HC Deb 06 February 1974 vol 868 cc1224-342

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

3.42 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

On 17th December I announced to the House reductions in public expenditure which will cut back demand in the coming financial year by some £1,200 million. That was in addition to the reimposition of hire-purchase and other credit controls. In the debate which followed, it was clear that there were some who underestimated the magnitude of the action which we had taken. In fact, the action which I announced on 17th December, in terms of demand, was more, in either absolute or relative terms, than in any other previous set of measures introduced by any post-war Chancellor. It was, as the Prime Minister pointed out, equivalent in demand terms to a doubling of the rate of VAT from 10 per cent. to 20 per cent., or to an increase of 7p in all the rates of income tax.

Since those measures were announced, the oil-consuming world has suffered a further massive increase in the price of crude oil, which has increased fourfold since the autumn of last year. As I told the House the other day, the increase in oil prices since the autumn will add about £2,000 million to our import bill As the right hon. Member for Leeds, East (Mr. Healey) has pointed out, there will be some offsets to this figure in terms of increased exports, but the fact remains that the staggering increase in the price of oil over these past few months poses an entirely new problem not just for the United Kingdom but for the world as a whole.

It is right, therefore, that I should start by dealing with the oil deficit, and then with the non-oil deficit, before coming back to the domestic economy and the dispute in the mining industry.

The price of oil has risen so sharply that the oil producers will find their overseas income rising considerably faster than their ability to spend it. The oil producers as a whole will, therefore, move into a massive surplus and the rest of the world will face an equivalent massive deficit. It is, as I said at Question Time the other day, now generally agreed among finance Ministers—and I think there is no dispute on the point between the two Front Benches—that the old orthodox solutions for dealing with payments imbalances cannot provide a practicable answer.

Therefore, the first conclusion is that the answer to the oil deficit does not lie in competitive deflation. The result of such policies would merely be to slow down the economies of the industrialised world, to create mass unemployment and, in the end, would still not achieve the desired result in balance of payments terms. The second conclusion is that the financing of the deficits of the oil consuming countries is not merely a matter for the individual countries concerned but is in large measure a matter for collective co-operative action.

Here the IMF has taken a lead. Dr. Witteveen, the managing-director of the IMF, proposed at the meeting in Rome of the Committee of Twenty that the fund should add a new financial facility to the existing facilities to help countries to follow consistent adjustment policies. He had in mind that the fund should provide credits related to the specific problem of coping with the higher costs of oil, and the details were set out in the communiqué which followed that meeting. I would only comment that I have told Dr. Witteveen that he can rely on the United Kingdom giving full backing to treating his proposals as a matter of great urgency.

The third conclusion to be drawn from the increased price of oil concerns the developing countries. It is natural that each of us in the industrialised world should concentrate on the particular consequences for our own individual countries. However, unless something is done about the developing countries the situation which faces many of them is little short of tragic. Perhaps I may give a brief instance of that. It concerns the position of India. In the Committee of Twenty I sit next to Mr. Chavan, the Indian Finance Minister, and he mentioned two facts. The first is that the increase in oil prices alone will this year cancel out 50 per cent. of India's export earnings. The second fact is that over 80 per cent. of India's oil imports are for essential purposes.

Taking the developing world as a whole, I believe the magnitude of the problem can be seen from the fact that the increase in oil prices for those countries will equal the whole of the estimated aid, both private and official. No one in this House will disagree when I say that surely there is here an additional responsibility on the oil-producing countries which find themselves with enormously increased financial resources.

I now turn from the problem of the oil deficit which in varying degrees is a problem common to the whole of the oil- consuming world, to the prospective underlying or non-oil deficit of the United Kingdom. The cause of this is in part—

Mr. Denis Healey (Leeds, East)

Before the Chancellor moves on, will he give us his view about the argument that the increase in the oil prices falling on the United Kingdom will be tantamount to a tax and is bound to reduce demand by that amount? Or does he take the view that the threshold provisions of phase 3 will tend to cancel out that effect?

Mr. Barber

I shall deal later with the effect of the increased oil prices on demand.

I was saying that the cause of the non-oil deficit is in part the short-term adverse effects of the depreciation of sterling, but it is mainly due to the unprecedented increases in the world prices of food and raw materials. In the autumn before the increase in the price of oil, there was—and still is—reason to believe that our underlying position would improve during this year. But, given the substantial size of the deficit without oil, it was clear that some corrective action needed to be taken to deal with the situation, and it was for this reason, among others, that I decided to introduce the measures of 17th December.

The action of the National Union of Mineworkers has already ensured that the non-oil deficit will be particularly large in the early months of this year. However, quite apart from that, it would be wrong, as the right hon. Member for Leeds, East has said, to aim at eliminating it altogether in a single year. I have no doubt that the necessary financing arrangements could be made this year. For example, we shall continue with the policy of public sector borrowing abroad. As I have said on several occasions in the House and outside, we have a sizeable borrowing capacity with the IMF and I would not hesitate to use it if necessary.

In spite of all the problems which have been created since the first announcement of the increased oil prices on 16th October, the foreign exchange markets have by and large reacted in an orderly way, and, whatever the disadvantages of floating, it will surely be generally agreed that there would have been far more problems if we had been operating with a fixed exchange rate. While it is natural that after the long post-war era of fixed exchange rates attention should still be paid to the sterling-dollar rate, it is no longer the best measure of the international value of sterling. It is now widely accepted that one has to have regard also to the cross rates between sterling and the other main currencies and to take account of the weighted average movements of sterling against the main currencies involved in our trade. It is a fact which any objective observer will welcome that, in spite of the oil problems and in spite of the industrial disruption with which we have had to cope, both of them since the autumn of last year, the effective exchange rate of sterling is today about the same as it was last autumn.

Since the debate which followed the 17th December measures, the price of crude oil has been raised even further; it is now nearly four times higher than it was in October. But if this staggering increase in the price of oil is a new burden which the nation has to bear, the prospects for the supply of oil have now improved. Over Christmas the Arab oil States reversed their progressive reductions in supply, bringing their January output target back from 75 per cent. to 85 per cent. of the September levels. In mid-January Saudi Arabia promised us additional supplies equivalent to 10 per cent. of United Kingdom consumption, and a major agreement was concluded with the Shah of Tran. Incidentally, it now seems a far cry from that Sunday in December when the right hon. Member for Leeds, East made his irresponsible and notable contribution to the petrol-pump panic by declaring to the country on the radio I think petrol rationing is now inevitable. I hope that the right hon. Gentleman will now give credit to my right hon. Friend the Secretary of State for Trade and Industry for his stand in refusing to succumb to the Opposition's demand for panic action.

There would now be only comparatively minor problems over energy for industry if it were not for the action of the NUM, which in its turn has made it necessary, in order to conserve coal stocks, to put most of British industry on a three-day week. I am sure that the whole House will want to pay tribute to the most encouraging co-operation which has been shown by both sides of industry. In order to maximise output both in the national interest and very properly for reasons of self-interest, trade unionists and employers generally have been ready to abandon practices which have hitherto tended to hold back maximum output. The common effort and the ingenuity of management and employees has been remarkable.

I attended this morning, as chairman, the meeting of the National Economic Development Council. I mentioned this again at that meeting. There was no doubt about it among the three parties on that council.

I hope that the whole House is grateful for the co-operation which has been shown throughout industry in these difficult times. The result is that even on a three-day working week the output of industry affected by the curtailment has been running at an average of about 70 per cent. of normal output.

Mr. Sydney Bidwell (Southall)

Does the Chancellor recognise that a considerable number of people who are normally Conservative supporters are tremendously puzzled about the existing situation, which seems to suppose that the Government, and the Chancellor in particular, do not have it in mind that because of the international oil situation and extended prices, mining labour has been put at a new premium? People are totally puzzled by the Government's failure to come to terms with that fact.

Mr. Barber

I mentioned at the outset of my speech—for the obvious reason that I wanted people such as the hon. Gentleman to know—the sequence in which I would deal with these matters. I shall come to the miners' dispute later. I should like to deal with it comprehensively.

I was saying that with the curtailment of power supplies industry has been maintaining outputs at about 70 per cent. of normal. But inevitably there has been a considerable increase in unemployment, an increase in the number of temporarily stopped workers, and a marked decrease in the number of unfilled vacancies.

All this means hardship for the working population. The NUM must bear the gravest responsibility.—[Interruption.] Whatever the Opposition may say, it is now accepted by the country that it would have been quite wrong if the Government had not taken the action which they took to conserve coal stocks. Concerning that, we have cause to be grateful to the right hon. Member for Bristol, South-East (Mr. Benn) for finally, and inadvertently, establishing that fact beyond doubt.

Obviously, the action of the NUM means that some industrialists will take a fresh look at their investment activities, and any cut-back will inevitably have an adverse effect on both working conditions and job opportunities. But here again, it is a fact that several large companies have announced very recently that they are pushing ahead with their investment plans which are directed to the longer term and are, therefore, unlikely to be affected by the present industrial disruption.

Although the increased price of oil and the many effects of the cut in coal production are bound to affect our standard of living, the overseas demand for our goods and the need to replenish stocks at home will be such that, when we have got over the present industrial disruption, output will again rise rapidly.

Concerning the forthcoming Budget, any provisional assessment at this stage must take account of a number of conflicting considerations.

Mr. A. W. Stallard (St. Pancras, North)

It will not be the right hon. Gentleman's Budget.

Mr. Barber

It is generally agreed—certainly on the two Front Benches—that we should borrow to cover the cost of the higher oil prices. Inevitably we shall also run some balance-of-payments deficit apart from oil; and we shall also, as the right hon. Member for Leeds, East agrees, need to borrow to cover part of that.

It is obviously of particular importance in the difficult days which lie ahead to maintain confidence in sterling. A depreciation of the effective rate would only make the problems more difficult. Our ability to borrow abroad the money that we need will depend crucially on confidence, and for that we should be seen to be making strong efforts to reduce our non-oil deficit.

On the other hand, action which might increase the risk of a world recession must be avoided. I have already referred to the consensus among Finance Ministers about the approach to the problems of deficits caused by the rise in oil prices.

Concerning the domestic economy and the steps which might be taken to ensure an adequate improvement in our non-oil deficit, we must bear in mind the substantial action to reduce demand which I took in December and which is now beginning to work through the economy. The effect of this has to be taken into account, together with the deflationary effect of the higher prices that United Kingdom consumers will have to pay for oil, which was referred to a moment ago by the right hon. Member for Leeds, East. Some capital investment plans are bound to be held back by the industrial dislocation. Also, one is bound to have in mind the fact that as a result of that dislocation unemployment is likely to rise. So for those reasons one would be reluctant to depress domestic demand.

But also to be included in any assessment must be this fact: already the three-day working week has reduced production by more than it has reduced personal expenditure. That is partly because of payments for the guaranteed week, partly because of payments of unemployment and other social benefits, and partly because in times of difficulty, such as these, families tend to draw on their savings. That is why, as I say, the three-day working week has reduced production by more than it has reduced personal expenditure.

As the right hon. Member for Bristol, South-East has done us the courtesy of turning up here today, I should like to say that as usual he was quite wrong—as the leader of his party pointed out—in suggesting that the effect was the other way round.

What this means is that the longer the industrial disruption, the more we shall be drawing down not only our stocks of coal but also our stocks of goods of all sorts. We must, therefore, expect that for some months, as I have already warned, there will be bad trade figures as our exports are damaged and our imports increased. All these serious, difficult, conflicting and, in part, imponderable considerations must be weighed up before reaching any judgment about the Budget.

The right hon. Member for Leeds, East has been very forthright in recent weeks in telling us of the needs which he sees for increased taxation

Mr. Harry Ewing (Stirling and Falkirk Burghs) rose

Hon. Members

Give way.

Mr. Barber

The right hon. Member for Leeds, East has proposed an increase in income tax. He has proposed special taxes on consumer durables like TV sets and washing machines. He has suggested an increased car tax, and possibly an increase in the tobacco duty. Only a week ago he suggested a payroll tax. As he has made it clear that a Labour Government would also keep VAT, we are entitled to ask whether this means a reimposition of the old SET on top of the existing VAT.

But depending on the way in which the situation develops, I certainly do not rule out the possibility of increased taxation. However, as the right hon. Gentleman has been so specific and so forthcoming in his advocacy of increasing both direct and indirect taxation, it will be interesting to hear from him this afternoon whether that still remains his view or whether he agrees with many of the economic commentators whose general view now is that at present a heavy increase in taxation might only add to unemployment and aggravate our economic difficulties.

It may be that what the Opposition have in mind is the increase in taxation which would undoubtedly be necessary if they were to get their way and to abandon all control over incomes. As The Times made clear the other day: if Britain elected a Government which had abandoned incomes policy … deflation would be absolutely necessary. It would have to be large enough to dispose of the non-oil element in the balance of payments deficit, and to make good the reduction of inflation consequent on the partial success of incomes policy so far … Without an incomes policy, any government would have to deflate at least to the point at which long-term unemployment was back at the million mark. Given the inflation that was still running when unemployment last touched a million, unemployment might rise to a level much higher than that, and for a long time. That is what the policy of the Labour Party would mean for ordinary people.

Mr. Robert Sheldon (Ashton-under-Lyne)

A few moments ago, the right hon. Gentleman was saying that, as a result of the phase 3 policy, which led to the dispute with the miners, we now have a situation in which the fall in production is greater than the fall in money incomes. Is not that the definition of inflation? Have not the right hon. Gentleman's policies directly led to increased inflation?

Mr. Barber

The hon. Gentleman has made a valid point. I am in agreement with him on the point that there is inevitably a differential between the fall in output and the fall in personal expenditure that tends to operate on demand in one way, but there are also other factors, such as increased oil prices and the action announced on 17th December, which tend to operate in the other way. Therefore, it is right at this time, if one is trying to make a rational assessment of the situation—[Interruption.]—I understood that the Opposition wished to have a debate on the economic and industrial situation, and I am giving the House the best assessment I can of the situation as it is.

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

Could my right hon. Friend explain why the increase in oil prices is deflationary but the increase in all other international prices has apparently been inflationary?

Mr. Barber

The point is simple. As far as the oil prices are concerned, the consequence of the staggering increase in oil prices at present will be to put up prices in this country. The consequence of that will be to depress consumer demand. The point I am making—with which I am sure my right hon. Friend the Member for Wolverhampton, Southwest (Mr. Powell) will agree from his own experience at the Treasury—is that these highly relevant factors have to be taken into account in deciding and forming an assessment of the conjuncture at any particular time.

Mr. Healey

Will the right hon. Gentleman now answer the point I made earlier? Under the threshold provisions of the pay code, the Government are obligated to compensate working people for increases in the cost of living above 7 per cent. Therefore, if oil price increases come at a time when the cost of living has already risen by about 7 per cent. they will be met by increases in pay. Therefore the oil price increases will not be deflationary?

Mr. Barber

It depends entirely on the threshold. If the threshold is triggered, this is bound to that extent to increase demand because of the increase in pay as a result of the policies we put forward. I would have thought that that was understood and accepted by everyone.

I was making the point that if all incomes policy were abandoned, as I understand is proposed by the Opposition, a much bigger dose of deflation would be required than would otherwise have been the case, with all the consequences of that for ordinary working people. At this time of controversy, it is as well to remind ourselves that all the main political parties in Britain recognise that the main threat to living standards, to economic growth and stability, is inflation, and indeed all those who care about social justice and stability should be in the forefront of the battle against rising prices, because inflation hits hardest the poorest and the weakest, the pensioners, the sick, the disabled, and all those who have not got big battalions to fight for them. Other countries have learned the hard way how inflation can undermine the democratic process itself.

Therefore, with the prospect which faced us over a year ago, we introduced a policy for the statutory control of pay and prices. What we have attempted to do is lay down a fair and sensible method of deciding the maximum increase in incomes which the nation can afford. The aim of all three stages of our counter-inflation policy has been to give particular help to the low paid, and it is accepted by the TUC that this is what we have done, whatever right hon. and hon. Members opposite may say. We have provided the biggest proportion of pay increases for the low paid. We have also encouraged progress towards equal pay, and it is also a fact that we have given the old-age pensioners a far better deal than they ever had under the last Government.

To a considerable extent, since 1972 inflation has been the consequence of costs and prices imported from abroad and over which we have no control, but there is also an element of inflation over which we as a nation do have some control and we shall succeed—

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

My right hon. Friend has just said that the increase in prices of imported foodstuffs and goods in part has been the cause of our recent inflation. Earlier he said that the increase in oil prices would be deflationary. Why is that different from the other increases in prices?

Mr. Barber

Perhaps I can explain once again to my hon. Friend. As far as increasing prices are concerned, obviously if prices of imported goods go up, in that sense it is bound to add to inflation. On the other hand, it is also perfectly true and is self-evident that when prices go up it also tends to depress demand in the country and tends to depress output.—[HON. MEMBERS: "Oh."] It is a policy—[Interruption.]— such as—

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. I hope that the House of Commons will live up to its reputation of being a fair place where all hon. Members, whatever the situation, get a fair hearing. I am saying this now because it may well get hotter still later on—so perhaps I had better say it now.

Mr. Barber

The Opposition's policy, which would apply only to prices and profits and would duck completely the problem of wage and salary costs, would be bound to fail because it is sheer illusion to pretend that prices can be controlled without controls over pay. The Opposition argue that their policy would avoid the difficult problem of persuading working people to accept moderation and restraint in the growth of incomes, but they are silent on the consequence—namely, that this would do virtually nothing to combat the underlying problem of escalating costs or, whatever the Opposition may say to the contrary, to combat the problem of rising prices.

I turn now to the dispute in the mining industry. I want first to remind the House of the course of events over recent weeks. Just under a month ago, at a meeting of the National Economic Development Council, the TUC representatives put forward a proposal. It was that if the Government were prepared to make possible a settlement between the miners and the National Coal Board, the other unions … will not use that as an argument in negotiations for their own settlements. In our subsequent meetings at No. 10 Downing Street, the TUC representatives stated that they regarded the miners as a unique case and that the TUC would not come back to Downing Street to seek special treatment for any other group.

We have recognised throughout—and the TUC accepts this—the significance of the TUC suggestion, its sincerity and genuineness. But we had to point out—and this was never disputed by the TUC—that other groups had the same sort of power as the miners to damage industry, to cause hardship and disrupt the life of the nation, and that there was nothing in the undertaking of the TUC to prevent such groups from following the example of the miners and using their own industrial power in support of excessive settlements.

Mr. Healey

Is the right hon. Gentleman aware that if there is one group of workers which has the same power as the miners to stop industry it is the electricity supply workers, and they accepted a settlement within phase 3 last week because, as their leader, Mr. Frank Chapple said, they wished to make it easier for the Government to allow the miners a settlement outside stage 3?

Mr. Barber

There are other groups, as the right hon. Gentleman knows. I will mention one in particular. I will not disclose in detail the conversation which we had across the table at No. 10 on this point, but if the right hon. Gentleman would like to inquire from the TUC —I am sure that my right hon. Friend the Prime Minister would have no objection—about the discussions we had on the railway settlement, which is still to come, I think he will find them significant.

The TUC, with complete frankness, agreed that there was nothing more that it could do by means of its undertaking to prevent that sort of thing from happening. Subsequent to that meeting and before the meeting of the NUM executive which had been called to discuss a ballot, my right hon. Friend the Prime Minister wrote to Mr. Gormley urging the executive carefully to consider once again the offer which had been made and also the other proposals. In particular, my right hon. Friend reminded Mr. Gormley that the Government had made it absolutely clear that we were ready, as soon as normal working was resumed, to start immediate talks with the National Coal Board and the NUM on the future of the mining industry, on improvements in pensions and provisions for health, and on the pay arrangements appropriate to the industry's future and its manpower requirements.

But the NUM was not prepared even to discuss any of those proposals with the Government. Instead it proceeded to a ballot of its members. It did so not on the offer which had been put forward, as had been done previously, but quite deliberately—and everyone knows the reason—it put the issue as that of strike action. [Interruption.] I hope that this will get some cheers from hon. Members opposite Mr. Scargill, president of the Yorkshire miners, put it frankly when he said: We have launched a massive campaign to shut down the bloody lot of the pits. That is how he put it. Will anyone cheer that?

Mr. Eric S. Heffer (Liverpool, Walton)rose

Mr. Eric Ogden (Liverpool, West Derby)rose

Mr. Barber

I have a lot more to say on this subject. On the same day on which that decision to go to a ballot was taken there was published the report on the problems of pay relativities which the Government had asked the Pay Board to prepare. We made that request in March last year. As soon as that report could be printed it was sent to the TUC and the CBI with an invitation to discuss it as soon as they were ready.

There then followed, as the House will recall, widespread suggestions that this report might offer a way of finding a solution to the miners' dispute. There was, in particular, the helpful approach of the Leader of the Opposition. In a letter to the Prime Minister of 29th January the right hon. Gentleman asked whether the Government are prepared—even as we have urged, while the miners' ballot is proceeding—to bring together as a matter of urgency and to consult all the parties relevant to the Relativities Report to ascertain whether they are prepared to agree "— I ask the House to note the following words— that the miners' claim should be urgently examined as an exceptional case, as envisaged in the Relativities Report? The Leader of the Opposition went on, equally helpfully, to ask whether the Government were prepared to use the report to build on the TUC proposal. It was apparent to the whole country that if the Government considered the Relativities Report offered a means of dealing with the miners' dispute, there would be a broad bipartisan approach to the grave situation with which the country was faced.

The next day the Prime Minister wrote to the TUC as follows: I am writing to you and the CBI to tell you that the Government accepts the principles of the Pay Board's report. The Prime Minister offered to set up the machinery as soon as the necessary consultations with the CBI and the TUC could be completed. It should be remembered that there was still a month to go before the operative date of a new settlement for the miners. My light hon. Friend suggested that if the mineworkers resumed normal working and accepted a settlement within stage 3 they could put their case for a relative improvement in their position forward for examination in accordance with the procedure described in the relativities report. All of this was in line with what everyone, except perhaps some Opposition Members, assumed to be the helpful approach of the Leader of the Opposition.

My right hon. Friend made it clear to the Leader of the Opposition—

Mr. Stanley Orme (Salford, West)

What about the TUC?

Mr. Barber

I will come to that in a moment. My right hon. Friend made it clear to the Leader of the Opposition that we saw no reason why the necessary procedure and machinery should not be agreed and brought into operation quickly, if necessary by appointing a body such as a Royal Commission to deal with this in the first instance. On 30th January there was a speech of considerable significance by Mr. Hugh Scanlon, who has been taking part in all our talks. He said that the trade union movement was ready to do its utmost to win a settlement of the miners' dispute with the aid of the relativities report. He continued: If this report "— that is the relativities report to which the Leader of the Opposition had been referring— can be used by either the Government or the Coal Board in discussions with the miners or if the TUC could assist in any way, and this results in an agreement acceptable to the miners and the Coal Board, it is something to which we would lend our most urgent and earnest endeavours. What could be clearer than that? Next, the reaction of the CBI. It informed us that it accepted the principles of the relativities report and was prepared to see its procedures used as a basis for considering the miners' claim. There remains on the Order Paper a motion standing in the name of the Leader of the Opposition and other members of the Shadow Cabinet which welcomes: the statement of the Vice-Chairman of the Pay Board indicating the means to a rapid settlement by invoking the Report on Relativities. My right hon. Friends and I still believe that the relativities report could provide a real solution to this difficult problem. It could enable us to make a rational assessment of the proper relative position of the miners and at the same time it could provide a means of ensuring that inflation is kept under control.

That was the basis on which we put our proposal to the TUC representatives at our meeting at 10 Downing Street on Monday. We asked them to accept this as the way to an honourable and legitimate settlement of the miners' dispute, which would build on the earlier TUC initiative. We talked with the TUC for four-and-a-half hours and I will tell the House why I found it one of the most disappointing meetings I have ever attended. I have been asked to deal with the reaction of the TUC.

