TRADE UNIONS

HC Deb 19 June 1974 vol 875 cc493-614

—(1) References in section 338 of the Taxes Act (exemption for trade unions) to a registered trade union shall be construed as including references to a trade union entered in the list of trade unions maintained under the Trade Union and Labour Relations Act 1974; and—

1. (a) if a trade union entered in that list was formed after 30th September 1971 it shall be treated as having been a registered trade union within the meaning of that section at all times between its formation and its entry in that list; and
2. (b) if a trade union was a registered trade union on 30th September 1971 it shall be treated for the purposes of that section as having remained a registered trade union so long as it remained a trade union.

(2) Section 123(2) of the Finance Act 1972 (which restricted the exemption conferred by section 338 of the Taxes Act) shall cease to have effecr.—[Mr. Healey.]

Brought up, and read the First time.

4.6 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey)

I beg to move, That the clause be read a Second time.

The clause ensures that in future trade unions entered in the list proposed under the Trade Union and Labour Relations Bill 1974, which is at present in progress through Parliament, will be entitled to provident benefit income exemption under Section 338 of the Income and Corporation Taxes Act 1970, Appendix A. In addition, it restores the relief with retrospective effect to trade unions which deregistered under the Industrial Relations Act 1971 and to new unions and newly amalgamated unions formed after 30th September 1971 which did not register under that Act. It also protects the position of those unions after 30th September 1971 which ceased to exist because of an amalgamation and will not, therefore, be listed in future.

In total, its effect is that, whatever action they took under the Industrial Relations Act 1971, trade unions will continue to enjoy the exemption under Section 338 of the Income and Corporation Taxes Act 1970 without a break.

I think the Committee knows that this clause is generally known as the Carr clause, after the right hon. Member for Carshalton (Mr. Carr), because it seeks to achieve an objective to which the right hon. Gentleman repeatedly pledged himself and the Government of which he was then a member; that is, to ensure that the provident funds of a trade union were not taxed as a result of the Industrial Relations Act.

Perhaps I may quote what the right hon. Gentleman told the House. He said: The assurance which I give, and which I stand by, is that it should be possible for a union which decides not to register under the new scheme of registration to take measures without insuperable difficulty to enable it both to protect its present provident funds and continue its provident fund activities."—[OFFICIAL REPORT, 4th August 1971; Vol. 822, c. 1714.] As late as 9th May of this year, after the last General Election, the right hon. Gentleman told us again that it was not the Conservative Government's intention that the provident funds of a union should be taxed as a result of the Industrial Relations Act.

I think the whole Committee and the country will agree that it would be scandalous if that had been the Conservative Government's intention, because the purpose of provident funds is to provide benefits to a member during sickness or compensation for personal injury while out of work, to a member by way of superannuation, to a member who has met with an accident, to a member who has lost his tools by fire or theft, for funeral expenses on the death of a member or his wife, and for provision for the children of a deceased member. I am quoting Section 338 of the Income and Corporation Taxes Act 1970, but those words have been on the statute book since 1893. Indeed, the provisions for relieving from income tax the provident funds of a trade union have been a fundamental part of our social system and tax machinery for over 80 years.

Yet, in fact, though we gather not in intention, the Industrial Relations Act robbed trade unions of this fundamental right—[HON. MEMBERS: "NO."]—if they chose to exercise another right which was totally legal; namely, not to register under the Act. That has made them liable in the last two years to pay as much as £10 million in additional taxation.

Mr. Peter Rost (Derbyshire, South-East)

They did not have to.

Mr. Healey

I am coming to that.

The last Government claimed that the unions which chose not to register under the Act could nevertheless retain tax relief by registering their provident funds under some other Act. But I am afraid that Ministers in the last Government were in a continuous muddle here. They kept making unequivocal assertions which they were later compelled either to withdraw or to revise.

On 23rd March 1971 the right hon. Member for Carshalton told us confidently—I remember the ring of confidence as he spoke these words— I am assured on technical advice that the Industrial and Provident Societies Act 1965 or the Friendly Societies Act 1896 is available for registering for the provident funds of unions which do not wish to register under the Bill in the industrial relations sense."—[OFFICIAL REPORT, 23rd March 1971; Vol. 814, c. 335.] But three months later he withdrew that assertion. He had to come to the House in a white sheet and accept, on 4th August 1971, that, as a result of further investigation, he had come to the conclusion that the Industrial and Provident Societies Act was not helpful in that respect. He continued to maintain that the Friendly Societies Act was helpful, but he proved to be as wrong about that Act as about the other.

It is true, as he had said in May, that there was no legal impediment to unions which wished to do so protecting their funds by hiving them off and registering as friendly societies. There are, of course, no legal difficulties in the way of the right hon. Gentleman living on the moon—

Mr. Russell Kerr (Feltham and Heston)

And a good idea, too.

Mr. Healey

—or becoming Prime Minister, but in practice the difficulties in both cases are formidable.

The Trade Union Congress General Council took legal advice as soon as this issue came up. In May 1971, on the basis of counsel's opinion, it was obliged to tell its members that the new friendly society proposed would have to be completely separate from the union and controlled separately. There would have to be a separate accounting system for the calculation of contributions. Unless every existing member and beneficiary agreed to the transfer of his accrued rights to the new society, the union would still have a commitment to provide the benefits to them, as their accrued rights would have to be assured.

Any payment of union funds into the friendly society for the purpose of providing or supplementing benefits, as can happen between union funds when the provident fund is not actuarially based, would be irrevocable. Of course it is true that some unions have operated their provident fund activities through friendly societies from the outset, but that is quite a different matter from trying to unscramble the funds of an existing union and creating a separate body with an entirely new membership.

The counsel's opinion showed that the obstacles in practice were insuperable, because a friendly society could not be formed simply by transferring the provident funds of the union into a separate fund. The friendly society must be formed by the union members and not by the union. While donations from a union's general fund might be added to members' subscriptions, it would not be possible to finance a friendly society through such donations alone. Nor would it be possible to make subscriptions to a friendly society a condition of membership of a union.

Indeed, counsel held that the Registrar of Friendly Societies would not only require formal separation of the friendly society from the union but would be unlikely to accept any degree of overt control through overlapping membership of the governing body and the executive committee of the union.

4.15 p.m.

The last Government knew perfectly well that this was the case. The point was repeatedly raised here and in another place during the passage of the Industrial Relations Act.

Mr. Robert Carr (Carshalton)

The right hon. Gentleman is, of course, entitled to state his opinion. He is not entitled to say that the last Government knew perfectly well that that was not the case. He has quoted one counsel's opinion. We took our legal advice through the proper channels, and it happened to be different from that. It is not unusual, perhaps, for counsel to differ, but, according to the advice given to us in a proper constitutional way, we knew—insofar as it is possible to "know" in this sense—the opposite of what the right hon. Gentleman is saying.

Mr. Healey

I shall shortly disprove the assertion that the right hon. Gentleman has just made. Perhaps it is convenient that he has made it so that I may be able to disprove it.

Lord Diamond raised the difficulties in detail in a debate in another place on 25th May 1971. He was told by Lord Drumalbyn that the interpretation that I have just quoted of the situation was correct.

The practical impossibility of the friendly society solution was raised continually in the House on later Finance Bills. On 27th June 1972, in Standing Committee E, my hon. Friend the Member for Birmingham, Ladywood (Mr. Walden) referred to the fact that his own union had considered the idea of forming a friendly society but had found it practically impossible.

A year later—this is the answer to the right hon. Gentleman—the Government finally conceded the point. The then Minister of State, Treasury, the hon. Member for St. Ives (Mr. Nott) said: I realise that there are practical difficulties in some cases in that for these purposes provident funds have to be alienated from the main union funds…I am therefore aware that what I am now suggesting "— the right hon. Gentleman's solution— cannot apply or appears not to apply in every case."—[OFFFICAL. REPORT, 10th July 1973; Vol. 859, c. 1425.] Nevertheless, the Government took no action to relieve the unions of tax penalties which they claimed they had never intended in practice.

They failed to fulfil the undertaking given by the right hon. Gentleman on 4th August 1971 that they would set up a special register for trade uinons which did not wish to register under the Industrial Relations Act, so that they could continue to receive tax relief on their provident fund activities if that proved necessary. They failed to meet repeated requests by the TUC that the six-month waiver of the rules in the Industrial Relations Act which was conceded at the beginning of its operation should be continued indefinitely.

The issue was raised yet again by the TUC directly with my predecessor, the then Chancellor, in a meeting at the Treasury on Tuesday 5th February, two days before the General Election was announced. Having heard yet again that it was not possible for trade unions to separate their provident fund activities for tax purposes, the then Chancellor, the right hon. Member for Altrincham and Sale (Mr. Barber), according to the TUC minutes of the meeting, said that he …realised that the whole issue was one of great importance to trade unions and he would endeavour to find a solution to the problem despite the difficulties which had been discussed. The Committee must presume that it was only the intervention of the election which prevented the Conservative Government from carrying out that pledge.

It has been left to the Labour Government to carry out a promise made by the Conservative Party on this matter, as, for example, on reducing the price of milk at a stroke. I would have expected that when we announced our intention to do this, the Conservative Party would have welcomed this solution and this fulfilment of a pledge to which they had committed themselves in such detail over so many years.

Our decision was welcomed, albeit reluctantly, by the arch-priest of the establishment—not a conspicuous ally of either the trade union movement or the Labour Party—Mr. William Rees-Mogg. In The Times on 24th April this year he said—this in many ways is the nub of my argument—in his leading article: It must anyway be regarded as improper to use the beneficiaries of a charitable fund as pawns in the business of influencing a trade union's leadership to adopt one rather than another of two equally lawful courses concerning something else altogether. He went on to say: The tax position of funds which deserve to be considered as having charitable status should be determined by principles general to the taxation of charities, not consequently on decisions of a completely different kind. He also went on to say—and here I feel that he showed less foresight as a prophet and wisdom as a commentator: Conservative MPs are likely to see the force of this, and it is indeed probable that if the Conservatives had remained in office to renegotiate ' the Industrial Relations Act, this is one of the things that would have been changed. Mr. Rees-Mogg must have been as shocked and surprised as I was that the Conservative Opposition have chosen instead to attack this decision, and in attacking it they have used arguments totally incompatible with the position that they took when in office and, furthermore, highly offensive to the whole trade union movement.

