only an interim Budget and that when the next Budget comes—as it must, in a short time—some of the loopholes which are still glaringly apparent must be stopped up.
The hon. Member for Test mentioned the Chancellor's reference to the European Economic Community. The hon. Gentleman said that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), by his speeches in this and previous Parliaments against entry into the Community, had stifled and halted industrial investment in this country. But I believe that it was not speeches by any hon. Member on this side, or indeed in any part of the House, that stifled the initiative on industrial investment. It was more to do with the structure and the set-up of the Community itself. That is why it was necessary for the Government to state in their election manifesto, and for the Chancellor to mention in his Budget speech, that a central part of our European Economic Community strategy rests on renegotiation. From Questions during the past week to three successive Ministers we have been able to extract a promise that renegotiation terms would be laid down—as indeed they have been laid down, in a White Paper today.
Mr. Hill: I hope that the hon. Gentleman will bear with me for a few moments. He referred to my speech. I was speaking about imports and exports deficits in relation to the Community, which had nothing to do with renegotiation of terms. It was pointed out by his right hon. Friend that we were suffering from a deficit of over £1,000 million because of our trade with Europe. My point was that our industrialists have had little encouragement from either sides of the House to put all their eggs in the European basket.
Mr. Milne: I welcome that intervention. While the hon. Gentleman did not mention renegotiation specifically, he cannot complain if I deal with it in reply
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to points which he raised. He will recollect that he took from the Chancellor's speech the fact that we were paying £210 million to Europe and receiving in return only about £120 million. But he struck at the core of the issue when he said, in relation to the Community, that we have to deal with the question of renegotiation. That is why I, first, made the point about the White Paper, and, secondly, referred to the strong emphasis which the Foreign Secretary has placed on the question of renegotiation.
Two factors emerge from that situation. First, the result of renegotiation will be put before the British people, in the form either of a referendum or of a General Election, and, secondly, if the renegotiated terms do not satisfy the House and the British people we shall come out of the Community and discuss with the Community the question of terminating our membership. That is the correct note to strike. That is the position which must be stressed in the coming months. If we deal with the question of renegotiation on the basis of this country remaining a member, our hands will be tied behind our backs. In addition, the basis on which a more equitable Budget could be introduced would have been lost because our financial commitments to the Community, if allowed to remain as they are, will have a crippling effect not only on British industry but on the hopes and aspirations of Britain and its people.
That is why we can welcome the Budget only to a limited extent. We can welcome it so far as it confers benefits on pensioners. We can welcome it so far as it deals with the question of social justice. But the Chancellor of the Exchequer, when he talks of the difficulty of finding money to finance these ventures and measures, must not forget that he has proposed a £50 million reduction in our defence costs whereas he should be talking in terms of much larger sums. The Labour Party's commitment to making cuts amounting to about £1,000 million in arms expenditure, made at its last annual conference, is another factor which must be taken into account.
But the overriding point is that the Budget is not just a means of shifting money from the better-off to those who need it more. A Budget must be the

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foundation of a policy involving a drastic reorganisation of the type of society in which we live, and the people who produce Britain's wealth must be given first access to it. Unless Chancellors of the Exchequer learn that lesson we shall not build the Britain for which many of us have worked.
8.22 p.m.
Mr. Nigel Lawson: Thank you, Mr. Deputy Speaker, for allowing me to catch your eye for the first time, on All Fool's Day, too—a date whose appropriateness to the occasion of a maiden speech needs no underlining.
This has been a wide-ranging debate, and I could not pretend to be able to follow all its twists and turns, but I am particularly glad to have had the opportunity of speaking after the hon. Member for Blyth (Mr. Milne), whose presence here is a symbol of a form of security of tenure which all of us have deeply at heart, although he has perhaps caused a lot of trouble at the United Nations.
The new constituency of Blaby, which I have the honour to represent, is in South Leicestershire. It is roughly 60 per cent. of the old Harborough division, whose Member, happily, continues to serve here as Member for the new Harborough division. Therefore, for me to pay the customary tribute to my predecessor would in the circumstances perhaps be in questionable taste—rather like publishing an obituary of the living. Therefore, I shall simply say that it is my ambition to serve my constituents as well as my hon. Friend did when they were his constituents.
Blaby is in a real sense the centre and heart of England. It is there that those two great Roman roads, Watling Street and the Fosse Way, cross. To come to the present day, it is in Blaby that the M6 meets the M1. As hon. Members of a monetarist persuasion will instantly recognise, that leads me logically to the subject of the Budget.
As a former professional Budget-watcher it was easy for me to recognise the parentage of this beast. It is by the TUC cart horse out of the Treasury grey mare. Therefore, I was not in the least surprised to hear the Chancellor of the Exchequer say that later in the year he
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intends to introduce a Budget of his own. In view of the speeches made earlier today, many of us on the Opposition side of the House would rather it was the Chancellor of the Duchy of Lancaster who introduced the subsequent Budget. However, I have always believed that every Chancellor should be allowed at least one Budget of his own. I am sure that will be the case on this occasion.
In his Budget speech the Chancellor said:
"Unless we can somehow halt the accelerating inflationary trends in our economy, the resulting political and social strains may be too violent for the fabric of our democratic institutions to withstand."—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 290.]
Those were sombre words, but I fear that the right hon. Gentleman did not exaggerate. Yet there was nothing in that long and complex Budget which did anything to halt the Gadarene stampede to which he referred. Indeed, some measures in it may actively make matters worse. It seems that everything has been staked, indeed gambled, on the success or failure of the so-called social contract between the Government and the trade unions—the philosophy, we are told, on which the Budget has been based.
A social contract is all very well, but, like my right hon. Friend the Member for Worcester (Mr. Walker), I found it difficult, in looking at the Budget in detail, not to be a trifle sceptical about it. Are we supposed to believe that the stony heart of the militant shop steward will melt at the thought of paying more for his cigarettes, petrol and beer in order to allow his wife to pay a little less for bread and milk? Perhaps this rather touching picture of male altruism is well founded, but I doubt it. It seems to me more likely that the Labour Party, which has always had a strange predilection for sacred cows, has gone one step further and now believes in sacred milk, too. Are we to believe that the great mass of trade unionists will suddenly be reconciled to the paths of moderation in wage claims by the knowledge that in future 33 per cent., and not 30 per cent., of any wage increase will be taken from them in tax? That applies to a married man, with two small children, earning as little as £25 a week. If hon. Gentlemen do not believe it, they should look at Table 17 in the Red Book.

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Are we meant to suppose that trade union activists will feel that an extra 2½ per cent. rise in the cost of living imposed by the Chancellor of the Exchequer "at a stroke" is a small price to pay for the promise that one day there will be a wealth tax?
The social psychology of clobbering the rich is a subject deserving of study. As one close student has written, there is
"a curious tendency within the Labour Party towards a suspicious, militant, class-conscious Leftism."
That is the observation of the right hon. Gentleman the Secretary of State for the Environment in that classic work, "The Future of Socialism". Can it be that fostering this suspicious, militant, class-conscious Leftism is compatible with the stirring cry for national unity which the Chancellor made the theme of his peroration in his Budget speech?
Perhaps, after all that, it is not to the Budget that we should look for the key to the so-called social contract, the sop to the trade unions. Perhaps, instead, that key, that sop, is to be found elsewhere—in the repeal of the Industrial Relations Act and the "Footwork" that we are told will replace it. At first sight, that seems to be a more plausible candidate, but, even so, there is something curious about it.
When I was listening recently to the eloquent oration of the Secretary of State for Employment, I was struck by the passage in his speech in which he accused the previous Conservative Government of having conceived of the statutory incomes policy as
"a kind of blunderbuss to brandish in the face of the Trades Union Congress and say to it 'Stand and deliver'."—[OFFICIAL REPORT, 18th March 1974; Vol. 870, c. 697.]
Most people in the country, and certainly the great majority of my constituents in Blaby, would say that if there is anyone these days who is inclined to say "Stand and deliver", it is the big trade unions. One of the more endearing characteristics of the right hon. Member for Ebbw Vale (Mr. Foot) is that he is inclined to live in the past. No doubt he imagines, even today, that he is marching alongside the Tolpuddle Martyrs or fighting the Taff Vale decision. But the rest of us know that times have changed
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and with them the balance of industrial power—and the balance of weaponry, as some of his right hon. Friends can testify. Some of us recall, during the celebrated "In Place of Strife" saga, the plaintive cry addressed by the Prime Minister to Mr. Scanlon, "Get your tanks off my lawn, Hughie". I am afraid that Hughie's tanks are still on the Prime Minister's lawn and, in the light of that, the present Government's intentions towards trade union law in general and picketing in particularly are thoroughly alarming.
If I may draw an analogy following the "blunderbuss" of the right hon. Member for Ebbw Vale, there is in the United States considerable concern over the constitutional right of every citizen to bear firearms and the violence and bloodshed that result from it. Sensible people there are campaigning to try to get the right limited by law. The position of the Government in a similar situation boils down to saying, "Of course people will be frustrated if they have only rifles, and this will lead to violence. For real peace and good order you should let them have machine-guns, or even bazookas." That is a serious point. The central problem of our time, however much hon. Members on the Government benches may try to hide away from it, is the problem of the abuse of trade union power. If a social contract is to mean anything, it must mean that that power has to be used responsibly, but we will not ensure that by enlarging that power, or making its abuse still easier.
The link between trade union power and wage inflation sheds a spotlight on the basic fallacy that underlies the social contract/egalitarian approach. The mechanism of wage inflation rests on two simple and unequivocal facts. First, there are more groups of workers who feel strongly that their relative pay in relation to that of other groups of workers should be improved than there are groups who feel that their relative position should be allowed to deteriorate. Secondly, many of these groups—not all—have the economic and industrial power to be able, at least in the short term, to force the relative improvement they seek.
No amount of egalitarianism—of clobbering the so-called rich in the sacred name of the social contract—can make the slightest difference to this central issue. The right hon. Gentleman the

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Chancellor of the Exchequer can have Mr. Harry Hyams hanged in public—and drawn and quartered, if he so wishes—but it will not make a jot of difference to the differing views of ASLEF and the NUR on the relative standing of their respective members. Why should it? Again, the right hon. Gentleman can, if he likes, impose a 90 per cent. capital levy on second, third, fourth or even fifth homes, but it will not make the slightest difference to the view taken by mineworkers about their position in the industrial league table. Again, why should it?
Let us suppose that it made sense for the Government to base all their hopes on the all-important struggle against inflation on the social contract. The crucial fact remains that there can be no such thing as a contract, social or otherwise, unless there are sanctions against those who break it. The question is—and this is the crux of the matter—what are the sanctions to be against the TUC or its member unions if they break the social contract which the Government are currently endeavouring to negotiate?
There are three, and only three, possible answers. The first is that the Government could stand by and allow the strongest groups to grab what they can, but refuse to increase the money supply accordingly. They could let events take their course so that there are bankruptcies, falling real wages and large scale unemployment among the groups which are less strong. The second possible sanction is to take the "free" out of free collective bargaining, which would envisage a return to the statutory incomes policy and all that—assuming we ever leave it. The third possibility is to take the "collective" out of free collective bargaining, and move to curb trade union monopoly power—which sooner or later is bound to happen.
The question to which we want an answer is which of those three possibilities is to be chosen by the Government. It must be one of those three choices. What is to be the sanction against breach of the social contract? Trade union members have a right to know the small print of the contract which they are being asked to enter into. But, above all, we in this House and the country have a right to know, and I trust that we shall be given the answer before this debate draws to a close tonight.
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Before entering the Chamber tonight, I took the trouble to read an essay which appeared in the Spectator on the subject of maiden speeches. It was written by my predecessor as editor—Iain Macleod, whose loss to this House, to the Conservative Party and to the country is still deeply felt by all of us. His principal piece of advice—indeed his only practical advice—was that a maiden speech should on no account exceed 15 minutes. I apologise to the House, for I fear that I may have transgressed that advice, but I shall try to do better next time.
8.40 p.m.
Mrs. Renée Short: The conventions of the House require that I congratulate the hon. Member for Blaby (Mr. Lawson) on his maiden speech. He delivered it very well and was rather witty at the expense of trade unions. He talked about militant shop stewards. But his view of the trade union movement is as inaccurate as his recollection of the figures contained in my right hon. Friend's Budget speech. I do not recognise the trade unionist whom the hon. Gentleman described as being the militant trade unionist who would not be prepared to sit back while some of the lower paid and weaker elements in our society got a rather better deal such as that which my right hon. Friend has offered them. Nor do I congratulate the hon. Gentleman on the accuracy of the figures which he quoted. He said that a married man with two children and an income of about £30 a week would pay more in income tax. He is wrong—
Mr. Lawson rose—
Mrs. Short: I am not giving way.
Mr. Lawson: The hon. Lady is wrong—
Mrs. Short: I repeat, I have not given way to the hon. Gentleman. A married man with two children earning that sum will pay £47 per annum less in income tax. In fact, he can earn £3,000 a year and still pay less tax—
Mr. Lawson rose—
Mrs. Short: No. I will not give way.
Mr. Peter Rees: Give way to a maiden.
Mrs. Short: I hope that the hon. Member for Blaby will be a little more

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accurate in future when he quotes figures—
Mr. Lawson rose—
Mr. Deputy-Speaker (Mr. George Thomas): Order. If the hon. Member for Wolverhampton, North-East (Mrs. Renée Short) does not give way, the hon. Member for Blaby (Mr. Lawson) must himself give way.
Mrs. Short: As the House knows, my right hon. Friend the Chancellor of the Exchequer painted a sombre picture, and it ill-behoves Opposition Members to attack him for the solution which he has offered. Those of us who were in the House in the last Parliament know that the difficulties which we face stem directly from the actions of the previous administration, not least of the problems which we now have to resolve being our enormous balance of payments deficit. The concern of the House and of the country must be to resolve that problem as soon as possible, and I am glad to see that from many parts of the House now there is a realisation that somehow we have to embark on a policy of import saving in order to cut down on the enormous amount of imports which have been sucked in by the inflationary processes activated by the previous administration.
I have had the opportunity to consult my constituents since my right hon. Friend introduced his Budget. They are delighted with some of his proposals, not least being the pledge to increase the old-age pension and the undertaking by my right hon. Friend the Secretary of State for Social Services to see that the heating allowance for pensioners is improved.
Naturally enough, my constituents have some criticisms. They are surprised not to hear squeaks from the wealthy. The wealthy have not been squeezed very hard by the Budget. They understand that the increase in electricity bills will hurt ordinary people. They understand that the increase in railway fares which has been asked for will hurt them and many other ordinary people. They are concerned that value added tax is to be imposed on petrol, and they do not quite understand my right hon. Friend's object in doing that. Is it to conserve a scarce world resource by making it more expen-
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sive and therefore less attractive to use? They do not understand why the 50 mph limit has been removed from motor cars travelling on motorways. This has produced a saving of petrol. It has also produced a saving of life. In their view, my right hon. Friend is being a little inconsistent.
My constituents are also disappointed that a wealth tax has not yet been introduced, though they understand that my right hon. Friend had very little time in which to do it. They know that we have done a great deal of work on how to introduce a wealth tax. They are concerned that my right hon. Friend said that there must be yet another Green Paper. Across the tables at Transport House we have passed many green, white and variegated papers on a wealth tax. I hope that my right hon. Friend will look at some of the documents which he had a hand in helping to produce and will not take too long before bringing his proposals forward.
I am glad that my right hon. Friend has put up the tax on tobacco and spirits to produce more revenue. I think that he could have gone much further.
I am not sorry that my right hon. Friend has put value added tax on sweets, crisps, and such items, but I think that he ought to take VAT off toothbrushes and toothpaste, in the interests of dental health. This is an urgent matter, as the right hon. Member for Leeds, North-East (Sir K. Joseph), whom I am delighted to see, will know. This is a serious part of the failure of the National Health Service to carry out the conservation that the nation needs. If we can discourage people from eating things that damage teeth and at the same time encourage them to buy and to use the things that help to preserve teeth, this will be an extremely valuable contribution.
My constituents are concerned that the defence cuts in the Budget are derisory. They are far below the commitment that we made during the General Election. I am not referring to the decision that was made at the Labour Party Conference, referred to by my hon. Friend the Member for Blyth (Mr. Milne), because that was not the commitment that we made during the election. My right hon. Friends are well aware that in many areas of social need, not least being the National Health Service and housing, a