Despite the views expressed by the Government, the Opposition and by almost every national newspaper that the Relativities Report might offer a way out of this most serious of problems, the TUC representatives said that because they would need more time before deciding whether to accept or reject the principles of the report, it followed that even if they were to accept the report in due course the relativities procedure could not be in operation sufficiently quickly in their view to provide a way out of the present dispute which would be acceptable to the NUM executive.

As if that were not enough, the TUC representatives also told us that they were unable to support the proposal that my right hon. Friend the Secretary of State for Employment should invite officers of the NUM to meet him before its executive meeting yesterday to explain to them the advantages of the possibility being offered of enabling the miners' claim for improvement in their relative position to be fully, objectively and thoroughly considered.

We must still hope that the TUC and the NUM, if only in the national interest, will have second thoughts about the use of the relativities procedure as has been so widely proposed. There are some who have suggested that the Leader of the Opposition is now back-tracking from the helpful suggestions that he previously made on this approach. If that were so, it would be irresponsible and despicable. I hope therefore that at the outset of the speech which is to be made by the right hon. Member for Leeds, East, we shall have clear reaffirmation that it remains the view of the Opposition, as of the Government and of every independent commentator, that the relativities procedure provides a sensible and rational means of dealing with the miners' dispute in a way which would be fair to them and which would maintain, in the long term, their relative position.

Mr. Heffer rose

Mr. Deputy Speaker

Mr. Heffer.

Mr. Ogden rose

Mr. Norman Atkinson (Tottenham)rose

Mr. Deputy Speaker

Order. I called Mr. Heffer. Will other hon. Members please remain seated? [Interruption.] Order. Let us have order, please Mr. Heffer.

Mr. Heffer

On a point of order, Mr. Deputy Speaker. Before I put my point to the Chancellor of the Exchequer, in order to stop confusion when hon. Members rise to intervene, could whoever has the floor indicate to whom he is giving way?

Mr. Barber

I am obliged. I am happy to give way to the hon. Member for Liverpool, West Derby (Mr. Ogden).

Mr. Ogden

Be it Eric I or Eric II, it is likely that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and I would say the same thing. Would it help the right hon. Gentleman in his disappointment if he had realised that the dispute with the miners has been going on for two-and-a-half months, during which time hosts of possible solutions have been passed to him from many quarters? Why is he so surprised when they come up with a possible solution at the eleventh hour the day before the strike ballot takes place—the sort of ballot which the Government were always seeking in their Industrial Relations Bill? Are they surprised when the miners say, "We have talked enough. We have been up enough blind alleys with the Government and will have nothing more to do with them"?

Mr. Barber

I think it was right that my right hon. Friend should respond to the suggestion made by the Leader of the Opposition at that time, and also to the suggestion made by many others, including Mr. Hugh Scanlon when he made his speech on the day on which my right hon. Friend the Prime Minister made his proposals.

Mr. Atkinson rose

Mr. Barber

No. I am not giving way again.

Several Hon. Members rose

Mr. Deputy Speaker

Order. If the right hon. Gentleman gives way, of course hon. Members may interject. If he makes it clear, however, that he does not wish to give way, hon. Members must remain seated.

Mr. Atkinson rose

Mr. Deputy Speaker

Order. The hon. Gentleman is a well-known parliamentarian. He knows the rules and understands that if the Chancellor does not give way I must order him to sit down. He must keep his seat. I am sure that he wishes to play fair.

Mr. Atkinson

The right hon. Gentleman posed some rhetorical questions which I am sure he now wishes a member of the Opposition to answer.

Mr. Deputy Speaker

Order. If the right hon. Gentleman wishes a member of the Opposition to answer he will so indicate.

Mr. Atkinson rose

Hon. Members

Name him.

Mr. Barber

I will help the hon. Gentleman, Mr. Deputy Speaker.

Mr. Atkinson rose

Mr. Deputy Speaker

Order. The hon. Gentleman is now going beyond the bounds, and he knows that he cannot do that. Unless the Chancellor gives way, he must keep his seat. I do not expect to have to tell him again.

Mr. Barber

I will answer my own rhetorical questions, Mr. Deputy Speaker. The next rhetorical question I shall put is: who has done best for the coal miners—the Labour Government or the Conservative Government? The fact is that over five years of Labour government the pay of the coal miners rose by an average of 1 per cent. a year faster than the cost of living. In the first three years of the Conservative Government their pay rose 5½ per cent. a year faster than the cost of living.

As Lord Robens has said, referring to the rundown of the coal industry in the 1960s: Mr. Wilson and the Labour Government of that day cannot absolve themselves from the very heavy responsibility of the present situation … that is why I think they have an obligation to do all they can to help the situation, to cool the situation, and not to stir it up.

Mr. Michael Stewart (Fulham)

On a point of order, Mr. Deputy Speaker. Is it not the usual practice in this House that speeches made by a noble Lord in another place are not quoted unless the noble Lord is a member of the Government—and even Lord Robens is not that yet.

Mr. Deputy Speaker

Speeches by noble Lords should not be quoted in full, but references may be made to them.

Mr. Barber

Instead of accepting that advice the Opposition have been doing all they can to stir up envy and hatred. That is true. They have steadfastly refused to encourage the miners to return to normal working and have instead been encouraging them to continue their industrial action. The result of their efforts can only have been to prolong the three day week and to intensify the inconvenience and hardship imposed on the British nation.

The real and most damaging condemnation of the Labour Party is that it has deliberately condoned and supported the industrial action of the miners in the hope that it would succeed in defeating the polices of Her Majesty's Government, and in the knowledge that the extremists in the NUM have been openly saying that their industrial action is designed to bring down the properly elected Government of this country.

So the issue at stake is whether our affairs are to be governed by the rule of reason, by the rule of Parliament and by the rule of democracy. The vast majority of people in Britain detest the alternative, which ultimately can only be chaos, anarchy and a totalitarian or Communist régime.

4.30 p.m.

Mr. Denis Healey (Leeds, East)

The House has listened to an extraordinary but not untypical speech from the Chancellor of the Exchequer. Right hon. and hon. Members may feel it appropriate that what may, according to the newspapers, be the last full debate in the present Parliament should be opened by the first grave digger of the present administration.

Let me start with something fairly un-controversial. I agree with a great deal that the Chancellor said at the beginning of his speech about the implications of the oil crisis for the behaviour of the consumer countries. However, he made two points on which I must comment now. First, he said, rightly, that it would be very damaging to the nation's interests to allow sterling to fall any further. Secondly, he said that if we are not to cover the whole of our non-oil deficit this year—and I agree that it would be a mistake to seek to cover it all this year—we shall need a good deal of help and understanding from our friends abroad.

What my hon. Friends and many hon. Members opposite find it difficult to understand is that in a situation in which, for economic reasons, we are likely to depend so much on financial and economic assistance from our foreign friends the Government should have gone out of their way to antagonise all those to whom we should first turn for help. Our relations with the United States have not been so bad at any time since Suez, and more evidence of their deterioration appear every day. Our relations with all the Western European countries except France are almost equally cold. Indeed, the only friends the Government seem to have in the world at present are to be found in the Middle East countries. Some of us find it surprising, if not shocking, that a Prime Minister who first made his name as Chief Whip of a Conservative Government drumming up support for the Suez operation should end his political career begging the Arabs for baksheesh.

Mr. Russell Kerr (Feltham)

Nice one, Denis.

Mr. Healey

However, the Chancellor of the Exchequer did one thing which was quite unexpected and, I think, unprecedented. He enunciated a new economic principle which startled many of his hon. and right hon. Friends as much as it startled us, namely, that the best way to reduce inflation is to increase prices. I am afraid that his tortured and painful efforts to explain why that was so had no effect whatever on the House. I shall return later to that point.

Throughout the Chancellor's tenure of his very high office, he has preferred popularity inside his own party as a smart political operator to the solid reputation which he might have gained by building on the firm foundations left to him by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). We all agree that the Chancellor is very quick on his feet; he can spin round from back to front faster than anyone. But the staggering thing in his behaviour over the past 3½ years has been his inconsistency. Throughout his tenure of office his economic policy has been neither firm nor fair.

The right hon. Gentleman started by renouncing altogether responsibility for controlling the economy and left it all to the struggle in the market place between capital and labour, subject only to the laws of supply and demand. That led to over 1 million unemployed within 18 months, the collapse of economic growth and investment in this country, soaring prices, and the devaluation of the pound. So in the middle of 1972 he decided to repeal the laws of supply and demand in the Counter-Inflation Bill. He decided that the Government should fix all wages by law and all prices except those which matter most—the prices of food and housing.

But throughout these reversals of the right hon. Gentleman's policy there was one constant theme, and that was an unremitting hostility to the trade union movement. During his "market" period, he sought, through the Industrial Relations Bill, to cripple the unions by destroying their power to negotiate. The result was that we lost more days in strikes in 1972 than in any year since the General Strike in 1926, and we had the biggest wage inflation since the war. Now the corpse of the Industrial Relations Act is rotting on a slab in the Department of Employment waiting for the next Labour Government to give it a decent burial.

During the right hon. Gentleman's second period of policy—the statutory control of prices and incomes—he tried to cripple the unions by withdrawing their right to negotiate. I do him this credit: it worked for a year because the unions saw the prospect of economic growth. Last year average earnings were kept down to the increase in the cost of living. But the operation of the right hon. Gentleman's incomes policy led to very serious distortions in the economy. Public industry lost labour to private industry; factories working on time rates lost labour to factories working on piece rates; large firms lost labour to small firms which were less carefully monitored by the Pay Board; people employed in industry lost out to the self-employed, particularly those working on the lump in the building industry; and, as a generalisation, manufacturing industry lost labour to the service industries where, again, the operation of the Pay Code was less easily controlled.

But the growth which led to a degree of reluctant acquiescence in the policy by the unions has turned out to be largely an illusion. It is true that there was a spurt in growth between the end of 1972 and the beginning of 1973, but we now know that that was achieved almost entirely by taking up the slack created by the 1 million unemployed in 1971 and 1972. In the second half of last year the annual rate of growth had fallen to 1 per cent. There were two reasons for that: first, growing shortages of skilled labour and materials in manufacturing industry; and, secondly, a 5 per cent. fall of productivity in the service industries which it is impossible to attribute to anything except the abolition of selective employment tax. If the Chancellor has another explanation for the fall of productivity in the service industries, we should like to know what it is.

Nevertheless, although growth was falling and the economy was overheating in many sectors, the Chancellor continued to pump demand into the economy when it was fully stretched through tax increases to the better-off, which sucked in imports and diverted exports to the home market. I defy the right hon. Gentleman to give any other explanation for the fact that at the end of last year the balance of payments deficit was running at nearly £2,500 million a year, that during 1973 we had a trade deficit with the industrial countries of the Common Market of over £1,000 million, and, worst of all, although the export industries had made heroic efforts to raise the volume of exports by 26.7 per cent. between the third and fourth quarters of last year, that the volume of imports rose nearly twice as much between the same quarters—by 47.9 per cent. The fact that devaluation was then bumping about between 18 and 20 per cent. turned this deficit in volume into a colossal deficit in money terms.

Those are the consequences of the policy followed by the Chancellor of the Exchequer in the last few years. The central problem was well defined by the Governor of the Bank of England in a notable speech on 15th January this year when he indicated that the non-oil deficit now represents 4 per cent. of our gross national product. We must during this year reduce it, though not—and here I agree with the Chancellor—eliminate it, and try to produce the investment which has consistently eluded the Government during their first three-and-a-half years of office. The result is that there will be less of the national output available for consumption in this country.

Economists knew these to be the facts well before the end of last year, but the sudden public recognition of the oil crisis presented the economic problem in a completely new dimension to public opinion. By the end of last year there was a general recognition by men and women throughout the country that we had once again been living beyond our means, that we faced a period—perhaps years—of substantial national sacrifice, and that the Government must give a lead to the people in two ways. On the one hand, they must take direct control of the resources available to the nation and use them so as to maximise growth and employment. On the other hand, as sacrifices are inevitable, the Government must redistribute income and wealth so that the burden of sacrifice is fairly shared.

The Chancellor rightly said that I had suggested that some tax increases are necessary. That is true. They are necessary to redistribute the burden of sacrifice, and the revenue from taxes on the better off and on less essential goods must be used to keep down the price of essential foodstuffs, housing and public transport. I am glad to say that an increasing number of the Chancellor's hon. Friends have come to this conclusion purely on an objective study of the nation's plight.

Although we all sense the public mood to be one of readiness to accept a lead and to make a sacrifice, the Chancellor threw away the most remarkable opportunity he has had since the Second World War. As I said on another occasion, the whole country was ready to put its shoulder to the wheel and the Chancellor simply took the wheel away.

Apart from long overdue restrictions on hire purchase—which, incidentally, were not extended to cover tax-free loan interest, which is an even greater source of inflation but which affects the rich whereas hire-purchase restrictions affect only the average man—the Chancellor put the whole burden of reduction of demand on cuts in public expenditure which were to fall late in the year and fall more heavily on the poorer parts of our community who make much greater use of public services than do the rich and which, incidentally, have a minimum direct impact on foreign exchange.

Nevertheless, the Chancellor recognised that cuts must come also in private consumption but, fearing loss of popularity—the loss of the only one of his achievements so far untouched, his reputation as the man who cut taxes—he made it clear by the extraordinary new principle which he enunciated this afternoon that he intended those cuts in private consumption to come from organising affairs so that in the coming year prices rise very much faster than do wages. That is the only basis on which his policy now rests. He wants to throw the whole burden of adjustment to the failure of his economic policy on the wage-earning section of the population.

I tell the Chancellor that this is not on. To begin with, the Chancellor cannot hope to achieve his objective without withdrawing from phase 3 and introducing a phase 4 of his incomes policy which has no threshold provisions and probably involves a wage freeze.

Mr. Barber

The single biggest change that puts up prices in this country is the increase in oil prices. Does the right hon. Gentleman agree with his right hon. Friend the Leader of the Opposition that the taxation on petrol should be cut?

Mr. Healey

I do not believe that the tax on petrol should be cut, nor does my right hon. Friend. The Chancellor is wrong in saying that the biggest single increase is the increase in oil prices. If one reads what has been said by various food manufacturers during the last few weeks, one can see that a colossal increase in prices is coming apart from the increase in oil prices, which, incidentally, will feed through in to the Index of Retail Prices long after the deterioration in our balance of payments which starts the moment that oil is landed at the new price.

As the Chancellor has asked me a question, perhaps he will answer this one. Will he give the House the assurance that he and his colleagues have no intention whatsoever of introducing a wage freeze or abolishing the threshold provisions of the phase 3 policy?

Mr. Barber

The answer is, "No, I cannot give such an assurance".

Mr. Healey

I was hoping during this afternoon to elicit some details of the Conservative Party's election policy, and I am glad that I am already beginning to succeed.

Besides failing to deal adequately with excessive demand in the economy, except through this callous, inhuman and impracticable policy of depressing wages below the increase in the cost of living, the Chancellor took no action to deal with the main constraint on growth in our manufacturing industry. He did nothing to deal with the shortages affecting growth and, most extraordinary of all, when the greatest shortage affecting British industry is of steel, he decided to cut investment in the steel industry as part of his public expenditure cuts. His right hon. Friend the Secretary of State for Trade and Industry, who is sitting in a natural dualism with him on the Front Bench, compounded this error by recently agreeing to pay the Shah of Persia in steel, for which British industry is crying out, in return for oil costing about twice the price of the equivalent amount of British coal.

That brings me to the immediate crisis which, as the President of the Confederation of British Industries told us yesterday, is as grave as that which faced us at the outbreak of the Second World War. The tragedy is that the crisis is wholly and completely unnecessary. At a time when Britain desperately needs more British coal, which is cheaper and which involves no balance of payments cost, at a time when the miners are streaming out of the pits because they are paid less than miners anywhere else in Europe except in Belgium—even less than they are in Spain—when miners are paid less than an 18-year-old typist can command in the City of London, and when miners can earn two or three times as much by working in private industry in the tin mines or the Thames tunnels, the Government decided on a fight to the finish with the British miners, because they saw their claim as an opportunity for exacting revenge for the humiliation which the miners inflicted on the Government in 1972.

The Government made it clear that they were determined to force the miners to accept a settlement which was determined months earlier in a Civil Service office by the detailed drafting of the phase 3 code, with no negotiation at all.

The Chancellor in his selective account of the course of negotiations between the Government and the National Coal Board did not point out the fact that the way in which the Government handled these negotiations will go down in history as a classic case of how not to negotiate—if "negotiate" is intended. The whole of the offer which the Government were prepared to make was slapped down on the table the moment the negotiations began. The Prime Minister was so uncertain of his ability to retain his resolution throughout the negotiations that, stage after stage, he deliberately removed from himself all possible room for flexibility or manoeuvre.

The Chancellor spoke a little about the relativities report. As I understand it—and I hope that the Secretary of State for Trade and Industry will tell us the facts a little later—the report should have been presented to the Government last September. And those of us who have read it, cannot for the life of us see why it was not. Nevertheless, I understand that it was available to the Secretary of State for Employment on the Saturday before it was published to the House. Yet when the TUC asked the Secretary of State for Employment for information about it, because it saw the report as a possible means of breaking the deadlock on the Monday, the right hon. Gentleman refused to discuss it. In the meantime the Secretary of State for Energy had contrived affairs in such a way as to provoke the miners into calling for a ballot.

On the Thursday, when the report was finally published, the Secretary of State for Employment went out of his way, in answer to a Question by the Opposition, to say that there was no possibility of using the report to break the present crisis. He said that it would have been quite improper to use a long-term affair of this nature to deal with an immediate industrial issue. In fact, at every stage where the Government have appeared to make some concession, they have made it in such a way that they have left no effective time for negotiation to take place.

Indeed, the Government, instead of negotiating, decided instead to attempt to turn public opinion against the miners by bringing in the three-day week. The Minister for Energy is still offering to solve the energy crisis by issues of luminous toothpaste and compulsory bingo. But the result of the three-day week has been a fall in output of between 20 and 30 per cent.—a fall which led the OECD to predict a 9.5 per cent. fall in British output for 1974 as a whole. I understand that it has already cost the economy £75 million a month because of the increase in the balance-of-payments deficit.

When the Government failed to swing the public against the miners through the imposition of the three-day week, they then told us that the three-day week was unnecessary after all. This provoked the miners—and the Government must have known this—to call for a ballot, a ballot which the Government had been asking them to call ever since the dispute began.

If the result of the ballot proves anything, it proves to the hilt that those who lead the British miners in the executive of the NUM are not just a handful of agitators but represent a larger majority of their membership than any political representative could ever claim to represent. The size of the vote was higher than we have had at any General Election, except one, since the Second World War. The size of the majority given to the leaders of the NUM was almost double that ever obtained by any British Prime Minister in history.

What the House and the country find difficult to accept is why the Government still refuse to allow negotiations on the only issue that is in dispute. I refer to the amount of money to be made available to the miners. It is true that the Government have offered to use the relativities procedure, but they have also made clear that there is no chance of this procedure producting a result for a long time and are not able in any way to predict the result. I cannot blame the miners for refusing to accept vague promises. After all, they are still waiting for the implementation of the seven-hour day promised to them by the Sankey Commission in 1919.

There is one aspect of the dispute which is widely misunderstood in the country and which The Times newspaper has got quite wrong in its editorial this morning. To settle outside the provisions of the phase 3 code would not be contrary to the counter-inflation policy. When the Secretary of State for Employment in his first appearance in the House after his appointment referred to the possibility of settling within the counter-inflation policy rather than within the limits of phase 3, many of us believed that he would do the sensible thing—namely, that he would make use of the powers which the Government asked the House to give him when the Bill went through the House. He could either amend the code—and he could still do that at any time he liked—or set aside the code in the national interest. Could there ever be a situation in which the national interest was more at stake than it is today?

The second point on which The Times is wrong, and has been misled by the Government, is in arguing that by making an exception provided for in the Counter-Inflation Act the Government would be opening the floodgates to waves of new claims of this nature. The fact is that 6 million workers have already settled within the phase 3 limits—almost all the workers who were due to negotiate during the winter period. All their representatives have formally endorsed the TUC proposal that the miners should be given exceptional treatment. In an intervention earlier in the debate, I quoted what Mr. Frank Chapple said on this subject.

The right hon. Member for Barnet (Mr. Maudling)—and I am sorry he is not here this afternoon—was right to point out in a letter to The Times the other day that the Government have got their phase 3 policy accepted. Why the dickens do they not make an exception of the miners when that is in fact the case, even though it is not legally the case? The most extraordinary thing is that, on top of this, the Government are undertaking, by nods and winks, that the miners will get more any way—perhaps later in the year, backdated as early as 1st March Why on earth can they not offer this now and get the miners back to work? The fact is that the Government are crucifying the nation on a clause in a code which has already lost all practical meaning.

I have some personal sympathy for the Prime Minister in this dispute.

Mr. Dan Jones (Burnley)


Mr. Healey

Because I believe that in one aspect of his personality he wants to move the country towards a new way of dealing with industrial relations. But there is an element of stony rigidity in his make-up which tends to petrify his whole personality in a crisis. He should never have allowed himself to be manipulated into this dead end by an oddly assorted quartet of his colleagues, who are now trundling him like a great marble statue towards the precipice.

Two of this obvious quartet are survivors from the eighteenth century. The first is the Leader of the House, an amiable man whom we all like but a man who is totally out of touch with the industrial realities of the modern world, as he told us once when he asked us to eat peaches. He reminds me of one of the more brutish Hanoverians, perhaps George III.

Then we have the noble Lord, Lord North—I apologise to the House: I mean Lord Carrington. He is one of the last great aristocratic amateurs in the Whig tradition. He finds no difficulty in combining scrupulous attention to his responsibilities as the landlord of rolling acres in Buckinghamshire with his rather more sordid duties as Chairman of the Conservative Party. He even finds the odd moment to visit his new Department of Energy.

Many of us find these two a rather agreeable pair. But they are joined in the conspiracy by two very difficult characters who we see sitting side by side on the Treasury Bench at the moment. I refer of course to the Chancellor of the Exchequer and the Secretary of State for Trade and Industry, who I feel would be rather more at home in contemporary Washington than in eighteenth century London. They have made it clear that they see this whole operation as a means of manipulating the Government into a General Election before the consequences of their own mismanagement catch up with them. They are consequences which are plain enough to anyone who reads the City pages in our newspapers.

No one can now deny that, whatever the outcome of the present disputes, it is now clear that 1974 is likely to be the worst year for the British economy since the war. The level of gross domestic product will fall, unemployment will rise, there will be a record balance-of-payments deficit and the rate of inflation will accelerate.

The Chairman of the Stock Exchange told us last autumn that the stock market was a barometer which indicated confidence in the Government's will to govern and the Government's ability to govern. We can look at the barometer. Yesterday, the share index fell below 300, and it is still bobbing round the 300 mark. It is a very accurate barometer.

I understand that some Ministers and Government supporters on the back benches may want to run for cover, or may have the more limited objective of ensuring that Parliament is not sitting during the first three weeks of a miners' strike when difficult decisions have to be taken. But the question which has puzzled me in the past 24 hours has been, if the Government call an election, what their programme is likely to be. Will they stand on their past record? Will they stand on the fact that they brought the value of the pound down below 75p, that they raised the cost of food by more than 50 per cent., that they doubled the cost of housing and that they produced a devaluation which is bumping round 20 per cent.? Will they run on their promises for the future that, if we re-elect this Government, in 1977 the pound will be down to 50p, the cost of food will have doubled, houses will cost four times more than when the Tories first got in and devaluation will have reached 40 per cent.? Somehow I doubt whether they will stand either on their record or on this kind of programme.