The right hon. Member for Carshalton on 9th May this year, had the insolence to say in this Chamber: The unions paid that tax when, in my view, they need not have done so, had they not been careless for political reasons of their trustee guardianship of their members' funds."—[OFFICIAL REPORT, 9th May 1974; Vol. 873, c. 624.] "Careless for political reasons of their members' interests"—those were the right hon. Gentleman's words. He went on to say that he would develop that charge in due course. All of us on the Government side of the Committee will be fascinated to hear him develop it.

Others of the right hon. Gentleman's colleagues have gone rather further. They have even asserted that unions which chose not to register under the Industrial Relations Act were seeking to act above the law—an assertion which they must have known to be false. The right hon. and learned Member for Hendon, South (Mr. Thomas), speaking at Llandrindod Wells on Saturday 27th April 1974, said of the clause that we are now debating: It was a special reward to the unions for deciding that they were above the law for refusing to take part in the Industrial Relations Act. That is what he said, and he is a man not without influence, we are told, in the Conservative Party.

Now we come to the Brutus of the Opposition Front Bench, the right hon. Member for Penrith and The Border (Mr. Whitelaw). It was he who struck the final blow. He said in a speech to the Primrose League on Wednesday 24th April—perhaps it was an election speech for all I know— The object of the largesse"— the fulfilment of the previous Government's pledges— is to relieve the Government supporters of the consequences of their own decision not to accept legislation lawfully passed by the previous Parliament. Does the right hon. Gentleman really claim that in deciding not to register under the Industrial Relations Act trade unions were acting illegally? That is an astonishing doctrine and is totally contrary to everything that right hon. Gentlemen opposite told us during the months and, indeed, years in which we debated this matter. Right hon. Members of the Opposition Front Bench have gone a very long way from all that they previously said when they were Ministers—that there was no intention to use the provisions of the Industrial Relations Act to prevent the unions from receiving tax relief on their provident funds.

I think that not only the Committee but the country must ask themselves why members of the Conservative Party have chosen this particular moment, when according to the newspapers there may be some prospect of an early General Election, to widen the gulf between themselves and the organised workers of this country by adopting a posture of arrogant hostility towards the trade union movement far more offensive than they assumed at any time during the worst period of confrontation when they were in office.

There has been some speculation in recent weeks about a possible change in the attitude of the Opposition towards the trade unions and industrial policy. Until now most of us assumed that the change would be designed to soften some of the asperities of the past. But instead we now see that if by some mischance they ever found themselves in office again, they would embark at once on a campaign of unrestrained aggression which could lead to us looking back on the two months of three-day working this year as an unexampled period of industrial peace.

Mr. James Prior (Lowestoft)

The right hon. Gentleman is trying to whip it up now.

Mr. Healey

The right hon. Gentleman has a charm which overcomes us all. We put down the new clause. The Opposition have chosen to debate it for a whole day on the Floor of the House, and they complain when we comment on the arguments they have used.

Mr. Prior

I suppose that the remarks that the right hon. Gentleman has just made are designed to keep peace in industry.

Mr. Healey

The remarks I have just made are designed to persuade the right hon. Gentleman and his right hon. Friends to recognise the error of their ways before it is too late for them. They seek to treat the working people of this country as some lesser breed, outside the law, to be exterminated if they act in a way which is not illegal but is contrary to the political prejudices of right hon. and hon. Members of the Opposition. I believe that in adopting that posture, which goes far beyond anything they did when in office, they are damaging the unity of this country no less than they are damaging the prospects of their party.

Mr. Prior

No words of mine could be as eloquent in condemning the right hon. Gentleman as are his own.

Mr. Healey

The right hon. Gentleman's eloquence is as overwhelming as his charm. I may be wrong, of course, and I readily concede this to the right hon. Gentleman: it may be misinterpreting the motives which lie behind the words spoken by so many Opposition leaders, those I have just quoted, and their opposition to the clause that we have moved. I dare say—perhaps the Opposition spokesman will confirm this when he winds up the debate—that the Opposition Front Bench is simply trying to provide us with the first example of new style opposition which has been promised by the right hon. Member for Sidcup (Mr. Heath) over the last few days. I note from the newspapers that he told his followers The phoney war is nearly ended. As always, I find myself fascinated and a little perplexed by his choice of words. I confess that the Leader of the Opposition was possibly right to describe his and his party's behaviour over the past three months as a "phoney war". I think probably the Committee can be united on that particular part of his statement. But what did he mean when he said "It is nearly ended"? Did he mean that it is ending tonight, or possibly tomorrow, or next week, in July, or after the Summer Recess? It certainly was not last night, when we had a majority which was far greater than would have been possible if the Opposition had been trying to win the vote.

Perhaps the right hon. Gentleman threw more light on this interesting question in his television interview on Monday. He said that he believed that the Labour Party was leading the country to disaster. But when his interviewer asked "If you believe they are disastrous"—

Mr. Peter Rees (Dover and Deal)

I fail to see what possible relevance this has to the debate on the new clause which we are supposed to be debating.

The Chairman

Order. When I find that there is a necessity to pull up the right hon. Gentleman, I shall have no reluctance in doing so. But that moment has not yet arrived.

Mr. Healey

I am grateful for that firm assertion of your authority, Mr. Thomas. As you will recognise, I was trying to reinterpret the actions of the Opposition in a way more favourable to them than the interpretation I put on them a few moments ago, and in that I was responding to an invitation of the right hon. Member for Lowestoft (Mr. Prior).

When the Leader of the Opposition was asked If you believe they are dangerous, surely for the country's sake you should be fighting harder? he replied No. What is the point of giving the present Government the opportunity of fighting a General Election? Say we had been able to defeat them on a major item on the Finance Bill"— like this one, I might remark to the hon. and learned Member for Dover and Deal (Mr. Rees)— and a General Election was called before the country itself realised the disastrous direction in which the Labour Party is leading us—what is the point of that? What is wise about that? What is the sensible leadership doing about that?

Mr. Peter Rees

Keep to the clause.

Mr. Healey

The Leader of the Opposition might well ask.

Mr. Peter Rees

Keep to the clause.

Mr. Healey

I dare say that some hon. Members might feel—

Mr. Peter Rees

Keep to the clause.

Mr. Healey

—that the attitude reflected in the Opposition's behaviour on this clause might be sensible, but is it leadership? There is something a little undignified in the Opposition behaving like a gang of grubby little boys popping out from behind a hedge to check the passing policemen and then belting hell for leather across the field the second he turns his head.

4.30 p.m.

I think that the Opposition have made a great mistake in choosing this clause and the problems of the trade union movement as an excuse for these antics.

Mr. Rost

Tell us what the Government are doing about inflation.

Mr. Healey

I am not surprised that the Opposition would like to change the subject, although I suspect, Mr. Thomas, that you might decide I was out of order if I sought to respond to the invitation from the hon. Member for Derbyshire, South-East (Mr. Rost). Perhaps the two hon. Members might sort this procedural point out with each other.

The Leader of the Opposition said that in this phoney war it is more important to win the argument than to win the vote. So far we have had no argument from the Opposition on this clause. We have had a series of gratuitous insults to the trade union movement intended to justify the posture which is the opposite to the one they adopted in office.

Mr. David Waddington (Nelson and Colne)

Justify the clause.

Mr. Healey

The Opposition do not have a leg to stand on in opposing the clause because it fulfils the decision by the Conservative Government to carry out a clear and specific understanding that the trade unions would not suffer in terms of taxation from the operation of the Industrial Relations Act. I hope that the House will unanimously justify the confidence of The Times by uniting in support of the clause.

Mr. Robert Carr

One point is quite clear. If we are supposed to judge in this debate, and in any Division we may have at the end of it, what are the merits of the clause, we can say that the Chancellor has certainly not attempted even to explain its merits, reasons and purpose in any substantial way. He has found it easier to indulge in what was no doubt for him an enjoyable political knockabout, which was perhaps also enjoyed by some of his hon. Friends. Nevertheless, this is a serious subject and that is how I intend to deal with it.

As he did on 9th May, the Chancellor today sought to honour me by describing this new clause 4 which the Government are hanging round their necks as the "Carr clause". Whether that be an honour is not for me to judge. We know, however, that the right hon. Gentleman's arguments are too clever by half and disingenuous in the extreme.

Of course it should be possible, as I said on 4th August 1971 in the House, which was a repetition of what I said on 23rd March 1971, for unions, without insuperable difficulties, to carry on their provident activities and to see that their provident funds protected against tax. Of course that is so. We meant that at the time and we still mean it. The Chancellor said that the Industrial Relations Act robbed the trade unions of that right. It did not rob them of that right, and of course that is what the argument is all about today.

Before coming to the substance of the argument I must refer to one thing said by the Chancellor which surprised me. He referred to a meeting which the trade unions evidently had with my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) when he was Chancellor as recently as the beginning of February this year. I wonder how he knows what was said and what was not said at that meeting.

Mr. Healey

May I answer that immediately? The TUC gave me a copy of the minute it took of the meeting, as it is perfectly free to do. I hope that the right hon. Gentleman is not sheltering behind some totally false and indefensible concept that discussions between a Chancellor and an outside body are not free to be referred to after an election. If he cares to fight his case on that procedural line the Committee will draw its own conclusion about the honesty with which he is presenting his case.

Mr. Carr

The Chancellor is entitled to his views, as are the trade unions, about what it is proper to disclose or not disclose when a body or an individual sees a Minister—this may happen while the right hon. Gentleman is Chancellor—at what are supposed to be confidential meetings.

Mr. Healey

I have met a large number of bodies including the CBI since I have been Chancellor. They have never hesitated—and I make no complaint about this—to reveal their views and the general reaction I took even though I was still a Minister.

Mr. Carr

I accept that, but will the right hon. Gentleman now say whether the trade unions on that occasion asked for retrospective legislation?

Mr. Healey

The trade unions asked for an indefinite continuation of the waiver given at the beginning of the Industrial Relations Act, and which had lasted six months. But, of course, they would have been prepared to accept any offer from the right hon. Gentleman which, in the light of their view firmly expressed on that occasion that the friendly societies route was inoperable, met their justified grievance which had been rejected by the right hon. Gentleman personally in the speeches to which I referred.