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saving of £500 million to £600 million on defence expenditure could make a valuable contribution.
There is no doubt that because of the incompetence of the Conservative Party we face the most serious housing situation of any Government for many a long day. In the public and private sector house building and housing starts have declined. This is a serious situation for people who want to buy and live in houses of their own or to seek houses from the local authorities.
My constituents are surprised that my right hon. Friend was so kind to the property speculators. Why have they been allowed to get away with it? What about the scandal of Centre Point? What about the scandal of unoccupied office blocks that appear in practically every town and city in the country? Are these people to be allowed to get away with it still until my right hon. Friend can deal with this matter in his next Budget?
People see high profits being made from property speculation and they are concerned about it. They see enormous quantities of building materials used for buildings that then remain empty. They see an enormous amount of skilled building labour used to put up buildings which are allowed to stand empty and provide large capital gains for their owners.
Several hon. Members have referred to the large profits that have been made by the banks. Indeed, one bank was so ashamed that it delayed the announcement of its profits until after the General Election. Why cannot the profits of the banks be used to help those who wish to buy homes of their own? I hope that my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for the Environment will look at this considerable source of wealth that has been created by the inflationary situation and high interest rates to see whether some of it can be used for the provision of homes.
I wonder whether the Government would consider raising a loan especially for housing, a housing fund, which could be made attractive by being guaranteed against inflation and which would be raised at a low interest rate of, say, 2½ per cent. This would certainly help those who wanted to buy their own homes to borrow at a reasonable rate of interest. With the usual amount for the servicing of the loan, and so on, a low rate of
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interest could be provided for home owners, with the proviso that if the value of the house increased, as I suppose house values will in future, a proportion of the increase would accrue to the fund by means of an increase in the sum originally loaned.
In this way, the community would clearly benefit from any increase in the value of housing due either to inflation or to the collective effort of the community, and the purchaser would have the benefit of a very cheap loan. In view of the burden of inflation, which has never been less than 5 per cent. in the post-war years and shows no sign of abating, ordinary people who see their savings dwindle practically to nothing as the cost of living rises would certainly be glad to put their money into this kind of fund, where it would be protected.
Taking into account the enormous interest rates—14 and 15 per cent.—that local authorities pay to raise money on the open market, plus the burden of income tax and inflation, investors cannot but lose on the capital value of their investment. A loan guaranteed against inflation at a low rate of interest would attract more people than the building societies do. I hope that my right hon. Friend will consider this. Not being an economist, I do not know whether it would work, but it seems attractive both to lenders and to borrowers. That is surely something that we want to see, because it would make more money avail. able for house purchase.
On Thursday the Secretary of State for Social Services dealt with the introduction of a free family planning service. I was surprised to see in one of the national papers the other day the claim that she had made this statement without consulting the medical profession. I am sorry to see in the Press today reports of confusion about how this vital service is to be introduced. I do not know the facts of the case, but I hope that the problem will be speedily resolved.
Athough my right hon. Friend said that only the small sum of £1 million is to be made available for this service, I am sure that every hon. Member will agree that this is an important step towards the kind of service to which we on this side were committed at the last election, and which most of the medical and nursing professions, the social

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workers and ordinary men and women want.
This sum is not enough for a really effective service, but any expenditure will bring enormous savings. It is estimated that we need about £40 million a year for a really comprehensive service. There are about 300,000 unwanted and unplanned pregnancies every year and the Office of Health Economics has calculated that about 15 per cent. of married mothers would be happy if their pregnancies had not occurred. A large proportion of terminations of pregnancy are unwanted births, as are most illegitimate births. The savings from an investment of £40 million on completely effective service over 10 years would be considerable.
We are talking now about a saving of hundreds of millions of pounds over the period. If one thinks of the antenatal services, the health services, the education services, and so on, that are needed right through life, starting when a new life is born, it becomes clear that the investment would be well worth while.
If one considers it from the point of view of the national economy, it is a good investment. People may say that £1 million could be spent in other ways that would be more worth while to a different section of the community, but to put the interests of women first for a change is a well worthwhile way of using this money and I hope that a much larger proportion will be invested in this purpose.
I can think of much more worthwhile uses being made of the £1,000 million that has been earmarked for Maplin, or the £1,000 million that has been earmarked for the Channel Tunnel, or the extra money that is being spent on Concorde. I can think of many more productive and useful ways of spending these colossal sums of money, and I ask my right hon. Friend the Chancellor of the Exchequer, who I am delighted to see in the Chamber, to allow our right hon. Friend the Secretary of State for Social Services much more than a paltry £1 million to carry out a reasonable and comprehensive free family planning service.
There is good and bad in the Budget. One always says that about every Chan-
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cellor's Budget, but I think that this Budget has placed in the forefront those who really need greater help from the community. I think that in carrying out our election pledges my right hon. Friend has carried the whole country with him, except, of course, for a few Opposition Members and perhaps a few members of the Confederation of British Industry who do not necessarily represent industry. I am sure that most people will congratulate my right hon. Friend on the social aspects of his Budget, and I hope that the criticisms that I have made will be met when my right hon. Friend introduces his next Budget.
8.57 p.m.
Mr. Michael Alison: I have only three or four minutes in which to make my speech. I have the great advantage of having the Chancellor of the Exchequer here tidying up his own speech and I cannot resist catching his ear for a moment, since he described the Budget judgment as an art. I wish to put it on record that it is very much an art and that I believe the right hon. Gentleman got his judgment wrong this time.
I say that for a number of reasons. The right hon. Gentleman has underestimated the extent to which a deflationary hole has already been dug in the economy. He has failed to take account of what Wynne Godley described as £1,500 million worth of oil price rise effects. If that is added to the previous Chancellor's £1,200 million cut in public expenditure, and a further £200 million which the right hon. Gentleman admits he has taken out of demand, it means nearly £3,000 million worth of deflationary effects in the economy, all to bite in 1974 after a period, that is to say in late 1973, when, in any case, economic activity has been levelling out.
The Chancellor of the Exchequer, in his fiscal measures, was at some pains to try to levy taxes which he hoped would have the effect of people digging into their idle balances, or dis-savings, so that there would not be too much of a drop in demand. But the real yield this year compared to what the Chancellor estimated in terms of income tax is not the extra £700 million that the

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right hon. Gentleman has put on but the staggering increase, due to fiscal drag, of about £3,500 million. A great deal of the extra tax will fall not on those whom the right hon. Gentleman selected as being specially able to bear it but on those less wealthy who will float up into the higher tax rates without any real income increase. This further aspect should have been taken into account by the Chancellor, but I do not believe that he has taken sufficient account of it. Local authority rates, which amount to a direct tax and feature in the right hon. Gentleman's Red Book as part of the tax revenue system, are also to go up this year. There is to be a net increase of 20 per cent.—about £530 million extra. This more than offsets the subsidies that he is to give on the different kinds of foodstuff. If food subsidies are to reduce the retail price index by 1½ per cent., certainly the extra rates alone will put it up by the same amount. With the increase in the retail price index of 1½ per cent. on that side, added to perhaps another 1½ per cent. from the various nationalised industry charges, and so on, this Budget will put 3 per cent. on to the retail price index, apart from anything which may come from outside.
Thus, the Chancellor has in my view seriously underestimated the size of the hole which has been dug in the economy. His only expectation of the hole being filled, which can be deduced from the table forecasting economic growth, is to come from the hope that exports will rise. But will they really rise? When one considers what the Chancellor has done to profits, the disincentive that he has placed on the long-suffering business executive who is responsible for the big turn round towards exports, and all the extra burdens which industry has to bear, it is very risky to single out the sector in the economy which is to face the greatest challenge—the export sector—and then deliberately to clobber the people in that sector who are expected to effect the turn-round.
We shall, I believe, have substantially increased unemployment as a result of the Budget. The Chancellor must be very careful and he must come forward in plenty of time to counteract the effect of some of the deflationary features that we have had recently.
9.1 p.m.
Sir Keith Joseph: The debate has been notable for a series of maiden speeches, to which tribute has been paid by both sides in the winding-up speeches on previous days. It falls to me today to pay tribute to my hon. Friend the Member for Eastbourne (Mr. Gow), the hon. Member for Kingswood (Mr. Walker), the hon. Member for Newton (Mr. Evans), my hon. Friend the Member for Ripon (Dr. Hampson) and my hon. Friend the Member for Blaby (Mr. Lawson).
I must warn the House that these new Members are setting a very high standard. Some of them have even made speeches of very high quality without notes. My hon. Friend the Member for Blaby has just made an absolutely scintillating speech, which lasted for about 15 minutes, during which he had no notes in his hand at all. So the House will have to look to its laurels. We have obviously a fine new intake of Members on both sides of the House who combine strength of feeling with lucidity and force of expression. Collectively, from the Opposition side of the House, I wish all the maiden speakers well. We shall be listening to them with great interest in the future.
I shall be the only speaker who will not congratulate the right hon. Gentleman the Chancellor of the Exchequer on his extraordinary physical performance in a marathon of 2¼ hours. After all, Mr. Gladstone thought nothing of a four-hour Budget speech, and the right hon. Gentleman would not claim to be the most wilting flower among politicians.
I shall not speak as if the reign of virtue ended and the reign of vice began precisely on 5th March. There are lessons for all of us in these last years, years in which, under my right hon. Friend the then Prime Minister, the Conservative Government made a determined and by no means ignoble attempt, supported by the Labour Opposition, to accelerate the growth rate of this country.
In the circumstances I have some sympathy for the Chancellor of the Exchequer. I have had a few days in which to study his Budget. Though some features of the Budget are certainly welcome, my right hon. and hon. Friends and I think that it contains elements which are deeply damaging to

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the national interest. I shall explain what they are.
I shall not waste the time of the House with speculation on the so-called Budget judgment. All the pundits are in total disagreement. The margin of error in the factors involved in the Budget judgment is probably vaster than the Budget judgment itself, and it would be the merest guessing if I were to pit my views against those of the other side. It is the Chancellor—poor devil—who has to choose a series of assumptions and work on them.
However, that being so, the House is entitled to know what those assumptions are. My right hon. Friend the Leader of the Opposition, my right hon. Friend the Member for Carshalton (Mr. Carr) and my hon. Friend the Member for Worthing (Mr. Higgins) all asked the Chancellor to publish the relevant figures in Table 4 applicable to the first half of 1975. This publication is hallowed by precedent, but all that we have had so far has been an entirely negative answer from, I think, the Chief Secretary.
That is not good enough. The House and the country are entitled to know the assumptions on which the Chancellor is basing his Budget judgment, and I hope that the right hon. Gentleman will tell us tonight that we shall have published, either in answer to a Question or in some other way, the missing lines in Table 4.
In the light of the obscurity in the near, let alone the more remote, future, the Opposition welcome the Chancellor's undertaking to keep all the factors under review and to make a revision of policy whenever necessary.
I come now to a few gentle comments on the Budget proposals, before turning to our main criticisms. First, the prospect that the balance of payments deficit is likely to taper off later this year—the right hon. Gentleman acknowledged this in his Budget speech—is largely due to the action of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) in introducing his December measures—the surcharge on surtax, the control on hire-purchase credit and the £1,200 million cut in public expenditure this financial year.
When my right hon. Friend, then Chancellor of the Exchequer, made that
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announcement, the present Chancellor was very rude about the cuts in public expenditure programmes. Those cuts were applied by my right hon. Friends and myself with great disappointment and regret. They cut into the social as well as the other programmes. This was the first time that the Conservative Government had touched the social programmes, and we hated doing it. I had hoped that the right hon. Gentleman, having expressed such regret, would do something to increase at least the most important programmes of all, that is, the health and social service capital programmes, but the House will have noted that despite the Opposition's rudeness when the cuts were made the present Chancellor in his Budget speech, specifically endorsed the action of my right hon. Friend the Member for Altrincham and Sale.
The Chancellor has been urged to cut defence spending sharply, and there have been speeches urging the same on him today. We note that he has cut the defence budget by £50 million. Neither party, in our view, should cut defence lightly. It is a dangerous world, and we need the alliance. I hope that the right hon. Gentleman will stand up to the urgings of his hon. Friends.
The Chancellor appears to be taking a pessimistic view of exports. As he says, they are competitive in price, and the price controls at home will tend to drive business men abroad. But will he explain why his right hon. Friend the Secretary of State for Trade predicts a 7 per cent. growth in world trade—in volume terms, I think—whereas he predicts an expansion of only 4½ per cent.—in value terms, I think—in our visible export trade? Value and volume are not compatible, but perhaps the right hon. Gentleman will tell us whether he is being deliberately pessimistic or whether there is some difference of judgment between him and his right hon. Friend.
The Budget embodies a complicated cat's cradle of trade-offs, including some subtle deflationary effects and several at any rate apparently deflationary features, such as indirect tax increases which may prove in fact to have inflationary consequences. The Budget will have a cumulative impact, producing tax and price increases at irregular intervals over the whole of the next year. The crunch for

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millions of households, on top of rate increases and price rises, will be nothing less than brutal, and I shall argue that the brutality has been intensified in some cases quite unnecessarily.
Already, the Government are being attacked on behalf of the poor. It is true that the tax threshold has been raised by the Chancellor, and that is welcome, but I calculate that he has raised it by only about half enough to make good the damage done by inflation
The poor and the hard pressed in our society—and there are, alas, still too many of them—can be helped only be expansion, which the Budget will stunt, and by tax-credit-type schemes. I hope that all the effort by the Conservatives on tax credits will not be wasted by the Government. We were supported by the Liberal Party on that score.
The Budget strategy is heavily dependent on the social contract. The Government have met most of the TUC shopping list and have paid cash in advance. Decisions, however, are not for the TUC but for the men and women on the shop floor. If a social contract means enlightened self-interest by the unions, each separately recognising the realities of the economy and the inter-dependence of all sections of society, we wish it well; if not, it will soon be shown up, and the Government with it, and there will then be problems as my hon. Friend the Member for Blaby so clearly emphasised.
The Government have announced a wealth tax and a gifts tax. We shall study the Green Paper with great care but it would be appropriate tonight to put down a marker. It is often said that many other countries more prosperous than ours have both wealth and gifts taxes. That is true, but in such countries the wealth tax and the gifts tax are alternatives and not additions to high rates of estate duty and direct taxation.
I shall not take the House's time by discussing policies where the Government may be right or may be wrong, where they have had to exercise the best judgment they can and where events are totally unpredictable. I shall concentrate on those parts of the Budget where in my view the Government are either certainly correct or certainly wrong. First, I have a wholehearted welcome for the pensions increase. May I add a personal
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special word of admiration—because I know something about the subject—for the staff at headquarters and in the offices all over the country for the monumental task they will carry out in ensuring payment by the end of July?
The country will realise, but perhaps I should repeat, that my right hon. Friends and I would certainly have raised pensions. There is no dispute about that. True, it would have been in the autumn. We would probably have raised them to well over £9, probably between £9 and £9·50—[Interruption.]It is true. Hon. Members have only to apply the same formula that we applied in 1973 to get that figure. I am not overstating the case. I have paid tribute to the Government's increase.
The higher contributions that the Government are demanding of employers which were commented upon by the hon. Member for Rochdale (Mr. Smith) will infallibly work through in higher prices several months after they start to be paid.
My right hon. and hon. Friends and I also understand the cutting of nationalised industry subsidies. My right hon. Friend the Member for Altrincham and Sale said that he would be reviewing subsidies when he made his December statement. It is right in principle that the Government should have cut the subsidies, but it is very hard on households, especially when added to the rate increases which have been made sharper than necessary.
I turn now to the three features in the Budget which we regard as dangerously wrong—the squeeze on company profits and liquidity, especially of small companies, the attack on enterprise, and the attack on management, the professions and the middle class. This is called a neutral Budget. In one sense—in the strictly economic balance of demand and supply—the Chancellor may so intend it. But neutral in its treatment of large numbers of the population it most certainly is not. The Budget treats many people very harshly and savages the hopes and expectations of hundreds of thousands of honourable men and women. The Budget may not soak the rich—if I may use that phrase—as much as the Chancellor's Left-wing friends would wish. However, it will do great damage, since much of this harm is quite gratuitous and disproportionate to the revenue

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produced. We shall examine the proposals extremely carefully when the Finance Bill comes before the House.
I shall try to explain the hidden horrors of the Budget, and I start by taking up the point made on Budget Day by my right hon. Friend the Leader of the Opposition when he spoke about the importance of growth to the economy. That is agreed by both sides of the House.
The fact is that no party knows infallibly how to accelerate the underlying growth rate of the economy. We all try, but none of us has succeeded in finding the way. What we must recognise is that it is only too easy to decelerate the underlying growth rate. How? By demoralising and disheartening the decision makers in our economy, and that is precisely what the Budget does.
The Chancellor of the Exchequer is a very intelligent man, yet he does not seem to understand the functions of profit, the delicacy of the processes of national wealth creation, or the central importance of working with human nature instead of against it. Despite the engaging speech of the Chancellor of the Duchy of Lancaster, Labour tends to disapprove of profits. It does not seem to recognise that profits earned in competition within the law serve a social function, that they are the best-known instruments of reconciling the interests of people as consumers, workers and investors. Most people have all three rôles, directly or indirectly. Profits subject to competition are the source of jobs, of improved standards of living, of growth and of taxes.
The Chancellor of the Exchequer made a reference to profits, but it might have been better if he had not, because it was alarmingly naive. My hon. Friend the Member for Pembroke (Mr. Edwards) elicited, in a reply to a Question only a few days after the Budget, the real trend in profits. The Chancellor of the Exchequer had, extraordinarily enough, referred to profits in gross terms in speaking of them to the House. He had taken no account of the effect of inflation on profits or even on stock appreciation. When he was asked the right question by my hon. Friend, the Chief Secretary to the Treasury revealed that, far from
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there being a healthy trend, profits had been trending dangerously downwards year by year and quarter by quarter. Now they have been reduced, from an average of 12 per cent. of the gross national product, during Labour's last term of office, to only 6½ per cent.
The Chancellor of the Exchequer is deceiving himself dangerously if he talks of profits being in a healthy state. The fact is that all too few companies yet use inflation accounting, taking account of the effect of inflation on stock and work in progress and other factors. The return on capital in all too many companies may well be negative. They may be paying dividends, and Governments may be levying taxation, on profits which, if they were properly judged, might be found not to exist. [Interruption.]
It is the return on capital, actual or estimated, that affects investment decisions.
There is not only a very low real return on capital now, if any, but a horrific catalogue of increased costs already in the pipeline, to which the Budget adds nationalised industry price increases and increased National Insurance contributions. Most of those inroads into profits are unavoidable, but the Government have gratuitously squeezed profits and liquidity by additions of their own. There are already pretty fierce price controls, so that firms cannot be sure of passing on increased costs. Now the price controls are to be tightened and made more uncertain by discretion, and delay of several months is built in. There is to be extra corporation tax and a 50 per cent. surcharge on advanced corporation tax.
Perhaps there are subtle timing reasons for some of these changes. But does the Chancellor of the Exchequer realise that merely to stay in business this year companies need substantially more capital than they had last year? The pressure on real profits and on liquidity will be intense on many companies, especially small companies. Of course, they can go to the banks, but at what cost in rates of interest?
I ask the Chancellor of the Exchequer to read Frances Cairncross's article in The Guardian this morning and to consider again what he has done. The Chancellor of the Duchy of Lancaster made a bland speech on the subject. He talked of the objective factors, but the