Some people suggest that they may run on a doctor's mandate. But the Government are responsible for the disease. They are a group of bacteria—the lot of them. Do the Government expect to seek a doctor's mandate, speaking as a bacillus? I doubt somehow whether that will be the answer.

Will they fight on the issue of who governs Britain—the people or the Pay Board, Brussels or London? Is that to be the prospectus that they put before us?

I suspect that the Government's intention—and the Chancellor of the Exchequer rather confirmed this by the tone of his speech—is to confine the issue to the miners' dispute alone. If they do that, they will have two questions put to them at every meeting, in every newspaper, every morning and every afternoon throughout the campaign. If they win the election, the moment that it is over will they settle with the miners outside phase 3, as many people believe and as the right hon. Member for Wolverhampton, South-West (Mr. Powell) has said? In that case, how do they justify inflicting three months of misery on us all? If that is not their intention, will they continue slugging it out until one day either the miners or the Government collapse from exhaustion? If that is their intention, even if the operation is a great success the patient will have died long before it is completed. There will have been thousands of bankruptcies, millions of unemployed, the collapse of living standards and what is worse, irreparable damage to the social, economic and political fabric of the nation.

Mr. John Page (Harrow, West)

The right hon. Gentleman suggests that a General Election may be called, say, tomorrow or the day after. Will he and his right hon. and hon. Friends use their influence to try to stop the miners going on strike, thereby saving the nation from all the difficulties that he is underlining?

Mr. Healey

My party has been trying to stop this strike for the past four months. There is only one way in which it can now be stopped and that is by giving the miners freedom to negotiate with the National Coal Board.

It is quite clear that the second option is what the Government claim to intend and to want. But no one else in Britain wants it. Even the CBI's mind has been concentrated wonderfully in recent days by the prospect that it will be hanged tomorrow—

Mr. Ian Mikardo (Poplar)

And by the telegrams that it has had from its members.

Mr. Healey

Of course, and I for one would be very glad if the CBI carried out a similar ballot to that of the miners. The result might be extremely interesting.

I ask the Government to reflect on what I have said and to think again, even at this late stage. After all, they have a responsibility to govern. If they abdicate that responsibility, we on this side of the House will be only too happy to take that responsibility from them.

5.8 p.m.

Mr. David Knox (Leek)

The last occasion on which I was called immediately after the right hon. Member for Leeds, East (Mr. Healey) in a debate on economic affairs was in the course of the Committee stage of the Finance Bill in 1972, when he made his notorious devaluation speech. It might be said that the right hon. Gentleman has been rather more responsible today than he was on that occasion, although he has at the same time been very much more boring.

The right hon. Gentleman said that my right hon. Friend the Chancellor of the Exchequer thought that inflation was cured by putting up prices. That is certainly true when a Chancellor is dealing with demand inflation. If it is not, perhaps the right hon. Gentleman will say why his right hon. Friends the Members for Cardiff, South-East (Mr. Callaghan) and Birmingham, Stechford (Mr. Roy Jenkins) put up taxes and so put up prices to deal with a demand inflationary situation when the Labour Government were in power. At the same time, perhaps he will tell the House why in the past 12 months he has been advocating increases in taxation to put up prices and so to reduce demand inflation.

The right hon. Gentleman is making a cheap debating point here, which is not worthy of him.

Mr. Joel Barnett (Heywood and Royton)

Will the hon. Member for Leek (Mr. Knox) say which of the programmes of the Chancellor of the Exchequer he accepts—allowing price increases to deal with inflation, or the other way round? Which does he accept?

Mr. Knox

The hon. Member for Heywood and Royton (Mr. Joel Barnett) knows more about these matters than the right hon. Member for Leeds, East. The hon. Gentleman knows that it is important to differentiate between cost inflation and demand inflation in this context and that a great deal of the misunderstanding from which we suffer has resulted from the fact that people do not make that distinction.

The right hon. Gentleman made a great deal about my right hon. Friend the Chancellor's policy being to ensure that prices rise faster than wages in the next 12 months. One of the great advantages of stage 3 is the threshold agreement which gives protection to people against price increases. If the right hon. Gentleman and his colleagues had supported stage 3 and if the National Union of Mineworkers' executive had accepted the offer that was made under stage 3, I am certain that my right hon. Friend would have been able to give an assurance this afternoon that there was no question of the threshold agreement being withdrawn. His reluctance to do so was because he was not certain, as no one is, what will happen in the British economy in the next six months.

I thought that the right hon. Gentleman's remarks about the miners' dispute gave a prejudiced outline of events. As any reasonable person knows, the Government have bent over backwards again and again to be conciliatory and the TUC and the CBI has bent over backwards to be conciliatory. The one group of people which has made no effort to be consiliatory has been the executive of the NUM.

If the right hon. Gentleman is trying to make the argument stick against the Government that within the Pay Board's report on relativities the miners will get an increase from 1st March and considers it a point of criticism that the Government are not making a definite offer now, it is equally a point of criticism against the NUM.

We are facing the most difficult, probably the worst, economic crisis that has confronted this country since the end of the war. We could probably have withstood and overcome the oil difficulties on their own. Indeed, there is a great deal of evidence that we were doing so. Industry was adjusting to the reduction of oil supplies. The supply position turned out to be rather better than we had reason to believe a short time ago. My right hon. Friend the Chancellor of the Exchequer pointed out that management had made a great effort to overcome the difficulties and to maintain output at an extremely high level despite the shortfall in oil supplies.

The quadrupling of the price of oil is causing severe international financial difficulties, but there appears to be the will to deal with them without doing too much damage to western economies. However, though we could have overcome the oil shortages and the increased prices without too much difficulty, it is obvious that the miners' dispute coming on top of those problems has created the desperately serious situation confronting us today.

Thus far things have been bad enough in British industry. The consequences of a prolonged dispute in the coal mining industry inevitably mean that they will get much worse. Industry has shown itself remarkably adaptable in the short term, but the longer these problems go on the more difficult it will be for industry to improvise in the manner in which it has done already.

The Leek and District Manufacturers' Association has expressed to me in strong terms today its worries about the future if the dispute is prolonged. As time passes the shortage of supplies and other difficulties will make the achievements that industry has obtained so far much more difficult. Inevitably, a prolonged miners' strike will cause a great deal of damage to British industry.

The current dispute has highlighted one of the most important questions confronting any Government in Britain today or indeed anyone with the responsibility for running a modern industrial economy—whether, on the one hand, to puruse full employment policies and to restrain price and income increases by a prices and incomes policy, or, on the other hand, to deflate the economy to the point where insufficiency of demand in the economy as a whole in relation to the supply potential will keep inflation under control.

I am firmly in favour of the first of these alternatives. I believe that a modern industrial economy works best at a high level of activity. I believe that most of our economic problems, particularly the lack of investment, arise because there has been far too much "stop" and not enough "go" in recent years. I believe that the maintenance of full employment is of tremendous importance, because I abhor so utterly a high level of unemployment with all the waste that is involved in it. If the economy is to be run at a high level of activity, there must be a high level of demand for goods and services which in turn means that there must be a high level of demand for labour in relation to the supply. In free market conditions that means that wages and salaries will rise excessively and cause rapid cost-push inflation. In such circumstances it is necessary to intervene in the labour market to restrain increases in wages and salaries if excessive cost inflation is to be avoided.

Politicians and political parties, particularly in Opposition, do not like to make that admission. The Labour Party took office in 1964 pledged not to introduce a statutory prices and incomes policy. Events forced it to do so. The Conservative Party took office in June 1970 pledged not to introduce a statutory prices and incomes policy. Again, events forced it to do so. In a full employment situation a prices and incomes policy is absolutely essential. Because I believe in a full employment economy, I accept that a prices and incomes policy is indispensable.

Mr. William Hamling (Woolwich, West)

The Government do not have a prices policy. It is only an incomes policy.

Mr. Knox

That means that such a policy must be observed.

The purpose of any prices and incomes policy is to prevent people using to the full the bargaining power that a full employment economy gives them. So far stage 3 has been successfully implemented in this respect covering about 6 million people. Therefore, there is no particular reason, nor any justification, for any exception to the rule, especially in view of the fairly generous offer that has been made to the NUM and the offer of a relativities report as well.

In a free market situation the miners could get more. But an incomes policy is specifically and directly about restraining individuals and groups of individuals from fully exploiting their market position. I find it strange that the Opposition, a so-called Socialist party, should support the miners' claim in the manner that they have done with arguments which have more to do with and owe more to Adam Smith and a capitalist economy than to Socialism and the intervention that is inevitable in Socialism. It is sheer humbug, as hon. Gentlemen opposite know perfectly well.

It is necessary to ask those who do not believe in a prices and incomes policy, but believe that the price of labour should be determined solely by supply and demand and that the miners' demand in particular should be determined on that basis, to face the logic of what they are saying. The logic is that they are for hyper-inflation or that they believe that at all times there should be substantial slack in the economy, that total effective demand should be substantially below supply potential that capital should be under-utilised and that there should be a large continuing pool of employment. I emphasise the word "large".

Ten years ago we could probably have got away with half a million unemployed. Experience in 1972 has shown clearly that 1 million unemployed did not restrain cost inflation. I do not know exactly what level of unemployment would be necessary now to stop cost-inflation. I suspect that it would be about 2 million.

If 2 million people out of work is the price to be paid for allowing free collective bargaining in Britain without inflation, it is a price which I am not willing to pay and it is a price which I am sure the British people are not willing to pay.

I appreciate that some are willing to pay this price. I think that my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) is willing to pay this price. At times we get the impression from the Labour Opposition that they, too, are willing to pay this price, if we can judge by the speeches that are made by the right hon. Member for Leeds, South-East who is the Opposition's spokesman on economic affairs. He has been telling us for some time that he believes in balanced Budgets. He believes also in eliminating the borrowing requirement. He has rejected Keynesian economics on a number of occasions recently. He is in favour of free collective bargaining. I should like him to spell out in absolute detail what this attitude means in terms of unemployment, because I believe that the level of unemployment required to enable the Government to forget about free collective bargaining is much too high.

Since the right hon. Member for Leeds, South-East took over as his party's spokesman on economics the Opposition have got into something of a mess. They have returned to the worship of balanced Budgets and all the other things that Philip Snowden stood for 40 years ago. The right hon. Gentleman is on record as supporting such outdated financial ideas.

I do not know who it was who first said that the British Labour Party owed more to Methodism than to Marx. Today he would have to alter this and say that the British Labour Party owed more to Montagu Norman than to either of these two sources. In the past few years we have seen the spectacle of a once radical party scorning radicalism and affecting the theories of defunct and old-fashioned economists. Today Montagu Norman seems to be the spiritual inspiration of the British Labour Party. It is tragic that, merely to avoid the slight unpopularity of small groups of people that support of a prices and incomes policy brings, the Labour Party should oppose such a policy. It is even more tragic when the logic of the position the Labour Party has adopted is that the level of unemployment must be very much higher as a result of this.

If there is to be an election in the near future I believe that it is very important that the electorate should realise clearly what the price of the Labour Party's economic policy is in terms of unemployment.

5.23 p.m.

Mr. Adam Hunter (Dunfermline, Burghs)

As we conduct this debate the prospects are that we are getting into a horrible economic mess. Nine years ago I came to the House unexpectedly because of my social background and my work as a miner. Never in my wildest dreams did I expect to find in the House indications that we were about to go into a catastrophic decline through the fault of the Government.

We all know that the problems are varied. The problems besetting the Government are a mixture of national and international ones. Invariably little or nothing can be done about international events. Surely something can be done about national events. The Government have a working majority and they should be able to control many of the things that happen domestically. The Government have failed completely to remedy the country's ills.

The Government have also failed to honour nearly all their promises, particularly those in relation to curbing inflation and putting the economy right. The miners' overtime ban, compounded with all the other problems, means that we are in a very serious position and it all adds up to a prescription for national disaster in the coming months.

We on this side indict the Government for causing industrial and economic chaos and for allowing so much bad feeling to be engendered, particularly between workers and the Government. This is a situation which has been fostered rather than one which has merely developed.

All of this is blamed on the miners because they imposed an overtime ban. If in the past the country had had to depend on my working overtime, and if all the miners had been like me, Britain would have faced this problem long ago and probably the problem would have been solved by now.

In my constituency I live among the miners. I have attended many rallies organised by the National Union of Mineworkers, Scottish Area, and the Scottish Trades Union Congress. I know that there is a feeling among the people that the present situation is very like that in the 1920s when there was so much industrial confrontation between employers and employees. We have not allowed the miners to forget that period in history.

I can say from my experience among miners, and knowing the result of the ballot, that the strike will continue for as long as is necessary to secure the miners' just rewards.

The Government admit that the miners are a special case even in normal times. We are not living in normal times. The whole energy situation has been altered. Everyone agrees that because of the importance of coal the miners are a special case. The Government seek a way out by wanting to refer the matter to a body to decide this in accordance with the Relativities Report, but the miners' union not prepared for the matter to be settled in that way. I meet miners, their families and people living in mining areas regularly. I know that they still consider that the Conservative Party is their traditional enemy and they are still suspicious of Conservatives.

The miners have been angered, particularly, about electricity supplies and the confusion over coal and oil stocks at power stations. I believe that the miners have good reason for anger.

The Government, particularly under the recent Coal Industry Act, have been generous to the coal industry and have implied that the miners have a good future ahead of them. This is simply because of the new energy situation. To prevent all the troubles and difficulties that Britain will face would it not be a gesture of good will for the Government to give the miners a little more now?

My colleagues have repeatedly said in recent debates that the miners have had too many promises made to them which have remained unfulfilled and this is one reason why they are not prepared to accept what the Government say about the Relativities Report. The confrontation with the miners is politically motivated. The miners are correct in not accepting what is offered to them in phase 3.

The Government could get themselves out of this serious difficulty by going further, either within phase 3 or a little outside it. The Government are in a serious difficulty over the three-day week. If the strike takes place and continues for any length of time there will probably be a two-day or one-day week. The problem could be settled simply by offering a few million pounds to the miners, and I suggest that the Government do that.

The Minister for Energy was in the Chamber a little while ago but has now left. Had he remained I would have reminded him that in 1965 he went down several English pits with me, a few young Conservatives and my mining colleagues. The Minister would agree, I am sure, that the conditions which he saw down the pits warrant much more than £35 a week for underground workers.

The miners are determined not to forget past years when coal was considered to be in decline. Nor will they forget the long period of run down in the mining industry, nor the callous way they were expected to stay in the industry until what seemed to be its inevitable demise.

The miners have co-operated patiently and have almost passively allowed the pits to be run down, knowing all the while that if the decline continued to the end their job security would go out of the window. In the past when oil was in the ascendency the Labour Government, as well as the present Government, argued that oil would replace coal in power stations. The accent seemed to be on oil-fired power stations. Now the situation has changed completely and the flow of oil from oil-producing countries is not what it used to be.

The miners have been patient. They suffered for at least a decade because of the run down in the pits. It was unfair to expect men to stay in the pits, particularly when they saw that the coal industry was gradually diminishing. That is one reason why men in the pits are so much concerned about their future. In the past wages in the pits were not high. Let us compare the years of the run down with what happened in America. There was also a great run down of the coal industry in America and other Western countries. In America the miners accepted the run down. The situation in the American mines was completely different from that in British mines because the American miners had excellent conditions. John L. Lewis, who represented the miners in America at that time, did a great job for them.

I am not surprised that the miners are now so militant, bearing in mind that they have been greatly exploited in the past. Everyone agrees that the mining industry and the miners are an important part of our economy. The miners are now bargaining from a position of strength and no workers who have been depressed in the past can let such an opportunity go by. We are now in a situation in which we can demand anything for working in the pits. The House should bear that in mind.

There is a rumour that there could be a General Election in the near future. If there is, and even if the Tories win, they will still have to improve on the present offer to the miners. The Government have tried to make the miners the scapegoats for the country's economic ills. That is nonsense. The miners are now going on strike and they have the support of many trade unions. The Government still have time, even at this late hour, to negotiate, as Joe Gormley, the president of the miners' union, said last night. All the Prime Minister has to do is to agree to negotiate. If the Prime Minister were to accept this opportunity it would not be a victory for the miners but a victory for common sense.

5.35 p.m.

Sir Robert Cary (Manchester, Withington)

I am happy to follow the hon. Member for Dunfermline Burghs (Mr. Adam Hunter). He is a miner and he knows mining inside out. He may wish to know that I had the privilege, during my first ten years in the House, or representing a mining constituency. As a young candidate in the early 1930s I lived in rooms with miners at Swinton and Patricroft. I descended most of the pits in the area and had a close view of the miners' working life. It is a hard life. It is hard for those who get the coal underground and it is hard on the surface for the families. That was particularly so in the 1930s. Perhaps there is no community more valuable in our society than the mining community. I agree with the hon. Member for Dunfermline Burghs that the miners have a vital, almost superior, place in society. With him I deplore the run down of that source of energy which is so natural to our country.

The decision of the National Union of Mineworkers yesterday morning sounded for me a note of tragedy and sadness. The decision was taken on Tuesday, 5th February. It was on a Tuesday—4th May 1926—when the General Strike was started by the TUC in support of the miners. I recall the miseries which I witnessed in the 1920s and again in the 1930s during my association with the mining community at Swinton and Patricroft.

I agree with my hon. Friend the Member for Leek (Mr. Knox) that in a world of often mass unemployment there has to be a high price which we can pay in this country in managing our economy in such a way as to create unemployment which many people regard as intolerable.

Mr. E Fernyhough (Jarrow)

The hon. Gentleman referred to the 1926 General Strike. That was the outcome of the miners deciding that they were not prepared to have their working day lengthened or their wages reduced. Did the hon. Gentleman regard the miners' stand at that time against their already low standards as defensible?

Sir R. Cary

I agree with the right hon. Gentleman about the circumstances of those years. But he must go back to the time when a German Chancellor of the Exchequer, with a taxable population of about 80 million people, imposed a surcharge on all electrical goods sold within the German frontiers, which enabled him to give a subsidy in 1922 and 1923 to the German coal owners, so that the Germans undersold our bunkering coal exports. From that flowed the tragedy of 1926 and the low standards—

Mr. Mark Hughes (Durham)

May I say with the greatest deference, as an economic historian, that less than 7 per cent. of our coal produced in 1923, 1924 and 1925 was for bunkering purposes. It cannot be said that a diminution of coal prices over the whole range of coals was consequent upon bunkering coal competition.

Sir R. Cary

I am thinking of the effect of that German subsidy on the coal industry in South Wales. But I agree with the right hon. Member for Jarrow (Mr. Fernyhough) that miners were being asked to accept standards which were too low.

In 1926 we had not just a miners' strike but a strike by the TUC, which declared a General Strike in support of the miners. That ended in nine days, but the miners continued their strike until the middle of November.

Mr. Mikardo

They were locked out.

Sir R. Cary

That is an easy alibi. The miners went back to work in November of that year. I agree that the shut down of mines was a great national mistake for which both sides of the House were responsible.

We heard today from my right hon. Friend the Chancellor of the Exchequer the strongest appeal I have heard for the Relativities Report, which could bring a solution to our present crisis. My right hon. Friend the Secretary of State for Employment tried almost at the eleventh hour to bring about a discussion with the National Union of Mineworkers, at 9 a.m. yesterday before its executive meeting. I bitterly regret the executive's attitude.

Mr. G. Elfed Davies (Rhondda, East)

I have been privileged to be present at most of the meetings and discussions between the Executive Committee of the National Union of Mineworkers and the Prime Minister and the Secretary of State for Employment. On each occasion we have had the same tale, without any change, and the miners' executive now says, "We are not going again for abortive talks. We want something there now, and then we shall negotiate."

Sir R. Cary

But the relativities board will have the power to make recommendations after its examination, and if there is an additional payment to be made to the miners it will be backdated to 1st March.

Mr. Fernyhough

The Government have the power to do that now.

Sir R. Cary

Yes, but my right hon. Friend the Chancellor has made that appeal to the NUM, even at this late hour. Joe Gormley himself says that there is still the ebb tide.

All I plead for now is that the NUM shall do the courtesy, not only to the Government and the CBI but to the whole British people, of taking one more look at the whole situation, by coming into conference with the Government and the CBI to reconsider the possibilities of the Relativities Report. Cash on the table takes many forms. If the relativities board recommends a payment to the miners over and above the present offer, the Government are under an obligation, and they are bound in honour to discharge it.

5.44 p.m.

Mr. E. Fernyhough (Jarrow)

Irrespective of the relativities board report, any Minister who wants to settle the dispute has powers under existing legislation. The Government had it written into the Act, so I do not know why it has not been used. The Secretary of State for Employment is in a position to say, if the National Coal Board and the National Union of Mineworkers negotiate a settlement unacceptable to the Pay Board, "I use the powers which the Act gives me to say that this agreement shall become operative." I cannot understand why the powers should have been sought except for use in such a situation as the present.

During the past three or four months in particular the Government have been getting into greater and greater difficulties. The people obviously had to be told a different story from that which they were told during the honeymoon years. If the Government had to tell a completely different story because the facts did not square with the myths they had spread, they had to find someone responsible for the great worsening in Britain's economic position. Someone had to be found to whom the guilt could be transferred.

The Government have decided that the miners shall take that role. Apparently the miners alone are responsible for all the difficulties now facing Britain. There is not a single intelligent man or woman who does not know that if the miners had not started an overtime ban, if they were not going to strike this weekend, the changed circumstances facing the country would be such that the Tories would inevitably be very unpopular, because it is their policies which have created the situation.

One of the things that the Government must learn quickly—I hope that the hon. Member for Leek (Mr. Knox) will learn it—is that it is no good saying that prices and incomes must be controlled when the workers feel that only incomes are being controlled, not prices, and when they know that only some incomes and not all are being controlled. Last Saturday I read in The Guardian the following headline: Directors' total rise is 136 pc". What will the Pay Board do about that? About three months ago it made laundry employers who were paying wages of £17 a week take 10p a week off those already low wages.

The miners see what the National Coal Board says in its advertisement, and they know what hon. Members on the Government side have been saying in the country, conveying the impression that the NCB is offering the miners a 16 per cent. rise. But they know that that is a lie. The National Coal Board is not offering the miners a 16 per cent. rise.

I have no right to speak for the miners, but I go so far as to say that, if the leaders of the NUM were told on the telephone tonight that the increase would be 16 per cent. overall, there would probably be a settlement. Yet constantly at Question Time and in their constituencies hon. Members say that the miners have been offered 16 per cent., when everybody knows that, in fact, the offer is roughly 10 per cent., and there are an awful lot of qualifications about the rest, and again the Pay Board comes into the picture. If they genuinely want a settlement, hon. Members should fairly and accurately describe what the miners have been offered, without plussing it up in the hope that no one except the miners will understand.

It is obvious from the Chancellor's speech today that we are to have a "Who governs Britain" election, and talk of "Reds under the bed". One would think that the miners had never been out on strike in earlier years, long before the Communist Party was ever heard of. The British Communist Party was not established until 1917. Has no Hon. Member on the Government benches read the story of the miners' strike in 1911, or read Richard Fynes' "History of the Northumberland and Durham Miners"? They struck for months and months. They were not led by Communists. If the Communists disappeared tonight, the situation would not change in the coalfields.

To imagine that 250,000 miners are being led by a handful of militants into a dispute which they do not want is tantamount to believing in fairies. It is about as intelligent to blame the Communists for the present dispute as it is to blame the Catholics for all the troubles in Ulster. Everyone knows that there is another side to the coin in Ulster, and it is nonsense to pretend that all the blame lies with the Catholics. There are others. Similarly, with regard to the miners, it is cheap to pretend that 250,000 of them—as intelligent as any other group of people in the country—are the dupes of cunning Communists who can lead them into decisions and actions which they would never undertake if the Communists were not there.