Mr. Carr

The Chancellor has made himself clear. The trade unions asked, I understand, for a change to be considered in this year's Finance Act, as they are perfectly entitled to do. They did not, I understand, ask for that change to be made retrospective. That is what the debate is all about—whether the change should be retrospective. This is, as everybody recognises, retrospective legislation. It has always been recognised by all parties in this Committee that any proposal for retrospective legislation requires a special scrutiny, and that it can be justified only in special circumstances.

The Prime Minister acknowledged this when he told the USDAW conference at Margate in April this year: No one likes retrospective legislation but it is justifiable when it is introduced to right a wrong which it was never intended should be inflicted". I would accept that test as one which might well justify an exceptional measure of retrospective legislation.

Mr. Healey

Perhaps inadvertently, the hon. Gentleman has misrepresented the point put by the TUC. It proposed that trade unions should qualify for the concession, and an alternative method available to the Government was also mentioned—that there could be an extension of the temporary provision in the 1972 Finance Act by which trade unions registered before 1st October 1971 continued to have tax relief on investment income applied to provident funds for the year 1971–72. That was clearly retrospective.

Mr. Carr

I do not think that it was. I have not seen that document. Perhaps we might be allowed to have a sight of it. But I do not believe, on hearing what the right hon. Gentleman said, that that was a claim for retrospective legislation. I do not want to become involved in detail, but I am forced to ask whether that was an agreed minute.

Mr. Healey

Perhaps the right hon. Gentleman wisely wants to divert the argument on to this. I have no idea whether it is an agreed minute, but I know that at least three of the right hon. Gentleman's right hon. Friends have recently applied to the Treasury for permission to view minutes which were made when the previous Government were in power. The right hon. Gentleman is free to obtain the Treasury minutes of the occasion if he wishes. But, as he will know, I am not free to do so. I have to rely on the minutes of the TUC.

Mr. Carr

Meanwhile, I prefer to rest on what my right hon. Friend has told me about the meeting, which is that he was not asked to make any retrospective provision. I believe that to be the fact.

I was saying that the Prime Minister said that retrospective legislation is justifiable when it is introduced to right a wrong which it was never intended should be inflicted. I said that I would accept that test as one which might well justify an exceptional measure of retrospective legislation. What I do not accept is that that test is satisfied in this case.

The payment of the tax which it is now proposed under the clause to refund was not inflicted inescapably on the unions by Government action or by the legislation passed by the House. On the contrary, it was a burden which the unions imposed on themselves without making any reasonable, responsible attempt to escape from it in the ways properly made available to them.

I want the Committee to look at the facts of the situation. The first point to stress has already been mentioned. I assured the House for the first time on 23rd March 1971, and again subsequently, that it was not the intention of the then Conservative Government that a union's provident fund should be subjected to extra taxation as a result of the Industrial Relations Act. I reaffirm that assurance today. If unions paid extra taxation on their provident funds, it was not as a result of any failure to honour the obligation in the assurance to which I have referred.

There were two ways in which unions could have protected their provident funds from taxation. The first and easiest way was to register. That was not a particularly difficult or unreasonable thing to ask. It was not an idea, a condition, thought up by a Conservative Government. The Donovan Royal Commission unanimously recommended in paragraph 792 of its report that all trade unions should receive corporate status and be registered. The Commission also unanimously recommended in Chapter XI of its report that certain requirements should be attached to registration.

4.45 p.m.

The previous Labour Government also proposed registration. The White Paper "In Place of Strife", stated in paragraph 114 that it is right and health in a democracy that any powerful body should be subject to outside scrutiny where abuse of its power can most harm the individual. The Labour Government of that time accepted that unions should register, and they said in paragraph 109 of the White Paper that they accept that a condition of registration should be that Unions will be required to have rules governing certain matters". They said in the same paragraph that refusal to register will lay a trade union open to a financial penalty by the Industrial Board. They also accepted, in paragraph 114, that it was necessary that the administration of union rules should be subject to independent review.

Thus, registration as a condition of achieving the benefits and privileges of trade union status was not a Tory invention. It was recommended unanimously by the Donovan Commission, which included trade unionists in its membership, including no less a person than the General Secretary of the TUC. The Commission's report was subsequently accepted by the Labour Government. [HON. MEMBERS: "They were wrong."] That is an opinion held by Labour Members who express it from a sedentary position below the Gangway. But it is a fact that the Labour Party and the Donovan Commission thought up the idea of registration and recommended it to the country. It was certainly not a concept invented by the Tory Party, the last Tory Government or me when I was Secretary of State for Employment.

Mr. John Tomlinson (Meriden)

The right hon. Gentleman has made great play of the concept of registration. Does he not agree that registration goes back much further than either the previous Labour Government or the Donovan Commission, and that it begins with the 1871 Act? It is nonsensical to try to pretend that the new concept is something to do with the Labour Government. The conditions attached to registration are what matter.

Mr. Carr

As the hon. Gentleman must know well, the Donovan Commission and the then Labour Government themselves attached new conditions to the old concept of registration.

Mr. Tomlinson

No.

Mr. Carr

Was it not a new condition that Refusal —to register— will lay a trade union open to a financial penalty"? That was a direct quotation from "In Place of Strife". Was not that a new concept of registration?

I believe that registration was a valid means to a valid and important end. It was in that context that I sought as Secretary of State for Employment to encourage trade unions to register under the Act and to accept the conditions attaching to registration. It is a pity, if the argument was just about the conditions attached to it, that the trade unions refused to consult me about those conditions. There was nothing disingenuous about what I did. If it is accepted that the purposes that registration was designed to effect were valid and important, it must also be accepted that it was right for the Government to seek to encourage registration and to refuse to make the path just as easy for those unions which desired to escape the responsibilities of registration as for those which were prepared to accept them.

But if registration were the easy and proper way of protecting a union's provident funds against taxation, it was not the only way. It was obviously the duty of the Government to accept the implications of their desire that registration should remain voluntary, and that if unions chose not to register they should be free not to do so. Our intention was that unions should voluntarily undertake the responsibility of registration, and that the Government should confine their rôle to persuasion and the provision of incentives to register. We carried out that duty.

Mr. Thomas Swain (Derbyshire, North-East)

It was blackmail.

Mr. Carr

There was no blackmail to register because we provided alternative means or made sure that alternative means existed. It is in that light that the Committee should view my statement during the passage of the Industrial Relations Act to the effect that a union should have a choice between obtaining tax relief by way of registration under the Act and obtaining it by way of: hiving off their provident funds…into separate organisations, registering them as friendly societies and thereby achieving the present degree of registration".—[OFFICIAL REPORT, 23rd March 1971; Vol. 814, c. 326.] The position which the Conservative Government adopted on tax relief may be simply stated. I and my colleagues made it clear, both in the House and in another place, that it was our desire that unions should continue to enjoy tax relief in respect of income from their provident funds. At the same time we satisfied our selves, on the basis of the legal and technical advice that was available, that there was no legal or constitutional impediment in the way of an unregistered union securing relief by hiving off its provident funds into separate organisations.

In the debate that immediately followed my statement of 23rd March, the right hon. Member for Blackburn (Mrs. Castle) commented that these matters would be "inconvenient" for unions. Subsequently the Labour Opposition changed their tune and argued in another place that the technical advice that the Government had received on hiving off union provident funds was incorrect. Arising out of that suggestion, the Government took two steps to meet the points made by the Opposition and by the trade unions, which were properly advising the Opposition on what they saw the difficulties to be.

The first step that the Government took was to amend that year's Finance Bill so as to ensure that those unions that chose not to register should have a year's continuance of tax relief to give them adequate time to fulfil their duties and to ensure the protection of their provident incomes.

Mr. Dennis Skinner (Bolsover)

Retrospective.

Mr. Carr

Yes, we did make that retrospective. It was right and proper so to do. Had we not done so we might have been taking away a proper right which needed time to be established.

Mr. Skinner

That is what my right hon. Friend the Chancellor of the Exchequer is arguing.

Mr. Carr

That is not what the right hon. Gentleman is arguing. We gave the unions an extra year in which to make their choice and to make their protection. That is the essence of what we did. The Government's second step—

Mr. Deputy Speaker (Mr. George Thomas)

Order. It is unreasonable not to allow a right hon. Member to state his case in the House without running interruptions.

Mr. Carr

The Government's second step was that the noble Lords, Lord Diamond and Lord Drumalbyn, met their legal advisers to consider the legal impediments which the Opposition claimed to have discovered. At the same time, the Lord Chancellor, at his own request, received a copy of the Opposition's legal opinion. The entire matter was subsequently debated twice in another place. At the end of the day the Lord Chancellor's view was accepted that there was no legal or constitutional reason for a union not to be able to transform its provident fund into a friendly society receiving tax relief.

At the end of the debate in another place Lord Diamond, speaking for the Opposition, concluded that the unions, in cases where unions found insuperable difficulties, should be entitled to the same tax treatment as promised to them, if they can establish to any reasonable independent person…that they have taken all reasonable steps to try and get this tax treatment and have not succeeded in doing so."—[OFFICIAL REPORT, House of Lords, 20th July 1971, Vol. 322, c. 922.] There is no doubt that that was a reasonable request on behalf to the Opposition.

There is also no doubt that if any union had complained to the previous Government that, having taken all reasonable steps, as indicated by Lord Diamond, it had met with insuperable difficulties, the Government would have investigated the complaint and would have acted accordingly. The plain fact is that at no point in the years that followed the passage of the Act did any of the unions complain to me while I remained Secretary of State for Employment or to either of my successors that they were meeting such difficulties.

Mr. Russell Kerr rose—

Mr. Carr

No, I shall not give way. My successors were never given any evidence that the unions, having made their best and determined endeavours to secure relief for their funds, found themselves against insuperable impediments. None of us in this Committee or outside has yet been given any such evidence. That applies since the present Government announced their plan for a retrospective cancellation of the tax paid by unregistered unions. The Chancellor of the Exchequer did not adduce one whit of evidence today to substantiate that claim.

I told the House in March 1971 that if I were convinced that some special register were necessary to protect the provident funds I would be prepared to propose it. I was not so convinced at the time and at no time thereafter did any of the unions come to me or to my successors to seek the setting up of a special register, they having tried and failed.