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crucial truth is that decision makers make their decisions about investment, expansion and employment not on objective but on subjective factors. If they feel the squeeze and feel they are deprived of profit they will not expand, they will not employ, and the country will suffer.
The Budget is infinitely depressing in its attitude to the position and prospects of management. British management has great strengths and some weaknesses. We who do not have to cope with the switchbacks of Government policies, with the incessant changes in laws as well as markets and competiton, day-to-day labour relations and all the rest should be modest in teaching management its business. Management's performance is crucial to much which we hold important.
If the Government want management to do a bad job, all that they have to do is to increase controls and, above all, sharply raise taxation on management. Believe it or not, that is precisely what the Government have done.
The Budget introduces vicious changes in taxation and in incentives for middle income people There is higher taxation for those at a £500 lower level of income than now, despite the falling value of money. Taxation is to be levied at 83 per cent. for successful managers. That is far above the rate in practically any other industrialised country. It introduces the ending of share option schemes, and mortgage interest facilities are on the way out. There is to be double stamp duty. Even the Chancellor's reaction to the Cayman Islands is ill-judged. My right hon. Friend the Member for Altrincham and Sale undertook to act in his next Budget, but the Chancellor proposes a sledge-hammer which will catch many worthy people who are doing vital, exhausting and exacting jobs of importance to the nation.
Marketing men who work for most of their lives in exporting, and overseas citizens who are working in London, will now go to other countries. They will be caught by a tax which will drive them, with their talents, away from the United Kingdom or United Kingdom employment.
Life was not easy for the middle class even under the previous Government. During the previous Government's administration, taxes went down, greatly to the benefit of the people. At the same
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time, prices rose and in the national interest my right hon. Friends, and I among them, for two years imposed ceilings on salary increases. Indeed, the ceilings are still present. Rates are now up sharply, and services are costing more. There is now to be an investment surcharge which will be payable from £1,000 per year instead of £2,000 per year. Stock Exchange share values have been halved—
The Financial Secretary to the Treasury (Dr. John Gilbert): Since when?
Sir K. Joseph: The fall is still going on. If very successful the higher investment income receiver will have to pay, as a result of the Budget, 98 per cent. tax on his higher investment income. The Government still do not appreciate that we are one nation. The cumulative discouragement to the decision makers, to the managers, to professional people and to the middle class is formidable.
Overhanging all is Labour's attitude to profit. Why should managers take risks when companies are starved of funds? Why should they do so when, if a project succeeds it is called anti-social and if it does not it is said to be failing the nation?
Managers are paid more because they have skills and/or responsibilities. They are paid more because it is their job to worry, to get ulcers if need be, in order to satisfy clients, to maintain good relations with all at work, to make profit whilst at the same time meeting all the laws and regulations and more besides. It is no easy job. We all depend upon management, "we" including wage earners.
What is the incentive for management if the Budget goes through? There is a psychological dimension which this Budget outrages. What motive is there for the middle class if it can get no personal benefit from exceptional effort and if its dreams and hopes, that have often sustained it through long and exacting apprenticeships, are shattered? The anti-profit, anti-management, uncomprehending, perhaps vindictive or perhaps merely culpably unaware prejudices of Labour will wreck the driving force of the economy, our management and professional classes.
Even Mrs. Gandhi has just cut by 20 per cent the taxes on the highest earners in India. She has done so just when the

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Chancellor is raising taxes sharply to the highest level in industrial countries. Soaking the better off for vindictive purposes will achieve no good and will do much harm. It may be thought that a squeeze at home will stimulate exports, but by piling disincentives on to management the Chancellor will risk demoralising the very people on whose drive and optimism jobs and exports depend.
I am not saying that our tax system is perfect; there is always room for improvement. I am saying that the battery of special miseries on top of the extra 3p on income tax is, in the aggregate, destructive of the interests of those whose skills and energy are vital. The Chancellor is working against the grain instead of with it.
Several of the right hon. Gentleman's changes produce little revenue. They are ideological. I predict that he will destroy more wealth than he will redistribute because he will damage the drive and thrift that the nation needs. It is as if the Government have said, "Since we cannot do justice to all, let us do conspicuous injustice to some". This Budget is not neutral. The tax changes are, in the aggregate, deeply damaging psychologically as well as financially to the middle class.
The right hon. Gentleman blandly presents these changes as needed in order to win the TUC's support and/or to finance redistribution. They serve neither purpose. The Chancellor is, at best, culpably ignorant of what he is doing or at worst is lending himself to a vindictive attack which will injure the nation. What a package of vicious body blows to the key decision makers of our economy.
There is a hint of something more. It is not just the active middle class who are hit, but the retired as well. The Chancellor has brought the elderly into surcharge regardless of whether they are very rich, rich or only comfortable.
On Saturday, Dr. Kenneth Smith wrote to The Times. He said that he was writing
"for those who are likely to suffer most under this Socialist Government. I refer to the large number of retired professional and university people who, like myself, after over half a century of hard work at an inadequate salary and service in two world wars, have managed to save a little money in addition to their
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pensions. This, of course, is 'unearned income' and subject to surtax over one thousand pounds per annum.
It was, no doubt, with people like us in mind that Mr. Barber introduced his merciful provision that exempted persons over 65 from a second surtax demand. Now Mr. Healey has revoked this clause, saying that he saw 'no reason why a person should sit back and spend vast sums just because he was over 65. (Labour cheers)'. No comment is needed here."
This again is either culpably heedless or vindictive.
Ever since Lloyd George—I hope the Government will heed this—schemes nave been devised by Governments for soaking the rich. Many have succeeded, but increasingly the schemes hit also the less rich, the not-rich and now even the not-poor, too. The middle class have virtues, not exclusively but preeminently, that any Government need to encourage—thrift, self-sacrifice, foresight, kindness. The Government's job is to widen entry to the middle class, to level up, not level down. We want more and more people to have middle incomes. It is not possible to achieve this by redistribution; it is only possible by expansion.
Redistribution produces very little for the wage earner and at a cost of endangering the middle class and its values. Redistribution and expansion are awkward bedfellows. They conflict. The Government choose redistribution. The Opposition, as my right hon. Friends have emphasised, choose expansion. This Budget may signal—if the Government survive, let alone if they are returned with a majority—the twilight of the middle class. There is a sinister echo of an earlier period of decadence—bread and circuses. A penny off the loaf and circuses—throw the widows of engineers and headmasters to the Inland Revenue.
We know far too little of human behaviour to destroy without understanding the consequences. The classes in this country are inter-dependent. All classes need each other. The Budget attacks, either casually or deliberately—I do not know which—the very dynamics of our society. It will demoralise business and professional people and damage the middle class. The result may be a blunting of enterprise and the spread of hopelessness in the very class on which we depend for hope. When the economy stagnates, it is the poor who suffer most.

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The Budget will hurt the rich, or some of them. It will certainly hurt middle incomes, and the middle class. It is upon their drive, standards and skills that the jobs and progress of wage earners depend. Demoralise management today, and wage earners suffer tomorrow.
I hope that the Chancellor of the Exchequer will consider what I have said. We appreciate that he has been very rushed and he may not have had time properly to appreciate all that he was authorising, but let him consult with the business and professional world, and, if he is willing to amend the Budget, when we get to the Finance Bill we shall help him. If he ignores what we have said he will have declared war upon the middle class.
9.30 p.m.
The Chancellor of the Exchequer (Mr. Denis Healey): We are at the end of an interesting, thoughtful debate which has been distinguished, as the right hon. Member for Leeds, North-East (Sir K. Joseph) has said, by an exceptional number of maiden speeches. I join him in particularly congratulating those maiden speakers who have spoken today. My hon. Friends the Members for Kingswood (Mr. Walker) and Newton (Mr. Evans) made thoughtful speeches full of knowledge and concern. The hon. Member for Eastbourne (Mr. Gow) made an exceptionally witty speech, while the hon. Member for Ripon (Dr. Hampson)—the seat which I first fought in 1945—showed real concern for the housing problems in his constituency. The hon. Member for Blaby (Mr. Lawson) made, I understand, a brilliant speech although I did not have the pleasure of hearing it, and revealed himself as something of a connoisseur of bloodstock, while the hon. Member for Moray and Nairn (Mrs. Ewing) reminded us of her interest in Scotland.
I also pay tribute to the right hon. Member for Leeds, North-East, who, in a sense, was also making a maiden speech. He took skilful advantage of his comparative innocence of the economic errors committed by the Government which he so recently adorned to correct and revise the policies on which they fought and lost the last General Election. We were back to Selsdon at a stroke in the speech we have just heard from the right hon. Gentleman, and we now know that the battle for the succession is on.
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However, the right hon. Gentleman at least made no attempt to disguise the sombre nature of the inheritance handed on to me—an inheritance made much worse by the three-day working week. I congratulate him on sparing us from that continuing refrain by all his predecessors in the debate from the Opposition Front Bench. He at least made no mention of the need for a statutory incomes policy. Indeed, how could he, because it was a statutory incomes policy which made the three-day week inevitable, costing the country twenty times more in output, although the Opposition when in power could have settled the matter six months earlier, as has finally been made clear.
The right hon. Gentleman re-echoed a complaint by some earlier speakers in the debate: I had not attempted to forecast in the Financial Statement this time the precise nature of the situation likely to face us in over nine months' time. Not one contributor to the debate from either side has denied that the objective judgment which I have had to make was exceptionally difficult because the future is clouded with three unique uncertainties.
First, we do not know how fast and evenly the economy will recover from the unnecessary three-day working week. Secondly, it is impossible to forecast the future course of world prices even three months ahead, never mind 12 months ahead. Thirdly, it is extremly difficult at this time to forecast the course and level of world trade over the next 12 months.
It would be ridiculous for me, or for any Chancellor, to pretend in March 1974 that he could make an accurate forecast for the first half of 1975. The hon. Member for Worthing (Mr. Higgins), who made a complaint about this a few days ago, should at least appreciate this fact, because in what must have seemed to him a far clearer prospect 12 months ago he made a forecast for the current half-year. His figures gave Britain a growth of 4·5 per cent. between the first half of 1973 and the first half of 1974. In the event, we expect a fall of the same magnitude.
Does the hon. Gentleman think it was useful for him to have published those forecasts? The price of crude oil has

1003
risen more than threefold since last April. Did the hon. Member take that possibility into account last year when he published the forecasts for the first half of 1974? Any one who based business decisions on forecasts like that must have come a terrible cropper. The fact that the Conservative Government made this mistake is no reason why I should make a fool of myself.
No one who has occupied the position which I hold can have failed to be conscious of the fact that economic forecasting is at best of times a hazardous and uncertain occupation, particularly today. But as evidence about what is happening becomes available over the weeks and months ahead, and as some of the uncertainties clear, I have pledged myself to make adjustments, if need be month by month—whether to assist investment or to maintain high employment—because my basic aim at all times, as I hope I made clear a week ago, is that Britain should make the maximum use of the manpower and resources available to her to achieve maximum output. But that output must be directed in future far more than it has been in recent years towards investment and exports.
Mr. Carr: Nevertheless, the right hon. Gentleman, in making his judgment and deciding what to do about taxes and their levels, must have had a figure in his mind for the growth target for the first half of next year. We want to know what it is.
Mr. Healey: The right hon. Gentleman must know that one would have to adopt different targets and different policies according to the extent to which, for example, the economy responds to the export opportunities which may or may not be open to it. It is impossible at this time responsibly to fix targets. Meanwhile, I am compelled to make a judgment, and most outside opinion thinks that probably I have got it right—
Mr. Terence Higgins rose—
Mr. Healey: Nobody intervened to interrupt the right hon. Member for Leeds, North-East, and I must be given time to get on with my speech. I have many points to answer.
Mr. Higgins: I am grateful to the right hon. Gentleman for giving way. I am sure that we were right last year to publish forecasts. The excuses which the right hon. Gentleman is making are pathetic, and they can be seen to be pathetic. The figures are available in the Treasury forecasts, and there is no reason why the House should not have them.
Mr. Healey: I do not think that by that intervention the hon. Gentleman either absolved himself from the idiocies which he perpetrated last year or fixed any blame on me.
The judgment which I have made in my Budget is the median position of most commentators. Yesterday, of the three more expensive Sunday newspapers, one thought that I had been too deflationary, the second thought that I had been too inflationary and the third accompanied a sermon, in which its city editor claimed that tax avoidance was now a patriotic duty, with two articles, one taking each of the opposing views.
But more important is the almost universal agreement inside and outside the House that, while we must begin to narrow the balance of payments deficit this year, we must do so slowly and steadily and cover the residual deficit by borrowing. It is extremely important that we should borrow in the right way and on the right scale in order to influence and protect the effective exchange rate. That is why I have reinforced the reserves with a Eurodollar loan amounting to $2,500 million, in which so much interest, rightly, has been shown. I thank the Leader of the Liberal Party for his kind words about the loan.
The House will be glad to know that the terms are first class from the Government's point of view. The period is 10 years. The interest rate will vary with the going Eurodollar at three, six or 12 months' periods at the Government's option. The margin on the inter-bank rate averages 0·5 per cent. for the first seven years and less than 0·6 per cent. for the whole 10 years of the loan. The loan will be drawn down at appropriate times of the Government's own choosing, although no decisions have yet been taken about that.
Some hon. Members asked why I did not go to the IMF. A drawing from the

1005
IMF would, under present rules, cost less than a Eurodollar loan, but it would be for a shorter term—for three to five years. I have not ruled out the possibility of using the United Kingdom's drawing rights in the IMF later in the year if that should prove to be necessary, but a drawing from the IMF could not possibly have been arranged in the three weeks available to me, and, in any case, I was determined in that period to make absolutely clear the Government's ability and determination to cover the prospective deficit. The efficiency and speed with which the Bank of England was able to make these loan arrangements through the clearing banks has been a source of considerable gratification on both sides of the House.
The rate at which we made this loan is far below that at which the previous Government sought to attract funds to London. Indeed, the rate at which the previous Government sought to attract private funds to London has been a major cause of excessive interest rates which are now both discouraging investment and wrecking the finance of the building societies.
I believe that the steps I have adopted will help us to maintain the present effective rate of sterling. The House must recognise that the fall in the rate of sterling from June 1972, when the pound was set afloat, has been an important cause of inflation. It was responsible for one-third of the rise in import prices in the following 15 months. It also cost us a great deal in guaranteeing our sterling balances. The House will be aware of the new guarantee which I have arranged for the holders of sterling balances. The new guarantee is in terms of the effective rate for sterling, and it will cost us much less than the last one, if we are ever called upon to implement it. I also believe that the steps I have taken will give us a much better chance of holding the exchange rate than did the policies followed by the previous Government.
I turn now to the consequences of the Budget and to some of the major criticisms that have been made of it in the debate. I will first say a word about the dog that did not bark in the night. Many hon. Members on both sides of the House believed that the advent to power of a Labour Government, or even the possibility that a Labour Government
1006
might come to power, might lead to serious pressure on the £ sterling. In fact, the effective devaluation of the pound has been a good deal less in the past three weeks than it was in the six months which preceded the General Election.
The Budget has been received very well abroad. The leader which has been widely quoted in the British Press from the New York Times was typical of foreign comment. This reception of the Budget abroad and the consequence for the parity of sterling will be important for the control of inflation in Britain. The reception of the Budget by those who take an interest in these matters abroad—who by no stretch of the imagination can be described as revolutionary Socialists—is in surprising contrast to the reaction of the Stock Exchange in Britain.
I admit that the Stock Exchange has been less than enthusiastic about my Budget. Indeed, there is some danger of people talking themselves into a recession—aided and abetted, as so often in the past, by the less responsible voices on the Conservative benches. But the central issue is the effect of the total Budget package on business profitability and on the prospects for investment. My right hon. Friend the Chancellor of the Duchy of Lancaster dealt with this matter in his inimitable way this afternoon, and I shall seek to decorate his remarks this evening.
Nobody can deny that there are some heavy burdens which business has to carry in Britain today. I refer to dividend control, price control, control of profits on domestic sales, the increase in the prices of the products of nationalised industries and the very high interest rates which I hope we may be able to keep down. But all these handicaps were either imposed or supported by the same right hon. Gentlemen who criticised them today.
On top of these specific handicaps of policy, there has been the effect on British business of the three-day working week, which was introduced by the Conservative Government and supported, to its eternal shame, by the CBI. What have I done to British business to compare with the handicaps imposed by the Conservative Government? I have closed some tax loopholes—but is there any Conservative who will get to his feet to say that I should not have done so? I recognise that there may be some aspects of the