Miners can read and write. They know what is going on. They know about the directors to whom I referred a few minutes ago. They know what is done by land speculators and property speculators. If easy millions can be made by that type of person, without any sweat and effort and without risk to life and limb, and the Government do nothing to take a penny of it, the men who are risking their lives and their limbs every day they work will have a natural reaction—"If it does not apply to them, to people who are producing nothing for the nation, why should the restrictions apply to us, who are producing Britain's lifeblood?"

Until the Government begin to deal with property and land speculators, with directors who increase their own fees and with the gentlemen who have their salaries in the Cayman Islands—until they are prepared to remove those sores from the body politic, they ought not to expect the co-operation and understanding of men who do work such as the miners do.

Who governs Britain? Who took us into the Common Market? Was it the miners who gave away so much of our parliamentary power? Was it the miners who demoted the House of Commons?

Sir R. Cary

It was Labour's application.

Mr. Fernyhough

It does not matter whose application it was. It was done on Tory votes. We have a right to ask who governs Britain. The present Government not only took us into the EEC against the will of the British people but, what is more, they have paid for our membership fee of the EEC three times as much as would have provided a generous settlement for the miners. If half of what we are paying as our membership fee to the Community could be offered to the miners tonight, the strike would be called off. I should much prefer to see part of that money going to our own miners, who are now so important, instead of going across the sea for purposes of which I do not approve.

Over the past two or three weeks, we have heard a lot of talk about who governs Britain and about obedience to the law. Generally speaking, the philosophy behind it is one to which I should subscribe. But there always have been exceptions, and I want the Prime Minister to take these exceptions into account. At various times in our history, men who thought, as he does, that they were big men and absolutely right, when they faced a situation in which they had either to climb down or almost ruin the country, decided that it was better to show a little humility and make a compromise.

I beg hon. Members on the Government side to turn up the Report of the Royal Commission on Trade Unions and Employers' Associations. Let them read appendix 6, where the story is told of what happened to the Betteshanger miners. During the war, it was illegal for men to come out on strike. The men went on strike, and they were prosecuted. As a result of those prosecutions, their leaders were sent to prison.

What happened? The permanent secretaries of Ministers at that time went to the gaols to negotiate with the men who were in prison. In order that we might have coal, we decided to ignore the law. Ministers at that time decided that it was not worth it, that to enforce the law and lose tens of thousands of tons of coal which the nation desperately needed was suicidal and indefensible. The Ministers of the wartime cabinet, with all their responsibilities and as much as they wanted to save face, nevertheless realised that it was better for them to climb down in the national interest than to save face and probably ruin the country.

Conservative Members ask whether we support the miners. I make no bones about that. I am backing the miners. There would be something wrong with me if I did not, given my background, my relatives and my experiences. There would be something sadly wrong with me if I did not side with the miners in a dispute of this kind. Conservative Members accuse us of stirring up men to defy the law. Many of my hon. Friends will remember the debates we had on the industrial training boards. The levy by the training board for agriculture was hotly disputed by the Conservatives. They constantly pilloried the Minister about it. They encouraged the farmers to defy the law. The Labour Minister subsequently had to compromise and instead of the farmers paying the levy which the law said they should pay, it was taken into account at the annual review.

The Conservatives saw nothing dishonourable in backing the farmers in not observing the law. They felt that the farmers had a legitimate grievance and that if they defied the law the law must be changed to suit the views of the farmers. In the present situation the Government, knowing full well what the consequences for Britain must be, ought to reconsider the stand that they are taking.

So, what about the miners? They have made and always will make a bigger contribution to the welfare of Britain than any Conservative Member and they will never get half enough pay for it. Some Tories say that the supplementary benefits should be stopped. They say, "Let us go back to 1926 and starve them back to work." The hon. Member for Manchester, Withington (Sir R. Cary) knows the poverty and misery of those days. Would he stand for cutting off the miners' supplementary benefit?

Sir R. Cary

Of course not. There is no attack upon supplementary benefits. If there is a strike the miners' wives and children should be considered in the proper way under the 1966 Act. No doubt the right hon. Member for Jarrow (Mr. Fernyhough) listened to that excellent miner's wife on television on Sunday night who was asked about going for supplementary benefit. She said she would sink her pride. She would not go for herself but she would go for her children.

Mr. Fernyhough

Of course I saw the programme and I am glad to have the hon. Member's confirmation on the point. Unfortunately he cannot speak for the whole of his party because some of his hon. Friends are on record expressing a contrary view.

Mr. Ray Carter (Birmingham, Northfield)

Yes, the hon. Member for Harrow, West (Mr. John Page).

Mr. Richard Kelley (Don Valley)

In 1926 the wives and children of strikers—including my wife and two children—were allowed what was in those days called parish relief which was the same as supplementary benefits now. Surely we are not to go back to 1926.

Mr. Carter

The hon. Member for Harrow, West (Mr. John Page) would.

Mr. Fernyhough

I believe that the vast majority of Conservative Members are more civilised than that. Nevertheless, a few of them are uncivilised enough to take a different view, but if they can get a television interview or write a newspaper article it is all lolly to them so what does it matter?

Mr. Ralph Howell (Norfolk, North)

Does the right hon. Member agree that before 1966 nobody in need was denied help? In 1965 under the Labour Government only £66,000 was paid out in benefits to strikers or their dependants.

Mr. Michael McGuire (Ince)

There were no strikes.

Mr. Howell

There were a considerable number of strikes. In 1972 as a result of the 1966 legislation, when benefits were given as of right to strikers—

Mr. McGuire

Not to strikers. The hon. Member is wrong.

Mr. Howell

I stand corrected. The benefits were given as of right to the dependants of strikers.

Mr. John Page

My hon. Friend was right the first time.

Mr. Carter

He was wrong.

Mr. Howell

Benefits were given as of right to the dependants of strikers and £9,500,000 was paid out in 1972, £5,500,000 to striking miners. The funds of the NUM were not used for the maintenance of its members. Do you agree that this is a proper state of affairs?

Mr. Speaker

As the hon. Member for Norfolk, North (Mr. Ralph Howell) has addressed me I will intervene: I must point out that what is happening is an abuse. The hon. Member I know is seeking to catch my eye to make a speech. This is a debate and hon. Members on both sides are somewhat to blame for these interruptions and for what is happening. I hope that the right hon. Gentleman will be allowed to go on with his speech and, in time, to conclude it.

Mr. Fernyhough

In reply to the hon. Member for Norfolk, North (Mr. Ralph Howell) I make only one point which is that with a Government whose industrial policy is such as inevitably to provoke strikes he must naturally expect that the amount paid out in supplementary benefit will be greater than under a Government which did all they could to avoid strikes.

The Prime Minister has made many U-turns. As the hon. Member for Leek said, the Tory manifesto said that they utterly rejected any control of wages and so on. I do not know the difference between utterly rejecting and simply rejecting. The Prime Minister made a U-turn and now he supports that control with an iron determination. In the past Ministers and Prime Ministers have made determined statements, but in the light of events they have been wise enough to realise that they could not stand by those statements unless they were prepared to see the country damaged, and in some cases, ruined.

That is the situation the Prime Minister faces tonight. There is no need for him to be so obstinate on this issue. I would make a gamble with anyone that if the Prime Minister were at this eleventh hour to decide that the time had come once more to make a slight diversion, while there might be a few of his hon. Friends who would cry like wolves outraged, many in his party would support him for being reasonable and sensible in the light of events and so would the country. Not only would many of his party back him but also the overwhelming majority of members of the CBI, the whole of the trade union movement and a very substantial proportion of the population of Great Britain—if we exclude the backwoodsmen.

The Prime Minister has a chance to go down in history as the man who took the nation to the edge of the precipice and then decided that he would resist rather than go over the top. I hope that he will have the wisdom and courage to make the necessary change.

6.10 p.m.

Mr. Ian Lloyd (Portsmouth, Langstone)

The right hon. Member for Jarrow (Mr. Fernyhough) has made two points on which I wish to comment. He quoted from The Guardian an article, which I have not seen, to the effect that in some way directors were not subject to phase 3 and that their emoluments and fees were not being regulated under phase 3. He ought to know that I made a specific inquiry of the Pay Board about a certain case affecting directors' fees. The ruling was absolutely catagorical. All directors resident and employed in this country were subject completely to exactly the same rulings as anyone else. If that it not applied, it is a most extraordinary state of affairs. But that is a relatively minor point. [Interruption.] If it is correct that it is not applied, it is a major point; but it is not.

My other point is of relatively greater substance. So much that has been said recently—the miners' strike has emphasised this—tends to suggest that the only real economic value in this very complex modern society is that produced by someone making, digging up or growing something. That is a very dangerous and, nowadays, an extremely primitive concept of economic value. How would Opposition Members value the work of Dr. Borlaug? I do not think that he has ever made or produced anything, except with his brain. But he was responsible for the green revolution, and throughout the world he made two blades of grass grow where one grew previously. I suggest that Dr. Borlaug and those like him—scientific workers who work with their brains—make a far greater contribution to humanity in the longer term—and, indeed, the short term—than practically any other category of worker. It is a very dangerous thing to suggest that human beings—however important they may be—who are not in those simple categories of production make no economic contribution to human society and deserve no reward.

Mr. Fernyhough

The comparison that I made was with miners and property and land speculators. I had nothing to say about scientists, because I know that they make a contribution.

Mr. Lloyd

I am glad to hear that the right hon. Gentleman has greatly narrowed his particular choice.

Mr. Fernyhough indicated dissent.

Mr. Lloyd

If he has not narrowed it, that is regrettable. But he has narrowed it, and I accept his qualification.

I should like to deal with two remarks made by the right hon. Member for Leeds, East (Mr. Healey). It seemed most unfortunate that at this critical stage of the nation's affairs, he should have used the term "baksheesh" in commenting on our relationships with the Arab States.

It is an unfortunate term, for reasons which all hon. Members will understand. It would be surprising if the Arabs living in the Arab States were not far more afraid of importing the English disease than we were of importing the consequences of baksheesh.

The other point made by the right hon. Member for Leeds, East is of some significance. He referred to the indices of soaring prices in this country and to a number of other economic indicators. On that basis he attempted to make sweeping condemnations of the Government. The interesting point is that in the indicators for every country in the OECD, without exception, irrespective of the character, colour or political complexion of their Government, in the last 18 months the record has been virtually the same. But what does the right hon. Member for Leeds, East say? Are all these Governments equally responsible, equally culpable and equally incompetent? If so, how does he relate that to their political complexions? That is the point with which I intend to deal in the rest of my speech.

The questions which the nation is entitled to ask are these. Where and with whom does the responsibility lie for inflation? Does it lie with commodity prices? Does it lie with the unions? Does it lie with the speculators referred to by the right hon. Member for Jarrow (Mr. Fernyhough)? Does it lie with some other perhaps less discussed and hidden factor?

Then the nation is asking whether a cash-on-the-table solution for the miners which is not inflationary is available. That is a sensible and an important question. Does the relative position of miners really justify some form of treatment beyond the level of the current offer? I shall not enter into a dispute about whether that is 10 per cent., 13 per cent. or 16 per cent. It follows logically from that question that if the miners' relative position is to change upwards, in a situation of constant national income whose is to go downwards? The one follows the other as night follows day.

Mr. Mikardo

Harry Hyams and the Lonrho merchants.

Mr. Lloyd

Possibly. All Opposition Members have their favourite categories of those whose incomes they would reduce. But if we are to produce increased wealth for substantial sections of the community on this scale, I do not see the resources being supplied by the type of measures which they would seek to apply to their favourite categories of those whose incomes they would reduce.

There are other vital questions which we should be asking, such as are we producing any increase in real wealth in the country? Can and should an anti-inflation guarantee be given generally to the community? Can we get through the next three or four years with virtually stable real incomes per head?

First, with whom does the responsibility for inflation lie? [HON. MEMBERS: "With the Government."] Hon. Members must exercise patience. They will probably be surprised at what I shall say. A fashionable doctrine is going around that a considerable proportion of our current inflation is imported. I direct the attention of hon. Members to a very interesting analysis recently produced by the OECD and commented upon by Dr. van Lennep in a recent speech in which he pointed out—it is a very important factor—that 80 per cent. of the rise in incomes resulting from higher commodity prices is to be found somewhere else in the country concerned or in another OECD country. Half of 1 per cent. of the rising prices referred to in the OECD report is attributable to the rise in the price of commodities imported from countries outside the OECD area. The OECD as a whole is largely responsible for its own inflation. Eighty per cent. is the degree of dependence. It is 80 per cent. self-sufficient in crude primary raw materials. Therefore, most OECD inflation is home made.

Then, with high raw material and energy inputs into agriculture, with a large proportion of rising food prices merely reflecting rising agricultural input costs, it seems to me to be unwise if not fallacious to say that there is a completely exogenous independent factor known as rising food prices which somehow aflicts the community and bears no relation to other causes of inflation.

Again, we are indebted to the OECD for a most fascinating analysis of the relationship between rising food prices and inflation, which shows that a substantial proportion of all rising food prices in the developed world is directly attributable to the high quality, complex inputs into the agricultural industry. Wage inflation hits that as well and is also very often an explanation for rising food prices. We are told that the developing countries' terms of trade accounted for nearly .5 per cent. of the 10 per cent. rise in the OECD prices.

Let us look now at the question of the unions. Every economic chart in every major economic publication dealing seriously with these matters shows that there is an almost complete identity between the rise in prices and the rise in earnings. It is not confined to the United Kingdom but applies virtually to the whole developed world and to other parts as well. If that is so, is it the answer to our question? Can we say that the contribution made by wage costs to inflation is negligible and is entirely the responsibility of the Government? I do not think we can.

Mr. Mikardo

I am listening carefully to the hon. Gentleman's hard worked and carefully researched speech. But is he not over-generalising? Should not one particularise as between different sectors of price rises? For example, whose wage increases were due to the considerable rise in housing rents imposed by the Housing Finance Act? Whose wage increases caused that?

Mr. Lloyd

In this place one is always in danger of generalising because of the over-compression that we have to do. But the rise in the basic wage costs involved in housing—builders' and plasterers' wages, the lump and the rest—must be considerable. It cannot be negligible. This is a mutually reinforcing situation and we cannot pretend that one factor is not a cause.

I am not making the fundamental point that the unions are the prime cause of inflation. I think that they go with the whole cybernetic process, largely because they have to and for a variety of other reasons. I will pass briefly over the popular explanation known as "speculation". When one looks at the scale and magnitude of inflationary forces in Western Europe, I doubt whether even if 300 Centre Points were scattered throughout the Continent and their contribution was magnified by 10 times we should get even something like 0.01 per cent. of the inflation in Western Europe. If we are looking for the causes of inflation, we must look not at Centre Point but elsewhere.

Monetary policy is a matter of great importance, but Governments have steadfastly refused to face up to the public expenditure deficits, almost without exception, throughout the Western world since the war, almost without discrimination by political colour, and for such Governments to say that monetary policy is not a cause of inflation is interesting but untrue. They have failed to impose income restraint or to bring rises in money income into line with output, and they are not going to sabotage their own economic policies by monetary restraint. It would be equivalent to cutting the cables of a very overloaded suspension bridge. What has the bridge been asked to carry in the last few years?

I come now to the central theme of my argument. If we look at the world monetary situation between 1970 and 1972 we find that the official international liquidity in the Western world increased by 69 billion dollars. If I am asked where the prime cause of inflation in the West and of the economic and social stress we and others are facing lies, I find the answer in that figure of 69 billion dollars in those two years. Then there was another 10 billion dollars in the first quarter of 1973, and it is estimated that in the second and third quarters of 1973 the total had again risen, this time by about three billion dollars a quarter, much of it originating in the United States. If we are to ask ourselves where the prime cause lies, we should look to the United States budgetary deficit and its consequences for Western Europe.

There are two main sources of this liquidity. The first is the United States deficit, which was 51 billion dollars in 1971–72, and the second is the contribution made by the European Monetary Co-operation Fund, which in the second quarter of 1973 was 750,000 billion dollars and in the third quarter 1½ billion dollars. We see where the prime generator of inflation began and what the consequences must be.

Governments which pretend, as ours and others do, that they are really controlling these phenomena, are living in cloud-cuckoo-land. They are not controlling them. They are being carried along on a great monetary tide over which they have virtually no control. The statistics support this contention, and if we accept it a great deal follows.

No special drawing rights of the International Monetary Fund were issued in 1973. There was some realisation that the situation had got seriously out of hand before the end of 1972. It takes about two years for the economic system of the West to begin to absorb increases in liquidity on this scale. The net result is the massive inflationary creation of credit which has taken place. It has worked its way into the world monetary system and has had the result that in 1973 OECD trade increased by 14 per cent. in real terms, and prices by 9.11 per cent. in world trade and in local currency by 20 to 22 per cent. throughout the area, of which we are part and to which we make our contribution. The corresponding total trade figures were 26 per cent. in local currency and 37 per cent. in dollars.

This affected the whole OECD area and our phenomena being regarded as domestic and the responsibility of the Government suggests a most extraordinary macro-economic delusion, as though the Government and the Opposition have some economic equivalent of the field-marshal's baton which they can wave in order to produce rapid and effective economic results. It is totally untrue.

Mr. Carter

It is the claim on which the Conservatives fought the last election.

Mr. Lloyd

It may be so. I did not fight my election on it.

The next question is whether the relative position of the miners justifies special treatment. The answer could be, "Yes" only on the assumption that they can escape the conflagration in some way. My contention is that they cannot escape it, because they live in the same house as the rest of us. What they are really doing, therefore, in a house that is on fire is asking us to throw petrol on the flames, in some way thinking that they themselves will escape the consequences.

Finally, who will accept a downward adjustment as a result of all this? The New Earnings Survey of 1972, a comprehensive document giving virtually all the relativity information we could possibly require—there is really no need for a relativities board, because it is all here—shows the average gross weekly earnings of major occupations. The miners come a long way down the list—the figures are for 1972, when their average wage was £36.6. Who are the people we must ask to change their relativities? We are always being asked to increase the wages of teachers, but teachers in further education come top of the list, with an average wage of £57.2. Next come electricity supply workers with £55, followed by Civil Service technical and scientific staffs at £54 and railway salaried workers at £44. Altogether, 15 groups of employees would have to agree to their relativities being reduced so that those of the miners could be increased. I do not think that they are likely to do that.

I come now to the most important element in the speech of my right hon. Friend the Chancellor of the Exchequer. He was discussing the popular view that because of the increase in oil prices we should all be 100 per cent. Keynesian in our view of the economy and should not allow ourselves to be dragooned into any form of sudden and massive deflationary policies. This is interesting, because we are told that it is a common view of the Chancellors of Western Europe I believe that we are dealing not with the balance of payments paper tiger but with a fundamental medium-term shift in the terms of trade, which technology and time alone can reverse. There has been imposed on Western Europe an oil surtax in which the size of the tax is virtually proportional to our energy imports.

If these premises are correct, certain conclusions follow. First, the scale should be neither exaggerated—there is no danger of that—nor concealed. Secondly, the scale is such that it is of a different order of magnitude from any conceivable contribution that can be made by re-distributive taxation. Thirdly, what is known as and popularly described as recycling of Arab funds is justifiable on only two conditions. The first is if it is to facilitate the basic readjustment required in the economies of the West. We must support it in that event. The second is if it is to postpone the readjustment Then we must look at it more cautiously because we are borrowing Arab capital and in a sense living on it.

That is justified only to the extent that the people of this country are prepared to use their savings to buy energy. Those savings are presumably available to be bought by the Arabs and, when the savings are exhausted, we shall have to find some other way. Nothing is more dangerous or disastrous than to say that by some monetary sleight of hand the basic readjustment need not be made. The IMF seems to have acquired, by some process of intellectual osmosis, a character defect of the national Governments whose creature it is—the capacity to create credit without apparent limit.

No conceivable form of IMF paper credit can alleviate or alter this situation for its energy-importing members as a whole. The shift in the fulcrum of the balance of trade is profound and is likely to be permanent. If such paper were issued to the Arabs in exchange for western currency balances they would soon control the IMF. Do we want that to happen?

I cannot see the Arabs agreeing to the IMF's acting in the rôle of a monetary incinerator, because that is the only rôle it can play which would wholly justify this modern, unanimously supported Keynesian concept of dealing with our international problems. That is my principal argument. The electorate's confidence must be firmly placed behind any policy we put forward. We shall not recover that confidence unless we are brutally realistic in the situation I have described and present the facts as we know them.

If there is a tear in the fabric of our industrial civilisation it will not be covered by Arab loans or IMF paper. We should pay our way. We should make whatever readjustments are necessary to enable us to do so. Above all, we do not want to subscribe to a doctrine of so-called reflation—the most dangerous, misleading and damaging word in the economic vocabulary of the post-war period. It is a word repeatedly used in a situation where virtually no Government have yet succeeded in eliminating or controlling inflation. When we reach once again the miracle position of 2 per cent. to 3 per cent inflation, then and only then can we start talking about reflation.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. We are losing ground very badly. If two hon. Members are to take nearly an hour between them what hope is there for the rest of the House? I hope that hon. Members who have had to wait so long will not think it amiss if I ask them to help.

6.35 p.m.

Mr. Cyril Smith (Rochdale)

The one statement made by the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd) with which I can agree is that we should be brutally realistic. Throughout my life I have had my ideals, like most hon. Members. At the same time, I have tried to be a realist. Being a realist means facing the facts as they are and not as we would wish them to be. The fact is that this country cannot afford a miners' strike. It can manage without the right hon. Member for Bexley (Mr. Heath but it cannot manage without coal.

My colleagues and I have repeatedly made suggestions to the Government which could have helped towards a settlement of the miners' dispute. I believe, as do my colleagues, that the initiative taken by the TUC ought to have led to a settlement of the dispute. Having listened to the Chancellor this afternoon I am bound to ask him—perhaps he will reply tonight—why he expects the TUC to trust him when he is not willing to trust the TUC.

The overtures which the Liberal Party has made over the past few weeks, many of them behind the scenes, have met the same response as overtures from every other part of this House and from sections of the community outside. We have met with obstinacy and a deep-rooted belief that the Tories are God's gift from Heaven; that they are the only ones with any answers to the problems. It has been proved that they have no answers at all. My hon. Friend the Member for Cornwall, North (Mr. Pardoe) made a suggestion in December which we still believe provides a solution which would be acceptable under phase 3. This was that there should be a production employment premium. I draw the attention of the Government to the fact that the initials of this phrase spell the word "pep"—something which the Government need in this situation.

Mr. Mark Hughes

Nice one, Cyril !

Mr. Smith

This premium is not a productivity bonus. Under it, cash could be given to the miners now. It is estimated that one ton of coal is the equivalent of between 4½ and 5 barrels of oil, depending on the quality of the oil. Oil is now fetching approximately 10 dollars a barrel. This means that coal is worth at least £18 a ton when compared with oil. The generating stations are paying £7 a ton for coal. If we could increase coal production over an agreed figure of, say, 122 million tons in 1974, we could afford to distribute much of the saving that would consequently accrue in cash to the miners.

Every million tons of coal now produced must be saving us £11 per ton in oil costs. Every additional ton would save us £18, less the cost of producing the coal. Therefore, if we talk only of increased production, let alone the saving gained by using coal as opposed to oil, and if we manage to increase production by the small amount of 3 million tons a year, it would allow us to distribute an additional £50 million to £65 million per annum to the miners.

That would be a wage increase, on top of the present offer, of between £3.60 and £4.80 per week—according to which figure one uses—across the board. I accept that those figures may be slightly too high or too low, but with the information I have they are based on the most conservative estimates. I would have thought that that might at least appeal to the Government. It would mean that we were paying for increased production.