Mr. Healey

Supposing a union had complained to the right hon. Gentleman that in the 12 months from the middle of 1972 to 1973 it had sought to follow the course that he suggests, had found it impossible and had produced evidence to show that it was impossible. In that event, would he have retrospectively relieved the union from the tax obligation that it had incurred in the meantime? It is important that we should know that. If he concedes that, then his general argument against retrospection falls.

Mr. Carr

The right hon. Gentleman might have listened to my opening argument. I quoted the Prime Minister and, as I have been challenged, I quote him again. He said: no one likes retrospective legislation but it is justifiable when it is introduced to right a wrong which it was never intended should be inflicted. I accept that test as one which might well justify the exceptional measure of retrospective legislation. Speaking for myself, the answer to the right hon. Gentleman is "Yes".

The gist of my argument is that, as we promised, in 1972 we introduced an amendment to the Finance Bill to give the unions retrospectively the year's grace that we promised. We would have honoured our promise if the unions had met insuperable difficulties. Nothing was inflicted on the unions and they never tried to use the alternative way out. They never came to us as Lord Diamond suggested on behalf of the Opposition. They never told us or anyone else that they had made reasonable efforts and had failed. At no stage did any union or the TUC collectively come either to me or to my successors to make that case or to take up our offer that if contrary to our advice, the difficulties were found insuperable, we would reconsider the matter.

5.0 p.m.

Mr. Healey

I hope that I am interpreting the right hon. Gentleman correctly, because we have some difficulty in interpreting him in this matter. Do I understand that the argument is no longer on the principle of retrospection but) on the narrow question whether trade unions had done sufficient in taking counsel's opinion relating to the new problems which they faced, or whether they should have taken some further action—we know not what—in defiance of counsel's opinion in order to test it?

Mr. Carr

That is not a narrow question, and the right hon. Gentleman knows it. To the best of our knowledge, they did not make any effort at all. They made no appeal to us to take up the offer to overcome the difficulties if they found them. That is a fact, and it cannot be denied. There is no evidence to suggest otherwise.

There are occasions, as we all know, when retrospection may be justified. What we have said is first that we should not retrospectively impose penalties on people which they were not liable to incur when they took the action, and, secondly, that in any case retrospection must be a very special thing specially justified by circumstances arising, as the Prime Minister said, as a result of an unintended burden inflicted on the people concerned.

The central part of our case is that, if there had been any evidence that unregistered trade unions had tried to hive off their provident funds as suggested, but had met with insuperable difficulties—perhaps constitutional difficulties—there would have been justification for the view that an unintended wrong had been inflicted. Indeed, I made it clear that our amendment to the Finance Act 1971 would put that view into legislation. But no such evidence was presented to us, and the present Government have not come forward with any, and therefore they cannot claim that there is here a very special case requiring retrospective legislation.

Sir John Hall (Wycombe)

Can my right hon. Friend recall any case where retrospective legislation has been introduced to relieve a taxpayer of a burden which he could have avoided by his own action?

Mr. Carr

Of course I cannot. Nor can the Chancellor. This is the burden of my case. If there was one jot of proof that this was an unintended burden inflicted on the trade unions, there might be a serious case to consider. But there is no such evidence. No evidence was produced by the unions to the Conservative Government, and the present Government have produced no evidence to the Committee today. There is no precedent, as far as I know, and nor have the Government made out a case for setting a precedent.

Why the trade unions did not seek to protect their funds in either of the ways suggested is a matter of conjecture. Some may think that it was carelessness or preoccupation with other matters. Others may think that it was a deliberate policy to pay the tax as part of their political campaign against an Act passed by Parliament. Whatever the reason, the trade unions were offered alternative means to protect their funds. They were given the time to make use of those means. Above that, they were given the assurance that, if they tried and failed because the problems in the way proved insuperable, the matter would be reconsidered.

The trade unions chose to do none of these things and they cannot now expect to have privileged treatment over all other taxpayers by having these taxes retrospectively refunded. The taxes were properly paid and were deliberately paid, and if Parliament were ever to start down the road suggested by the Government, where should we ever stop, and where and how could respect for Parliament and the law ever be sustained?

Mr. Ivor Clemitson (Luton, East)

I must declare a past interest. In the three years before coming to this place I worked for a trade union. Lest any hon. Members think that I have an axe to grind in this matter, I should point out that the union concerned was for technical reasons forced to register under the Industrial Relations Act 1971, and therefore suffered no loss of funds.

We have heard a lengthy exposition from the right hon. Member for Carshalton (Mr. Carr), in which he totally failed to talk about the real issue in the debate. That issue is one of power. The Conservatives' view is, basically, that the balance of power in the relationship between unions and employers has tipped in favour of the unions, that the unions have become comparatively too powerful. The logical conclusion of that view is that the power of the unions should be contained and, indeed, reduced. This was the basic thinking behind and the intention of the Industrial Relations Act 1971. If any hon. Members opposite doubt that, I invite them to read the debate which took place yesterday afternoon in Standing Committee E, dealing with the Trade Union and Labour Relations Bill, particularly the remarks made by the right hon. Member for Lowestoft (Mr. Prior).

We, needless to say, have never accepted the thesis that the growth in the size and power of companies and corporations, particularly of supranational companies, in this century has been matched by a comparable growth in the power of trade unions. It is true that the unions have grown in membership, that their financial resources have grown and that they have become accepted as participants at the top table in consultations about the economic affairs of the country. But one has only to look at the rudimentary nature of international trade union organisation, or at the purely financial resources available to unions compared with those of the large companies and corporations, to get the argument about the balance of power into its true perspective.

Trade unions are not rich organisations. Their financial resources are meagre in comparison with their size, with the size of their membership and with the tasks that they have to perform. That is certainly so if they are to be able to give a reasonable service to their members and to make a proper contribution to the betterment of industrial relations.

Industry is becoming more and more complex in technology, organisation, managerial techniques and so on. If unions are to perform their traditional functions of caring for their members, of bargaining over wages and conditions of work, and so on, they need greater resources. But, more important, if they are to become more and more concerned with a much greater range of issues—including issues which up to now have been regarded as managerial prerogatives, of which investment decisions are an obvious example—they will need greater resources still. Yet, just at the time when the unions needed greater resources, their already meagre funds were depleted to a considerable extent, and that deple tion of resources was part of a deliberate plan to tip the balance of power against them.

It is argued that the trade unions concerned need not have forfeited the money, but that they consciously and of their own free will chose to do so. I would not argue with that proposition. In their view the conditions attaching to the saving of the money in question were more than they were prepared to stomach. Remember that the decisions in question were reached democratically, because trade unions are democratic organisations. For them the money was to be kept only at the price of a loss of autonomy and freedom which they and their forebears had struggled and striven for years to achieve.

We have, I hope, learned some lessons. I hope we have learned that the philosophy behind the 1971 Industrial Relations Act, that the power of trade unions must be reduced, was, and is, profoundly mistaken. We have, I trust, learned that to try to improve industrial relations by such means as the Industrial Relations Act is not the right way. I hope we have learned that the way forward in industrial relations is not through a reduction in the power of trade unions but through the build-up of ways in which the power of trade unions can grow and expand in positive and constructive ways.

We are, therefore, rightly in the process of clearing the ground by getting rid of the Industrial Relations Act. Then I hope we shall be able to build a framework of industrial democracy. If this is to be successful, if we are to have better industrial relations—and I am not talking merely in terms of fewer working days lost through industrial disputes; I am talking in a much more positive and profound sense—two things must be done about the finances of trade unions.

First, trade unions need more money, not less, to do their job. Secondly, a gesture of good will needs to be made to the trade unions by the restoration to them of money which is rightfully theirs. This is not appeasement, as I have no doubt some Conservative Members will be arguing later. This is not a sweetener. This is a tangible token of our trust in the trade union movement and of our intention to create a system of industrial relations more in tune with the growing democratic aspirations of the workers of this country.

Mr. Jeremy Thorpe (Devon, North)

The hon. Member for Luton, East (Mr. Clemitson) made many factual remarks with which I find myself in agreement. He did not, however, come to the nub of the question, which is what the legal position was, could have been and might have been. If I may paraphrase the Chancellor, what he was saying was that he accepted that the previous Government intended something but did not manage to achieve it and, therefore, what the Government are doing is trying to achieve by this new clause that which the previous Government sought to achieve but failed

If that be so, we are not having a tremendous argument on the emotional issue as to whether trade unions should have these funds. We are asking a simple question, which is whether, in this legal conflict it is right to say that those unions which chose to deregister under the Industrial Relations Act immediately lost the tax exemption under Section 338 of the Income Tax Act 1970. It is the view of the Labour Party and the TUC that they did. It is the view of the previous Government that they did not. That seems to be the nub of the conflict.

I confess that I think doubts were initially raised by the obiter dicta, or perhaps express statements, of the former Solicitor-General the right hon. and learned Member for Surrey, East (Sir G. Howe) in Committee on the Industrial Relations Bill on 10th February when he said—I hope I paraphrase him accurately—that it was his view that no registration meant no qualification as a friendly society in respect of provident funds.

That was certainly the indication which he gave then. It was, therefore, hardly surprising that the then Opposition on 23rd March 1971 sought to move an amendment which would remove any doubts and produce the guarantee of tax advantage which it was the united wish of the House should persist. Today the Chancellor said that on that occasion the right hon. Member for Carshalton (Mr. Carr), reiterating that it was his wish that these tax benefits should continue, believed that it was unecessary to make the suggested amendment because there were two possibilities. The first was registration and the second, for those who did not wish to register, was hiving-off, so that the benefits of the 1965 Industrial and Provident Societies Act and the 1896 Friendly Societies Act could operate.

5.15 p.m.

The right hon. Gentleman went on to say that he would recommend the setting-up of a special register if the intention which he had could not be fulfilled in any other way. At that time my colleagues and I were, first of all, not satisfied by the right hon. Gentleman's view, not least because the 1965 Act is not appropriate to the question of tax relief. The right hon. Gentleman perfectly frankly admitted this in the House at a later date. We were not convinced by his ipse dixit as to what the legal position was. We believed that if the legal opinion expressed by the Solicitor-General was not correct we needed a legal opinion of considerable compulsion and weight before we could be satisfied.