1007
measures I have proposed affecting foreigners in Britain that will require careful consideration, and the House will have an opportunity to consider those matters when we discuss the Finance Bill. I can assure the Opposition that I shall not show myself to be doctrinaire on any matter relating to the Finance Bill; I am prepared to judge the issues on their merits.
All I have done—apart from closing tax loopholes which should never have existed—is to add 2 per cent. to the expected rate of corporation tax, bringing it up from 50 to 52 per cent.—where it will still be lower than the effective rate of company taxation in the United States. On top of that, I have asked for a 50 per cent. increase in advance corporation tax. But this measure encourages investment because it applies only to distributions. From this point of view it has little effect on close companies, which distribute very little of their profits. It will be offset by a reduction in mainstream corporation tax liability at the end of the year when business may need the money more than it does today.
There has been a great deal of talk in the House this afternoon about the liquidity problem from which business is now suffering. Let me give the House some facts. In the third quarter of last year—the last quarter for which we have figures—corporate liquidity in Britain amounted to £9,500 million. That is three times the total British defence bill, four times the total tax liability of the companies concerned, and 15 per cent. of our gross domestic product. It may well be that liquidity has fallen particularly during the three-day working week, but I see no reason why the mass of British business should find itself short of money for investment in the coming year. I understand that this is the CBI's view. The CBI's worries concern the following year. But if difficulties arise for specific companies, I have made it clear that I shall see that the banks do their best to help to provide them with money for investment or stock building. It is a great pity that last year business disposed of 21 per cent. of the funds available to it for productive investment simply by putting the money into the banks.
The most important contribution that we have made to business in terms of
1008
investment is to give it the guarantee of steady and continuous growth. It has this in this Budget. I have also given business the guarantee for which I was asked by the CBI before the Budget—that I shall monitor the situation to make sure that, however the world situation changes, this steady and continuous growth can be maintained.
No one knows better than the Leader of the Opposition that, historically, the level of profits in Britain has very little to do with the level of investment. I sympathised very much with his words when he attacked British business in a very well-publicised speech at a luncheon with the Institute of Directors. He said:
"The curse of British industry is that it has never anticipated demand."
Speaking of his party, he went on:
"When we came in we were told there weren't sufficient inducements to invest. So we provided the inducements. Then we were told people were scared of balance of payments difficulties leading to stop-go. So we floated the pound. Then we were told of fears of inflation: and now we're dealing with that. And still you aren't investing enough."
The Leader of the Opposition was quite right. It is very difficult to find any technique by which any British Government, Conservative or Labour, can stir British industry—
Mr. Edward Heath: indicated assent.
Mr. Healey:—I am glad to see that the right hon. Gentleman agrees with me—into using its money, when it has it, to provide productivity for the future.
Business is in a uniquely favourable position today. It has no limit on the profits that it can make from exports, and I hope that British business will now turn to exports for the profits out of which it can increase its investment.
The Stock Exchange has never been regarded as an accurate representative of productive industry in Britain. Nor, I fear, is the CBI always an accurate representative. But I hope that on this occasion the motto of British business in this respect will be, "Do as I do and not as I say." I notice that ICI, which has produced so many distinguished leaders of the CBI, decided the day after the Budget to go ahead with its biggest investment programme for many years and to invest £150 million in Britain. We were told by its chairman that spending is

1009
needed now to meet anticipated demand two or three years ahead and to increase the company's penetration into world markets. That sounds like good investment planning to me, and it is an example which every firm in Britain would do well to emulate.
I turn now to the major issues of the debate in this House. I deal first with redistribution. The right hon. and learned Member for Surrey, East (Sir G. Howe) made it crystal clear where the real disagreement in this House and in the country lies when he said that
"…the central fallacy that underlies the thinking of the Government…"
is
"…that we can advance the social condition of the people of this country by redistribution. We have passed that point…".—[OFFICIAL REPORT, 28th March 1974; Vol. 871, c. 668.]
In this Budget, we have carried out a major redistribution which will have major effects on the life and social wellbeing of the community as a whole. I have increased income tax by £470 million in this Budget. Of that sum, £395 million comes from the 3·5 million taxpayers who are earning more than 1½ times average incomes—about £3,500 a year. Only £75 million comes from the 17·5 million people who are earning less than one and a half times average incomes. For nearly half of taxpayers, the 10 million incomes which are below £2,250 a year—just under average earnings—there is a net reduction in direct taxation. I believe that this type of redistribution through the tax system makes a major contribution to the health of the community as a whole—and I intend to go a great deal further before I have finished, especially in helping those I have had no power to help on this occasion who are too poor to pay income tax at all.
Leaving the matter of redistribution, where they have not a leg on which to stand, the Opposition then attempted to argue that I was redistributing in this Budget only by raising prices to everybody.
What are the facts? Food subsidies are cutting the RPI by 1·5 per cent. and the rent freeze is cutting the RP1 by 0·7 per cent., a total cut of 2·2 per cent. Indirect taxes are raising the RPI by 1·75 per cent., so there is a net gain on RPI of nearly 0·5 per cent. from the measures that I have mentioned.
1010
The Opposition have tried to fix the whole of their case that I am raising prices by the increases in the nationalised industries' prices. But that argument was finally scuttled, to his credit, by the right hon. Member for Leeds, North-East tonight because he made it crystal clear that the last Government would have raised the nationalised industries' prices by the same amount as we have raised them.
Sir K. Joseph: I made no reference to the amount.
Mr. Healey: Would the right hon. Gentleman have cut the subsidy, which now stands at £500 million after my measures, below £500 million? What further increases in the RPI would he have brought about to achieve that goal? Would he have cut it by less? In that event, by what increases in what sort of taxation? The right hon. Gentleman cannot escape these questions. The fact is that these increases in the nationalised industries' prices are the inevitable consequences of the previous Government's profligacy in the past. The responsibility for the inheritance that we carry belongs to the previous Government, not to this one.
It is interesting that the Opposition appear to accept that we should subsidise the nationalised industries to the tune of £500 million, although those subsidies are totally indiscriminate going alike to rich and poor, to the private individual and to the great corporation. Yet they say that to spend the same amount to subsidise basic foodstuffs is wrong although a subsidy on foodstuffs going to private individuals is more important the poorer a person is, the more children he has in the family and, above all, if he is an old age pensioner. In the end, the whole of the Opposition's critique of the Budget amounts to saying that we should not help the family and the housewife to the same extent as we are helping the nationalised industries.
I am not surprised that the Opposition have had some difficulty during the last eight days in flogging themselves into a fury over this particular matter. Although they use words like "national bankruptcy", and "a legacy extremely damaging to the national interest", they do not believe it and they know that they could not make the country believe it.

1011
That is why they are not dividing the House tonight.
The fact is that this whole debate has been a mock battle with wooden swords. The Opposition are handing in their swords to teacher tonight until the next time to play the game. They will not win the nation's respect in this way, nor even the respect of their own party and the country. I ask the House to reject the Opposition's party games and to accept this Budget as a first step to economic recovery and social justice.
Question put and agreed to.
Resolved,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of amendments with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;

(b) for refunding any amount of tax;

(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

(d) for any relief other than relief applicable to goods of whatever description or services of whatever description.

Mr. Speaker: I am now required, under Standing Order No. 94, to put successively without further debate the Question on each of the remaining 32 Ways and Means Resolutions, on the two procedure motions and on the Money Resolution, on all of which the Finance Bill is to be brought in. Instead of reading out each motion in extenso I propose to follow the procedure used in recent years; that it to say, I will first state the title of a motion and then put simply the Question "That the motion be agreed to."

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

  2. SPIRITS (CUSTOM AND EXCISE)
  Motion made, and Question,
  That, as from 27th March 1974:

  (1) the rate of the duty of excise chargeable under section 1 of the Finance Act 1964 on British spirits by virtue of Schedule 1 to the Finance Act 1973 shall be increased by £.1·5600 per proof gallon;

  (2) the rates of the duties of customs chargeable under the said section 1 on imported spirits other than perfumed spirits by virtue of Schedule 1 to the Finance Act 1973 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased—

  1012

  (a) in the case of spirits not comprised in sub-paragraph (b) below, by £l·5600 per proof gallon; and

  (b) in the case of liqueurs, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is not to be tested, by £2·1000 per liquid gallon,

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  3. BEER (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That:

  (1) as from 27th March 1974 the rates of the duties of customs and excise chargeable under section 2 of the Finance Act 1964 on beer by virtue of Schedule 2 to the Finance Act 1973 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased—

  (a) except as regards the increases mentioned in paragraph (b) below, by £2·4600 per 36 gallons; and

  (b) as regards the increases in the rates of duty falling to be made, in the case of beer of an original gravity exceeding 1,030 degrees, for each additional degree, by £0·0220 per 36 gallons;

  (2) as respects beer on which there have been paid duties of customs or excise at the said increased rates, the rates of drawback allowable under the said section 2 by virtue of the said Schedule 2 or any such order shall each be increased by the like amount per 36 gallons,

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  4. WINE (CUSTOMS)
  Motion made, and Question,
  That, as from 27th March 1974, the rates of the duties of customs chargeable under section 3 of the Finance Act 1964 on imported wine (including the lees of wine) by virtue of Schedule 3 to the Finance Act 1973 or any

  1013
  order made before that date under section 1(4) of the Finance Act 1973 shall each be increased—

  (a) except as regards the additions mentioned in paragraph (b) below, by £0·545 per gallon; and

  (b) as regards the additions to the rates of duty falling to be made, in the case of wine exceeding 42 degrees of proof spirit, for each additional degree or fraction of a degree, by £0·045 per gallon,

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  5. BRITISH WINE (EXCISE)
  Motion made, and Question,
  That, as from 27th March 1974, the rates of duty of excise chargeable under section 3 of the Finance Act 1964 on British wine by virtue of Schedule 4 to the Finance Act 1973 shall each be increased by £0·545 per gallon.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  6. TOBACCO (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That—

  (a) as from 27th March 1974 the rates of duties of customs and excise chargeable under section 4 of the Finance Act 1964 on tobacco by virtue of Schedule 5 to the Finance Act 1973 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased by £1·400 per pound;

  (b) as respects tobacco on which there have been paid duties of customs or excise at the said increased rates, the rates of drawback allowable under the said section 4 by virtue of the said Schedule 5 or any such order shall each be increased by the like amount per pound,

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the pro-
  1014
  visions of the Provisional Collection of Taxes Act 1968.—[Mr. Henley.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  7. GENERAL BETTING DUTY (EXCISE)
  Motion made, and Question,
  That the general betting duty chargeable under section 1 of the Betting and Gaming Duties Act 1972 or section 16 of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 in respect of any bet made after 30th March 1974 which is not an on-course bet within the meaning of the section in question shall be of an amount equal to 7½ per cent. of the amount staked.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  8. POOL BETTING DUTY (EXCISE)
  Motion made, and Question,
  That the amount of the pool betting duty chargeable under section 6 of the Betting and Gaming Duties Act 1972 or section 18 of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 as respects bets made at any time by reference to any event taking place after 31st March 1974 shall be equal to 40 per cent. of the amount on which the duty falls to be computed.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  9. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES
  Motion made, and Question,
  That the period after which orders under section 9 of the Finance Act 1961 may not be made or continue in force shall be extended until the end of August 1975.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  10. VALUE ADDED TAX (TIME OF SUPPLY)
  Motion made, and Question,
  That Part I of the Finance Act 1972 (and in particular section 7(8)) shall have effect, and

  1015
  be deemed always to have had effect, as if references to cases where—

  (a) goods or services are supplied for a consideration the whole or part of which is determined or payable periodically or at the end of any period; or

  (b) goods are supplied for a consideration the whole or part of which is determined at the time when the goods are appropriated for any purpose; or

  (c) goods are supplied on hire for any period; or

  (d) services are supplied for any period,

  included cases where the supply took place or began before the passing of that Act.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  11. INCOME TAX (SURTAX RATES FOR 1972–73)
  Motion made, and Question,
  That section 10 of the Finance Act 1973 shall have effect as if each of the higher rates applied by subsection (1) of that section and the 40 per cent. mentioned in subsection (2) of that section were increased by 10 per cent. and one half of the surtax attributable to those increases shall be payable on 1st July 1974 and the other half on 1st January 1975; and that provision may be made for the recovery from members of dissolved companies of any surtax attributable to those increases.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  12. INCOME TAX (CHARGES AND RATES FOR 1974–75)
  Motion made, and Question,
  That income tax for the year 1974–75 shall be charged at the basic rate of 33 per cent. and—

  (a) in respect of so much of an individual's total income as exceeds £4,500 at such higher rates as are specified in the Table below; and

  (b) in respect of so much of the investment income included in an individual's total income as exceeds £1,000 at the additional rates of 10 per cent. for the first £1,000 of the excess and 15 per cent. for the remainder;

  except that, in the case of an individual who shows that, at any time within that year, his age
  1016
  or that of his wife living with him was 65 years or more, income tax at the additional rate of 10 per cent. shall not be charged in respect of the first £500 of the excess mentioned in paragraph (b) above.

  TABLE

  Part of excess over £4,500

  Higher rate per cent.

  The first £500

  38

  The next £1,000

  43

  The next £1,000

  48

  The next £1,000

  53

  The next £2,000

  58

  The next £2,000

  63

  The next £3,000

  68

  The next £5,000

  73

  The remainder

  83

  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  Mr. Speaker: There does not seem to be much questioning of these motions so far. Therefore, with the approval of the House—I want to make it clear what I am doing, because this is an innovation—I will now put Motions Nos. 13 to 33 together, if that is not objected to by any hon. Member.

  13. INCOME TAX (ALTERATION OF PERSONAL RELIEFS)
  Motion made, and Question,
  That the following alterations shall be made in Chapter II of Part I of the Income and Corporation Taxes Act 1970—

  (a) in section 8 (married and single relief)—

  (i) in subsection (a) (married) for £775 there shall be substituted £865;

  (ii) in subsection (1)(b) (single) for £595 there shall be substituted £625; and

  (iii) in subsection (2) (wife's earned income) for £595 there shall be substituted £625;

  (b) in section 10(3) (appropriate amount for child)—

  (i) for £265 (child over 16) there shall be substituted £305;

  (ii) for £235 (child over 11 but not over 16) there shall be substituted £275; and

  (iii) for £200 (child not over 11) there shall be substituted £240;

  (c) in (section 7 relief for persons over 65 with small incomes)—

  (i) for the references to £700 and £1,000 (income limits for exemption) there shall be substituted references to £810 and £1,170; and

  (ii) for the reference to £340 (the excess over those limits beyond which relief by

  1017
  reduction of tax is excluded) there shall be substituted a reference to £565; and

  (iii) for the reference to 50 per cent. (the percentage governing relief by reduction of tax) there shall be substituted a reference to 55 per cent.; and

  (d) in section 24 (reduction on account of family allowances) for £60 there shall be substituted £52;

  but this Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of that Act (pay as you earn) before 20th July 1974.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  14. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1974)
  Motion made, and Question,
  That the rate of advance corporation tax for the financial year 1974 shall be thirty-three sixty-sevenths.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  15. ADVANCE CORPORATION TAX (SURCHARGE)
  Motion made, and Question,
  That charges may be imposed by requiring payments to be made in addition to payments of advance corporation tax falling due in the financial year 1974.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  16. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1973)
  Motion made, and Question,
  That corporation tax shall be charged for the financial year 1973 at the rate of 52 per cent.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  17. CORPORATION TAX (SMALL COMPANIES)
  Motion made, and Question,
  That—

  (a) the small companies rate for the financial year 1973 shall be 42 per cent; and

  1018

  (b) the fraction by which corporation tax charged on income is reduced under section 95(2) of the Finance Act 1972 shall for the financial year 1973 be three-twentieths.—[Mr. Healey.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  18. DISALLOWANCE OF INTEREST (INCOME TAX)
  Motion made, and Question,
  That charges to income tax (including charges for past years of assessment) may be imposed by provisions restricting the circumstances in which interest may be deducted from or set off against income.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  19. INCOME TAX (FOREIGN ELEMENTS)
  Motion made, and Question,
  That provision may be made—

  (a) for charging to income tax certain income arising outside the United Kingdom and not remitted to the United Kingdom; and

  (b) for amending the provisions relating to the charge to income tax in respect of emoluments from offices and employments and, in connection therewith, restricting the exemptions from charges under section 187 of the Income and Corporation Taxes Act 1970 (payments on retirement or removal from office or employment).—[Mr. Healey.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  20. ORDINARY RESIDENCE (INCOME TAX AND CAPITAL GAINS TAX)
  Motion made, and Question,
  That provision may be made whereby for the purposes of income tax and capital gains tax ordinary residence in the United Kingdom has in certain circumstances the same consequences as domicile in the United Kingdom.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions) and agreed to.