I come to the point made by the hon. Member for Portsmouth, Langstone, who said that it was not possible to increase the miners' wages without causing inflation. If we increase those wages in relation to increased production we take away the inflationary spiral of the wage increase. If that is not acceptable, I suggest that the Government should make the miners an immediate weekly salary offer and refer the rest to some kind of relativities board, with the guarantee now that any reference from it would be accepted by the Government and would be backdated to 1st March.

Clearly a solution has to be found. Clearly one will be found. Clearly such a solution will mean more cash for the miners.

An hon. Member said earlier that he was on the side of the miners. I am on the side of the country, not just the miners. This means that if we do not want to have one- or two-day working, or that we do not want to lead the country to bankruptcy, we have to settle with the miners by giving them extra money. I cannot understand why the Government should be willing to push the country to the verge of bankruptcy when they know that in the end, election or no election, they will be forced to settle—or their successor will have to do so. Settling the dispute will mean giving the miners extra money—so why push the country to the verge of bankruptcy?

I hope that the Government will find it possible, just for once, to be realistic. If they do, it will mean, in my language, that they stop fiddling and messing about and achieve a settlement by giving the miners more cash. In short, my appeal is "Get on or get out".

6.43 p.m.

Mr. Peter Rost (Derbyshire, South-East)

On the last occasion, in November, that I had the honour of being called by you, Mr. Deputy-Speaker, I suggested that a solution to the dispute might result from a settlement based upon a long-term contract, accepting that it was not possible in the national interest to put more money on the table at that moment, but accepting also that on the relativities and the long-term arguments there was a genuine case for an upward adjustment and that it should be on the basis of a long-term contract. Unfortunately—many of my constituents in my mining community in Derbyshire and the rest of the East Midlands agree—the NUM has decided not to accept such a proposal, which has now been made.

We realise that the NUM is not prepared to negotiate; it is prepared only to dictate. I agree with the hon. Member for Rochdale (Mr. Cyril Smith) that we need coal, and need it now more than ever. I agree with him also that we cannot afford a strike. Nor, on the other hand, can we afford further inflation. This, surely, is the dilemma; we must have coal and we must control inflation.

I suggest to the Government that rather than watch the mining industry being wrecked by a prolonged strike, which would mean many pits never re-opening, watching the economy being ruined and the whole nation brought to the brink, and paying ransom money which we cannot afford, we should examine an alternative which has not to my knowledge yet been suggested. There is an alternative—to pay ransom money which we cannot afford or to sit out a strike which will wreck the industry and the economy. The alternative is drastic and radical, as befits a desperate situation. I suggest that the alternative is that we hand the industry back to private enterprise.

Is there any good reason why the coal mining industry should still be nationalised, apart from the sacred cow of nationalisation with which we are still indoctrinated on both sides of the House? Has nationalisation proved an efficient form of management control? Has nationalisation improved productivity? Has it produced profits? Has it served national interests? Has it created harmonious industrial relations? [Interruption.] I prefer to develop my own argument, and do not wish to delay the House unduly.

There are plenty of other natural resources in this country which are developed far more efficiently by private enterprise. Our oil and gas are minerals which are being developed efficiently without industrial relations which tear the whole country apart. What is so sacrosanct about coal that it should remain nationalised, apart from the dogma of the Labour Party? I know that it is an alien concept that we should even consider denationalisation.

My proposal is that the NCB be dissolved immediately, that all employees be dismissed—that includes the miners—and that private enterprise be invited to tender for individual pits or groups of pits immediately, in the same way that tenders for North Sea oil leases have been invited and accepted. I suggest that payments for taking over reserves and pits should be nominal, but that royalties should be extracted from the coal produced.

Opposition Members may regard that concept as ridiculous. I am glad that they are playing to the dogmatic standards which one expects. But I suggest that the economics of the industry have now so dramatically altered that there is no reason why coal should not be produced economically. Arguments which applied in 1947, based upon the historical, social and economic history of the industry, certainly do not apply today.

As the hon. Member for Rochdale has reminded the House, coal is underpriced. If it were managed by private enterprise coal should be allowed to be sold at the free world market price, which would be substantially higher than the current price. I suggest that those Opposition Members, and my hon. Friends, who have said as I have that it is important to conserve our energy resources and use them efficiently, would regard it as an incentive that our energy supply should no longer be subsidised. There would be a much stronger incentive for converting and using energy more efficiently than at the moment. Further, for the first time since nationalisation, coal can be produced economically and profitably.

The tenders which I suggest should be invited should be accepted on the basis of the following three criteria: first, those who are successful in tendering for pits or groups of pits should guarantee immediate production. They should be able to guarantee that there would be no delay in getting the coal moving again. Secondly, those who are successful in tendering should produce evidence of their mining expertise. There is plenty of mining experience—indeed, international mining experience—in this country. We have only to consider the activities of companies like ICI, RTZ and Consolidated Gold to realise that plenty of miners are not mining coal and are not in the NUM. Those members of the NUM who are about to go on strike would have the choice of deciding whether they wished to stay in the mining industry or to seek employment elsewhere.

The third basis for accepting tenders should be evidence that the group successful in tendering had signed up a work force on a long-term contract in order to manage the mines. Therefore, the alternatives to the miners would be much wider and much more attractive than they are now, because those who decided to stay in the industry would be able to sign up on the basis of higher productivity. No doubt absenteeism would be lower and there would be much more attractive profit-sharing and even profit-participation and productivity bonuses than there are now. There is no reason why some of the present members of the mining industry should not themselves tender on a co-operative basis. They might well be successful, and would make a much better job of it than is presently the case.

I suggest that solution in all seriousness, because it would immediately solve the nation's dilemma. It would be a long-term solution, because it would create for the people employed in the industry higher incentives, greater rewards from productivity and far more security, because customers would again have confidence in the product. Output would be greater and the industry would expand. By better working practices and more intensive utilisation of the industry we would achieve not only higher productivity but higher output.

Mr. Cyril Smith

As the miners are due to commence their strike on Saturday, can the hon. Gentleman guarantee to get a buyer before then?

Mr. Rost

I should not have given way. I was about to deal with that point.

If what I suggest was done with haste there is no reason to suppose that industry would not respond quickly to the challenge, in the same way that it would respond to further licences offered for North Sea oil development or any other mineral development. The economics of the coal mining industry could be such that there would be profitability, and private enterprise would not waste the opportunity of having a go, particularly as the national interest is very much involved. Industry in general would be anxious to protect its future energy resources and companies would wish to tender in order to secure their own supplies. I have no doubt, therefore, that there would be a fairly substantial response to my suggestion.

This is the time when we must try a radical policy, to restructure rather than sit back and face ruin. The desperate deadlock situation which confronts us, with the pollution of industrial relations, demands a radical solution. Such a solution is to return the industry to commercial, competitive, free enterprise management. The social and economic circumstances which led to nationalisation in 1947 are not applicable today. The coal mining industry has become one of the unacceptable faces of Socialism. I should like to see it become one of the acceptable faces of capitalism.

6.56 p.m.

Mr. Ian Mikardo (Poplar)

While listening to the speech of the hon. Member for Derbyshire, South-East (Mr. Rost), I was watching carefully the faces of the occupants of the Government Front Bench. They were a study in mournful embarrassment. I am sure that all of them were thinking, as they listened to the hon. Gentleman, "If only we had enough supporters like him we would not need any opponents".

I much enjoyed the hon. Gentleman's speech. It was the most hilarious entertainment to which I have listened for many years. My only regret about it is that our proceedings are not televised. If they were, I am sure that the hon. Gentleman's performance would have gone down a bomb in the mining villages of South-East Derbyshire, especially among the miners, who would have noted that the first item in the hon. Gentleman's recipe was that they should all get the sack.

In considering this dispute between Government and miners—it is not between miners and employers—I take as my starting point the massive vote of confidence which the mineworkers, in their ballot, gave to their national executive committee—a much bigger vote of confidence, as my right hon. Friend the Member for Leeds, East (Mr. Healey) pointed out, than any political party in this country has ever had. Indeed, Mr. Gormley received a much bigger measure of support from his constituents than any hon. Member has received from his constituents.

The massive mineworkers' vote disposes once and for all of two myths. The first is that the leaders of the National Union of Mineworkers, as of other trade unions, do not represent the views or carry the support of the mass of their members. Only people like some hon. Members opposite who had never seen a mineworker in the flesh and never talked to one face-to-face could ever have believed and propagated that myth. Now it is dead for all time.

The second myth, or stupidity—my right hon. Friend the Member for J arrow (Mr. Fernyhough) referred to it briefly—which has been totally exposed by the mineworkers' ballot is the concept that has been flown as a kite by hon. Members opposite over the last couple of weeks that the miners could be frightened off giving their executive authority to call a strike by the threat to withhold welfare benefits from their families. It is a typical characteristic of the proponents of hard-faced Toryism that they should want to inflict suffering and deprivation not only on strikers but on their non-striking wives and children as well.

It is in the natural order of things that this piece of dehydrated Christian charity should have emanted from Edgbaston. I know Edgbaston well. It is a pleasant, airy, leafy, affluent suburb. A substantial part of it—with its large and opulent, if rather ugly, houses—was built up by the 19th century Birmingham ironmasters, who were also masters of the art of grinding the faces of the poor. It seems that their ghosts still walk amongst its comfortable greenery and still inspire their heirs, who speak for them.

Leaving aside the repugnance that any decent person will naturally feel about this obscene suggestion, it will not wash on practical grounds because it is in direct conflict with British standards of legality. A Government of this country can punish people only when they break the law. Except in a small number of specialised cases, there is no law in Great Britain that makes it illegal for a worker to go on strike. The only country where such laws exist are those run by totalitarian dictatorships, and that is not the sort of rule that commends itself to Britons. All this talk of punishing strikers by making them and their families go hungry is absolutely foreign to us.

Welfare benefits are not charitable largesse handed out by the Government. Every worker contributes a sizeable part of his wages every week towards the funds from which the benefits are paid. He therefore gets those benefits, when they are payable, not as a gift at the discretion of the Prime Minister but as a contractual right which he has paid to secure for himself.

Mr. Patrick Cormack (Cannock)

I agree with all that, but when the hon. Gentleman talks about totalitarian States not allowing strikes, are not those the very States that Mr. McGahey believes to be Utopian?

Mr. Mikardo

I never heard such rubbish in my life. I challenge the hon. Gentleman to produce one word I have ever said or written which gives the least substance to that statement. I will give £100 to any charity named by the hon. Gentleman—

Mr. Cormack rose

Mr. Mikardo

I am not giving way again. Go and get the evidence—

Mr. Cormack

On a point of order, Mr. Deputy Speaker. I was not accusing the hon. Gentleman of anything. I mentioned Mr. McGahey.

Mr. Mikardo

I beg pardon. I am not responsible for Mr. McGahey. He is not an ally of mine, he is an ally of the Prime Minister. The Prime Minister is delighted with Mr. McGahey Mr. McGahey has nothing to do with me; he belongs to your lot over there. If he had not existed, the Prime Minister would have invented him.

To come back to the jolly little ploy of threatening the miners—we know from the ballot on Monday that the ploy was utterly counter-productive. Anyone who knew the miners at all would have expected that. I spent part of last week end in the Nottinghamshire coalfield talking and listening to miners in their welfare clubs—

Mrs. Jill Knight (Birmingham, Edgbaston)

I thank the hon. Gentleman for his courtesy in writing to me before the debate to tell me that he would refer to me. I assure him that there was no question of a ploy to force the miners not to strike in my suggestion that the taxpayers objected to having to finance actions which were against their best interests. The hon. Gentleman referred to the massive support the NUM executive had had from the miners' vote. I received far more than 85 per cent. support from outside for the remarks I made in the House. It is suggested that most people accept that just because people pay taxes they can withdraw their labour at any time they prefer to say at home and still receive benefits from the State, I am afraid the hon. Gentleman is wrong. Should not he make his remarks to the NUM and not the Department of Social Security?

Mr. Mikardo

If I had known that the hon. Lady's inevitable intervention would be as long as that I might not have been so ready to tell her what I was going to say. She is wrong. I do not believe that there is a wave of indignation. I am sure that many people write to her, but any crank who makes a cranky speech gets a lot of letters. I could cook up letters at any time; there is no difficulty about that. Has the hon. Lady worked out how much of the contribution paid by each taxpayer in 1973 was used for paying welfare benefits to the wives and children of strikers? It was 3p per taxpayer.

Mrs. Knight

That is irrelevant.

Mr. Mikardo

To resume my speech after the speech of the hon. Lady, I was talking about the reaction of the miners to what the hon. Lady said. Only a small number of miners were angry. The ones who were angriest were those who do not get welfare benefit anyway because they are single men. They were more angry on behalf of their married colleagues than were the married men themselves, but they were a minority. The great majority of the miners I met in the Nottinghamshire coalfield thought that the suggestion of withholding benefits from the non-striking wives and children of strikers was so much beneath contempt that it was not even worth getting angry about.

I turn to consider what is the level of wages which the country should pay to the miners. I begin with one point that is not controversial. Despite all the differences of view, arguments and controversy, the one thing about which we are all equally agreed is the necessity of maintaining a good, efficient mining industry with at least the level of output which we are getting now and preferably an even higher level of output. In the present energy crisis of the world and the nation nobody doubts that we absolutely must do that.

I recall that when I was Chairman of the Select Committee on Nationalised Industries a few years ago and we were investigating the National Coal Board we heard evidence from the board and the National Union of Mineworkers, on the one hand, who wanted the industry's output target to be set at 155 million tons a year, and, on the other hand, from the Labour Minister, who wanted a target of 135 million tons a year. In the end the Government got their way, as Governments generally do, and we had the lower target. What would we all give now only to have the 100 million tons of coal that were lost as a result of accepting the lower target?

The basic threat to our energy position, and hence to our capacity to maintain ourselves as an industrial nation, is not the short-term threat of a mine-workers' strike. It is the long-term threat that in 10 or 15 years' time we shall not have any mineworkers at all. The industry is losing 30,000 men a year. I talked to an ex-miner the other day. He left the pits four months ago and now works on a chicken battery farm, in lovely countryside and nice sunshine, and earns £6 per week more than he earned when working on his belly down the pit. He is one of 30,000 a year who are leaving the mines and voting with their feet.

The rate of recruitment is nowhere near sufficient to compensate for that and to maintain the labour force. From that fact I derive a simple and straight answer to the question, "What should miners be paid?" The answer gets away from the nit-picking points made by the Chancellor of the Exchequer in his speech this afternoon and also avoids the abstruse complexities of the argument put to the House by the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd). It leans heavily on the point so rightly made by the hon. Member for Rochdale (Mr. Cyril Smith), because it is based not only on what is right for the miners but also on what is right for the nation. My simple answer is that mineworkers should be paid enough to ensure that the rate of wastage goes down and the rate of recruitment goes up until the recruitment rate overtakes the wastage rate.

I do not know—nor does any Government supporter—what is the wage level or how many pounds a week are necessary to achieve the objective of a lower wastage rate. The figure can be discovered only by trial and error.

My guess—and it can only be a guess—is that the amount the mine workers are asking for now would be too low to achieve a favourable balance between recruitment and wastage. I suggest that we should try and then see the result. I believe that we should pay the mine workers their full claim now and then, in the next year, watch the figures of recruitment and wastage very closely. If at the end of the year the labour force was still running down we should not wait for another claim from the mine workers, much less wait for them to ban overtime or to go on strike; we should offer them more money until we get to the point when recruitment overtakes wastage. If we do not take such a course we shall not have the labour force which both industry and the whole nation need.

This is a simple exercise in the law of supply and demand and is fundamental to the philosophy of the Tory Party. The Tories will no doubt protest that what I propose is inflationary, but in other matters they have always been willing to accept the law of supply and demand, irrespective of the inflationary effects. What is happening to the price of oil is also a simple exercise in the law of supply and demand. I did not observe any members of Her Majesty's Government, or, indeed, any of the Conservatives who have spoken today, resisting the demand of the oil sheikhs because they were inflationary. The Government may talk bravely about standing up to the miners, but they send two Ministers to grovel at the feet of the Shah of Persia.

The Government's obstinacy has inflicted great damage on our economy because of the three-day week—and, as my hon. Friend the Member for Dunfermline Burghs (Mr. Adam Hunter) said, the nation could well end up with a two-day week or even less. The overt and obvious effects of this damage are clear enough for all to see and bad enough to make us all suffer. They include unemployment, discomfort, loss of exports and additional price rises.

Besides all this, there is one major effect of such a dislocation which is not so obvious and which, even if the dispute were settled tomorrow, would take us a long time to overcome. That hidden effect is the run down of investment in British industry, and especially in manufacturing industry. It is that factor, and not the mine workers' dispute, which is the endemic element in our economic crisis. The hon. Member for Leek (Mr. Knox) said that we were doing all right with all the other problems in the economy and would have succeeded if it had not been for the miners, but the fact is that this dangerous and almost lethal run down in investment in British manufacturing industry began long before the miners' dispute. In 1973 investment in the manufacturing industry in Britain, in real terms, was lower than it was in 1970—and the current mining dispute had nothing to do with that. Since the Tories have been in power investment in British manufacturing industry has been running at half the rate of the Japanese and at two-thirds the rate of most countries in Western Europe. Now that figure will drop even faster.

I thought the Chancellor of the Exchequer was over-optimistic in his speech—a speech which did not endear itself very much to either side of the House—and indeed complacent about the future of industrial investment in a year or two. Under a three-day week, what is the inducement for a manufacturer to buy new machinery when he is allowed to run his existing machinery for only 70 per cent. of the time? In many medium-sized companies—and this is a fact of life in many of our constituencies—managements are running out of cash reserves. If they want to re-equip they must borrow money at today's astronomical rates. What incentive is there for them to do that? Even if they were to re-equip, they would find themselves because of the three-day week, in a vicious circle because they cannot get machinery delivered on time and they cannot get new buildings put up when they want them.

These are the cold, hard facts of the situation. They will remain cold, hard facts and will not be changed one whit if we were to have an early General Election. An election might change the composition of this House, but it will not change the labour force in the coalfields. Whatever Government are returned, they will still have the same miners to deal with. If the unexpected and unthinkable were to happen and the right hon. Gentleman the Prime Minister were to find himself back in Downing Street, he would still have to deal with the same problem and would still face the same miners.

Let us make an extreme supposition and ask what would happen if the Conservative Party won the election on a huge landslide victory and the Prime Minister were to find himself in power with 200 more supporters behind him. What would he do with them? Would he send them down the pits to dig the coal? Would he send them out with cudgels and whips to force the miners back down the pits? Would he send them to Waterloo Station to drive the trains? Would he send them out as evangelists to persuade British industrialists to resume the investment programme which they have given up because they have no confidence in the Government's policy? Would he send them overseas as export salesmen to try to arrest the rapid balance of payments deficit? What on earth would he do with them? What simple problem would we solve by their existence?

There is, however, one huge prospective advantage to be derived from a General Election. The incoming Government will be able to deal with our severe problems—and their task will not be easy—on their merits and without being hog-tied to the necessity of saving the Prime Minister's face.

The Prime Minister and those four other troglodytes who were so brilliantly described by my right hon. Friend the Member for Leeds, East are leading a rush to destruction at a rate which makes the Gadarene swine look like a field of hamstrung selling platers. Surely even now there must be one or two right hon. and hon. Members on the Treasury Bench who can persuade the Prime Minister to change course.

7.20 p.m.

Mr. Christopher Woodhouse (Oxford)

I begin with a slight digression, addressing myself to one point vigorously made by the hon. Member for Poplar (Mr. Mikardo).

The hon. Gentleman had a great deal of merry fun at the expense of my hon. Friend who wanted to denationalise the coal mines. As it happens, I agree with the hon. Gentleman that this is not a practical proposition, but I wonder whether he studied a few weeks ago a letter in The Times by Professor Kaldor, who was an economic adviser to the previous Labour Government, in which he argued forcefully that if the coal mines were in private ownership there would be no miners' dispute today and that the economic problems of the coal mines would be solved. Incidentally, of course, the solution would at the same time deal with one of the matters to which the hon. Member for Poplar attached importance, which was that the wage structure of the coal mining industry should be such that the recruitment rate overtook the wastage rate. It is very unlikely that such a wage structure will ever be achieved under nationalisation under any Government, but the doctrine adopted by my hon. Friend and Professor Kaldor might appeal to the hon. Member for Poplar as solving his own problem as well.

That is a digression. It is not the main substance of my speech.

I have observed with some regret that so far the debate has tended to follow the common form of debates on the economic crisis. The common form is for Government supporters to lay the blame on the obstructiveness of militants in the trade unions and for Opposition supporters to lay the blame on the mismanagement by the Government of their economic policy. To be honest, all of us know that there is an element of truth in both allegations.

I propose to reverse the usual order of priority by addressing myself to one or two of the Government's mistakes first, so that no one can say that I tried to gloss over them. I shall put the obstructiveness of militants in the trade unions second so that no one can say that I put it first.

The basic mistakes of this and every Government over the past 10 years can be summed up in one word or, perhaps to follow a phrase of the late, memorable Sam Goldwyn, in two words—"discontinuity".

It has become customary for every incoming Government to emphasise their own originality and innocence of past error by dismantling as much as possible of the apparatus set up by their predecessors. This is a bad doctrinaire habit, and it was not always the case. But in the last decade there has been far too much chopping and changing and swapping horses not simply in midstream but on the very edge of a cataract.

I will not go back to 1964. That is a matter for the consciences of Opposition Members. But, going back just to 1970, it seems to me that many of the Government's misfortunes and most of their mistakes illustrate this fatal principle of discontinuity. I am not saying that every breach of continuity was a mistake. On the contrary, some departures from the policies of the previous Government I approved entirely, especially those affecting defence, education and taxation. What I am saying is that every mistake was a breach of continuity.

The most glaring example which occurs to me—though I know that it may not appeal to the Opposition, judging from some of the unenthusiastic noises which I heard earlier in the debate—was perhaps the dismissal of Lord Robens from the National Coal Board, but for which I am confident there would have been no miners' strike in 1972 or today. The other less spectacular mistakes were the abolition of several useful institutions set up by the Labour Government, some of them only after that administration had dismantled useful institutions set up by the previous Conservative Government. Some of the examples within the last few years which I have in mind are the Industrial Reorganisation Corporation, the National Board for Prices and Incomes and the Consumer Council. That these were mistakes has been in effect admitted by the present Government's subsequent passing of the Industry Act, the Counter-Inflation Act and the Fair Trading Act.

It seems to me in retrospect that it would have been much wiser to accept and adapt these institutional arrangements rather than to abolish them and then belatedly to replace them. I hope that it is not too late to press the Government at least to reconsider their decision to abolish the regional employment premium and instead to adapt it to a new purpose, perhaps by turning it into a subsidy for skilled training in development areas as the CBI suggested when the REP was first introduced.

The process which I advocate is, after all, the characteristically British way of carrying through economic and social change—not by revolutionary radicalism, not by the eradication of either the Left or the Right, but by a democratic radicalism in adapting existing institutions to new purposes.

I hope that not only on the Government benches but on the Opposition benches the validity of this principle will be recognised. If the Opposition were prepared to recognise its validity, they would for example cease to declare their intention to renegotiate the Common Market treaty, which means in effect to abrogate it, and they would cease to declare their intention to repeal the Industrial Relations Act rather than to adapt and adjust it. It is certain that the Industrial Relations Act will have to be amended drastically. I have said this before, and I have already urged the Government to take the initiative in declaring their intention to amend the Act. Last time I said this I added that I hoped that they would do so in this Parliament. That is still my hope. But it is equally certain that, as in any Act of 150 or more sections, a great deal is, in practice, common ground between all reasonable people concerned with industry and that perhaps as much as a half or two-thirds of its provisions would have to be re-enacted in some form sooner or later even if the Act were repealed.