That is no reflection on the right hon. Gentleman, but the doubts I had about a statement of the legal position coming from a non-lawyer were precisely the same doubts as I have about the Chancellor's legal pronouncements this afternoon, to which I will come in a moment. Because we were not convinced that the Solicitor-General was "reversed", my colleagues and I voted with the then Oppositon for the amendment. I believe that was right. I believe that we had not been given sufficient satisfaction as to the legal position of those who hived-off provident funds.

The right hon. Member for Carshalton referred to the discussions which took place between Lord Diamond and Lord Drumalbyn, when it was agreed that, because there was a clear legal conflict, both sides would take their own independent legal advice and then concert. This was done. As a result, when Third Reading was reached in another place on 20th July 1971, Lord Diamond said that two leading counsel had been consulted and had advised the TUC and it was his view that the understanding expressed by the right hon. Member for Carshalton was not likely to do the trick.

It is not without significance that at that stage the Lord Chancellor thanked Lord Diamond for the courtesy that had been afforded him in allowing him to see the opinion. Lord Hailsham went into the legal decision in considerable detail. He said that he was not only satisfied—again I paraphrase but most hon. Members who are interested in this will have read the debate—that the position was as the right hon. Member for Carshalton thought it, but he further believed that there were four or five different ways in which provident funds could be hived off so that they could produce the tax benefit which was generally desired. He mentioned charitable funds being set up with trustees, covenants; the purchase of annuities and the transfer of funds to friendly societies to obtain the benefits of the Friendly Societies Act. He mentioned that NALGO and the National Union of Teachers had already done that. He accepted that there might have to be a separate subscription and indicated that, in his view, which I share, there was nothing wrong in there being a separate subscription, possibly collected at the same time, for particular funds which one is entitled to say should be treated in a very special way. He also expressed the view that there were no legal, constitutional or technical reasons why it was not possible to hive off in this way.

We have been in this difficulty. The Government say "We have had a legal opinion and we do not think that the Tory Government were right." We do not know what was in the legal opinion. Still less do we know who compiled it, atlhough I have no doubt that it was the work of one or two eminent "silks". We are asked to believe that all is well. The Government say "We have seen the legal opinion. The Conservative Government made a complete hash of it. Just take it on trust from us." Similarly, the Conservative Government said "We have taken legal advice. The Lord Chancellor has read his advisers' views and the other side's views and he prefers his own."

We are, therefore, concerned with a conflict of legal opinion. No Member, with the exception of about four or five Ministers, has seen the opinions and the evidence on which they were based. That is a profoundly unsatisfactory situation. My colleagues in another place, having considered the Lord Chancellor's speech, believed that he had given the legal under takings and assurance which we did not feel the right hon. Gentleman, with the best will in the world, had been able to provide to our satisfaction, and, therefore, they voted with the Government.

The Prime Minister, in his speech to the Union of Shop, Distributive and Allied Workers on 28th April, said that no one liked retrospective legislation. The speech has been quoted in extenso, so I shall not quote it at length, but he went on to say that Two years' experience of the Act showed that his hopes proved liars". He was referring to the view of the right hon. Member for Carshalton. He continued: The unions found they could not ensure the necessary protection for their provident funds in the way suggested". Our difficulty is that not only do we not know the legal position but we have not been given one example of a union which tried to hive off and found that it could not do so. I am sure that the right hon. Gentleman the Secretary of State for Employment, good parliamentarian that he is, would be the first to agree that if there were ways in which there could be hiving off, if there were legal avenues open to trade unions to hive off provident funds and still obtain the benefit of Section 338, the case for retrospectivity would not have been made out.

I therefore find it staggering that not one example has been given in the Government's presentation of the case. For all I know, there may be examples. If there are, it may well affect the way in which right hon. and hon. Members vote. However, we should jealously guard against the principle of retrospectivity.

The Secretary of State for Employment (Mr. Michael Foot)

In the debates which took place at the time of the passage of the Bill and in some of the subsequent arguments there has been dispute between the legal authorities, as was admitted by the right hon. Gentleman, whether occasionally there are difficulties in carrying out the hiving off operation. I am not talking about its legality or constitutionality. Some say that it would be extremely inconvenient or difficult, which was the advice the TUC received; others say that it would not be so difficult.

However, as apparently every hon. Member, including, I trust, the right hon. Gentleman, is in favour of the unions getting the relief in any case, why not provide for it? It could have been provided for at the beginning, so it is no good the right hon. Gentleman saying that this is just a legal question. Where there is a will there is a way. This is not a matter of retrospective action. It could have been dealt with in advance.

Mr. Thorpe

The right hon. Gentleman poses a fair question. A case for retrospectivity is not made out because something is difficult and complicated. It may be made out if something is impossible. But no evidence has been given of any union being faced with an impossible siltuation in the hiving off operation.

Mr. Foot

Plainly, different views were being expressed, as anyone who reads the reports of the House of Lords debate at the time of the passing of the 1971 Bill will agree. No one was speaking out of malevolence. Therefore, in order to remove doubt, why did not the Conservative Government, if they wished to assist, say "As there is doubt, we shall ensure that the tax relief is provided, whether or not the unions are registered"? They could have provided for relief, but they did not. They said that they wanted to provide for it, and we are now carrying out their wish.

Mr. Thorpe

The right hon. Gentleman asks why the Conservative Government did not provide for it. I am not my brother's keeper—as the right hon. Gentleman may say in another context. All that I am saying is that the legal opinions, which I believe were respectable, just as I believe the Government's opinion was respectable, differed. We are being asked to make a judgment without knowing what was in the legal opinion and with no evidence of unions having hiving-off problems.

My answer to the question why we do not have the will to achieve what we want is this. We are introducing an element of retrospectivity in a Finance Bill. If it is accepted, how much easier it will be for Governments of different complexions and for different reasons to follow the same procedure as the present Government intensely believe to be necessary. This is a dangerous precedent.

Mention has been made of the Burmah Oil case. The Labour Government intro- duced retrospective legislation but the Tory Opposition had drafted the Bill, so they felt they could not intervene, and kept quiet. We led the attack because it was retrospective legislation.

If the Secretary of State wishes to make out a case for retrospective legislation, particularly in a Finance Bill, first, he has to show on the basis of the most unimpeachable legal authority that there is no alternative open to the trade unions, with no possibility of hiving off, and, therefore, that they are bound automatically to suffer the tax disadvantages of deregistering. No legal evidence has been given, and the Chancellor of the Exchequer would not put himself forward as a Lord of Appeal in Ordinary.

Secondly, in order to justify what is proposed, some evidence must be given. Not a scintilla of evidence has been given in the debate, and unless we can have more convincing evidence about the legal opinion—

Mr. Skinner

What will the right hon. Gentleman do?

Mr. Thorpe

If the hon. Gentleman will belt up, I will tell him. Unless the right hon. Gentleman produces evidence on the legal position and makes out the case for retrospectivity, all my colleagues and I will vote against this measure.

Mr. Nigel Lawson (Blaby)

The Chancellor of the Exchequer had the temerity to say that we on this side of the Committee had not a leg to stand on. The plain fact is that he and the Government have not a leg to stand on, and there is a simple test. If the Government had a leg to stand on, this proposal would have appeared in the Labour Party manifesto. Nothing of the sort appeared.

This is a brazen and unequivocal piece of retrospective legislation. What is more, it is retrospective legislation in a Finance Bill, as the Leader of the Liberal Party has just pointed out. It is not as though this was the first piece of retrospective legislation or attempted retrospective legislation in this year's Finance Bill. In Committee upstairs only on Monday we had a Clause 4, again absit omen, which sought retrospectively to set aside a court judgment. In the event, I am glad to say that on Clause 4 the Government's retrospective intentions were defeated and that the forces of constitutionalism prevailed, as I trust they will again today.

5.30 p.m.

The retrospection in this clause—appropriately enough, new Clause 4—has been defended by the apologists among the Government's supporters broadly on two grounds. The first is that, in effect, the Government are merely implementing their predecessors' clearly expressed intention to exempt the provident funds of trade unions from taxation. This argument has already been examined in detail by my right hon. Friend the Member for Carshalton (Mr. Carr), and I shall not go into that again. The crux of the matter is that the trade unions deliberately failed for well known political reasons to take the steps open to them to relieve themselves of this tax liability. This has been admitted by the hon. Member for Luton, East (Mr. Clemitson).

The question before the Committee, in plain English, is: if the trade unions deliberately seek the martyr's crown, is there any reason why the taxpayer should have to pay for so expensive a bauble, especially, some may think, when a number of unions are evidently able to abstract large sums of money whenever they happen to need it from mysterious and anonymous donors—

Mr. Skinner

The hon. Gentleman should tell us about his improvement grants.

Mr. Ian Lloyd (Havant and Waterloo)

On a point of order, Sir Myer. Is it possible for the Committee to have some freedom from the seedy, seditious and sedentary interruptions of the hon. Member for Bolsover (Mr. Skinner), of whom we are thoroughly weary?

The Temporary Chairman (Sir Myer Galpern)

I appreciate the alliteration of the hon. Member for Havant and Waterloo (Mr. Lloyd). In any event, interventions from a sedentary position are entirely out of order.

Mr. Skinner

Further to that point of order, Sir Myer. I understand perfectly well that there may be problems in this Chamber when an hon. Member is trying to put across what may be a provocative and controversial point of view. There have been many occasions during the past four years when I have been subjected not to isolated interruptions from sedentary positions but to a tumultuous barrage from Conservative hon. Members. I have never complained. When I first came to the House I realised—

Hon. Members

This is not a point of order.

Mr. Skinner

Yes. There it is again. My case is closed.

Mr. Lawson

Perhaps I might just interpolate the comment that many right hon. and hon. Members of this Committee find the passion for self-advertisement of the hon. Member for Bolsover (Mr. Skinner) incredibly boring.

Mr. Skinner

The hon. Gentleman should tell us about his improvement grants.

Mr. Lawson

The second ground advanced by the Government to justify the retrospection in this clause is the argument that, whereas it may be wicked to increase anyone's tax burden, it cannot be wicked to reduce it retrospectively. That distinction is manifest nonsense. The Government require a sum of money in taxation revenue, and a retrospective reduction for some means a retrospective increase for other taxpayers, however thinly spread it may be. It is true that hitherto there have always been retrospective increases in taxation against which this Committee has had to guard itself. But I cannot recall a case in which we have faced a proposal for a retrospective reduction in the tax burden of a group of people at the community's expense.