  21. LIFE INSURANCE COMPANIES (CORPORATION TAX)
  Motion made, and Question,
  That provision may be made for excluding section 93(2)(a) of the Finance Act 1972 (fraction reducing chargeable gains for purposes of corporation tax) in its application to cer-

  1019
  tain gains made by life insurance companies.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

  22. FRIENDLY SOCIETIES (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to income tax (including tax may be imposed by provisions restricting the exemption of friendly societies from income tax and corporation tax and treating certain payments made by such societies as distributions.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  23. INCOME TAX (SHARE OPTION SCHEMES AND SHARE INCENTIVE SCHEMES)
  Motion made, and Question,
  That charges to income tax (including charges for the year 1973–74) may be imposed in connection with the acquisition by any person, as a director or employee of a body corporate, of shares or an interest in shares or of a right to acquire shares.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  24. TRANSACTIONS IN DEPOSITS OF MONEY OR DEBTS (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to income tax and corporation tax, including charges for past years of assessment and accounting periods, may be imposed by provisions about transactions in deposits of money or debts.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  25. DEPRECIATORY TRANSACTIONS (CORPORATION TAX)
  Motion made, and Question,
  That charges to corporation tax (including charges for past accounting periods) may be imposed by provisions amending section 280 of the Income and Corporation Taxes Act 1970.—[Mr. Healey.]
  put forthwith, pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  26. COMPANY LIQUIDATIONS
  Motion made, and Question.
  That further provision may be made with respect to corporation tax chargeable on the profits of a company which is wound up.—[Mr. Healey.]
  put forthwith, pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  27. INTEREST PAID TO DIRECTORS AND DIRECTORS' ASSOCIATES
  Motion made, and Question,
  That it is expedient to provide changes in the rate of interest prescribed by section 285(4) of the Income and Corporation Taxes Act 1970.—[Mr. Healey.]
  put forthwith, pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  28. TAXATION OF CERTAIN GAINS FROM LAND (INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX)
  Motion made, and Question,
  That provision may be made for imposing charges or additional charges to income tax, corporation tax and capital gains tax in respect of capital gains accruing on disposals of interests in land in the United Kingdom, including disposals made since 17th December 1973.—[Mr. Healey.]
  put forthwith, pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  29. FIRST LETTINGS OF BUILDINGS FOLLOWING MATERIAL DEVELOPMENT (INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX)
  Motion made, and Question,
  That charges to income tax, corporation tax and capital gains tax may be imposed in connection with provisions for treating interests in buildings in the United Kingdom which have resulted from or been the subject of material development (including interests in any associated land) as being disposed of in certain circumstances, including circumstances that have arisen since 17th December 1973.—[Mr. Healey.]
  put forthwith, pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  30. STAMP DUTIES
  Motion made, and Question,
  That for the period beginning on 1st May 1974 and ending 31 days after the earlieset of the dales mentioned in subsection (2) of section 50 of the Finance Act 1973, the provisions set out below shall have effect.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the said section 50.

  (1) As from 1st May 1974 the stamp duty chargeable under the heading "Conveyance or Transfer on sale" in Schedule 1 to the Stamp Act 1891 shall be double that which would have been chargeable immediately before that date, but so that, except in the case of transfers of stock (including units under unit trust schemes) or marketable securities, the stamp duty chargeable under that heading shall be charged by reference to the amount or value of the consideration for the sale at the following rates, that is to say—

  (a) where the amount or value of the consideration is £15,000 or under and the instrument is certified within the meaning of section 34 of the Finance Act 1958 at £15,000, nil;

  (b) where the amount or value of the consideration is £20,000, or under and the instrument is certified as aforesaid at £20,000, one-quarter of the full rate;

  (c) where the amount or value of the consideration is £25,000 or under and the instrument is certified as aforesaid at £25,000, one-half of the full rate;

  (d) where the amount or value of the consideration is £30,000 or under and the instrument is certified as aforesaid at £30,000, three-quarters of the full rate;

  and any stamp duty chargeable by reference to that heading shall be charged accordingly.

  (2) Where the amount of any stamp duty which would otherwise be chargeable under or by reference to the said heading is neither 5p nor a multiple of 5p, the amount chargeable shall be equal to the smallest sum greater than that amount which is either 5p or a multiple of 5p.

  (3) Paragraph (1) above shall not affect the operation of any enactment limiting an ad valorem duty to 50p in certain cases.

  (4) As from 1st May 1974—

  (a) the heading "Bearer Instrument" in Schedule 1 to the Stamp Act 1891, as amended by paragraph 6 of Schedule 7 to the Finance Act 1970, shall have effect as if; in paragraphs (3) and (4), for the references to 5p there were substituted references to 10p;

  (b) the heaving "Duplicate or Counterpart of any instrument chargeable with any duty" in the said Schedule 1 shall have effect as if for each of the references to 25p there were substituted a reference to 50p;

  1022

  (c) the heading "Lease or Tack" in the said Schedule 1 shall have effect as if—

  (i) the duty chargeable under paragraph (2)(a) and paragraph (4) were if and £2 respectively; and

  (ii) subject to section 125(3) of the Finance Act 1972, each of the rates specified in the Table set out in paragraph (3), as substituted by section 56(1) of the Finance Act 1963, were doubled;

  (d) section 62(2) of the Finance Act 1963 (Commonwealth stock), as amended by paragraph 11 of Schedule 7 to the Finance Act 1970, shall have effect as if for the references to 5p and 25p there were substituted references to 10p and 50p respectively; and

  (e) subsection (3) of section 65 of the Finance Act 1971 (composition in respect of transfer duty on certain loan capital) shall have effect as if for "15p" there were substituted "30p", but only as regards agreements entered into under that section on or after 1st May 1974.—[Mr. Healey.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  31. STAMP DUTIES (COMPOSITIONS)
  Motion made, and Question,
  That the stamp duties chargeable under section 115 of the Stamp Act 1891 and section 37 of the Finance Act 1939, as amended by subsequent enactments, by way of composition in respect of the transfer of certain stock (including units under unit trust schemes) and otherwise shall be double those now chargeable.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  32. STAMP DUTIES (NORTHERN IRELAND)
  Motion made, and Question,
  That in the enactments relating to stamp duties having effect in Northern Ireland there may be made amendments corresponding to amendments made by any Finance Bill of the present Session in any enactment relating to stamp duties having effect in Great Britain.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  33. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)
  Motion made, and Question,
  That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective

  1023
  effect) which may arise from provisions designed in general to afford relief from tax.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  PROCEDURE (FUTURE TAXATION)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provisions taking effect in a future year whereby for the purposes of income tax and capital gains tax ordinary residence in the United Kingdom has in certain circumstances the same consequences as domicile in the United Kingdom.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  PROCEDURE (REGIONAL EMPLOYMENT PREMIUMS)
  Motion made, and Question,
  That, nothwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provisions amending the enactments relating to regional employment premiums.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  FINANCE [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question,
  That; for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of moneys provided by Parliament—
  1024

  (a) of any increase in the sums payable out of moneys so provided under section 92 of the Finance Act 1965 which is attributable to provisions of the said Act of the present Session increasing as from 12th February 1974, the maximum grant which may be paid under that section to a sum not exceeding, for every gallon of fuel used or estimated to have been used in operating a bus service within the meaning of that section, the rate per gallon of the duty of excise chargeable on hydrocarbon oil produced in the United Kingdom at the date of use of the fuel, including any addition to that duty by virtue of an order under section 9 of the Finance Act 1961; and

  (b) of any increase in the sums payable out of money so provided under the Selective Employment Payments Act 1966 which may result from any provision made by the said Act of the present Session for continuing the payment of regional employment premiums in respect of weeks beginning after 6th April 1975.—[Mr. Healey.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  Bill ordered to be brought in upon the Resolutions relating to Ways and Means and Finance [Money] and the orders relating to Procedure made this day; to be brought in by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Harold Lever, Mr. Edmund Dell, Mr. Joel Barnett and Dr. John Gilbert.

  FINANCE
  Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance, presented accordingly by Dr. John Gilbert and read the First time; to be read a Second time tomorrow and to be printed. [Bill 13.]

MINISTRY OF POSTS AND TELECOMMUNICATIONS (DISSOLUTION)
10.3 p.m.
The Secretary of State for Industry and Minister of Posts and Telecommunications (Mr. Anthony Wedgwood Benn): I beg to move,
That an humble Address be presented to Her Majesty, praying that the Ministry of Posts and Telecommunications (Dissolution) Order 1974 be made in the form of the draft laid before this House on 20th March.
This order gives effect to the Government's decision to abolish the Ministry of Posts and Telecommunications and to transfer its functions to the Department of Industry and the Home Office. These changes in departmental responsibilities require an order which cannot come into effect unless Parliament approves it. As hon. Members will know I am temporarily doubling as Minister of Posts and Telecommunications until the order comes into operation.
I will come to the order itself later, but first the House might find it helpful if I refer briefly to the proposals as a whole.
Hon. Members will recall that the Ministry of Posts and Telecommunications came into being on 1st October 1969 by virtue of the Post Office Act 1969 which also changed the status of the Post Office from a Government Department to a public authority. The Ministry was charged with two distinct tasks. First, it assumed responsibility for radio regulatory and broadcasting matters. Secondly, it was given the rôle of sponsoring within Whitehall the affairs of the new Post Office and of Cable and Wireless Limited on much the same basis as, say, the Department of the Environment looks after British Railways.
The Ministry is a very small one employing only about 460 people, and the Government believe that it is now preferable for governmental responsibility for the Post Office to be exercised in the wider context of a large Department which has greater resources available to it. In view of the very large capital investment requirement of the Post Office, particularly the telephone side of the business, it was decided that oversight of its operations would fit in best with the functions discharged by the
1026
Department of Industry, but it would not have been appropriate to transfer responsibility for broadcasting matters to that Department. As any Government responsibilities in this field are primarily of a regulatory nature, it was thought that they could most appropriately be exercised by the Home Office which is closely concerned with this kind of social issue and which has considerable experience of regulatory methods conducted through independent public authorities.
As hon. Members will see, the order transfers all the functions of the Minister to the Secretary of State. This is all that is required in law. In practice, the functions will be divided between myself and the Home Secretary on the basis that I have outlined.
Mr. Phillip Whitehead: Into which Department will technical decisions of principle be fitted?
Mr. Benn: I shall do my best to explain to my hon. Friend. I know his interest in this matter, because it is an interest that I share. The technical aspects of cables, if that is what he is thinking of, and I imagine that it is, will involve the interests of both the Home Secretary and myself, and it would clearly not be right, on the basis of the division of responsibility that I have described, that this should be seen either purely as a broadcasting matter or purely as a technical matter. I am aware of the implications of this, but in practice there will be consultation between the two Secretaries of State. I might add that the existing staff of the old Ministry of Posts and Telecommunications will be absorbed within the Department of Industry and the Home Office, but it is too early to say how many of them will be transferred to each Department.
I hope that in this brief introduction I have covered the broad points of the order. If hon. Members have any questions to which they would like a reply, I could attempt to answer them if I could catch the eye of the Chair towards the end of the discussion, or my hon. Friend the Member for York (Mr. Lyon) would similarly attempt to answer any questions arising on radio and broadcasting topics.
The order seeks only to give effect to what the Government believe will represent a welcome rationalisation of work

1027
within the Government machine, and I assure hon. Members that it does not imply any change of policy in the accountability to Parliament of the Post Office, nor will it affect the traditional independence of government enjoyed by the broadcasting authorities in this country.
Before passing from the order and leaving it in the formal way that I have done, perhaps the House will allow me to say that this order, which dissolves a relatively new Department, the Ministry of Posts and Telecommunications, brings to an end an old chapter and opens a new one in the history of the Post Office. I see some Members present who have had some association with the Post Office, but I am sure all hon. Members will recognise that this development is in line with a long stream of thinking going back to Rowland Hill himself.
It is, perhaps, wrong to let the motion go by without drawing the attention of the House to the very formidable list of people who have over the years urged that we should adopt a new policy towards the Post Office. When I was in the process of recommending, in 1964–65, that the Post Office should be made a public corporation, which was the decision adopted by the Cabinet and implemented in the 1969 Act, I looked up some of the references which had been made to this very issue over the years. If the House gives me a moment, I should like to put on the record some of the things which were said over this period so that the House will recognise that this is in line with a very long development of thinking.
Sir Rowland Hill is quoted in his "Life", on page 404, in 1864, as saying:
"It has been repeatedly urged in Parliament and in the public press that the Office of Postmaster-General should cease to be political and become permanent; and as already intimated, I cannot but consider such a change highly desirable."
Going from 1864 to 1902, Sir Austen Chamberlain, sometime Postmaster-General, said:
"In a great administration like this there must be decentralisation, and how difficult it is to decentralise, either in the Post Office or in the Army, when working under constant examination by Question and Answer in this House."
1028
Going forward to the recommendations of the Select Committee on the Telephone Service in 1922, one finds that the Select Committee, in its report, House of Commons 54/1922, said:
"The Secretary's department at the General Post Office, which really controls it, has neither special business training, other than that of the ordinary Civil Service, nor special expert and technical qualifications."
That Committee called for a Postmaster-General or a Minister of Communications on a different basis.
The late Lord Attlee, who was Postmaster-General in 1931, argued in an article that he wrote shortly after he left office:
"The Department should be administered either by a non-parliamentary Postmaster-General or by a Board appointed by the Minister for a term of years."
Lord Wolmer, a Conservative, a former Assistant Postmaster-General, argued that the Post Office
"must be free of civil service regulations, Treasury control and political interference."
If the House will bear with me I should like to complete this historical record from my files. Reginald Bevins, a former Postmaster-General said in his book published in 1965:
"The Post Office also suffers from another serious disorder. Unlike most Government Departments, the Post Office is not an administrative department. It is a business. Whoever heard of a business being conducted by a political Minister and by civil servants who are recruited in the same way as those who go to the Ministry of Health or Housing?"
In the same year Mr. Ernest Marples, a former Postmaster-General, said the same thing in an article that he wrote.
It fell to me, as Postmaster-General following Mr. Bevins, to make the recommendation to the Cabinet that this change should be made. It took the form of the Post Office Act 1969. It gave birth to a Department which had a short but a significant life. But now we are recognising that the two main areas of responsibility which fell to the Minister of Posts and Telecommunications naturally divide into the regulatory function which falls now—or will fall if the House approves the order—to my right hon. Friend the Home Secretary and his successors, and the responsibility for sponsoring what is now a great and growing nationalised industry, the Post Office Corporation,

1029
which will fall, along with the British Steel Corporation, to the Department of Industry to sponsor.
Those hon. Members who have taken an interest in the Post Office and who know and love it, as I candidly do, will recognise that in these developments there is a certain logic. No doubt the right hon. Member for Bournemouth, West (Sir John Eden), who occupied the office which I now occupy but will shortly lose, will want to put some points that he thinks are of significance, but he will also recognise that in giving the Post Office its head now to develop in a way in which one would expect a great public corporation to develop, one would want to feel that, as it leaves its old, separate sponsoring Ministry, it enjoys the good will of both sides of the House of Commons.
10.15 p.m.
Sir John Eden: The House is grateful to the right hon. Gentleman for the explanation which he gave in introducing the order. I shall certainly not advise my right hon. and hon. Friends to oppose it, although, as he rightly surmised, there are one or two questions which, in justice, one should put.
I heartily endorse the thinking which plainly lies behind the move, namely, that the responsibilities hitherto enshrined in the Ministry of Posts and Telecommunications are of such significance to the well being of everyone in this country and of such national importance that the Minister—or, as now emerges, the Ministers—in charge of those responsibilities should have a direct say at Cabinet level.
Considering both the Post Office side and the broadcasting side, encompassed in summary form, though quite inadequately, by the term "communications", one recognises the immense responsibilities which this small Department has been carrying. It is absolutely right that the weight of these responsibilities in their several parts should be acknowledged and proper regard be paid to them by ensuring that at the head of the Ministerial establishment is a Minister of Cabinet rank. Quite frankly, I always felt this strongly when I was there, and I
1030
am sure that it is right that that should be done.
The question mark hangs over whether it be right to go, as the order now proposes, straight to the break up or separation of the two functions. I readily understand the right hon. Gentleman when he says that they are separate and it is easy to take them apart and send them into different directions. But I wonder whether this has been done rather too hurriedly by the incoming Government. I say that with great respect and in a spirit of questioning rather than of criticism. There is doubt in my mind as to whether they have chosen the right home for the two separate parts. I shall return to that in a minute.
It has been put to me that one way of proceeding would have been to create a separate Ministry of Communications. It will be known to the right hon. Gentleman and to his right hon. Friend the Member for Walsall, North (Mr. Stonehouse), as well as to some of my hon. Friends, that many of one's counterparts as Ministers with responsibilities in this sector in other countries have been Ministers of Communications, with responsibilities not just covering the postal and telecommunications side but going into and incorporating transport communications as well. Clearly, one of the possible moves open to the present Government was to create a Ministry of Communications incorporating the existing Ministry of Posts and Telecommunications and some of the responsibilities of the Department of the Environment in relation to transport and some of the responsibilities of the Department of Trade and Industry, as it used to be, in relation to airways.
It would have made sense to do that, and I should like to know whether it was considered. Was that one of the options which were weighed before the decision was taken? It might have made sense to have moved the whole of this Department, comprising broadcasting and posts and telecommunications, initially into the Department of the Environment. That is certainly one of the suggestions that has come my way. The other was to have built on the base of the Ministry of Posts and Telecommunications and to have made that into a much larger Department of Communications as a