My plea, of which all these are illustrations, is for continuity and adaptation rather than for constant bouts of radical upheaval. The significance of this argument in the present context is that sooner or later—and preferably before a General Election—we shall have to arrive at a multilaterally agreed system for vetting and controlling incomes and prices within the limits of what is practicable and reasonable—at first inevitably with statutory backing but later on a voluntary basis—involving everyone concerned with industry and Government which everyone will know will survive changes of Government. That will have to come. That means getting Opposition, TUC and, incidentally, CBI agreement. That is why the recent initiative by the TUC is so important. I say "is", not "was", because I hope that it still is.

It is important not solely or even primarily in the context of the miners' dispute but chiefly in the much wider context of the whole future of industrial relations and economic management.

If institutional arrangements to secure such a permanent outcome—such a permanent system which would survive changes of Government—could be elicited from the recent TUC initiative, it would be a prize to which the ending of the miners' dispute would be relatively secondary. Indeed, if—but only if—that greater prize could be won, almost any settlement of the miners' dispute would be cheap. The alternative, if neither prize is won, if the TUC initiative is finally let slip, needs no words of mine to elaborate it.

7.32 p.m.

Mr. Alan Fitch (Wigan)

I should like to comment briefly on something said by the hon. Member for Derbyshire, South-East (Mr. Rost) about the mining industry reverting to private enterprise. This idea is absolutely unthinkable. Furthermore, I should like to remind the hon. Gentleman of the days when British mines were in private ownership under the old coal owners who, without exaggeration, were the most reactionary and inefficient bunch of people imaginable.

Mr. Rost

Is the hon. Gentleman suggesting that there has been no change in economic or social conditions since then? Is he further suggesting that the present situation in the mining industry is all that glamorous?

Mr. Fitch

Obviously conditions must have changed. However, I maintain that it would be unthinkable and completely wrong. I am sure that even the most reactionary Conservative Government would not think of taking that step.

I vividly recall, in the early 1960s, accompanying the late General Secretary of the Lancashire miners, Mr. Edwin Hall, to meetings held in various parts of the Lancashire coalfield to launch a campaign sponsored by the Lancashire miners to persuade local authorities, clubs and industry to heat their buildings by coal-fired rather than oil-fired plant. At that time and, indeed, in the decade that followed, the oil industry had been successful in getting industry and local authorities to install or replace coal-fired plant by oil-fired plant. The miners' leaders unceasingly warned the country about the danger of relying on supplies of fuel from a politically unstable area like the Middle East at the expense of our own indigenous coal. Unfortunately, that advice fell on deaf ears—Members representing mining constituencies were often accused of tedious repetition because their speeches always contained that warning. Our views were listened to politely, but were completely ignored.

Times have changed since 1970. Oil prices have risen to such an extent that coal is now cheaper than oil. Only a year or two ago the National Coal Board estimated that the price of oil and coal would coincide by about 1978. That process has already taken place. The price of coal can go up at least £2 a ton and still be competitive with oil.

I believe that the whole country realises that our most reliable form of fuel is coal. On the other hand, it would appear that our future oil supplies could depend on the passing whims of the sheikhs.

It is against the background of the increasing importance of the coalmining industry in the energy crisis that we ought to consider the mining dispute.

In view of the new situation, I cannot understand the inflexible attitude of the Government in their dealings with the miners and the TUC. Every constructive proposal that has been put forward by these two bodies has been rejected by the Government.

The first lesson to be learned from the present energy crisis is that the miners should be at the top of the industrial tree as regards both pay and social benefits. If this crisis teaches us nothing else, it ought to teach us that.

It is as well at this time, when the miners are being unjustly criticised for their lack of patriotism and for putting, as we are told, sectional interests before the interests of the community—we hear a lot of these sentiments expressed by Members of the Conservative Party—to analyse coolly and rationally what the miners have contributed to (he industrial peace of this country since the war.

I was working underground when the five-day week was introduced. No sooner had that taken place than we were asked to forgo it and work six days, which we did without a murmur, without any opposition, in the national interest. Then followed a period when miners' wages were in the middle-rated group—perhaps eighth, ninth or tenth. Certainly we did very little about that. There was no industrial action whatsoever.

That was followed by a period of drastic pit closures. Whilst the NUM very properly and rightly objected to many of the closures, as far as my memory serves me, there were no large-scale industrial disputes. There may have been certain industrial disputes about the closures, but they were not widespread.

Therefore, during the last 25 years the miners have shown great patience and have contributed greatly to the industrial stability of this country. Is it any wonder that the great majority of miners, who are politically and industrially moderate, are tired of being fobbed off with promises of jam tomorrow, but never today?

I should have thought that a hard-headed businessman like the Secretary of State for Trade and Industry would at once recognise the validity of the miners' claim to sell their labour at the market rate, especially now that the oil crisis has made coal even more essential to the economy, or, to put it another way, that the miners should be paid the market value of the coal that they mine. I should think that philosophy would appeal to such a hard-headed businessman as the Secretary of State for Trade and Industry.

I come now to what I consider the real crux of the problem. The way to industrial peace is to get our priorities right. I do not think that we shall ever have industrial peace—I am not talking particularly about the mining industry, but industry in general—until we get our priorities right.

I should like to illustrate what I mean. Six months ago a young miner and his wife—constituents of mine—came to see me. They were worried and perplexed. They had put down a deposit of £700 or £800 on a new house which was to cost about £3,000. During the time that the house was being built the builder kept increasing the price. The house was eventually completed, but the builder maintained that it was not completed and, as justification, pointed to the fact that such things as doorknobs had not been fitted. The house remained vacant for another 12 months. Then the builder said that the young couple could have the house for £6,000 although they had signed an agreement to buy it for £3,000.

That was rank profiteering. How could I ask that young couple to abide by phase 3—not that I would—when the Government have blatantly assisted and encouraged land speculators in building property and have done little or nothing to eliminate the many spivs who remain in society. Until we get these things right and until our priorities are got right there will not be, and we cannot expect there to be, industrial peace.

I refute the charge that the National Union of Mineworkers is defying the law. My hon. Friend the Member for Poplar (Mr. Mikardo) touched on this question. The overtime ban and the strike following on a perfectly proper ballot are not illegal. They are legal weapons. There is too much loose talk about workers in general defying the law and too little talk about the vast majority of trade unionists who gain their objectives by legal means.

The Government have not invoked the Industrial Relations Act, because it is in disrepute. The body of men most responsible for making this ridiculous Act look irrelevant and unworkable—I do not think that sufficient tribute has been paid to them—were the railwaymen who in their dispute in May and June 1972 implemented the provisions of the Act. The railwaymen had a cooling-off period, they had a ballot, and they voted to strike. The Government could do nothing about it. Ever since then the Government—perhaps wisely—have not resurrected the Act.

Those Conservative hon. Members who are happy at the thought that we are about to embark on an election should remember that the vast majority of gains made by the unions have been made in a perfectly legal way. The Industrial Relations Act has been proved to be highly irrelevant and bad for sensible industrial relations.

I appeal to the Government to re-open talks with the NUM leaders with genuine proposals to go some way to meet the miners' claim. The offer of the Trades Union Congress was genuine. I believe that the 6 million trade unionists who have settled under phase 3 are the same people who have said openly that the miners' case should be treated as a special one. If the Government were to give the miners extra cash, I do not think that there would be any discontent amongst those who have already settled or any demand that they should have more money.

Any election on the theme "Who governs the country?"—I know what is in the Government's mind; obviously it is a question of the Government versus the trade unions—would be a non-starter. The Government seem to have overlooked the fact that we in Britain live in a mature democracy, and that the people will not be fooled by such a slogan. Ever since the Government took office in 1970 their relations with the trade unions can be described as a general botch-up. They have failed psychologically and literally in their dealings with the trade union movement. Even at this late hour I ask the Prime Minister to think and think and think again.

7.45 p.m.

Mr. John Page (Harrow, West)

I particularly wish to be considered uncontroversial in what I say tonight. In the hope of taking hon. Members opposite with me I shall make two criticisms of the Government and one of the National Union of Mineworkers and then make my speech.

My first criticism will be of particular interest to my hon. Friend the Deputy Chief Whip. Although we have had from the hon. Members for Wigan (Mr. Fitch) and Poplar (Mr. Mikardo) and from my hon. Friend the Member for Oxford (Mr. Woodhouse) particularly significant and important speeches, it is very disappointing that there is no senior Minister present, especially as there are six Cabinet Ministers to deal with industry and economics and nine Ministers of State, though, interesting enough, there are only four Under-Secretaries. Much as I admire the Under-Secretary—my hon. Friend the Member for Harrow, Central (Mr. Anthony Grant)—when he passes on to my right hon. Friend the Prime Minister particularly urgently what I have said this evening it is possible that it will be considered to be favouritism. I remember that when I was in Opposition I criticised the lack of Ministers—

Mr. Arthur Lewis (West Ham, North)

They are all on strike.

Mr. Page

I am trying to make a serious contribution. It would be courteous to the House if, tomorrow, there were more Ministers present to listen to our contributions which so many of us have taken a great deal of trouble to prepare.

My next criticism is that we are in this mess because the Government decided to adopt a statutory prices and incomes policy and because of this have got boxed in. In Committee on the Prices and Incomes Bill the hon. Member for Poplar fought his right hon. Friend the Member for Blackburn (Mrs. Castle). I do not know whether the hon. Gentleman voted against the Prices and Incomes Bill.

Mr. Mikardo indicated assent.

Mr. Page

I wish I had had like courage. I abstained on stages 1 and 2. I wish that I had had the courage to go into the "No" Lobby. It is only by back benchers showing that they mean what they say that they can produce results.

I was in support of the draftsmen of stage 3. I believe that it was drafted with the greatest care so as to allow the miners the best deal possible. It is an awful pity that Mr. Daly was not invited to the Department to agree the draft of stage 3 so that he knew where we were going. I regret that the hon. Member for Wigan said that for the miners it is always a case of "jam tomorrow". The miners are not getting everything they want, but I believe that the offer to them is proportionately more advantageous than offers made to people in other industries.

It is disappointing that the miners realise that the present, with oil supplies cut, is the moment that they have the greatest power, which they have decided to use ruthlessly to attain their ends. To insist solely on having money on the table is not a genuine form of negotiation.

We need a pay policy which in certain industries would be non-statutory and which should be acceptable, but we should not go in for gross deflation. I have come to the conclusion over the past year that we have to differentiate—as we should have done in the Industrial Relations Act—between people employed by nationalised industries, in local and central government and those employed in private industry. Private industry should be sufficiently grown up as to be able to sort out among employers, employees and the unions how best to get along. I do not believe that Government interference is needed here. I do not agree with my hon. Friend the Member for Oxford—who left the Chamber immediately after I said something nice about him—that we must have continuity in the maintenance of a prices and incomes policy. Private industries and their employees and unions should get on with it.

There may be some employees in private industry, such as newspaper workers, who, though relatively few in number, can cause great damage and have great influence. I do not agree with either the hon. Member for Wigan or my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) that when there is a monopoly position in the provision of work the ordinary methods of supply and demand can operate.

We must designate for special treatment certain industries, and possibly groups within those industries, such as groups of people who can in a short time cause a lot of damage to the country as a whole. These industries or groups should be treated in such a way that they would be considered as a kind of elite and not as a kind of works council. For a start, the mine workers, the electricity, gas and water supply workers, certain transport workers, dock workers and certain airport workers could be included. The police, and probably the Services, would not be included. My list is small, but other hon. Members can add other industries which they feel could qualify for this elite category. An Act of Parliament would be necessary to give these groups special status. The Act would give them security of employment and specially advantageous pension and redundancy arrangements.

How would the scales of pay for these groups be arranged? I am sorry that the hon. Member for Poplar is not present, because I believe that the Act would have to provide that wage scales were determined on the basis that there was a shortage of suitable labour in the industry concerned. Alternatively, the criterion would have to be comparability with other workers not in those groups.

Mr. Arthur Lewis

Where would the property speculators fit in?

Mr. Page

I will not be drawn. I always enjoy a rough and tumble with the hon. Gentleman. I would not mind the rough on this occasion but I would not like him to tumble on me.

If agreement cannot be reached between the employers and the workers there would have to be a compulsory independent arbitration.

Mr. Dennis Skinner (Bolsover)

Bring the wives in.

Mr. Page

The arbitrators would have to be carefully chosen. The Act of Parliament would lay down that the arbitrators should not be allowed to take into account any propositions from the Government or be influenced by the Government of the day in making judgment on the shortage of labour in the industry concerned and on comparability with wages in other industries. This would be the only way to bring back a sense of acceptability into compulsory arbitration.

These are the more attractive elements in my plan. If the compulsory arbitration is found to be unbiased and produces excellent results for the groups involved, the idea should become acceptable. On the other hand, there should be no restriction on the right to strike. However, if the workers did strike they would not be paid social security benefits. If they chose to go on strike they would have to be paid from union funds or use any savings they have. Most people—certainly it applies to me—work to provide for their families.

Mr. Skinner

What about the kids?

Mr. Page

The main task of my work is to provide for my family. I consider that that is my prime responsibility.

Mr. Skinner

Tell us about all your jobs.

Mr. Page

The hon. Gentleman is demeaning himself even more, when I am trying to make a serious contribution to the debate. He might just sit back for a moment and try to acknowledge that for once, instead of listening to his own verbal diarrhoea, which I find as revolting as the colour of his socks.

We come now to the perhaps most complicated and least attractive of my options, which is that if people do not work reasonably according to their normal work pattern—if they work without enthusiasm, work to rule, go slow or refuse overtime—there should be a mandatory agreed deduction from their pay.

If the railway rule book is brought up to date and perhaps cut by half its present size, it will say that the driver must ensure that the doors of carriages are shut before the train leaves the station. He could walk along the platform and inspect each door, but that is not what he normally does. Reasonable working will be difficult to define, but it should not be beyond the wit of sensible and responsible people to decide what it is and what it is not. Working to rule can mess up the industries of the elite groups to which I have referred almost as much as a strike. The public must be protected.

Mr. Arthur Lewis

Will the hon. Gentleman give way?

Mr. Page

No. I cannot accept interruptions.

We have talked a little today about social security benefits. No developed country provides social security benefits for those who go on strike, except Germany in a narrow instance when there is an official strike. In Sweden, which is so often held up as an example of good industrial relations and which is a long-term Socialist State, it is considered by both unions and employers that it would be wrong for the Government to provide benefits for those on strike, as it would be an unwarrantable interference in the dispute between employers and employees. It is not properly realised that we are unique in that the taxpayer subsidises those who go on strike.

I am grateful to my hon. Friend the Under-Secretary of State for Trade and Industry for having listened to my speech. I hope that he will take it as a serious contribution to what might be done after the election, which I hope will take place on 28th February. When we return after the election, I recommend the Government to adopt my suggestions as a means by which they can throw away a statutory prices and incomes policy and bring a sense of fairness and reality into the life of the country again.

8.4 p.m.

Mr. Roy Hughes (Newport)

The hon. Member for Harrow, West (Mr. John Page) has been in a very reasonable frame of mind tonight, rather different from that which the correspondence columns of The Times sometimes reveal. But Harrow is a long way from coal mining, and therefore I do not propose to follow the hon. Gentleman's line of argument.

The country faces a serious industrial and economic situation. I represent a steel constituency. Steel is an important industry in Wales, and it is important to the country as a whole. It employs more than double the numbers employed in mining in Wales. The steel industry faces serious difficulties, and any disruption of that industry will have a serious effect on other industries.

There, are already widespread shortages of certain steels. The British Steel Corporation is importing coking coal, which is scarce and expensive. Dr. Finniston, the chairman of the corporation, has said that after eight weeks of a miners' strike no more steel could be produced, and after four to seven weeks there would be a trickle of steel that had already been made, and then it would be curtains to this key industry. That would have a grave effect on the motor car industry, our biggest export earner. British Leyland would be in jeopardy, in a very difficult financial position.

The miners can last out for more than eight weeks. They have shown by their recent ballot what a determined frame of mind they are in. The 1972 strike lasted for no fewer than 50 days. Britain is now much weaker economically. Last year we had a trade gap of £2,350 million.

The three-day week has already had its effect on production, exports and profits. The increase in the price of oil has added massive burdens to our balance of payments problems. Inflation is still rampant. The whole outlook is gloomy.

Much of the present situation is due to the Government's mismanagement. They failed to realise that immediately the Arab countries used oil as a bargaining counter to seek redress of their legitimate grievances, phase 3 was as dead as the dodo. The Prime Minister has shown little understanding of the situation. He is trying to prove that he has hairs on his chest. He is determined on a policy of confrontation with the trade unions.

The miners' overtime ban has continued for about 13 weeks. To meet their claim in full could be well justified, because coal is basic to our economy. Good pay is necessary to retain the labour force in the industry. The miners are essentially reasonable people, and the dispute could have been settled for less than the full claim.

In the past few days, the Prime Minister has spoken of a Royal Commission. Naturally, the miners are a bit sceptical about that. They have long memories. My right hon. Friend the Member for Leeds, East (Mr. Healey) reminded the House of the Sankey Commission and the promises which were made to the miners at that time. I have taken the trouble to turn up the text of the letter written at that time by Mr. Bonar Law to the general secretary of the miners' union. It was dated 21st March 1919, and said: Speaking in the House of Commons last night, I made a statement in regard to the Government's policy in connection with the Report of the Coal Industry Commission. I have pleasure in confirming, as I understand you wish me to do, my statement that the Government are prepared to carry out in the spirit and the letter the recommendations of Sir John Sankey's Report. In fact, those promises took 28 years to be realised—and by a Labour Government, in 1947, when the coal mines were taken into public ownership.

Mr. Arthur Lewis

Even today, the report has not been fully implemented in the sense that it should have given a clear seven-hour day. I know that there has been an arrangement, but even to this day it has not been fully and wholly operated.

Mr. Hughes

My hon. Friend will appreciate that the miners always laid great store by the public ownership of the industry, and that was the basic point of the Royal Commission at that time.

The present crisis has to do with the personality of the Prime Minister. He is insensitive to the needs of the situation. His stubbornness has known no bounds. There have been plenty of opportunities to settle the dispute before now. There was the offer on waiting and winding time. There was the offer by the TUC, expressing its constituent unions' offer to hold back and minimise their own claims so that the miners' claim could take precedence. There has been the pay relativity issue, and only at this eleventh hour has the Prime Minister seen fit to become interested in that. The duty which hon. Members on the Government side now owe to the nation is to get rid of the Prime Minister.

The dispute has been revealing also of the class nature of our society. My hon. Friend the Member for Poplar (Mr. Mikardo) has already dealt with the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) and her reference to the miners as the enemies of the State, together with the suggestion that social security payments to miners should be stopped, going back to Dickensian workhouse conditions. That is what is being advocated now.

Mr. Mark Hughes

Less eligibility.

Mr. Roy Hughes

Less eligibility, as my hon. Friend says, going back to Edwin Chadwick's day and to 1834. Undoubtedly, statements of that kind have had their effect in the miners' ballot, making them even more determined to stand by their leaders.

Then there was the outburst by the Minister of State who is responsible for the arts.

Mr. Hamling

He knows a lot about mining, of course.

Mr. Hughes

Another expert on mining, as my hon. Friend says. On 23rd January, the Daily Mirror reported the hon. Gentleman as saying: I would like to see what a miner would do with the inadequate and irregular payments on which our actors and actresses have not only to exist but to look glamorous. His remarks, the Daily Mirror tells us, brought jeers from guests at the Evening Standard awards ceremony. Producer Joan Littlewood, who led the heckling, said last night: 'It was bloody annoying to hear someone talk about the miners like the Minister did. Some entertainers can get paid £30 for one hour's overtime when working on something like a TV commercial. Try telling that to the miners'. Guests at the lunch ate smoked salmon and guinea-fowl, and drank toasts in red and white wine".

Mr. Arthur Lewis

Is my hon. Friend aware that the Minister who made that remark used regularly to get £80 for a 45-minute contribution to "Any Questions", including a free dinner?

Mr. Hughes

I am glad that my hon. Friend has reminded the House of that revealing fact.

A week or so ago, we had an interesting contribution from Mr. Justice Faulks, another expert on mining, one might say. The Western Mail, reporting his judgment in a divorce case on 29th January, quoted these words, with reference to the man concerned: If he had been a miner in South Wales, I might have overlooked it. But he was a cultured gentleman living in a respected part of the community, and that would not do". This was a man who had been kicking his wife. My father was a miner. He left the mines at an early age, with the miner's disease of nystagmus, and in his latter years he was nearly blind. Both my grandfathers were miners, and my mother's brothers were miners. I was not aware that they treated their women folk in that way.

On top of all that, we have had the Tory "Red scare". There have always been Communists in the miners' leadership. Arthur Horner, the miners' general secretary over a long period, was a lifelong Communist, and a patriot if ever there were one. He led the miners in the post-war period when we faced a difficult economic situation. The nation was crying out for coal, and he led the miners then along moderate paths, when they could have got almost any wages they desired. But, instead of that, the National Coal Board was supplying coal to industry at below the production price.

Arthur Horner was succeeded as general secretary by Will Paynter, another Communist. I have taken the trouble to turn up two of Mr. Will Paynter's newspaper articles, written in 1967, when he pleaded with the then Labour Government, on both economic and social grounds, not to run down this vital industry. Who was the patriot at that time? Was it Mr. Richard Marsh, then Minister of Power, or was it Mr. Will Paynter, the miners' general secretary?

In the Evening Standard last night, one read—some of us knew it already—that our miners are the lowest paid in the whole of Western Europe. I am sure that that must make a lot of people think. There has been a deluge of misrepresentation about the National Coal Board's offer to the miners. Hon. Members constantly talk about a 16½ per cent. offer, and we read the same talk in the newspapers. It is nothing but lies. For a start, 3½ per cent. of the so-called 16½ per cent. is hypothetical, in respect of productivity. It is not yet negotiated, it might take 12 months to negotiate, and it would then have to be approved by the Pay Board. Moreover, 6 per cent. of it would be for night shift work, but almost every other industry gets additional payment for night shift work. Why discriminate against the miners? We are therefore left with the basic 7 per cent.—the whole basis of phase 3.

The Government should settle with the miners. Even the president of the CBI is saying so and it would be the best possible thing that could happen to this nation.

8.20 p.m.

Mr. David Madel (Bedfordshire, South)

I agreed with the first part of the speech by the hon. Member for Newport (Mr. Roy Hughes), when he pointed out the danger of the shortage of steel supplies to the car and truck industry and to other manufacturing industries. This will happen unless there is a speedy solution to the dispute and an end to the three-day working week. The first part of his speech underlined three main points of the debate—the importance of coal, the importance of an incomes policy of sorts, and the various suggestions about a possible Budget following what my right hon. Friend the Chancellor said today.

I am glad that my right hon. Friend opted for caution in saying that it would possibly be dangerous to depress demand any further. Not only would that be dangerous for manufacturing industry in the south of England; it would have a quick effect on manufacturing industries which have moved to the regions. This particularly applies to firms which have been persuaded to invest outside the sphere of their normal investment area. If demand were further depressed I could foresee a sharp rise in unemployment in the regions.

The question has been raised whether purchasing power should be further reduced for salary and wage earners. We cannot possibly guess what the situation will be in a month's time, but one point of any possible Budget would be further increases in pensions which would presumably mean increases in national insurance contributions. For many people that would be another form of increased income tax. A casual reference was made by the right hon. Member for Leeds, East (Mr. Healey) about washing machines and other so-called luxury goods, and he asked whether there was not a case for increasing the tax on these items. Although they may be regarded as luxury goods they are often manufactured in the regions, and to depress the demand for them could have a deleterious effect upon the employment situation in the regions.