The question to which we have to address ourselves is why, in this case, the Government have seen fit to do it and why, uniquely, the trade unions are to be the beneficiaries of this largesse. Incidentally, many unions, if they get the money, will put it straight into their general funds simply because they do not have separate provident funds.

Mr. Skinner

Into property, like the hon. Gentleman did.

Mr. Lawson

We have to ask ourselves what are the special merits of the trade unions which entitle them to this uniquely favoured treatment. Some people outside this Committee suggest that the Government want to hand out this money because it will go into the funds of the Labour Party's paymasters and then be paid back in order that the party may fight the General Election which cannot be far off. I do not subscribe to that Machiavellian explanation. However, the Government have only themselves to blame if they allow that to be widely believed.

What is so special about the trade unions? In his important and perceptive note of reservation to the main report of the Donovan Commission, Sir Andrew Shonfield, who to my knowledge has always been a supporter of the Labour Party, rightly described the British trade union movement as "a licensed conspiracy". Now it seems as though it is also to have, if not a licence to print money, at least a licence to have money printed for it.

What functions do the trade unions perform which justify this unique licence? What is the raison d'être of the trade union movement in Britain today? I want to attempt a brief analysis of it, not in any spirit of arrogant confrontation, or whatever was the abusive language of the Chancellor of the Exchequer, but in a cool, analytical light.

The trade unions are important as a pressure group or, more accurately, a collection of pressure groups in our plural society. But that does not explain why they should be singled out for special privileges and immunities. In the past they have been rightly concerned to protect their members from unfair dismissal, from hazards at work, from dangers to health, and so on. But today they are protected by Parliament through legislation, and quite properly.

What else is there for the trade unions to do? Certainly they cannot maintain full employment. The only argument is about how much unemployment they cause by pricing workers out of jobs. They cannot promote economic growth. Again, the only argument is how much their activities actually retard it. As is all too clear, and as I am sure the Chancellor of the Exchequer would agree if he were here, the trade unions cannot even protect workers as a whole from the inflation which they themselves largely cause. It is true that one trade union can gain on behalf of its members at the expense of another or, more easily, at the expense of those who are non-unionised, such as retired people. But this is hardly so worthy and meritorious a national objective as to justify special privileges and immunities, special treatment, and now the retrospective handing back of £10 million of taxpayers' money.

I am not concerned with the unions' methods, though they have given rise to concern over a long period. Since we have with us the Secretary of State for Employment, who spends most of his time living in the past, perhaps I might quote an extract from a report of the London Compositors' Society, itself a trade union, as far back as 1834.

The extract reads: Almost all trades unions hitherto formed have relied for success upon extorted oaths and physical force. The fault and destruction of all trades unions has hitherto been that they have copied the vices which they professed to condemn. While disunited and powerless they have stigmatised their employers as grasping taskmasters; but as soon as they were united and powerful, then they became tyrants in their turn, and unreasonably endeavoured to exact more than the nature of their employment demanded, or than their employers could afford to give. That was 1834: plus ça change.

Mr. Tomlinson

I have been trying to check the hon. Gentleman's reference to the Donovan Report where Mr. Shonfield, in his note of reservation, describes the trade unions as "licensed conspirators"—

Mr. Lawson

He calls it "a licensed conspiracy".

Mr. Tomlinson

Will the hon. Gentleman give us the exact reference to the report of the Donovan Commission?

Mr. Lawson

It is in one of the early paragraphs on a left-hand page. If the hon. Gentleman reads it carefully he will find it. If not, I shall be happy to show him where it is afterwards.

My argument is not about the union's contribution to the evil of inflation, serious though that is and the greatest threat to this country, but that, in modern, post-Keynesian conditions, the trade unions collectively no longer have any industrial or economic raison d'être. Because of that, as some of their leaders explicitly recognise, their rôle and raison d'être are becoming increasingly political—the acquisition and the exercise of political power.

This is not a new analysis. One particularly disquieting aspect of that power was mentioned by the Prime Minister just five years ago. On 5th June 1969, speaking about the trade unions—the hon. Member for Meriden (Mr. Tomlinson) can look it up if he wishes, but I always get my quotations right, and I quote for the last time—he said: It was a predecessor of mine, Stanley Baldwin, who referred to certain Press lords who were exercising a certain degree of arrogance in political matters, that they were asserting their claim to power without responsibility. That claim is being reasserted now not by Press lords but by another estate of the realm. The position has not changed since then—even though that of the Prime Minister has, from Tiger Baldwin to Appeaser Chamberlain.

The clause is eloquent testimony to that change, for what is at issue is not simply the constitutional impropriety of retrospective legislation, serious though that is, not the payment of £10 million to the trade unions—a token, as one hon. Gentleman opposite called it. The clause is a symbol of something far more fundamental: whether the power of Parliament should defer and become subservient to the rival political power of the trade unions; in short, whether parliamentary democracy has the self-confidence to stand up to the gravest constitutional crisis and challenge that it has yet had to face. Heaven help us all if it has not.

Mr, David Mitchell (Basingstoke)

The situation revealed in the debate today seems quite simple. The trade unions decided to play politics after the passing of the Industrial Relations Act. They decided to thumb their noses at the Act. They knew what they were doing, and they are now asking the taxpayers to make good the consequences of their own folly by retrospective legislation.

It is said that when each new Government come into office Ministers arrive at their offices and their desks are cleared. All the working papers left by their predecessors are removed. They are then shown round, they meet their staff, and finally, when the other civil servants have gone, the Permanent Secretary unlocks a cupboard and brings out, one by one, the skeletons that have been left by past administrations—not just the previous one—over many years.

I understand—perhaps this account can be confirmed—that on this occasion the Chancellor of the Exchequer poked about a good bit further than his predecessors and made an extraordinary discovery. He thought he had come into office with the cupboards bare, the till with no money in it, and nothing in the kitty. Then, opening a cupboard, to his astonishment he found it stuffed with millions of pounds—£10 million. There-more, a Cabinet meeting was called and consideration was rightly given to the rival claims of different Ministers for spending this money on their Departments. That was right, for one of the major tasks of the Government is to consider priorities when they are to spend the taxpayers' money.

I understand that at the ensuing Cabinet meeting the Secretary of State for Education and Science claimed that the money should go on teachers' pay as a useful lift to attract the right calibre of man and woman into the teaching profession. That was turned down.

5.45 p.m.

Then the Secretary of State for Social Services put in her bid. She wanted the earnings rule relaxed for pensioners. She also wanted to extend the constant attendance allowance which was introduced by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) when he was Secretary of State. From the time that the money was paid out the then Opposition complained that insufficient was being paid out. Therefore, here was an opportunity to rectify the situation.

There was then a suggestion of an increase in hospital building, a further suggestion that the money should be spent on cancer research, and, finally, a suggestion that the right priority would be to spend it on nurses' pay. I believe that that would be a better priority than the one chosen by the Government. However, those suggestions were turned down.

Even the plea by the Minister of Agriculture, Fisheries and Food, that something should be done to ease the problems facing farmers who were having to slaughter pregnant cattle because they could not afford to take them through to birth and fattening, was turned down.

Next, the Secretary of State for Trade put in his bid. He said—I understand the point—that he must have more money to encourage exports because he had to offset the damage being done to our export trade to Chile, South Africa, and other countries of which he disapproved, where exports were to be discouraged or barriers put up against our selling abroad.

Then, fearing and remembering the consequences if we were to leave the Common Market and trade barriers were to be put up against us, the Secretary of State for Industry, I understand, pointed out that the effects would be so disastrous that British Leyland would probably be bankrupted if it were locked out of the European market and that, therefore, the money should be devoted to that area.

Then suddenly the right hon. Gentleman remembered his responsibilities to small businesses. He had fobbed them off on a junior Minister, but I think he had a guilty twinge. Perhaps something should be done for small businesses. The £10 million could make a contribution towards the productive potential of this country and help to offset some of the damage being done to small businessmen by increasing corporation tax, the introduction of the new vicious advance corporation tax, and the threat of a wealth tax which hangs over so many small enterprises today. They dare not spend money on investment and expansion for they do not know how much they will need to have available for the Chancellor's wealth tax.

Mr. Bob Cryer (Keighley) rose—

Mr. Mitchell

The hon. Gentleman will have his opportunity to speak later.

Those are the competing expenditures for that money. It is proper for the Cabinet and Parliament to consider the right priority for that £10 million. I take a different view from that of the right hon. Gentleman and the Cabinet. I do not agree that it is right to give the £10 million as aid to the trade unions.

The Ministers in putting forward the views of their Departments, if they did—if they did not, why not?—were right to ask their colleagues to consider these matters.

The Secretary of State for Industry would probably want an emergency fund to keep big firms going while they were being bled white with taxation by the Chancellor of the Exchequer before he was ready to take them over under his new proposals.

Mr. Rost

At knockout prices.

Mr. Mitchell

At knockout prices, as my hon. Friend says.

The Chancellor of the Exchequer, looking a little uneasy and desperate to encourage savings in the economy, probably recalled the words of Lincoln: You don't help the wage earner by destroying the wage payer. You do not create wealth by destroying the wealth creator. You do not encourage thrift by penalising and destroying the saver. Perhaps Lady Falkenden put in her hand, too. She has not yet assumed her ministerial rôle, but no doubt she suggested that the money could be spent on reclamation.

However, the Secretary of State for Employment swept all before him. He beat them all with impeccable logic. He has repealed the Industrial Relations Act, extended the immunities of trade unions and immensely strengthened their power, and here was a way of bribing them not to use that strengthened power, in spite of the danger of public misunderstanding about 87 per cent. of the funds of the Labour Party coming from trade unions. Nevertheless, it was considered that the biggest bribe in history given to the trade union movement would persuade it to eat out of the hand of the Secretary of State for Employment.

But the Secretary of State does not know the difference betwen a pensioner and a prisoner, and that is the position in which he and his colleagues find themselves in relation to the trade union movement today.

Despite all the alternative expenditures which could and should have had priority for the £10 million of taxpayers' money, this was chosen as the top priority. Any registered trade union would not have had to pay this money in taxation. The trade unions exercised their choice. We all exercise our choice in life, but we have to take the consequences of our decisions. The trade unions, however, are asking for the right to take the choice to play politics and then to let the taxpayer pick up the bill afterwards, instead of taking the consequences themselves.