1031
whole with a Cabinet rank Minister at the head of it.
I have two points to make about the proposal to separate. The first concerns the decision to place responsibility for Post Office and telecommunications with the Department of Industry. As the House will know the Post Office has a massive order book for equipment from British industry. British industry is very much dependent upon the way in which the Post Office discharges its responsibilities in order to equip it and to provide the most efficient possible telecommunications network. Important decisions have been taken in relation to future equipment such as TXE4 which will lead into the next generation of electronic switching equipment.
There have been worries about the relationship between the manufacturing companies and the monopoly buyer. I shall not go into any detail, because this is not the time to do so. I simply question the right hon. Gentleman at this stage because it is important for him if it is possible to make it quite clear—and I readily accept it may not be—within his Department that a direct conflict of interests could arise here. It is not necessarily in the national interest that that should happen, but from the basis of my experience I know that it could.
Of course, I welcome that the needs and requirements of the manufacturing industry as well as of the Post Office are understood by Government before decisions are taken by Ministers. Also I wish to be quite clear that if, when the matter comes to Ministers, there are separate points of view, those points are separately expressed to the responsible Minister so that he has an opportunity objectively to weigh up the relative arguments before taking a final decision.
I assume that the right hon. Gentleman accepts that it is not right to return to virtually a complete integration of the responsibilities of the Post Office in buying equipment and developing its own needs and the needs and wishes of the manufacturers into some re-created form of the ring system. I am sure that the right hon. Gentleman will wish to take the opportunity to make quite clear how it will work out in practice.
1032
I welcome that the Under-Secretary, who has for a long time carefully followed these matters in Opposition from the Front Bench, is to be the Minister directly concerned with Post Office matters in the Department of Industry. As he will recognise, there are many major decisions to be taken about the Post Office which will no doubt fall to be taken by the Secretary of State and I would assume from the answer given by the right hon. Gentleman in HANSARD on 25th March that the Under-Secretary will answer direct to him on Post Office matters.
I turn briefly to the Home Office aspect. I see that the noble Lord, Lord Harris, is to be the Minister responsible for broadcasting policy. He has very good qualifications. He trained as a journalist with a daily paper in my constituency, and I believe that his parents live in my constituency. Therefore, he comes from a very good stable.
The fact that broadcasting matters are to be made directly the responsibility of a senior Minister is a recognition of the significant place that broadcasting should rightly hold in the eyes of the Government of the day. It is a right decision to put someone of top calibre in charge of a matter of such critical responsibility as broadcasting.
But the right hon. Gentleman will no doubt have learnt from his hon. Friend the Minister of State, Home Office, that during a debate on Friday one or two questions were raised by his hon. Friends the Members for Crewe (Mrs. Dunwoody) and Derby, North (Mr. Whitehead) indicating a degree of worry, which to some extent I share. For the sake of brevity, I shall just touch on those questions.
I do not wish to be alarmist, and I genuinely do not read extra-sinister overtones or undertones into the move which has been made. However, I feel that an element of worry—no more—exists over there having been brought together in a single Department of State responsibility for the police, security, the operation of the criminal law and now broadcasting. I do not know what lies behind this move. Is the aim to create something similar to a Minister of the Interior? If so, we need to have it explained more fully and frankly than the right hon. Gentleman has been able to explain it

1033
so far. I do not expect that that is the real purpose. It may well be a kind of consolation prize for the Secretary of State for the Home Department for not having become Chancellor of the Exchequer. Whatever the reason may be, the right hon. Gentleman should realise that bringing broadcasting into the Home Department has the wrong image so far. He needs to take that fact very seriously at the outset.
I am grateful for what the right hon. Gentleman said and for what the Minister of State said on Friday. I was taken to task for pressing him on the matter, but it was important that we should have it spelt out that the Government do not intend to depart from what has been the practice of all Governments of not intervening in matters of programme content and similar matters. I was reassured by the Minister. It was right that that was spelt out by the right hon. Gentleman and by his hon. Friend. But I hope that the right hon. Gentleman will take seriously what I said about the image and the inter-relationship of these various factors in the broadcasting sector. It is a matter which needs to be spelt out at the beginning of this new chapter in the history of the Department.
The right hon. Gentleman made a whole series of historical references. I shall bring them up to date by simply saying that such a move, as I know he fully realises, means a tremendous upheaval for all the men and women who work in the Department. The right hon. Gentleman said that it was small Department, and numerically it is, but the people there have recognised the full weight of their responsibilities. They have come to work together as a most effective, happy and harmonious team. It is now being broken apart rather suddenly and rather rapidly. Apparently that is being done without a great deal of thought.
I know that the right hon. Gentleman will be among the first to join with me in paying tribute to those who have worked in the Department. As the last Minister of Posts and Telecommunications in the previous Government, I take this opportunity of thanking them for the way they served me and the previous Government. I have no doubt that that tradition of service will continue in what-
1034
ever capacity and in whatever Department they find themselves in future.
10.30 p.m.
Mr. Phillip Whitehead: I echo what the right hon. Member for Bournemouth, West (Sir J. Eden) has said about the distinguished service of many people in the Post Office over the years. It would be wise if at this hour I do not let my eyes stray back to the Hills—either Rowland or Charles—or any distinguished people with whom the Post Office has been connected, but to confine myself to one or two caveats about the immediate future.
I too have worries about the division of responsibilities which seem implicit in the order if Paragraph 2 meant what it says and no more. It says:
"The Ministry of Posts and Telecommunications is hereby dissolved and all the functions of the Minister are hereby transferred to the Secretary of State."
Perhaps we might know in the immediate future where to address our real concern about future broadcasting, and not merely its future but the future of the interrelated technologies with which it is intimately bound. As the right hon. Gentleman has said, we now have not merely that one voice in the Cabinet for which he no doubt pines, but two voices. The division will inevitably mean that in the minds of some right hon. and hon. Members there will be some confusion as to precisely where the decisions will be taken about the future of broadcasting, and especially about all the interrelated matters which lie within the remit of the Post Office.
Technological developments, which have been closely watched by the Ministry of Posts and Telecommunications, are so interrelated that it is impossible to distinguish technical decisions of principle from the more philosophical and political implications of decisions on the future of broadcasting. Developments such as cable television, satellite transmission and video cassettes are part of the economic and social arguments for saying that the whole of the mass media are a part of the telecommunications system. The future of broadcasting is bound up on the transmission side with technological and investment decisions on a national scale in which broadcasting plays only a small part. Much of broadcasting's existing transmission system is a by-product

1035
of other communications such as the telephone and data transmissions. With new technologies that will increasingly become the case.
I fail to understand how we can look at the development of cable television in isolation from the Post Office's proposals for interrelated telecommunication networks. I also fail to understand how we can look at the future without considering the implications of matters such as facsimile transmission and CEFAX for the development of the Press. Equally important is the future of the cinema, to which my hon. Friend the Member for Crewe (Mrs. Dunwoody) referred last Friday. We must also consider what will happen to the cinema in view of the future of video cassettes and in the event of pay television being incorporated in cable television. All these matters have been discussed and to some extent were within the scrutiny of the Ministry of Posts and Telecommunications.
Many hon. Members would like to know precisely where responsibilities now lie. There has been considerable argument about transmission and I shall devote my time to transmission as that is the most urgent consideration which lies before the policy makers, be they in the Department of Industry or in the Home Office. The case has been put very strongly by the Post Office Engineering Union that there should be a completely integrated transmission system. Those of us who remember the reports of the estimable Select Committee on Nationalised Industries will remember what was said in the Committee's first report on Capital Investment Procedures. It recommended
"that a long-term plan embracing telephony data transmission and the transmission and distribution of radio and television signals should be drawn up as soon as possible."
One is entitled to ask: by whom? This matter is urgent. If there is to be an integrated system as recommended by the Select Committee, the matter should be discussed in the relevant Ministry.
The same Select Committee on Nationalised Industries, in its second report, said in one of its recommendations on the performance of the Independent Broadcasting Authority that it did not feel particularly capable of arbitrating between those who said that
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transmission should remain with the broadcasting authorities and those who said that transmission should be separated. It drew attention to the fact that in the latest service set-up by the Canadian Broadcasting Commission no transmitting facility had been given to the broadcasting authority. This point has been made by the POEU in arguing for integrated transmission facilities.
These are technical and complex matters. They are strenuously resisted by the Federation of Broadcasting Unions and others who wish to see transmitting remain connected with the output of broadcasting. These are matters which we shall wish to see resolved one way or other in the near future. This was the kind of decision I had in mind when I said to my right hon. Friend that we wanted to know whether technical decisions were to be in the hands of the Department of Industry or of the Home Office.
There are two other matters for imminent decision, as well as whether there is a comprehensive inquiry into the future of broadcasting and mass communications. The first is the question of decisions on cable television. At the moment the Ministry of Posts and Telecommunications has been administered by the Post Office direct. The five cable television experiments taking place in five towns have been operated entirely under the Ministry of Posts, and nobody else. No statutory authority has been responsible for them—in other words, they have operated directly to the Minister. That experiment is continuing, and indeed one of the five experiments is barely under way at present. In this situation I should like to know in whose hands now rests the day-to-day administration of cable television. Is this experiment to be continued and extended?
We know that in other comparable Western European countries, and on the North American continent, cable television is expanding by about 12 per cent. a year. This process is being somewhat artificially confined within this country. There are many in the commercial sphere, particularly the Cable Television Association, who wish to see this process expanding much faster and who indeed wish to see a separate Cable Television Council. At the moment no decision has been taken on this matter.

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We are somewhat behind the French who have set up seven experiments in cable television and who, according to the latest report from the Council of Europe on cable television in France, have now set up a State authority under the French Ministry of Information. Since a Ministry of Information implies a one-way form of communication, I would not want to see an integrated responsibility for broadcasting and the technical developments that follow within that kind of single Ministry. Therefore, I should like to know where these decisions are to be taken in the near future.
There is one final technical matter to which I should like to draw attention, namely, the question of a decision on satellites. Our contribution to Intelsat and to the international satellite programme generally has been fairly significant. There are those who argue that we have not received our due return. There are also many who would argue that commercial pressures are overriding within Comsat, the American organisation that services the satellite communications industry in the United States, particularly under the Nixon administration. I wish to know where the decisions are now to be taken about the level of our contribution to Intelsat and the extent of our international communication satellite technology. I hope that we shall be told where the decisions are likely to be taken on our participation in respect of the future of the European geo-stationary system, if there is to be one. Does my hon. Friend the Minister wish to intervene?
The Minister of State, Home Office (Mr. Alexander W. Lyon)indicated dissent.
Mr. Whitehead: Perhaps my hon. Friend does not know, in which case he confirms my point. We are in considerable doubt about where the day-to-day decisions will be taken which will materially affect our future broadcasting technology.
Many people think of investigations into broadcasting as being entirely concerned with the destiny of the fourth television channel, with the style of television programmes and with the responsibility for taste, balance and due impartiality. In the past the technical matters to which I have alluded, which involve far-reaching
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investment decisions and far-reaching decisions of principle, have, on the whole, rested snugly with the Ministry of Posts and Telecommunications. It would seem that in future they are, to some degree, likely to be divided between the Home Office, with all its responsibilities and well-known caution in these matters, and the Department of Industry.
As I have tried to show, all these technical decisions inter-relate. They are all intimately connected with the way in which broadcasting in particular and telecommunications in general will develop. Therefore, the Ministries which are to take the investment, planning and political decisions should also inter-relate. We on this side of the House, and probably hon. Members opposite, would like to have more information about the form in which that inter-relationship will take place within the Government.
10.41 p.m.
Mr. Ray Mawby: As the last surviving Assistant Postmaster-General, I should like to say a few words on this measure. I was impressed by the reasonable manner in which the Secretary of State presented it, but I expected that because he was a Postmaster-General, and Postmasters-General and Assistant Postmasters-General have always been reasonable.
The hon. Member for Derby, North (Mr. Whitehead) referred to the subject of international satellites. When I was in office, we might easily have become American-dominated. As one of the major communications nations, this country could have become hirers of the system, but, in fact, we became partners in an international satellite corporation.
The Secretary of State referred to the 460 people who are employed in the Ministry. The Department has moved along a logical course, and the people involved have done their duty extremely well, and the House should pay tribute to the service they have given. Some of them will now go to the Home Office and some will go to the Department of Industry. I hope that they will be as happy in their new environment as they were in the old.
The right hon. Member for Bournemouth, West (Sir J. Eden) referred to the question of responsibilities in broadcasting. That matter exercises the minds of

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people not only in the House but outside it. I do not think that either the BBC or the IBA is carrying out its responsibilities in maintaining the standard of morality that the people expect. I ask the Minister of State, Home Office to draw this view to the attention of his right hon. Friend the Home Secretary.
Mr. Deputy Speaker (Mr. George Thomas): Order. I do not want to interrupt the hon. Gentleman, but he will realise that we are discussing the control of the Post Office, and I hope that, after I have allowed him to make his point about morality, he will get back to order.
Mr. Mawby: I apologise profusely, Mr. Deputy Speaker. I was carried away. We all have our axes to grind, but I will not grind that axe any further.
The hon. Member for Derby, North takes a different view from me on data transmission cable television. The Post Office has shown the world that there is no one better at data transmission, but it should seriously consider the amount of capital expenditure in which it is involved in providing computers to deal with data. The Post Office can provide an excellent service for data transmission but it should not go beyond that.
I wish all the people within the Post Office who have served us all so well good luck. The staff who served the Minister of Posts and Telecommunications will be split up, some going to the Post Office and some to the Department of Industry, but I know that they will give the same excellent service to those Departments as they gave to us when we were in office.
10.48 p.m.
Mr. Eric Ogden: It is clear from your clarion voice, Mr. Deputy Speaker, that you do not require any broadcasting system. It is good to know that it is lasting so well in your new duties. Because of your suggestion to the hon. Member for Totnes (Mr. Mawby), I will not follow his criticism of the BBC and the IBA, except to say that if he had used the words "good taste" or "objectivity" rather than "morality" he might have received a greater measure of support from the House.
I join him and other speakers in paying tribute to those who served Members of Parliament so well in the Ministry of
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Posts and Telecommunications. Each time I have had contact with people at the Ministry, they have been most helpful, and I am sure that that has been the experience of all hon. Members. I am talking now not about service by the Post Office itself, which is excellent, but service by the Ministry.
My sole criticism of the hon. Member for Bournemouth, West (Sir J. Eden) is of his suggestion that the sole reason for the division of the Ministry of Posts and Telecommunications between the Department of Industry and the Home Office was in order to give a consolation prize to my right hon. Friend the Home Secretary for not being appointed Chancellor of the Exchequer. Who would want to be Chancellor of the Exchequer to clear up the mess which the last Government left? That is the only party political point I intend to make tonight.
My right hon. Friend the Secretary of State was followed by a large measure of agreement from the Opposition Front Bench. As older Members know, when there is a large measure of agreement between the two Front Benches alarm signals should be ringing on the back benches. If, therefore, in the cold light of morning, my questions seem a little jaundiced, I hope my right hon. Friend will not be too hard on me. But they have to be asked, and now is the time to ask them. I am referring particularly to the Post Office side in this context. The Post Office service goes back further than Rowland Hill. It was founded in 1657 and I think it is the best in the world, despite all the criticisms.
The old titles of Postmaster-General and Assistant Postmaster-General disappear with the system. The occupants of both offices served the nation very well, no matter which side of the House they came from. But the offices became, really, stepping-stones to higher ministerial office. Few Postmasters-General and few Assistant Postmasters-General were able to stay in office long enough to get the full value from the Department. I suppose that this order is not quite as important as the dissolution of the monasteries, but it is an opportunity to record these things.
My right hon. Friend said that the reason for the Government's decision lay in there being a large department and a small department with a very large

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capital investment which had to be controlled. So, part of the Ministry goes into the Department of Industry and part into the Home Office. My right hon. Friend gave us many quotations supporting the Government in this move, but he did not say, nor did he attempt to say, why the last Labour Government did not do it in 1969. I can recall no suggestion at the time that we should follow reorganisation of the Post Office into a public corporation by a dissolution of the Ministry itself. If it is right to do it now, why was it not right to do it in 1969?
The Government's decision attracted some publicity, but only after the decision had been taken. Was it not possible for consultation to take place first with the Post Office Corporation itself or with the consultative committees or with the trade unions or with the Parliamentary Labour Party or with the Labour Party itself?
We have had some information about who will have day-to-day responsibility for the Post Office, and I am certain that it will be in good hands. Could we not have a leaflet or some other type of publication explaining in detail just where the political responsibility lies? This new structure will be a joint venture by my right hon. Friends the Home Secretary and the Secretary of State for Industry, and such information would be useful both to the House and to the country. It is a new venture. I think it will have support from all sides of the House. But this is the time to ask what consultation was undertaken and how far it was able to be extended.
10.55 p.m.
Mr. A. J. Beith: I am pleased to be called after the hon. Member for Liverpool, West Derby (Mr. Ogden), because one of his points was in my mind, although I differ with his view about it. There are aspects of the order which are welcome and overdue. The hon. Gentleman referred to the transfer of responsibility for the Post Office Corporation to the Department of Industry. I regard this as a natural development which could have been undertaken when the change in status of the Post Office first occurred, and it is right to do it now.
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As we connive at the dismemberment of the old Ministry of Posts and Telecommunications, it is primarily to its effects in this House that I wish to refer. The administrative implications of the change are sound, because the basic assumptions on which it is proposed are sound. It is to the implications to this House and to ministerial answerability that some attention needs to be directed.
There will no longer be a Minister of Posts and Telecommunications. That is no great loss in euphony. He was perhaps the most unattractively-styled Minister. If the Postmaster-General had to go, it was a pity that he had to live on a little longer with such an unpleasant title. But it means that in this House no Minister can concentrate upon and have primary responsibility for broadcasting. Successive Home Secretaries have pointed out how matters of pressing national importance arrive like bolts from the blue to disturb whatever they are trying to consider in the long term and to divert their attention to immediate, short-term and usually drastically serious problems. It is difficult to see how the Home Secretary can take the longer-term view of broadcasting which is needed. Many people are looking to the Government for a major review of certain aspects of broadcasting policy. I have in mind such matters as the future of television and the future of commercial radio. These require the major interest of a Minister. We were interested to hear the Minister of State on Friday setting out the new responsibilities of the Home Department, some of which will be carried out largely in another place, and there is widespread concern about ministerial responsibility. If the major review of broadcasting is to be one of the Home Secretary's main concerns, it will require a tremendous shift of emphasis for him and his Department.
May we be clear that all telecommunications matters relating to broadcasting are now to be in the hands of the Home Office and that only strictly Post Office matters have been transferred to the Secretary of State for Industry? Where is the boundary to be?
There are, for example, a number of problems affecting wavelengths which will need discussion. They might appear to be highly technical communications