My right hon. Friend the Chancellor also warned of the danger to exports, and said that there was a good opportunity for increasing exports if we could move out of the present energy situation. For instance, the car and truck industry still has a high level of export orders and in order to sustain its investment in the regions it needs a high level of demand at home. Another factor which has emerged from the energy crisis is the need for the motor manufacturers to develop smaller engines, which use less fuel. The investment in and development of such products cannot come about overnight. We hope that it will come about as quickly as possible, and we hope, too, that the investment needed for research will be provided by a high volume of sales and production this year. We have seen what happens to industry in general if the car and truck industry is used as a yo-yo. That is why I welcome what my right hon. Friend the Chancellor said about exercising caution about depressing demand any further.

I turn now to the tax on fuel oil and petrol. According to the newspapers the oil companies have applied to the Price Commission for an increase of about 6p a gallon on petrol. I see my hon. Friend the Financial Secretary on the Front Bench. I have corresponded with him and asked him many Questions about the petrol tax. I believe it is wrong to group petrol, drink and tobacco together. It might have been right to have a special regulator tax for these three items in 1961 but, in 1974 with the huge increases demanded by the oil-producing countries, the time has come to remove petrol from the influence of the regulator.

The Arab countries have constantly quoted the tax paid on petrol as a reason for further increasing the price of oil. Petrol is essential. Not everyone has a car, but the effect of an increase in the cost of petrol spreads throughout the cost of living and I reiterate that it is wrong that petrol should continue to be considered with drink and tobacco under the regulator.

We have all promised to be fairly brief and I shall therefore spend little time dealing with the Pay Board and its activities under stage 3. Inevitably it is easy for a board operating an incomes policy to work well under phase 1, phase 1½ or phase 2. After all, it did not have much to do. There was a freeze for three or four months and then a very rigid norm—or perhaps it might be called severe restraint. Therefore, from November 1972 until the beginning of stage 3 the board had a relatively easy task. When stage 3 took effect its mistakes began to become apparent. Let us take the power engineers for an example. As if the country did not have enough energy problems and industrial difficulties, the power engineers decided to operate a ban on out-of-hours working from 1st November. They claimed special payment for that work and the Pay Board appeared to say "No." For seven weeks the country was on the brink of widespread electricity disruption. On 3rd January a settlement was announced and the general secretary of the power engineers, Mr. John Lyons, said they had achieved the essence of what they were seeking. Why could that not have been put right early in November? Why was the Pay Board not seen to convene a meeting between the Electricity Council and the engineers to try to settle the dispute? By the time phase 3 of an incomes policy has been reached the country is looking to the Pay Board to help people to settle under phase 3. Manifestly it was not seen in that light over the power engineers dispute.

Another example is the mining dispute. Nearly everything that could be said has been said about it, but has there been a meeting between the Pay Board, the National Coal Board and the NUM? It is not necessarily only for the NUM or the NCB to convene a meeting. Surely it is within the remit of the Pay Board to ensure that such a meeting takes place, and to see what can be settled under phase 3. If we are to have a relativities body, which will in a sense be a national incomes commission, it will presumably take over the function of the Pay Board. It should have an easier task than in 1972. Most of the people who settled up to the Wilberforce levels in 1972 did so after the report of the inquiry into the mining dispute. It is the other way round now. Most of those who were involved in wage negotiations and high settlements in 1972 have already settled under stage 3.

I therefore suggest that it is within the power of a relativities board to make suggestions to get us out of the current difficulties. How long would such a board take to report? Perhaps a month. Perhaps we could persuade the NUM to postpone any action for a month, so that such a board could be seen to be trying to bring about a solution. I emphasise, however, that if we are to have a national incomes commission, relativities board, pay board, or whatever it is, when we have progressed thus far from a statutory freeze, it must be more active. Such a board must have sensitive political fingertips.

Mr. Arthur Lewis

Will the hon. Gentleman give way?

Mr. Madel

No. I am approaching the end of my speech. On the subject of the power engineers' dispute the Pay Board was not as politically sensitive as it might have been. We must have an early improvement in its performance.

8.29 p.m.

Mr. Mark Hughes (Durham)

As a young boy brought up in a coal-mining village, to me the adult world was divided into two groups of people. Those to whom one said "Hey Mister" were one's natural friends. Those to whom one said "Please, Sir" were one's natural enemies.

Any Government trying to deal with the economy of a country must start from that very simple proposition. As long as the Government demand that they should be referred to as "Please, Sir" and that the miners should come to them saying "Please, Sir" instead of coming on a basis of equality and saying "Hey, Mister, I want my rights", so long will the Government get it wrong.

Economics, at its root, has that psychological relationship that, whether it was picking windfall apples as a little lad or settling the miners' dispute today, the rate for the job for the "Please, Sirs" was three times as much as the rate for the job of picking apples for those to whom one said, "Hey, Mister".

The present Government have consistently and continually got that crucial pre-economic relationship wrong. I have here a very simple letter about a datal worker underground. It comes from No. 77 Quarry Crescent. Bearpark, County Durham. It is about a husband and wife and two children. The husband has spent 41 years underground. The letter states: I pay £4.19 rent now and 60p school dinners.

Yours faithfully,

Mrs. Gibbon."

What is the pay chit at the end of 41 years in the pits? It is £23.70. What does this man get out of the offer currently in front of him? He gets 7 per cent.—after 41 years of saying "Please, Sir." He still gets only 7 per cent. of £23.70 take-home pay. That is why men like him, Durham miners with a pedigree in the mining industry longer than that of any noble Lord bar two in the other place, and people like the Ramshaw family, whose name is to be found on the first pay chits in the early 18th century and one of whose descendants will be the first mayor of Durham under the new reorganisation, these hereditary miners, bring to the present economic dispute something of the economic arithmetic.

It is not simply the calculations of econometric figures of inflation. It is the problem of pride of a group of men who have received from a succession of Governments massive injustices. Any Member of the House who has seen "Close the Coalhouse Door" will realise the depths of disillusion with the nationalisation which affected the mining community. To pretend that that does not exist is to delude ourselves. The new National Coal Board is as much "Sir" as its predecessors.

What miners are asking for now is not a short-term measure. The long-term build up of dissatisfaction in the case of County Durham—which I know best—is compounded with a new feature. Whereas until 10 years ago there was no real alternative—it was the dole queue or the pit; that was the simple world in which people lived—now for the first time there is the alternative of highly-welcome factories such as those of Mullards, Courtaulds, and Black and Decker, and the new industries which have been brought in, with which we are delighted. But when men see their daughters aged 22, for example, with little training, earning more as clerks in those factories than they can earn working underground after 30 years in the pits, can one wonder that they become bitter?

These are not men who take strikes lightly. Almost on the fingers of one hand can the strikes in the Durham coalfield over the past 150 years be counted—1833, 1844, 1892, 1911, 1926 and 1972. Those are the only times the Durham coalfield has gone on strike. These are not men who lightly go on strike, who vote by an 86 per cent. majority to give the mandate to their leaders to call a strike because of the actions of a minority of agitators of Communist leanings. These are men whose whole history is a compound of patriotism

Anyone here who knows something of the recruiting figures for the Durham Light Infantry or the South Wales Borderers or the Duke of Wellington's Regiment in South Yorkshire knows that these men when it comes to a real call to patriotism stand prouder than any other group, and they will not be blackmailed by the media telling them that they are reneging on their duty to the country. They have never been found wanting in that respect.

Yet these are the people whom the Government, by accident or design, have forced from the moderation of Sam Watson, Alf H. Hesler and others into the intransigent position they now hold. How is it that a group of men so committed to moderation for so long can be transformed into militants?

The answer to which I come, regrettably, is that the Prime Minister and his acolyte, the Chancellor of the Exchequer, and the activities of the Government have led the miners into this position of hostility. It is no joy to me to see the deep personalised hostility towards the Prime Minister. It is an acceptable part of political life that there should be a difference of opinion, forcibly expressed, as miners are in the habit of forcibly expressing opinions. But when I find in the working men's clubs and the pit lodges and elsewhere this acid, this burning personalised hatred of the Prime Minister, I become deeply disturbed, because what is then at issue is not merely phase 3 or the status of the Government—it is the status of this whole House and of the political institutions of the country, which have been brought to a level of disrepute and disrespect that can do no other than great damage to the whole country. That damage is of a different order of magnitude from any damage that a four-week or seven-week miners' strike can induce.

Probably few in the House now can recall in person the speech which Stanley Baldwin made in this place immediately following the 1926 General Strike. Although he is not the most popular figure in present-day mythology, it would be right for the public at large and for hon. Members, particularly members of the Government Front Bench, to reread what Baldwin then said—that it was not the rôle of any Government to use their undoubted constitutional power to impose their will upon a minority. That is one of the most significant remarks of any British Prime Minister this century. What Baldwin said in 1926 needs to be said today, that for the Government to stand upon their undoubted constitutional right to insist upon phase 3 is to do the constitution not a service but a disservice.

The men whom I have the privilege to represent are not miltant by nature. They are not men easily moved to wild action. These are men whom circumstances and the Government have forced into a position where they can do no other. Like Luther they will stand and like Luther, or the miners of 1833, they will eat grass before they give in because they are convinced that only thus can they hold their heads erect in the social strata in which they belong. It is that misunderstanding of the situation that is the greatest condemnation of this Government.

8.42 p.m.

Mr. Ralph Howell (Norfolk, North)

The whole House will have been impressed by the sincerity of the speech of the hon. Member for Durham (Mr. Mark Hughes) even if all hon. Members cannot agree with all that he has said. I agree with much that he said. Whatever happens now, the events of the past three months will be damaging to everyone in the country. The longer the confrontation goes on the more damaging will its effects be.

When the history of this period is written we shall look back in amazement to see how the high standard of living achieved in the past three years—the best standard of life we have ever had—was recklessly thrown away by this self-inflicted injury. I am particularly concerned with the damage it will do to the elderly, the retired and the low-paid workers. I represent a constituency with one of the highest percentages of elderly people. In addition, our agricultural workers are low down in the wages scale. When they accepted their award under phase 3 no protest was raised anywhere in the House.

I am particularly concerned with those pensioners who have tried to save to achieve a better standard of living than they would have had if they had relied solely upon their pensions. All our efforts to contain inflation have been directed towards helping such people maintain the standard of living for which they have worked and saved.

What is all this confrontation about? It has little to do with miners. I have listened to debate after debate in which we discussed the merits of miners' wages, their conditions of work, their health hazards, and so on. We have been missing the point for a long time.

I want to raise two matters. First, it is an odd society which can be brought to a three-day working week merely because 3 per cent. of the work-force decides not to work overtime. That is something which needs correcting rapidly. I believe that the miners have merely been pawns in this power game. It is no coincidence that the power workers, the railwaymen and the miners had their industrial actions simultaneously in the middle of winter, especially when the nation was confronted with the oil crisis. At the worst possible time these three industrial disputes were phased in to cause the maximum disruption.

I am convinced that this was carefully engineered, phased and planned, and that the miners have been merely thrown into the battle, largely against their wishes—because only a few months ago they voted for no industrial action. Yet, under phase 3, with the best offer of any group of workers, they are suddenly whipped into this confrontation.

This problem [Interruption.]—I shall attempt to develop my argument if hon. Members will give me the chance—is largely to do with Communists, anarchists and Maoists who are determined to wrest power from the House of Commons. It is of as much consequence to Opposition hon. Members as to we on the Government benches. Many Opposition Members are deeply concerned at what is happening. A small group of people are determined to wreck democratic government—not just to bring down this Government but to make it impossible for any democratic Government to govern. It is time that the Prime Minister drew attention to these people, identified them and spotlighted their numbers.

I do not believe that there are Reds under every bed, by any means. [Interruption.] Yes, there are one or two Reds on the benches. The creed, and the record, of the Communist Party is alien to this country. In 1966, 62,000 voters voted Communist; in 1970, only 37,000 voted Communist, which means that the Communists are getting nowhere by the ballot box but are, nevertheless, determined to gain power by other means. If one works out that voting strength, it means that only one in 800 voters voted Communist. Yet if one examines the amount of power that Communists wield on the executives of the country's 12 major unions it will be seen that one in eight are Communist, which gives an idea of the degree of power that they have gained in recent years.

Mr. Peter Hardy(Rother Valley)rose

Mr. Howell

No, I cannot give way. I have 10 minutes and I need it all myself. My second question is: how is it that this small number of people can wield as much power as they do? [An hon. Member: "Tell us."] That is just what I intend to do. I believe firmly that it is the system which we are operating—the system which has been developed over the last 30 years, with layer after layer of mistakes in our taxation system, in the social security system and in the employment system—which has created the conditions under which practically every strike is successful. Much has been made of the miners' overtime ban, but it has little to do with the situation. Over many years, every industrial action has been successful. Much more serious are the continual strikes in the car industry and the fact that wages in that industry have rocketed, making all other sections of the community dissatisfied. A few weeks ago, on inquiring why Massey-Ferguson tractors were not coming on to the market, we were told that there were 19 strikes currently affecting the production of those tractors.

I have continually drawn attention to the fact that it is utterly absurd for the present Government or any other to pay benefits to strikers' dependants as of right, because it is a misappropriation of public funds. In 1966 the Government made a serious mistake—and once we have made a mistake we do not seem to have the ability to correct it—in giving benefits to strikers as of right. Prior to 1966, there was provision whereby anyone who could prove hardship could receive benefit from the State. In 1965, only £66,000 was paid out in that respect. In 1972, the miners' union decided not to pay its members out of union funds and £5½ million in State benefits was paid out in that strike alone.

It is not the Government but the people generally, and most of all, the elderly and lower-paid people, who are financing strikes which are damaging, inconveniencing and even endangering them. That is wrong. It is one reason why responsible trade union leaders are losing control of their unions and power is passing from the leadership to the shop stewards. Many trade union people recognise the danger of any irresponsible person being able to call a strike regardless of whether money is to be paid out of union funds.

Secondly, the ease with which people can leave their employment and get other part-time work and at the same time draw benefits needs tightening up.

Mr. Peter Hardy

In mining areas?

Mr. Howell

I am talking not about mining areas but generally.

Thirdly, something needs to be done about the taxation system, whereby as soon as a person stops work he receives a PAYE refund.

The combination of all those factors creates a situation in which striking or acting irresponsibly is painless and as a result virtually every strike is successful. I am convinced that until we can correct these matters industrial relations will not be satisfactory. No amount of Industrial Relations Acts will correct the situation. We must create conditions in which it pays people to work, and work well. The Government must take note of this. Whether or not we have an election, until conditions are created in which it pays to work well we shall never succeed and Britain will never be prosperous.

8.55 p.m.

Mr. William Hamling (Woolwich, West)

The hon. Member for Norfolk, North (Mr. Ralph Howell) needs to learn something about industrial relations. He should go and live in a Durham village for a month or two to learn the character and disposition of the men for whom my hon. Friend the Member for Durham (Mr. Mark Hughes) was speaking. To a certain extent the debate has been unreal. We have heard the accents of Newport, Dunfermline Burghs, Jarrow and Durham, and we have heard many other hon. Members who represent the miners who have been the subject matter of much of the debate.

The hon. Member for Manchester, Withington (Sir R. Cary) referred to the 1926 General Strike. I remember well the General Strike and the 26 weeks' lockout. I admire the humanity and sincerity with which the hon. Gentleman spoke—in stark contrast to the speech of the hon. Member for Norfolk, North. I remember not only the damage that was done to the industry of the nation in those days but the damage that was done to the social fabric of the country, damage that took 25 or 30 years to repair. Those of us who remember those days approach the debate with a certain amount of responsibility.

The Chancellor of the Exchequer's concluding remarks, in which he attacked the miners, were not worthy of him, and I will tell him way. The miners have served the nation well in the past. They are not men who by tradition or experience want confrontation. I, too, know the Durham mining areas and I know my hon. Friends the Members for Durham, North-West (Mr. Armstrong) and Fife, West (Mr. William Hamilton) and others of my hon. Friends who come from mining families and mining places. They are not men who seek conflict. The miners simply want to negotiate their wages and conditions freely with their employers.

This dispute has been going on for a long time. Many of the proposals that have been made in the last two weeks could have been made 10 weeks ago. My hon. Friend the Member for Blaydon (Mr. Woof) knows this well. He is another of the reasonable men, another of the ordinary miners who are as English and at patriotic as anyone in the House. I speak as one who during the war held His late Majesty's Commission. There were miners serving with us who deliberately gave up a sheltered occupation to join the Royal Navy or the Royal Marines. These are the men whom hon. Members stigmatise as enemies of the country. They are as English as anyone. All they ask—I speak as an Englishman—[HON. MEMBERS: "British."]—I speak as an Englishman. The Scots can speak for themselves; they often do; and the Welsh even more often. I speak as an Englishman, as one who represents an English constituency.

All they ask is that they should be treated with the respect that in a democratic society one is entitled to expect—that they should be able to negotiate freely and not be subjected to the kind of intemperate attacks to which the right hon. Gentleman subjected them this afternoon. I know he had provocation. I understand that, but I ask him, sincerely, to consider that we face in the next few days one of the most critical times we have ever faced. If we do have a strike there will, as a result, be no victors. No one will win, not the Government, not the miners, not the country: no one.

These eyeball-to-eyeball confrontations may suit old-fashioned cavalry officers, but they cause awful carnage amongst the troops.

Moderate people such as ourselves tremble when we hear people talk about confrontation, talk about fights to the finish, talk about battles. We are all citizens of the same community. We are all citizens of the same country. All that we on these benches ask is that the Government recognise that, and that the Government recognise that there is a better way than the path of confrontation on which they have set their steps. There is a better way. The better way is to talk; the better way is consultation; the better way is negotiations. That is all that we on these benches ask.

We are all moderate people. None of us here is undemocratic. None of us seeks to overthrow the constitution of this country. All of us who, in the Labour Party, have come here, came as convinced democrat. We have pledged our lives to this parliamentary method. We know no other. When the time comes for an electoral confrontation the people of this country will decide it is time to have a Labour Government, but, however that may be, we accept these democratic methods. That is the way we were brought up. That is the way the miners were brought up. That is the way the steel workers were brought up. That is the way my father, a railwayman, was brought up.

I can remember the 1926 strike. We had enough of it then. We do not want any more of it now.

I appeal at this late hour to the Government to seek means of securing an honourable settlement with justice to both sides. People have talked about "face". All of us have lost face. All of us have accepted a compromise at some stage or another in negotiations, in our political life, in our private lives. Are the Government not big enough, not men enough, to make some small compromise—not just a compromise for tomorrow, but something tangible, something real they can offer to the miners? They are a special case.

At one stage during the discussions it was said that the TUC offered, "We will not take advantage of the situation". The Prime Minister himself has boasted in this House that 6 million people, trade unionists, have sought settlements under stage 3. Is not that an earnest of the sincerity of those unions affiliated to the TUC?

My own union, the National Union of Teachers, has claimed a special position for teachers, yet in line with TUC policy, since we are affiliated to the TUC, we accepted a settlement under phase 3 so that the Government could obtain the assurance they wanted. What more do they want? They have been given these assurances, but have turned them down.

I say to the Government, before it is too late, before we tear ourselves apart and destroy our nation, that they should bring some rational thinking to bear in the situation. Instead of wild talk, let us have a little peace talk.

9.6 p.m.

Mr. William Shelton (Clapham)

In the few moments that remain to me in this debate, I wish to say a few words about some of the underlying causes and solutions which have been proposed in this debate and in the last few weeks in connection with some of the industrial disputes which confront the nation—in particular, the miners' dispute.

The first solution to which I should like to draw attention was that which was so admirably advanced by the hon. Member for Ebbw Vale (Mr. Michael Foot) on 21st January, in the debate on the divided nation. The hon. Gentleman propounded the theory that if we had more equality we should have fewer disputes. His solution was that we should have a radically fierce Budget, which would level incomes and wealth.

It is probably true that we have too much inequality, but in an economic sense the argument was admirably answered by my right hon. Friend the Secretary of State for Social Services. I shall not go into detail, since the debate is fully set out in HANSARD. My right hon. Friend referred to the size of the cake and emphasised how fast its size had increased. The important factor which he stressed was in terms of the amount of wealth which we are gaining in this country rather than the way in which it is divided. He said that when one looked round the country one saw the division between various groups, such as that between ASLEF and the NUR, rather than any division between rich and poor.

My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has propounded his belief in the use of the monetary supply by which he suggested that our problems could more or less be cured. Mention has been made of a hypothetical figure of 2 million unemployed, which we may need before any end to industrial strife is reached. I am sure that nobody would countenance such a figure. Nevertheless, my right hon. Friend also put forward the other day the appealing argument that if the miners were offered and given more money, and if the monetary supply were not increased in any way, it would not matter because someone else would have to pay less. Theoretically he is right, but I believe that the people who would have less would not be the unions but the old-age pensioners, the poorer people, the weak and the sick. It is the Government's duty to protect those people. Therefore, one must disregard that argument.

I then come to the solution propounded by many Members of the Labour Party, which is that we should have price control but not wage control.

Mr. James Hamilton (Bothwell)

The Government want it the other way round.

Mr. Shelton

Perhaps the hon. Member for Bothwell (Mr. James Hamilton) believes that there will be restraint on the port of the trade unions. What I was saying was that the course propounded by the Labour Party would inevitably lead to inflation—

Mr. Hamilton rose

Mr. Shelton

I am sorry that I cannot give way to the hon. Gentleman, but I must conclude in a moment or two. I was saying that such a course would inevitably lead to inflation and possibly to rationing. That was precisely the programme started by the ill-fated Government of President Allende of Chile a year or two ago. I make no comment on that, for that is quite true.

The fourth solution, which I regarded with some doubt a year or two ago and which I now believe to be the only solution, is that of prices and incomes restraint. I am afraid that the free market solution failed in 1972, and in the present situation we have to stay with prices and incomes restraint. It may or may not be socially unfair. I have not time to argue that, but what I can argue is that those who say that it is unworkable are quite wrong, and I advise them to read the recent review of the Price Commission published a week or two ago, which shows that about 16.5 million people settled within phase 2, that there were about 7,000 agreements within phase 2 and that, as we know already, there have been about 5 million in phase 3. That, in my view, must be the way ahead for this country.

9.11 p.m.

Mr. Eric G. Varley (Chesterfield)

If this debate has done anything, it has proved to those who have attended it and the public outside who read about it tomorrow that the moment of truth has come. In the interests of truth, the Opposition are determined to ensure that the country knows the facts about the tragic and unnecessary dispute in the mining industry.

It is a dispute which has been brought about by the stubbornness and arrogance of the Prime Minister who, I am afraid, understands nothing about the miners of Britain and nothing about the ordinary people of the country. It is a dispute which has been deliberated exacerbated to give the most discredited Government for the past 30 years a chance to make a bolt for it and to dodge retribution for the collapse of all the policies on which they swindled their way to power.

I speak proudly as a former mine-worker. So long as my father, who has a 20 per cent. pneumoconiosis disablement, coughs out his lungs in the pit village where I was born—my father who saw service in the trenches in France in the First World War—I am damned if I will put up any longer with the tissue of lies and libel being poured out from the Government benches.

The Government are trying to libel men who have given their health and in some cases their lives to provide wealth which has made it possible for those who now abuse and revile them to be well fed and well paid. Some of them make more in a year than the average miner will ever see in a lifetime.

Too many Government supporters cheer smugly and complacently when the Prime Minister repeatedly describes the pay offer to the miners as "generous". My right hon. Friend the Member for Jarrow (Mr. Fernyhough) analysed that pay offer. So often have Government supporters cheered the Prime Minister for describing that offer as being one of 16½ per cent.—and the right hon. Gentleman has repeated it so often that it is now bandied around—that the time has come to look at it in detail.