But the Secretary of State for Employment says, "Ah, this is different. We have a social compact. We want to improve the atmosphere. We want to change the atmosphere of the trade union approach to Government." Will it work? We have a right to ask that question. In trying to answer it we do not need to gaze into the crystal ball. We can "look in the book", and see that it has been tried before.

Let us look back to 1965, to the joint TUC-CBI statement on prices and incomes. The Committee should recall the terms of what then happened when the atmosphere was being improved in this connection. I quote from HANSARD of 16th December 1964. The First Secretary of State and Secretary of State for Economic Affairs, the then Mr. George Brown, told the House that he had discussed matters with representatives of the trade unions and he had reached an agreement. on the terms of a joint statement setting out the principles on which a prices and incomes policy should be developed…"—10[OFFICIAL REPORT, 16th December 1964; Vol. 704, c. 382.] He said that there would be a meeting later that day to sign the statement. The statement, as it appeared in HANSARD, indicated that there would be attempts to raise productivity and efficiency so that real national output can increase, and to keep increases in wages, salaries and other forms of incomes in line with this increase…"—[OFFICIAL REPORT, 16th December 1964; Vol. 704, c. 387.] What happened? Twelve months after the statutory control of prices and wages was introduced in the policy which was set out, the solemn declaration of intent had totally failed to be kept—

Mr. Tomlinson rose—

Mr. Mitchell

The hon. Member will have an opportunity to address the Committee. I am not anxious to prevent him making his own contribution.

The year 1964 was not the only occasion when attempts were made of the sort I have described. In 1969 we had the copper-bottomed guarantees given. At that time the then Prime Minister—who is also the present Prime Minister—said, In the course of yesterday's discussions the General Council"— of the TUC— unanimously agreed to a solemn and binding undertaking which set out the lines on which the General Council will intervene in serious unconstitutional stoppages. My right hon. Friend the Member for Sidcup (Mr. Heath) then intervened and asked, What will happen should unofficial strikers ignore the trade union leaders, and go on striking? The Prime Minister replied, The TUC has given us this binding declaration". He later said, …the TUC will place an obligation on the unions concerned to get their members back to work. It will then be the duty of the unions concerned to do this, including, where appropriate, the use of their rule books—[Laughter.]…[Interruption.]—[OFFICIAL REPORT, 19th June 1969; Vol. 785, col. 700–2.] We are going over the same ground again today. We are being asked to spend £10 million of taxpayers' money in a bribe to persuade unions to carry through a social contract or social compact. I do not make the charge against the TUC that it is dishonest in any way. There is no dishonesty, but there is impotence—an unsatisfactory condition which no one seeks to advertise—but it is nevertheless an unfortunate position for it to be in.

What possible prospects are there of the social compact being carried out today? The best way to judge that is to look at the trade union conferences taking place at present. Delegates to these conferences are mandating their union leaderships. Bearing in mind that this money is to be forthcoming, and that the social compact is in existence, the Government should today be finding a ready response from the union membership and the union conferences. But we find, for instance, that the electricians at their conference at Hastings have agreed to abandon stage 3 deals and to try to imitate the miners. We find also that the teachers, at Eastbourne, have called for a 37 per cent. wage claim; the clerks, at Blackpool, have decided to oppose stage 3; the draughtsmen, also at Blackpool, have decided to oppose stage 3; the shop-workers, at Margate, have put in a 20 per cent.-plus claim, with a claim also for longer holidays, higher overtime rates and a shorter working week; and to cap it all, what greater determined confrontation against the so-called social contract would it be possible to produce than that of the miners who, in conference at Porthcawl, have put in a claim for £100 a week for next winter?

Further, the farmworkers, at Clacton, have claimed an 81 per cent. increase in pay; the technical staffs, at Harrogate, have decided to reject any TUC control of wages; and the printers, at Great Yarmouth, have decided to reject the current stage 3 offer. APEX, the clerical part of the AUEW, has decided to oppose any wage restraint while private enterprise survives. [Interruption.] The hon. Gentleman may dislike what I am saying. But the only possible justification for this £10 million of taxpayers' money being given to the trade unions is that the unions are to give something in return through the social compact, yet it is clear that they will not do so.

A newspaper which no one could accuse of being a Conservative newspaper, The Times, states today: Wage restraint pledges would be folly, Mr. Scanlon tells union. So there we have it in simple and straightforward terms. The Government, having £10 million to spare which we did not know they had, have considered the alternatives and have decided, despite all the priorities on which it could be spent, that the right priority is to give it to the trade unions—not to all the trade unions, but only to those which have been most politically motivated, those which had chosen to defy the theme of the Industrial Relations Act and refused to register, those which are the biggest, boldest and most bloody minded. That, with respect to the Secretary of State, is not a good enough criterion for spending £10 million of the taxpayers' money in the way that is proposed.

6.0 p.m.

Mr. Charles Loughlin (Gloucestershire, West)

One of the tragedies of the debate is that it seems that the Opposition have learned nothing. The last two speeches from the Opposition reflect the kind of mentality that was shown towards the trade union movement when right hon. and hon. Gentlemen opposite were on these benches. That resulted in the greatest confrontation ever between the trade unions and the Government and the total collapse of British industry, which brought the country nearly to bankruptcy.

The hon. Member for Basingstoke (Mr. Mitchell)—and in a moment I shall deal with some of the points that he made—may think that it is highly desirable for the Tory Party to continue with a policy of confrontation with the trade unions.

Mr. David Mitchell indicated dissent.

Mr. Loughlin

The hon. Gentleman shakes his head. He is not even conscious of his attitude. He is not even conscious of the effect of his words on those who listen to and read the debates in this Committee. He should not imagine that the TUC and the trade unions affiliated to it do not read HANSARD. He should not imagine that they ignore what is said in this Chamber. If he believes for a moment that it is possible to create in British industry the climate that is essential to our future prosperity by attacking at every touch and turn the whole of the trade union movement, he is living in a fool's paradise.

Mr. David Mitchell rose—

Mr. Loughlin

No.

Mr. David Mitchell

On a point of order, Sir Myer. Is it in order for the hon. Gentleman to put into my mouth words which I did not utter and to suggest that I expressed views which I did not put forward?

Mr. Cryer

Further to that point of order, Sir Myer—

The Temporary Chairman

Perhaps I may deal with one point of order at a time. It may be that the hearing of some hon. Members is not as acute as that of others and there may, therefore, be some misinterpretation of what is said. One Member's comments are misinterpreted and misapplied by someone else. The hon. Member for Basingstoke (Mr. Mitchell) has made his point.

Mr. Cryer

On a point of order, Sir Myer. During his speech the hon. Member for Basingstoke (Mr. Mitchell), who refused to allow interventions or corrections, implied that he had knowledge of Cabinet proceedings. I assume that that is a fantasy, but the hon. Gentleman did not express it as such. So far as I am aware, Cabinet proceedings are secret.

The Temporary Chairman

What is and what is not a point of order will one day have to be considered very carefully to decide what is genuine and what is spurious. The hon. Member for Basingstoke raised a genuine point of order because he wanted to correct an impression which it was said had been created.

Sir Harmar Nicholls (Peterborough)

Is it just a convention that when a Member attacks another Member's speech he gives way to allow the original speaker to intervene to put the matter right, or can that be raised as a point of order?

The Temporary Chairman

These are matters of give and take in the debate. I am sure the hon. Gentleman knows that that is a common practice. We seem to have stirred up a lot of strife. The afternoon was peaceful until the hon. Member for Peterborough (Sir Harmar Nicholls) arrived.

Mr. Loughlin

Perhaps I may make two brief comments on the points of order. First, I assure you, Sir Myer, and the hon. Member for Basingstoke that my hearing is rather acute. I made a charge against the hon. Gentleman, and I am willing to repeat it because that was my interpretation of the whole tenor of his speech and the words that he used. Secondly, if the hon. Member for Peterborough (Sir Harmar Nicholls) had been here while the hon. Member for Basingstoke was speaking he would have realised that on eight or ten occasions his hon. Friend refused to give way.

Sir Harmar Nicholls

Did my hon. Friend mention your name?

Mr. Loughlin

No. I do not believe that he mentioned your name at all, Sir Myer, except when he began his speech. Hon. Gentlemen opposite sit there grinning like Cheshire cats. One can see who is the biggest "burden" on that side of the Committee.

Mr. F. A. Burden (Gillingham)

On a point of order, Sir Myer. Since when has it been wrong for an hon. Member to smile at another hon. Member's interpretation of what a previous speaker said? This is not debate. This is turning the place into cloud-cuckoo-land.

The Temporary Chairman

I appeal to hon. Members to try to maintain the dignity of the debate.

Mr. Loughlin

Sir Myer, I very much regret your making such an observation.

The Temporary Chairman

Order. I am casting no aspersions on the hon. Gentleman. I merely made a general appeal, without specifying anyone, that we should maintain the dignity of the debate, and that is what I hope hon. Members will do.

Mr. Loughlin

As long as it is a general observation, I shall accept it. I hope that no one is suggesting that I am demeaning the dignity of the House by my remarks. I have been here long enough to know that this is the kind of cut and thrust that one has met in debate during the last 15 years. I want to get back to the point that I was making when the hon. Member for Basingstoke became so sensitive. I hope that that is not demeaning the dignity of the House.

If we are to secure our future prosperity, the first prerequisite is complete co-operation between the "two sides" of industry. I do not believe that hon. Gentlemen opposite have been debating the issue involved in the clause. They have been using this debate as a vehicle to attack the trade union movement.

There were some slimy personal references in the speech of the hon. Member for Basingstoke. Why was there a reference to Marcia Williams? Why was there a reference to reclamation? Why were there a number of references to the Prime Minister, with no connection with the issue with which we are dealing? It demeans the dignity of this place when people indulge in that kind of conduct without reprimand from anybody except hon. Members on this side.

As for the copper-bottomed guarantee and the Prime Minister's statement, that guarantee referred to the spate of chalk-line or demarcation disputes. If ever there was a successful effort by the TUC it was the one which resulted in that agreement. When hon. Members talk about the biggest bribe in history they should be careful of their language. Is it a bribe for a Government to redress what they think is a wrong? We are not giving this money to the unions for union organisation; we are repaying £10 million taken from their funds set aside for sickness, unemployment, death and funeral benefits.