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matters, but they raise very serious implications. The re-allocation of commercial wave lengths is one which will arise if the Government decide, as I hope they will, to take back some of the wavelengths which have been provisionally allocated to commercial use to ensure a total national radio service. This is a decision not only of technical importance but of general broadcasting importance, and it is one that the Home Secretary should consider.
Mr. Whitehead: The hon. Gentleman might concentrate the Government's mind by asking which Minister will be responsible for the renegotiation of the Copenhagen Convention on European wavelengths.
Mr. Beith: I am grateful to the hon. Gentleman for reminding me of that. It is an issue which Ministers always raise when wavelengths are under consideration. Although they have been profligate with the wavelengths that we have already, I shall be interested to know who is to deal with the future wavelengths which we can get by European agreement.
Transmitters provide another area where the boundary between the technical and the policy fields is not clear. The number of transmitters, the programme for transmitter building, and cases which have arisen in recent months such as Belmont, now happily settled, all illustrate that there is no natural technical and policy boundary which can be followed.
Questions of licence revenue, which may appear to be simple Post Office matters, raise serious broadcasting implications. Some of us have been trying to persuade the Crawford Committee that there is cause for remitting the licence revenue or using it to subsidise relay services in areas with no adequate service of television reception. This is a matter which crosses the boundary between technical and policy matters.
I turn now to the issue of Questions. When we had a Minister of Posts and Telecommunications we had an allotted time for Questions in this House on broadcasting and postal matters, both of which could get a clear and regular airing and over which the right hon. Member for Bournemouth, West (Sir J. Eden)
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exercised responsibility for some time and, indeed, answered many Questions on matters raised by me. This avenue is no longer open to us. Now we must share the time with many pressing Home Office matters.
At the first opportunity during Business Questions at the beginning of the Session I asked the Leader of the House whether provision could be made for Questions on broadcasting and postal matters to gain some priority, at least occasionally. I have been informed by him today that this matter will be discussed through the usual channels.
I hope that Ministers are aware that there is concern that broadcasting policy Questions will be pushed to the bottom of a fairly long queue of Questions for consideration by Home Office Ministers. We shall enjoy being looked at sternly by the Minister of State, Home Office when he gazes at us over his glasses, but only if we get the opportunity. I have indicated my fears about which Ministers will be responsible. It will be a matter of concern if we do not get a Minister at the Dispatch Box often enough to answer Questions on broadcasting matters. I had hoped that there might be an opportunity of providing a separate slot as there is for questions to the Minister of State, Civil Service Department. If the title of Minister of Posts and Telecommunications had been retained and held in plurality with another Department, that at least would have been possible.
All these matters exercise concern. I hope that I have left sufficient time for the Minister to give us an adequate reply.
11.3 p.m.
Mr. Tom King: I join the hon. Member for Berwick-upon-Tweed (Mr. Beith) in drawing attention to the difficulties that may arise in determining where the dividing line is to come. I hope that the points that he made will get a clear answer tonight.
My interest is that I have already trod the path which the noble band from the Ministry of Posts and Telecommunications is shortly to tread, because in the last Government I had the pleasure of working with the Ministry before following dutifully behind my master to the Department of Trade and Industry.

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Therefore, I think that I can claim some experience of the kind of reception that awaits them.
I think that I can join my hon. Friend the Member for Totnes (Mr. Mawby) in saying that it will be a happy transition. They will miss some of the aspects of the Ministry of Posts and Telecommunications that those of us who had the pleasure of working there appreciated most. It was an intimate, friendly and compact Department. By its nature it was the smallest Department in Whitehall, and, as one would expect, it had the attributes of a small and closely knit community. By no stretch of the imagination could the Department of Industry be described with such adjectives. Without question is has many virtues, but it lacks the closeness and personality.
I recognise that this is a reasonable order, but I think that the Secretary of State introduced it in a most unreasonable way. Some of the arguments that he adduced were the worst that could be found. I am sorry that he has come under such fire from both sides of the House. The two measures with which he, as a prophet of consultation, has been involved in the House today appear to have involved no consultation whatever on his part. However, I think it was a little unfair of the hon. Member for Liverpool, West Derby (Mr. Ogden) to attack him from behind his back on this sensitive point.
Mr. Ogden: From behind my right hon. Friend's back is not of my choosing. I would prefer to do it to his face.
Mr. King: Whichever way, I am sure that the Secretary of State was wise to face his accuser. Nevertheless, it was a very telling point.
The Secretary of State referred to rationalisation. This was not the best reason to adduce for this move. The right hon. Gentleman was not present when his right hon. Friend the Secretary of State for Trade was attributing the total cause of our balance of payments deficit to the fact that the old Board of Trade had disappeared into the new Department of Industry and stating that one of the prime reasons why the balance of payments would now improve was that at last the Department of Trade and Industry was being broken up and the old
1046
Board of Trade hived off. Now we see the arch-priest of rationalisation back at work, including yet more Departments into the Department of Trade and Industry.
I thought that the right hon. Gentleman was a little carried away when he said that this was the culmination of what so many had sought. He quoted the freedom from Government control that everyone sought for the Post Office. One quotation referred to the need for freedom from Treasury control, and he said that at last this had been achieved—this, on the same day as the Chancellor of the Exchequer finished the debate on a Budget which announced increases in postal and telephone charges. That does not look like total freedom from Treasury control.
The right hon. Gentleman also said that these Departments would naturally divide, but after the speeches of the hon. Members for Berwick-upon-Tweed and Derby, North (Mr. Whitehead), no one seriously believes that. I suppose that one should not watch reactions in the Chamber, but I noticed that when the hon. Member for Derby, North asked who would be responsible for cable television there was quite a Front Bench consultation. The fact that the right hon. Gentleman could not reply to the intervention about where the various people would go shows that the division has not yet been made. It will be more complicated.
One area gives me, and, I know, my right hon. Friend the Member for Bournemouth, West (Sir J. Eden), great concern. The difficulty of the old Ministry was the ability to vet and to approve on a sound basis the new generation of telephone exchange equipment. I recognise that this will be a great difficulty for the right hon. Gentleman and his Department. The decision is complicated, and enormous sums and the fate of our telephone system until the end of the century and beyond depend upon its being right. It is difficult to know whether there is in Government the adequate expertise to give Ministers the right information. That decision was as difficult as any that my right hon. Friend had to take, and it will obviously require continuing monitoring by the right hon. Gentleman as well.
My other concern over the change is the situation of broadcasting. The speeches tonight show the concern of all

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hon. Members with the fact that broadcasting is a very hot potato. It is the most powerful influence in this country—beyond Parliament. No Government like to he seen overtly to influence it, yet it is subject to enormous political pressure by all parties. The difficulty is to know what to do with it. It has to be sponsored by someone, it has to be in some Ministry, yet any Ministry is open to criticism.
I felt that the Ministry of Posts and Telecommunications was a happy British compromise. It was not a major Ministry, its Minister was not in the Cabinet, yet it had a Minister with a separate responsibility who was rather jealous of that responsibility. Although he had to be sponsored in Cabinet and, therefore, there was a Cabinet Minister with overall responsibility, there was a distinction and a buffer. What worries me is that broadcasting will now come under the responsibility directly of a Cabinet Minister, with all the strongest political pressures on him.
I think that, in a funny way, with all its imperfections the old system had some merit, and it worries me very much that the pretence, if one likes, or the mystique that broadcasting was not under quite such direct political pressure has been cast away and we may be moving, perhaps not under this administration, or even under ours if we come to office shortly, but under a future administration, to something like a Ministry of the Interior.
One does not have to look very far across the Channel to see in what we think are advanced modern democracies how total can be the political interference in broadcasting. It is against that background that I have some regret at the developments that we see in this order.
Mr. Wyn Roberts: Does my hon. Friend agree that the order and the allocation of responsibility for broadcasting to the Home Office are part of the Government's overall strategy of which we heard on Friday? Would it not be far easier for us to make up our minds about the order if we knew what the overall strategy was?
Mr. King: My hon. Friend has nipped in nimbly when I had sat down, but I am sure that that is a provoking thought.
11.11 p.m.
Mr. Ian Wrigglesworth: We enjoyed that little bit of knockabout between the hon. Member for Bridgwater (Mr. King) and his hon. Friend the Member for Conway (Mr. Roberts). But there is a fair degree of unanimity this evening that this is a welcome reorganisation of Government Departments and I do not think there will be too many tears at the wake. It is something that I welcome. I am pleased that the sponsoring Department of the Post Office will have access to the Cabinet and that the Post Office will have the backing and sponsorship of a large Department of State.
There are two matters which I should like to raise at this late hour, and I shall be as brief as I can. The first is to make the serious point that the Post Office is not all about communications. The Post Office is a vast conglomerate, and I am never sure, on the postal and telecommunications side, where communications end and where transport begins.
There are other facets of the operations of the Post Office that will come to the attention of my right hon. Friends who will have to concern themselves with banking, data processing and the other activities carried out by the Post Office. I make the plea to my right hon. Friend that due attention should be paid in the Department to these aspects of growing importance to the Post Office and that they should not be swallowed up in the consideration of the telecommunications business and the postal business.
My second point concerns the Post Office Users' National Council, which has been one of the most vociferous and most successful of the consumer consultative councils in the nationalised industries. Under the chairmanship of Lord Peddie it has made a considerable impact on the thinking of the Ministry and of the Post Office, and I should like to see that work continued in years to come.
I must ask my right hon. Friend who will be responsible for the sponsorship of the Post Office Users' National Council. I do not want to see its work being stifled and lost. I want to see it being given the support that it has received over the last couple of years from the Ministry of Posts and Telecommunications so that it can carry on the good Job that it has been doing on behalf of

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the consumers in looking at Post Office affairs.
I do not wish to go further than that this evening. I hope that we shall have further opportunities in the near future to look at Post Office affairs. I reflect some of the comments that have been made in saying that this reorganisation will not remove from right hon. and hon. Members the opportunity to approach the Secretary of State and to make points on the Post Office Corporation and its activities.
I hope that my right hon. Friend will be able to cover those two points when he replies to the debate.
Mr. Deputy Speaker: I understand that two Ministers wish to reply to the debate. The second Minister will, of course, do so by the grace of the House.
11.15 p.m.
Mr. Bean: Some points of substance have been raised. If my hon. Friend the Minister of State for the Home Department could deal with broadcasting, I shall do my best to go through the points made.
First, I accept what the right hon. Member for Bournemouth, West (Sir John Eden) said about the benefit of being in the Cabinet if one is dealing with these problems, which may be thought slight but are usually very significant because on both sides they touch the public so intimately. Having been a Postmaster-General out of Cabinet, I share the right hon. Gentleman's feeling about the importance of having Cabinet position. As to his proposal that the Ministry might have been included in the Department of the Environment, it is possible, as was done in Sweden, to link it with road transport and rail, because even at the end of the parcels service one is dealing with an aspect of communications. But the right hon. Gentleman and the House will know that Government decisions are taken by the Prime Minister of the day and that this is something which is, therefore, rather different in decision making from decisions collectively taken by Ministers.
It is not normal for the Prime Minister to consult civil servants about the disposition of Departments or about the people he puts in charge of them. There-
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fore, as no one has been affected in relation to his Civil Service status but all that has happened is that he has found himself under a different Minister, the point about consultation may not arise.
On the question of the Post Office being a customer of the telecommunications industry and the Ministry now being sponsor of the industry, this is a reversal to the position before 1964, when the hon. Member for Totnes (Mr. Mawby) was both sponsoring Minister for the industry and Postmaster-General. There is no great logic in this. The previous Government specifically did that with the aircraft industry and air corporations and the shipbuilding and shipping industries, whereas we have generally taken the view that the sponsoring Minister should be different from the Minister who sponsors the user industry. But in this particular arrangement it reverts to the pre-1964 position.
My hon. Friend the Under-Secretary will be accounting in the House directly to me on Post Office matters. I know that in his contributions to the debates he has won the respect of hon. Members who follow Post Office matters. I am proud to have him with me in this task.
I join also in saying something about the officials of the Ministry of Posts and Telecommunications. Despite what I have just said about consultation with civil servants and the machinery of Government question, I should like to repeat what has been said about the loyal service that they have given in a Department which very much affects relations between the Government, the public sector as a whole and the people. I worked with them in 1964–66. I am very proud to have found myself 10 years later in association with the brigade. Those who come into the Department of Industry will certainly be welcomed by the Secretary of State, whatever their fate may be in a large Department. Like the hon. Member for Bridgwater (Mr. King), I have made this track before, from the Post Office in 1964 to the Ministry of Technology, which was my Department under another name. There is a connection between the two Departments. I shall make it my business, as will my hon. Friend the Under-Secretary, so see that those who come to us are welcome in their present position.

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My right hon. Friend the Home Secretary will be responsible for all broadcasting matters. There is a logical division between broadcasting administration and Post Office sponsorship. It is true—this is a very significant point—that the impact of the technology of communications on broadcasting possibilities is a very important interconnection. But it is not uncommon in Government to find two Ministries overlapping in a common interest where one is policy and one is technology. I would expect that on matters such as cable there would clearly be a common interest in certain aspects. But all broadcasting matters, as my hon. Friend the Minister of State will show, will pass to the Home Office.
My hon. Friend the Member for Liverpool. West Derby (Mr. Ogden) said that he had a natural suspicion whenever he found the two Front Benches in agreement.
Mr. Ogden: I was quoting my right hon. Friend.
Mr. Benn: I did not realise that, but I was about to say that I entirely agree. I have never felt easy in my mind when I found the exchange of courtesies across the Floor going beyond a certain formal politeness.
My hon. Friend asked why this change had not been made in 1969. I believe that it was discussed. He asked for a guide to be made public so that anyone in doubt should have it cleared up. I think that that might be done in a formal Written Answer, and I shall see whether that can be arranged.
My hon. Friend the Member for Thornaby (Mr. Wrigglesworth) asked about Giro and the users' council. If I may boast paternity in respect of both those services, in which I remain deeply interested, I assure my hon. Friend that the promotion of the Giro and the necessary business base to ensure that it grows will be my concern as the sponsoring Minister. I assure him also that the Post Office Users' National Council will continue and will, I hope, play a leading part in the development of the Post Office, beginning with the difficult task of looking at the tariff increases now foreshadowed.
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I thank the House for the courtesy with which it has received the motion, and I commend the order for approval
11.22 p.m.
The Minister of State, Home Office (Mr. Alexander W. Lyon): May I by the leave of the House deal with the matters which come more within the ambit of the Home Office?
In view of the concern which has been expressed about the way the division will take place, perhaps it would be best if we tried to set it out in a Written Answer so that the House could turn to it for guidance.
Broadly, in the general structure the Home Office will be responsible for broadcasting and the Department of Industry will be responsible for the Post Office side of the present administrative set-up. The Home Office will receive the Minister of Posts and Telecommunications powers under the Wireless Telegraphy Acts, which include the power to control the use of frequencies. Also, it will have the BBC's charter and licence and agreement and the Independent Broadcasting Authority Act, and the powers under Part IV of the Post Office Act 1969, which include the power to control the use of cable to provide services similar to over-the-air broadcasting services.
In practice, therefore, from the standpoint of the way in which the old Ministry of Posts and Telecommunications was divided, the Home Office will acquire the radio regulatory division which licences the use of frequencies, for instance, in aeronautical services, private mobile radios and so on, and it will negotiate international agreements on the use of the frequency spectrum. Thus, it will fall to us to deal with any renegotiation of the Copenhagen agreement.
The second part of the old Ministry was the broadcasting department responsible for advising Ministers on policy relating to the BBC and the IBA and on broadcasting generally. This also will come to the Home Office. It will include the use of frequencies for broadcasting and the use of cable to provide broadcasting services.
Lastly, the Home Office will take the directorate of radio technology, which provides the engineering support for the

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radio regulatory division and the broadcasting department.
In terms of personnel, therefore, the Home Office will take about two-thirds of the personnel who used to work for the old Ministry of Posts and Telecommunications. The rest, who are broadly responsible for the sponsorship of the Post Office, will go to the Department of Industry. I shall consider whether we can set that out in a Written Answer so that it is easily available.
I think that the right hon. Member for Bournemouth, West (Sir J. Eden) raised somewhat impishly the question of whether we were trying to move towards a Minister of the Interior by merging all these powers of communications with all the powers of control that exist in the police department. If studied carefully that suggestion can be seen to be nonsense. The powers which the Home Office has in most of its areas of control are strictly limited and much less than the average Ministry of the Interior or Ministry of Justice elsewhere. The actual powers in the police department are extremely limited compared to continental ministries.
This is simply a question of English history. The Department of Home Affairs is the residual legatee of most of the administrative powers of government on the home side. It was originally the only Department of Home Affairs, and it, therefore, contains a whole collection of Government powers which include, as well as the police, things like the theatre and cinema and the whole matter of the kind of powers exercised in government in relation to obscenity and so on. These matters come within the purview of the Home Office largely because it is that residual legatee.
The question of where to put broadcasting, if the old Ministry is deprived of the powers relating to the Post Office, in the whole spectrum of Government is not a difficult decision to make. The obvious place is the Home Office, which has the general oversight of the liberty of the citizen. It is interesting that I should be criticised tonight on the basis
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that we have taken into a somewhat despotic Government Department this whole area of communications. Only last Thursday at Question Time we were being urged from the Opposition benches to keep within the control of the Home Office the whole question of the amendment of the law relating to picketing. Only in the Home Office, the Opposition felt, did we have the necessary expertise in balancing the individual liberties of various groups of citizens. If we have it for that, we have it also for the sphere of telecommunications.
It has never been the policy of successive Governments that we should intervene in the content of broadcasting programmes, and it is not the intention of this Government—and I hope not of any other Government—to do so. I state that specifically in relation to any kind of political content, but I state it also with a view to what was said by the hon. Member for Totnes (Mr. Mawby) in respect of the issues he raised. It would be wrong if a Government were to take that kind of power. They have a regulatory function in the overall conduct of bodies appointed by Parliament, and they should exercise that power properly within the limits set by Parliament. But to intervene in the direct content of individual broadcasting programmes would be wrong. I do not think it was the intention of my right hon. Friend the Prime Minister when he made this break that the Home Office or any other Department would do it.
Question put and agreed to.
Resolved,
That an humble Address be presented to Her Majesty, praying that the Ministry of Posts and Telecommunications (Dissolution) Order 1974 be made in the form of the draft laid before this House on 20th March.
To be presented by Privy Counsellors or Members of Her Majesty's Household.