The miners have been offered a 7 per cent. increase in basic wages. Under that offer, the surface worker would have his basic rate of £25.29 increased to £27.59, the underground worker would have his basic rate increased from £27.29 to £29.86, and the coal face worker would have his basic rate increased from £36.79 to £39.36. That is the "generous" offer to which the Prime Minister refers repeatedly and about which I have no doubt the Secretary of State for Trade and Industry will tell us shortly. That is money that no hon. Gentleman opposite would look at as a reward for his strenuous efforts. I doubt whether any hon. Gentleman opposite would go down a pit for that kind of money.

On top of this 7 per cent. basic increase comes money for night work. At present miners get 2½p—6d in the old money—extra for each hour of night work. Face workers do not get even that at the moment. Under this so-called generous offer all of them will get an extra 17p for each hour worked between 8 p.m. and 6 a.m.

Mr. Neil Kinnock (Bedwellty)

If they are allowed to do it.

Mr. Varley

If they are allowed to do it. Night allowances like that would get a horse laugh from print workers in Fleet Street who have the unappetising duty of setting up articles by better paid journalists such as Bernard Levin and others admonishing the miners on how unpatriotic they are for turning up their noses at this generous offer.

Added to the basic and the night money is another 1½ per cent. providing better holiday pay and extra days off—a few more days in which miners can see daylight probably in their gardens. Miners take great pride in their little gardens at the backs of their cottages in the pit villages. They regard them with great pride. But those gardens are nothing compared with the 154 acres in Buckinghamshire which Lord Carrington is hoping to sell for £10 million. I would bet that is an increase of more than 16½ per cent.

Mr. Reginald Freeson (Willesden, East)

Does my hon. Friend appreciate that the existing use value of that land would be about £300,000? That is a measure of the profit margin involved.

Mr. Varley

Exactly. I am sure that Lord Carrington would regard that as a generous offer.

The increase that the miners have been offered on their basic rate of pay and the extra allowances for night work and holiday pay add up to 13 per cent. Where does the other 3½ per cent. come in to bring that total up to 16½ per cent? The answer is that it does not exist, except as a gleam in Mr. Derek Ezra's eye. What hell that man has been put through by this Government who, twice in two years, have refused to let him negotiate with his workers.

We are told that this mythical 3½ per cent. is possible under a productivity deal which has yet to be negotiated and which has not been submitted to the Pay Board for its approval. We are reliably informed that the Pay Board has already given the thumbs down to that 3½ per cent. productivity offer. That is very odd. A waiting and winding time agreement, which could have ended the dispute months ago, is ruled out by the Pay Board before its possibilities can be probed. Yet a mythical productivity deal, which has never been officially put to the Pay Board, is included by the Prime Minister as part of the offer in an attempt to deceive the country into believing that the miners are being offered 16½ per cent., which they are not.

Under stage 3 many workers have come off better than the miners. I do not want to take up the time of the House unnecessarily, but there was an exceptionally good article in last Monday's Daily Mirror by Mr. Geoffrey Goodman, its industrial editor, in which he said that the Government know that others have got much more than the basic offer that has been made to the miners.

This phoney 16½ per cent. offer has been trumped up to make other workers jealous of the miners—that is what it is all about—to try to induce them to condemn the miners for turning down the offer and to set worker against worker in the hope that the outcome will be a divided nation. I tell right hon. Members opposite that they have been rumbled. Nobody sees it as a 16½ per cent. offer. It is not a 16½ per cent. offer.

The House should know the facts about the offer because we are told by the Prime Minister that the House has some special responsibility for it. Hon. Members may not be aware of it, but according to the Prime Minister this offer has been put before the House and endorsed by it. I do not remember it even though I have attended every debate in the House on the coal industry for the past 9½ years. However, we have the Prime Minister's word for it. On Monday of last week in that party political "Panorama" programme the Prime Minister made a remarkable statement. I am certainly obliged to the Daily Express for reprinting that broadcast in full. In it the Prime Minister declared that this offer was an offer approved by Parliament". I do not know when we approved it in the House. I do not remember it. I remember the Prime Minister repeatedly trying to rebuke my right hon. Friend the Leader of the Opposition for allegedly attempting to negotiate on this matter across the Floor of the House. It seems that we went one better and actually approved the deal. Perhaps it went through as unopposed Private Business at half-past two when we were not looking, or something of that kind.

In any event, the Prime Minister adds this unaccepted offer to the other pay increases under this Government and says how much better it all is than what the miners got under Labour. He does not say how much of this increase was not voluntarily conceded but granted only after the first of the pit strikes which have been the Prime Minister's personal contribution to our "Better Tomorrow". He does not mention the way in which miners' wages, like all wages, have been eroded by price increases which have been the result, not of wage inflation or world prices, but of deliberate Government action.

As my hon. Friend the Member for Poplar (Mr. Mikardo) asked, what about rent increases under the Housing Finance Act? These are not caused by wage inflation or world prices. What about mortgage increases caused by the Government's dear money policy? They were not caused by wage inflation or world prices. What about dearer school dinners, the abolition of free school milk, increased prescription charges, higher food prices consequent upon our entry into the Common Market? All the Common Market countries have had to put up with higher world prices, but in 1973, a year of wage freeze and wage control, Britain's food prices soared way ahead of all our eight EEC partners.

There is another myth that the Prime Minister has now decided to propagate. He is rewriting history so fast that he will soon be eligible for the editorship of the Soviet encyclopaedia. Yesterday, in answer to a question by my hon. Friend the Member for Bolsover (Mr. Skinner) the Prime Minister had the nerve to tell the House the NUM … has never been prepared to negotiate on any aspect of the subject"—[OFFICIAL REPORT, 5th February 1974; Vol. 868, c. 1032.] That is what the Prime Minister said yesterday. They were his very words. I have no doubt that perhaps over the next week or two he will use those words over and over again.

In that case what were all those talks about just before Christmas? What were those meetings between the Secretary of State for Employment and the miners' negotiating team on 20th December—the nod and wink talks, as they have come to be known? Were they not negotiations? What about the talks on protective clothing and pensions held on 21st December between the National Union of Mineworkers and Mr. Norman Siddall, the Deputy Chairman of the National Coal Board? Were they not negotiations? What were the talks, for example, on 27th December when the National Union of Mineworkers brought up the question of winding time and waiting time? Were they not negotiations? They actually sent round at that time for the Deputy Chairman of the Pay Board saying, "Will you come round and interpret some of these things for us?" They were negotiations.

Why did the National Coal Board send men to 42 pits solemnly armed with stop watches to time how long it took a miner to prepare to go down the pit and have a bath and clean up afterwards? Were they not negotiations? Was that just part of the Christmas pantomime season?

What was the outcome? One set of negotiations led merely to another set which in turn was a prelude to a further set of negotiations, which broke down in the first week of January because of the Pay Board's veto. The miners have negotiated in good faith and are still ready to do so. Hon. Members on the Government side of the House may suggest that the miners should go and see the Prime Minister. I do not blame the miners for not wanting a lecture from him, or not wishing to have a sanctimonious letter from him. Why should they go to see the Prime Minister in an atmosphere in which he may try to get them to agree to a wholehearted consent to phase 3, which is now in tatters as a result of the quadrupling of oil prices, which the Government are tumbling over themselves to pay?

When the Prime Minister says that the miners have never been willing to negotiate he is not telling the truth. It is the Prime Minister who is not prepared to negotiate. I understand that at one time the Prime Minister was called a "man of integrity", yet he has certainly not allowed the negotiations with the miners to take place in a meaningful way.

Mr. Hugh Dykes (Harrow, East)

Can it be inferred from what the hon. Gentleman says that he supports the Gormley formula of cash on the table now?

Mr. Varley

I do not know where the hon. Gentleman has been. The formula he mentions is the only way to get out of the dispute. That view is taken not only by the Labour Party—it is also the view of the Confederation of British Industry. Perhaps the hon. Gentleman would care to consult the Chancellor of the Exchequer on that point.

The Prime Minister says that the miners have never been willing to negotiate. But there is another matter upon which the Prime Minister persistently seeks to mislead the nation. He trots out repeatedly—it was in his sanctimonious letter to Joe Gormley on 24th January—his boast of how the Government are providing £1,100 million of public money for the coal industry. That claim was first propagated by the Secretary of State for Trade and Industry, whose removal from the scene of the coal industry was the best thing that happened to the industry for a long time.

What about this £1,100 million provided by big-hearted Peter and generous Ted? It does not exist—like the 16½ per cent. offer to the miners. The whole myth has been exploded by the Minister for Energy, who was kind enough to provide me with the truth behind the sham. It seems that he is throwing a little light on something. He tells me that £275 million of the £1,100 million is simply written down assets—just a paper transaction—while another £175 million of this bountiful £1,100 million is a write-off of accumulated deficits—yet another paper transaction. These two paper transactions account for £450 million of the much-vaunted £1,100 million.

What about the rest of the £1,100 million? Most of it does not exist. It is just a paper figure—a ceiling for possible grants which may or may not be made between now and 1978. Nobody knows how much of that total figure will be paid out. That is up to the Secretary of State for Energy, when he can spare time from his principal job as Chairman of the Conservative Party, at Central Office.

What we know is the estimate for the current financial year, which is £154 million. It can be only an estimate, because there are another two months to go. Therefore, what that £1,100 million boils down to is a possible £154 million.

This is humbug. I hope that the Secretary of State for Trade and Industry, who probably thought that he had a triumph in the last debate on the matter, will not trot out again that £1,100 million and tell us how it has been committed to the mining industry.

There has been a great deal of talk and humbug from the Prime Minister about the coal industry in the past few weeks. One would never guess that it came from a man who, as Leader of the Opposition, told the House, In my opinion, the closure of pits should move forward as fast as possible, and faster than it has been doing "—[OFFICIAL REPORT, 1st December 1966; Vol. 737, c. 658.] The right hon. Gentleman has turned into reality his dream as Leader of the Opposition. Under him, all the pits are closing down at a stroke. He is turning the closing down of pits into a grand old British custom. They will be able to set it to music and sing about it over the next few weeks at all those marvellous concerts the Prime Minister has in Downing Street, although perhaps all that will come to an end, too.

Conservative Members have no idea of the feelings of ordinary people about the shabby treatment the Government are meting out to the miners and about their attempt to stoke up and exploit the pit dispute for their own squalid purposes. The feelings of working men are being expressed on the factory floor and in the clubs. The Prime Minister may well be more impressed by the views of someone who is obviously very sympathetic to him personally, and who wrote a letter to The Times last week, from a respectable address in New Bond Street, London, W1, saying: I am in the process of engaging a new secretary and am currently interviewing applicants. I have seen a number of young women aged round about 20–25, who have said they would require salaries ranging between £2,000 and £2,500 per annum. In addition, they would have three weeks holiday a year, luncheon vouchers, would work in a pleasant office, in a most agreeable part of London. I cannot believe that the service rendered to the community by miners can be less than secretaries, and I would suggest that they have been grossly underpaid in the past. Mr. Heath commands a great deal of respect as a man of integrity and determination, but I think he has completely misjudged the mood of the nation who, on the whole, feel that not only are the miners a special case, but a very special case, as distinct from any other class of employees. The dispute will be settled one day, better sooner than before the nation is mortally damaged. Talks with a fresh offer should start immediately, coupled with a statement that this would be the only case permitted outside Phase Three. There will have to be a settlement. There is talk—I do not know how true it is—that this is likely to be the last debate in this Parliament. We shall soon know. If it is true, we shall soon be in the middle of a General Election campaign. I believe that the British people will seize with both hands the chance to hurl this discredited Government out of office.

But whoever wins the next General Election will still have to settle with the miners. Nothing on earth will get a miner down the pit if he is not prepared and willing to go there. The Prime Minister should understand that, and understand it quickly.

I have lived among miners all my life, and I thought that I knew them pretty well. But last weekend I was surprised and saddened when I went round the pit villages to find how deep the bitterness had gone.

Sir George Sinclair (Dorking)

The hon. Gentleman and his Friends stirred it up.

Mr. Varley

That is the Prime Minister's personal contribution to "One Nation". That is what he is doing, and I hope that he is proud of it.

I urge the Prime Minister, even at this late stage, to allow negotiations to take place. The miners want to negotiate—nothing more. I urge him to authorise a settlement which will allow all involved to emerge with honour. If he does that, he may well enhance his reputation. But if he decides otherwise, as everyone is now speculating that he will—or already has—and he opts to make a bolt for it, the decision will be in the hands of the British people. We on this side are confident that the people of Britain will vote to get Britain back to work.

9.36 p.m.

The Secretary of State for Trade and Industry (Mr. Peter Walker)

The hon. Member for Chesterfield (Mr. Varley), who has always taken a close interest in every debate on coal, has for the first time, speaking from the Dispatch Box, suggested that the Coal Industry Act was of no importance. He went out of his way to give the incredible impression that £1,000 million was, in fact, no more than £150 million. He knows perfectly well, having taken part in the debates on the Bill, that the pension provision for miners was doubled and the payments to miners made redundant due to collieries running out of coal were substantially increased.

In fact, the Coal Industry Act was welcomed by the National Union of Mine-workers as a major reform. If the Opposition have now reached a stage at which they endeavour to suggest that measures such as that Act, very much to the benefit of the coal industry, are of little importance, it only shows their ignorance and misunderstanding.

The debate began with the right hon. Member for Leeds, East (Mr. Healey) giving his views on the economic scene. He was followed by my hon. Friend the Member for Leek (Mr. Knox), who devastatingly exposed the way in which the right hon. Gentleman wished to pursue, in economic terms, policies which his own party strongly opposed in the period after the last election. He laid claim to the great success of his predecessor in the last Labour Government, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), in what he achieved as Chancellor. But it was his own party at its conferences following the General Election which strongly condemned the way in which those policies had endangered growth, had endangered public expenditure, had endangered the social services and had increased unemployment. In almost every debate within the Labour Party at that time we were told that it was a period noted for stagnation, noted for rising unemployment, and noted also for substantial reductions in public expenditure in the very spheres in which the Opposition now say they wish to see no cuts.

Therefore, the Labour Party in all its analyses of the economic scene has endeavoured to advocate policies contrary to those which we thought it recognised had failed when it was in office. The right hon. Member for Leeds, East missed some fundamental factors in his analysis of the economic scene. He spoke of the position of world trade without in any way pointing to the fact that in 1973 the British economy enjoyed considerable progress in obtaining for the first time since the war an increased share of world trade. Likewise, when he repeated, as he has frequently repeated, his comments about the failure to obtain investment and to see that British industry modernised, he failed to say that there was plenty of evidence that substantial modernisation and investment had been taking place in recent months. That is clearly indicated by the orders placed with the machine tool industry. In the first 10 months of 1973 they were half as high again as the year before. It was illustrated, too, by the many announcements by major industries of modernisation on an unparalleled scale.

Mr. Healey

Will the right hon. Gentleman give us the figures—since he obviously has them at his fingertips—of the level of industrial investment in 1970 compared with 1973? Does he not recognise that there was fall of 18 per cent. in investment between 1970 and 1972 and that therefore the increase he claims for last year did not get half way back up to the level of the last year of the Labour Government?

Mr. Walker

Again, the right hon. Gentleman is wrong. The figures I gave were for orders for the machine tool industry in the third quarter of 1973. They were at a record level. The right hon. Gentleman constantly endeavours to play down the modernisation that is taking place in British industry and his comments are extremely detrimental to the potentiality of British industry.

One of the spheres of investment that the right hon. Gentleman mentioned was steel. He said that this was one area where there was a considerable shortage of capacity and it was therefore wrong to have sold steel to Iran. I shall deal with the question of Iran later, but it is worth noting that the shortage of steel-making capacity last year was due to total neglect to invest in that industry during six years of Labour Government. It was the Conservative Government which announced the major modernisation programme which the Labour Government should have put in hand but which they failed to do.

As for the situation on Iran, two factors have affected our economy in recent months, one of them of an international character and the other self-inflicted. The oil situation is the most important. I was delighted to hear the right hon. Gentleman confirm that it was never his view as Shadow Chancellor, or the view of the Leader of the Opposition, that petrol tax should be reduced. He argued the opposite case. However, he was wrong because the Leader of the Opposition categorically stated that he was in favour of reducing petrol tax. The moment the news of the Arab oil price increases was announced the Leader of the Opposition said: Petrol and some oil products are heavily taxed. The Government should do all in its power to stabilise oil prices by corresponding reductions in taxation. Does the policy of the right hon. Member for Leeds, East prevail in the Labour Party, or does the Leader of the Opposition's view find favour? Perhaps the right hon. Member for Leeds. East would like to answer. That is another basic disagreement on the economic policy of the Labour Party.

Regarding the balance of payments, there are certain new opportunities in regard to the oil producers. I noticed that the right hon. Member for Leeds, East unlike his right hon. Friend the Member for Bristol, South-East (Mr. Benn), treated the deal with Iran rather in the same way as the hon. Member for Poplar (Mr. Mikardo) and one or two other Labour Members, as something which should not be done, and treated the relationship with Iran as something which was humiliating and bad. I hope that the view of the right hon. Member for Bristol, South-East prevails on this occasion. It is seldom that I have that hope. But if the Labour Party does not recognise the importance of establishing good economic relationships with a country such as Iran, with its considerable economic potentiality, it will be making a considerable mistake.

In regard to the transaction with Iran, the right hon. Member for Leeds, East mentioned the position of steel exports. Of the total of £110 million-worth of British exports which will take place as a result of this agreement, only £6.6 million worth is connected with steel, and that is for items which the steel industry considers will have no adverse effect upon the supply to British industry. Presumably the Labour Party has some respect for the judgment of the British Steel Corporation, which is a nationalised concern. The corporation considers that the greater availability of oil as a result of this agreement will mean that the steel production in total will be that much higher, and that it will, therefore, be to the benefit of steel consumers in Britain. I hope that we shall not have any more loose talk such as we have had this afternoon to the effect that the great bulk of the deal was about steel.

Mr. Ogden

Will the right hon. Gentleman try to show that he realises that in three days, two hours and fifteen minutes' time the coal miners will be on strike, and that if that happens there will be no steel? Will he give his attention to good relationships not necessarily with Iran but in respect of our immediate problems?

Mr. Walker

I should like now to deal with the speech of the hon. Member for Chesterfield and come to the point about the current situation regarding relationships with the miners. First, the hon. Member condemned the method of negotiations which have taken place. He said that the Government had negotiated badly because they had left no further room for negotiation. I remind the hon. Gentleman that throughout the talks my right hon. Friend the Secretary of State for Employment has made it perfectly clear to the miners that there are considerable spheres in which important negotiations could have taken place. There was the sphere of pensions, which throughout has been available for negotiations. The NUM has taken no advantage of the constant invitations to look at the manner in which miners could benefit there. There are a number of spheres concerning various health factors.

When the hon. Member for Chesterfield quotes his figures and various indications of certain categories of people who will get less than he thinks they deserve, he also knows that the NUM could always have renegotiated the package in a very different way, with a different emphasis on different categories of miners, and that the NUM has never done so.

The hon. Member for Durham (Mr. Mark Hughes) made a very moving speech in which he outlined his personal relationship with the mineworkers and stated how much he regretted that a fierce hostility had been built up. A similar tone was struck by the hon. Member for Chesterfield. He created a pitch and quoted figures. His figures were listened to with attention by both sides of the House. I hope that the same will also apply when I provide figures as to the changes which have occurred in the NUM position.

If the NUM had accepted this offer even without the productivity agreement, it would have meant that face workers over less than four years of the present Government's period of office would have had an increase of £18 a week in their earnings. [Interruption.] I hope the House will listen to these important figures. They would have attained an extra £18 a week—that is, an average of £4.50 per year—[Interruption.] The Opposition might like to hear this. We listened to the figures which the hon. Member for Chesterfield gave. [Interruption.] If the Opposition really want the country to know the facts, they will listen to these figures.

Over the past three or four years of Conservative Government, the miners have had an average increase of £4.50 a year. I remind the Opposition—who, in the debate, have shown such passion on behalf of the miners—exactly what happened during their six years of office. In the first year of the Labour Government, the miners had an increase of 86p; in the second year, which was the best year ever for the miners under the Labour Government they had an increase of £1; in the third year, their average earnings went up by 59p.; in the fourth year, they rose by 38p. All this was under the rule of the party which now condemns us as being unfair to the miners. Where were all these emotional speeches about the miners then? In the fifth year of the Labour Government, the miners' average earnings went up by 80p.

Mr. Mikardo

Without a strike.

Mr. Walker

In the sixth year of the Labour Government, the average went up by 83p, and, as the hon. Member for Poplar (Mr. Mikardo) said, without a strike, which is a very significant point. Under the Conservative Government, the miners' average earnings have increased by £4.50 a year.

Let us look at the figures in total. During the six years of Labour Government, the earnings of face workers went up by £4.46—less than the average each year under the Conservatives. Let us also look at the question in relation to inflation. In five of the six years the face workers had an increase less than the rise in the cost of living. One can imagine the emotional speeches if the Conservatives had treated the miners in that way.

Mr. Kinnock

I agree that it was a terrible thing that the miners did not demand or get more—they should have done—but will not the right hon. Gentleman acknowledge that throughout these years and many other years previously these wage agreements were put to the ballot and were overwhelmingly accepted by a democratic vote, whereas this latest offer has been rejected by an 81 per cent. majority?

Mr. Walker

The hon. Gentleman has raised an important point. The miserable increases that I have listed were being given each year to the miners and were, for the face workers, less than the rise in the cost of living. Yet we did not have the then Prime Minister urging his colleagues to go into the pits and find out how badly the miners were being treated. During that period of neglect of the miners, when many miners were becoming redundant and unemployed and when there was no Industry Act, the party which showed such passion today because there is a Conservative Government in power remained silent about the plight of the miners.

The hon. Member for Durham referred to miners being paid less than typists. Perhaps in 1964, when they were being paid £15 a week, they were getting less than typists. But the Labour Party was not interested in the comparative position then.

The significant thing about today's debate is the manner in which both Labour Front Bench spokesmen have failed to deal with the point made by the Chancellor when he asked why the Leader of the Opposition changed his whole attitude to the question of relativities and their importance the moment the Government tried to get a settlement on that basis. The fact is that the letter which the Leader of the Opposition wrote to the Prime Minister on 29th January clearly implied that one solution to the problem was to do something quickly about the relativities report.

When the Government told the TUC and the CBI that they were eager and anxious to act quickly there was never one word from the Leader of the Opposition to encourage the TUC to do this. Throughout the whole of the period the Leader of the Opposition has by his silence shown complete irresponsibility. To claim to be the Leader of the main opposition party when he is unwilling to say whether he is in favour of a strike or against it, to put forward a suggestion and, when it is accepted by the Government, to drop it immediately, shows that if Left-wing extremists can be accused of playing party politics on this issue, then certainly so can the Opposition.

Mr. J. D. Concannon (Mansfield)rose

Mr. Bernard Weatherill (Treasurer of Her Majesty's Household)

I beg to ask leave to withdraw the motion.

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

Order. The hon. Member for Mansfield (Mr. Concannon) was on his feet before the hon. Gentleman sought leave to withdraw the motion.

Mr. Concannon

I want to clear up some of the basic untruths uttered by the Secretary of State for Trade and Industry in speaking about miners' wages. What he forgot to say was that during the period he was talking about most of the miners volunteered not to take a wage increase so that they could help lower-paid miners in Scotland, Wales and elsewhere to catch up.

They were not then negotiating with the Government. They were freely negotiating within the industry, making and taking their own decisions. Everything the right hon. Gentleman said tonight was sheer hypocrisy—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

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