MINISTRY OF POSTS AND TELECOMMUNICATIONS (DISSOLUTION)
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr Golding.]

FLEETWOOD
11.29 p.m.
Mr. Walter Clegg: The last Parliament had one distinct advantage over the present Parliament, in that the hon. Member for North Fylde, being then a Government Whip, was unable to speak except to move the Adjournment of the House. Alas, those halcyon days are past.
Other hon. Members left the Chamber swiftly as soon as I rose to make what is virtually a maiden speech after four years of silence. But I propose to bear in mind what I call Clegg's Laws of Listening, which I formulated after sitting for many a weary hour on the Government Front Bench and keeping silent, as you have to do in your Chair, Mr. Deputy Speaker. The first of those laws is that the second half of any speech appears to be twice as long as the first, and the second law is that the enjoyment of a speech is in inverse proportion to its length. I shall try my best to bear those two laws in mind when I speak.
The problems I have chosen to raise in the debate affect the port and town of Fleetwood in my constituency. They are very much the problems of success and not of failure. Not many years ago many people said that the port of Fleetwood was finished and that Fleetwood as a town was on the way down. That is quite contrary to what has happened over the past few years. From about 1970 onwards the port and the town have flourished.
The change started with the reinstatement of the Isle of Man steamer service for summer travellers to the Isle of Man from the port. Then we had the expansion of industry on the town's estate, after the adoption of Fylde as an assisted area, and next we had remarkable development in the port itself.
First, we had the new Jubilee Quay for the inshore fishermen, and in the space of one year alone the inshore fleet doubled. We have also embarked on the modernisation of the fish dock. Work on that has just about started, and it will mean a much better dock for the use of the fishing fleet in future.
In addition, we have had a development of the dry cargo side of Fleetwood, which has been remarkable. I pay tribute
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to the British Transport Docks Board, and particularly to our local manager, who has played such a great part in the operation. From being a port that handled comparatively little dry cargo, we are now handling more and more through lift-off facilities. Roll-on, roll-off facilities are being made available. A Private Bill has come to Parliament from the board to provide even more facilities in the port. This is very good for the town and the port of Fleetwood. We have very good labour relations.
I am pleased that the board has made an effort to develop our port, but it produces problems, as success often does. One problem is the flow of traffic to the port, which has to come through some winding country lanes from the present M6. When the Blackpool spur of the M6 is built, it will still have to come through country lanes. The part I am concerned with is a stretch between the end of Amounderness Way and the boundaries of Fleetwood.
I have been given figures by the board of the flow of traffic along the stretch of road which goes through Thornton Cleveleys in my constituency, quite a heavily populated area. In 1973 the estimated number of road vehicle journeys—vehicles using the port, and not light traffic—was 61,630. This year that figure will increase to about 73,000. but I am told that in 1975—and this is a revised figure I received over the weekend—the estimated number of road vehicle journeys is about 200,000.
All this is in addition to the normal traffic to the port, which includes holiday traffic going to Fleetwood itself and to Thornton Cleveleys—both holiday resorts —private motorists going to the Isle of Man steamer and other heavy vehicles which use the same route for the factories that ICI has in the area and for the power station. It is true that we have a railway system for freight which still goes to part of Fleetwood but it does not go into the port itself. It stops short at the power station and the ICI sidings. One can see little hope of relief in that respect.
The impact upon Thornton Cleveleys already is quite intense. I want to quote what the local newspaper had to say about the stretch of the Fleetwood Road which is now used by these heavy vehicles. I travel along it frequently and

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it looks something like the Menin Road in the First World War—as though it had been shelled—because, in addition to all the problems of traffic, we have had the construction of a major sewerage scheme and a drainage scheme, and the road is upset.
The Thornton Cleveleys Times of 22nd March had the headline:
"'It's Murder', says traffic sufferers"
and it went on:
"Walls and chimneys cracking, tins of food jumping off shop shelves, beds shaking and pictures moving on the walls were just a few complaints from up-in-arms residents this week complaining about heavy traffic using the Fleetwood Road, Thornton."
One of my constituents said that it was almost like living in a house with a poltergeist, because everything was always on the move.
There is also the problem of safety—of heavy vehicles using a narrow road lined for the most part on both sides with houses.
The Minister is probably well aware of this problem because it has been put to the Ministry before. What is needed most of all to effect relief is the completion of the Thornton Cleveleys bypass, which would take traffic from the end of Amounderness Way and take it through Copse Road, Fleetwood. This would have an immediate effect if it were constructed as quickly as possible. I have been in touch with the Lancashire County Council—the road authority—and with the new Wyre District Council, which was inaugurated today, and to which I wish the best of good will. Both councils give very high priority to this project.
I ask the Minister two specic questions: first, has there been any delay in letting the Lancashire County Council know the full material it needs for its transport policies and programmes, and, secondly, when will it be possible for the Department to let the county council know how much money it will have available?—because I understand that in this case these priorities are set more by the Lancashire County Council than by the Department itself.
The key factor for the county council is: when will it know how much money is available so that it can allocate priority to this road? The needs for this road are incontestable. They are two-
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fold. First, there is the need to look after the safety of the people using the road at the moment and to look after the lives of the people living along the road, in the environmental sense, and, secondly, the need for new communications, especially with the new spur of the M6, which is essential if the port of Fleetwood is to develop, remain properous, and become more prosperous. I press the urgency of these items on the Minister and his Department. I urge them to do all they can to give us this relief road as soon as possible.
I now turn to some other problems of the port which are not the direct responsibility of the hon. Member—I have informed him of these—but which he could well pass on particularly to his right hon. Friend the Minister of Agri. culture, Fisheries and Food.
The Fleetwood fishing fleet is under some difficulty in that it must be kept fully modernised. It is easy for ports that do not have modernised fishing fleets to fall by the wayside. For example, Milford Haven is now virtually finished as a fishing port. That leaves Fleetwood as the major deep-sea port on the west of the country, including Wales and Scotland.
Fleetwood has a strong desire to keep its fishing fleet up to date. It has that desire for more than one reason. Deep-sea fishing is a highly dangerous, skilled and arduous job. If any job was referable as a special case involving hardship at work, the trawlermen's job would surely come into that category. Fleetwood wants to send its men to sea in the best equipped ships that it is possible to have. I ask that consideration be given to reinstating the grant which was obtainable for the building of fishing vessels.
At the same time I ask that consideration be given to the impact of oil fuel costs on the fishing industry. If it were possible to get back such costs from the market there would be little or no problem, but I doubt whether that is possible. I am not asking specifically for the refunding of such costs, but I ask that the matter be kept under surveillance. At one time there was an operational subsidy, but that is no longer in force. Fuel costs are having an impact on the fishing industry, and I ask that the matter be kept under review. Unless there is a proper return from the

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market or some sort of subsidy it is possible that fishing will become unprofitable. That would be a dangerous situation.
Finally, I draw attention to the problem of fishing limits. Fleetwood vessels are still fishing around Iceland, but that fishing will come to an end. The Law of the Sea Conference at Caracas will take place this year, and many countries are saying that they are determined to obtain wider fishing limits. If that is so, the fishermen of Fleetwood will want their share of any new limits that the conference hands out. We must have fishing grounds to enable the fleet to live.
The fishermen have suggested a limit of 200 miles. If other countries get wider limits, that is what Fleetwood will want. We shall have to bear in mind the points of view which are expressed at the conference, but if other countries leave the conference with wider limits there will be a tremendous reaction in this country right around the coast if similar limits are not granted to our fishermen.
I have referred to some of the problems in the port and town of Fleetwood. Happily, they are problems which arise from success and not from failure.
11.44 p.m.
The Under-Secretary of State for the Environment (Mr. Neil Carmichael): I am pleased to be able to welcome what the hon. Member for North Fylde (Mr. Clegg) called his maiden speech. We all know that it is a maiden speech after an enforced silence as a result of his duties as a Government Whip.
I sympathised with the hon. Gentleman to some extent when he said that he listened for many weary hours to Adjournment debates as my Department tends to get a larger share of Adjournment debates than most Departments. Certainly you, Mr. Deputy Speaker, must be one of the best informed of hon. Members. Adjournment debates are certainly good for an Under-Secretary of State's geography.
The hon. Gentleman put the case for his constituency most succinctly. In the short time at his disposal, he brought out perhaps more points than I shall be able to deal with. However, he can be assured
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that a note has been taken of all the points he raised.
Before I deal with the main points raised by the hon. Gentleman, I should like to say a few words about the port of Fleetwood itself—perhaps from a slightly different angle from that outlined by the hon. Gentleman, although I agree with him that Fleetwood is a fast growing and expanding port. In 1973 the total traffic handled at Fleetwood was 497,000 tonnes. This compares with 335,000 tonnes in 1972, an increase of little less than 50 per cent. Future prospective developments at the port suggest that even higher levels of traffic will be achieved when these are completed and in use.
With a view in particular to the Irish traffic, the British Transport Docks Board is currently constructing a new roll-on, roll-off berth at the port on the south side of, and near to, the existing jetties in Fleetwood harbour. Fleetwood has been selected for new services because of the freedom for vessels to operate on timed sailings, free of restrictions arising from depths of water or the need to enter enclosed docks. Furthermore, this year work has begun on a scheme for the renewal and modernisation of fish landing and processing facilities at the fish market. Included in the scheme is the reconstruction of the east entrance jetty. This is a much-needed project, and, in view of its importance to the fishing industry, the Government are giving a 60 per cent. grant towards the cost under the provisions of the Fisheries Act 1955.
Turning to the future, the board is currently promoting in Parliament a Private Bill in which powers are being sought for the construction of three roll-on, roll-off berths, reclamation of tidal land and road access on the eastern side of the tidal harbour. These berths will also be available to serve the Irish traffic. It will be clear from what I have said that the board regards the port of Fleetwood as having the potential for considerable expansion.
Having set the scene so far as the port is concerned, I will now try to deal with the main points raised by the hon. Member. As for the problems of road access to Fleetwood, perhaps I should first sketch the general background to the road programme which the present Government have inherited. Its broad

1061
aims are to promote growth and secure environmental improvements by linking the important ports and airports with the major centres of population and the less prosperous regions and by diverting long-distance traffic, particularly heavy goods vehicles, from a large number of towns and villages, including historic towns. A number of responsibilities are laid down in the programme we inherited.
In general, these broad objectives have the support of the new Government, but the programme will have to reflect fully the Secretary of State's views on what is now the correct order of priorities. Some of the options being considered are whether resources should be concentrated on building a network of routes which would be particularly suitable for use by heavier lorries and whether road building standards should be revised to reflect more closely existing needs.
The economic importance of links to the ports must not be forgotten, but it is unrealistic to expect that funds will allow the provision of direct trunk access links to all ports. Most of us are probably ambivalent towards heavy lorries we welcome the cheaper distribution of goods which larger loads make possible, but we want this without having to pay the price of sharing our roads with them, not least in the built-up areas in which we live. For some this is indeed a heavy burden, and I understand and sympathise with the feelings of those whose daily lives are disrupted by the movement of heavy vehicles. There is nothing between the hon. Member and myself on that score. This problem arises in many parts of the country, although naturally the hon. Gentleman is much more concerned about it in his part. I have great sympathy with what was said in the newspaper from which he read.
The remedy appears to be deceptively simply. We should build other roads on to which very large vehicles could be diverted. But such measures are essentially long term, and each proposal for bypassing built-up areas and thus providing relief for those living in them has to be carefully weighed and balanced against the resources available for such works.
Let me now turn to the particular problem with which the hon. Member
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is concerned. The port of Fleetwood is about 20 miles from the major national route network in the shape of the M6. Moreover, the completion of the construction of the M55 about one year from now will bring the port to within about 10 miles of the network. So, in general, Fleetwood will not be ill-served by the national road network. The problem is a much more local one and lies in the principal road system covering that intervening 10 miles.
But this part of the problem has not been neglected. The Lancashire County Council, as highway authority, has improved the A585 between Kirkham and Singleton. It has provided two sections of a Thornton Cleveleys bypass, one to to the south, from Skippool to the outskirts of Thornton Cleveleys, and one in Fleetwood itself. There is no disagreement about the need to link these two sections. This would clearly benefit both commercial transport and the harassed citizens along the intervening route which the A585 and B5268 at present provide for want of any other.
The decision how soon this can be done will rest very much with the new Lancashire County Council. I should mislead the hon. Member if I were to lead him to expect the road to be built during 1974–75. I cannot be sure how long the various statutory processes would take before the county council could start work. But certainly no orders are yet before the Department and at best some months would elapse before contracts could possibly be let, even were we able to approve them on financial grounds in the present economic climate. The scheme had not reached the firm programme even under the previous administration, and I should be surprised if we were now able to accept it as an additional commitment.
We have to face the prospect, therefore, that this work will fall to be considered by the new Lancashire County Council for such priority as it can give it in its transportation policy and programme and will come within the new transport supplementary grant arrangements allied to the rate support grant. The old Lancashire County Council was, of course, fully aware of the situation and concerned to do the work as soon as possible, but the hon. Member will understand that I cannot foresee what

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decision the present council will come to after it has weighed this scheme against all the other demands facing it. One of the hon. Gentleman's purposes in raising the matter tonight was to impress on the new county council the importance of the scheme, which he has powerfully done.
Turning now to the question of the railways, the immediate obstacle to securing any transfer to rail is that the rail connection to the docks was removed in 1970 when Fleetwood passenger station was closed because there was so little traffic. It is no use having rail facilities if they are not used. I understand that the British Railways Board has not been asked to reinstate rail services, and it would need to be sure of an economic return before re-connecting. Nearby ports—Heysham, which is BR-owned, and Preston—are already rail connected.
On the general question of transfer of freight from road to rail, the Government are concerned to see that the rail network is used to full advantage. The Government are considering how suitable traffics can best be transferred, without an unnecessary increase in transport costs. Rail is best suited for bulk trainload traffics over fairly long distances such as specialised merry-go-round, coal, iron, and steel trains, and not small consignments of general merchandise requiring marshalling and door-to-door delivery. The majority of loads in this country are short distance and tend to be small.
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If I may give the hon. Gentleman some statistics, the road network is 200,000 miles and the rail network is 11,500 miles. But last year rail carried less than 10 per cent. of the freight tonnage. The average haul in the country of both road and rail is about 40 miles. The lorry average is about 30 miles and the rail average about 80 miles. The scope for transfer to rail is, therefore, small. The general policy is that road and rail should tend to be complementary and not competitive.
I hope that what I have said about the role of the county council clears up some of the questions raised by the hon. Gentleman on roads and access.
The hon. Gentleman spoke about fishing and was kind enough to say that he did not expect me to answer the questions he asked. The fishing industry is primarily a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food. I will bring the hon. Gentleman's questions to his attention and ask him to comment on them directly to the hon. Gentleman.
The job of the trawl fishermen ranks amongst the most arduous, and I have some experience of this. I will bring to my right hon. Friend's attention the question of oil fuel costs in the fishing industry and also the matter of fishing limits, which are beyond the remit of my Department. I am sure that the hon. Gentleman will receive a direct reply from my right hon. Friend.
Question put and agreed to.
Adjourned accordingly at three minutes to Twelve o'clock.