If that is a bribe, the £2 million a day that we constantly pay to British industry is also a bribe—and we do that 365 days a year. That is not just a question of—10 million. If we constantly harped on that in every speech that we made about British industry, we should commit the same error as Conservative Members commit when they talk about the unions—

Sir Harmar Nicholls

Would the hon. Gentleman give way?

Mr. Loughlin

The hon. Member has not been in for any previous speech—

Sir Harmar Nicholls

I am in now.

Mr. Swain

He is like a parrot in a cage.

Mr. Loughlin

I will give way in a moment or two.

Sir Harmar Nicholls

Thank you.

Mr. Loughlin

If someone's political philosophy demands that he criticise a section of the community, that is reasonable. It is legitimate for Conservative Members to criticise the unions or a specific union if they wish, but if they use every issue of this kind to reflect their anti-union bias, they are set on a dangerous road.

Sir Harmar Nicholls

Does the hon. Gentleman realise the dangerous argument that he used a second ago, when he spoke about the £2 million a day given to industry? Included in that figure is money to encourage industries to go to development areas, areas to which economically it would not suit them to go, to which they go to help the national need to provide for such areas. If it is now to be argued that in helping the nation in this way these industries are holding out a begging bowl, the hon. Member and those who take the same view may kill one of the most desirable developments in this country in improving such areas. The Secretary of State for Employment, who is present and who will now have to handle this policy, may like to give his hon. Friend some advice.

6.15 p.m.

Mr. Loughlin

If all the money to which I have referred were being used for that purpose, I would agree with the hon. Gentleman, but that is not so.

I want to turn now to the tortuous speech of the right hon. Member for Carshalton (Mr. Carr). I had assumed that the reason for the Conservative Party's opposition to the new clause was that they had an objection in principle to retrospective repayments. The right hon. Gentleman went around in ever-decreasing circles to explain that he did not object to retrospective payment but only to retrospective payment on this occasion, because the unions had refused to do what he was almost commanding them to do at the time of the Industrial Relations Act.

Any of us who have been in the trade union movement for any time and those Conservative Members who were here then know the immense antagonisms created by the Industrial Relations Act. It would have been impossible to persuade the unions to take any advice on that Act from the right hon. Gentleman, who insisted forcefully on carrying it out to the extent that it was guillotined clause by clause.

Mr. Burden

Is the basis of the hon. Members argument that the unions must be above the law and that we must do nothing but accept that they are above the law?

Mr. Loughlin

If the hon. Gentleman were a little more patient—if he is not careful, he will become as impetuous as I am—he would see the burden of my argument. I do not know whether he just wants to get his name in HANSARD, but that may be the case.

Mr. Burden

Do you always have to be so offensive?

Mr. Loughlin

This is the difficulty in allowing interventions. One spends time developing a theme and then has to return to it.

I had been referring to the ever-decreasing circles of the previous Home Secretary. He objected not to the principle but to the refusal of the unions to take his bidding.

I was saying that the right hon. Member for Carshalton ought to have known that under the circumstances at that time it would have been impossible for the trade union movement to accept any advice at all. The Trades Union Congress and individual trades unions are not composed only of people who are officials. What is very often forgotten by Opposition Members is that the trade unions are the sum total of their membership. The trade union general secretaries, presidents and officials are charged with doing two things. They are charged with advising their members and with leading their members. But to lead people is one of the most difficult things in the world. Very often we as politicians choose our words guardedly when we are advising or trying to persuade people to take the point of view that we wish them to take.

In the realms of leadership, it is impossible for trade union officials to be too much out of accord with their members, as it is equally impossible for politicians to be too much out of accord with their associations. That applies to Labour, Liberal and Conservative politicians. One issue that the trade union movement has to face constantly, particularly the TUC and union officials, is that it has to take with it the whole of the membership on the shop floor. Even if the whole of the TUC and all the officials of unions had wanted to accept the advice of Conservative right hon. and hon. Members when they were in Government, in consequence of the policy of confrontation with the trade union movement that they had pursued, it would have been impossible for the officials of the unions to hold the membership in check.

It is no good the Conservative Party imagining that it can pursue a policy of confrontation with the trade union movement. If—God forbid!—it should ever happen that the Conservatives should come to power at some future date, they will have to create the conditions in which prosperity for the people of this country can be achieved. They could not possibly create those conditions by the kind of attitude that they have adopted previously or that which they are adopting at present in debate after debate, in which they are singling out the trade union movement for the worst possible kind of calumny. When the Opposition talk, as the hon. Member for Basingstoke and the hon. Member for Blaby (Mr. Lawson) talked, about how the trade unions have held the country to ransom to get wage increases—I am paraphrasing their words—and about how the unions are now again going through the whole process of wages demands at conferences, they should realise that we are not living in the world of even five or 10 years ago. We are living in an entirely new situation.

It is no good anyone, of any political complexion, trying to lecture the ordinary man or woman today about the demands that they are making on the economy. It is no good saying to the shop assistant, the engineer or the mine worker that his demands are unjustified or excessive, as long as we have so great a disparity in incomes across the social spectrum. When we have announcements made—as we have had today—about someone who is earning £28,000 a year—

Mr. Burden

Nationalised industries.

Mr. Loughlin

I wish that the hon. Gentleman would try to be a little more objective.

Mr. Skinner

Perhaps the Chair might instruct the hon. Gentleman.

Mr. Loughlin

Perhaps I should ask for your protection, Sir Myer.

The Temporary Chairman

I am obliged to the hon. Gentleman, but I do not think that he requires my assistance.

Mr. Loughlin

People may read that people are in receipt of £28,000 a year and that they are today to have an increase in wages of £350 a year. References can be made to the nationalised industries, and to judges, as they have been. But if I wanted to go a stage further, I could talk about some of the top salaries in business and industry, because they are relevant.

We cannot tell people that their wage demands are excessive while we still have the disparities that exist in society. We must begin to think not in terms of relativities between miners, engineers, shop assistants and nurses but in terms of relativities across the board in a changing society so that the disparities can be ironed out. We ought to be concentrating our efforts on that to a far greater extent.

I urge Opposition Members not to continue to try to make the trade union movement a bogy. One has to live with the trade union movement, and that means living with trade unionists. One can live with people only when one begins to try not only to understand them and their problems but to understand the context in which their problems arise. If we once begin to try to do that, debates such as we have had so far will no longer take place. If there is no principle involved, there is no reason why on this occasion—as it is not trade union industrial funds that are involved but sickness, unemployment and death benefits—the determination of the Opposition to force a vote tonight could not go by the board.

6.30 p.m.

Mr. Waddington

I found it somewhat difficult to relate many parts of the hon. Member's speech to the clause. I certainly do not accept for one moment that the previous Government adopted a policy of confrontation. It became more and more obvious towards the end of that Government's life that there were certain powerful influences at work which were determined to frustrate the policies decided upon by a democratically-elected Parliament, but that is not what we are discussing this afternoon.

The hon. Member said, in those of his remarks which bore some relationship to the clause, that the money would not be given by the Government to trade union officials but would go to the sick and others who benefit as a result of the provident activities of the unions. If the hon. Member had been in the Chamber to hear the Chancellor he would have heard him say on a number of occasions that one of the justifications for the clause and the change in the law which he was seeking was that not only did the trade unions have no separate provident funds but that it would be intolerably difficult, if not impossible, for separate funds to be created.

I invite the attention of the Committee to a leader which appeared in The Times on 6th May. It read: Mr. Robert Carr expressed surprise when he learnt during the passage of the Act that many unions did not have separate funds for their provident activities. His surprise is justified. The next time anyone dares to turn his hand to the statutory regulation of trade unions that is a point to take up. Indeed it is, because it is difficult to see how it will be possible to ensure that the £10 million gift will be used for provident purposes. I hope that the Secretary of State for Employment will address his mind to that point when he replies to the debate. In view of all these difficulties, I challenge the right hon. Gentleman to explain how we are to know that the £10 million will be used for provident purposes—for pensions, sickness benefits, death grants and so on, since no proper separation is ever provided between these types of fund and between expenditure of moneys for different purposes.

I can see nothing to prevent trade unions, who will benefit from these gifts at the taxpayers' expense, from using the funds to pay more officials, for general administration or even for financing strikes.

I am sorry the Chancellor is not here now to hear what I have to say about his speech. What I say as a humble Member is that I believe it was disgraceful. It was a frivolous contribution in which he did not try to address himself to arguments in favour of the clause. I took the gravest exception to see him sitting across the Chamber grinning like a Cheshire cat and treating this as a most frivolous matter when I thought that everyone considered it to be an issue of the greatest importance. I know from experience that the Secretary of State for Employment will not treat us with that sort of discourtesy tonight but will try to deal with the important matters of principle which are involved here.

The Treasury is not normally noted for its great generosity, and I can think of no previous case of a citizen being granted the privilege of the retrospective cancellation of a tax obligation. I know of no such case in the history of this country, and I cannot recall any mention in the Labour Party manifesto that a Labour Government would make this great departure from previous practice.

The matter goes much further than that and far beyond the simple issue of retrospection. The relief is not being granted to remedy a mistake. It is not being granted to right a wrong which the authorities never intended to inflict. It is not even being granted retrospectively to the innocent victim of a penal law. I can imagine circumstances eventually developing when after three or four years of irresponsible government by a Left-wing administration, during which elderly widows with small investment incomes have been soaked, there may well be demands from an incoming Conservative administration for a dreadful wrong like that to be put right.

The important point is that the relief is being granted to trade unions which need not have paid the tax if they had wanted to do otherwise. The relief will go to unions which chose not to qualify for tax relief when they could have so qualified in the same way that I chose not to qualify for tax relief for six children when I stopped at having five. They chose not to qualify and there has never been the suggestion that a person who deliberately chooses not to qualify for a tax relief should expect a Government at some time in the future to change the law to grant him the benefit he freely rejected.

We all know that these bodies adopted this course of action as a political gesture in complete disregard of the interests of the prospective beneficiaries of the provident funds of which we have heard so much. I have found few things more nauseating in recent weeks than having to listen to the Chancellor of the Exchequer referring to Section 338 of the Income and Corporation Taxes Act 1970. He has been talking of how the Tory Government had so arranged matters that these unions were not able to benefit from that section so that if a member were sick or incapacitated through personal injury, he might suffer loss of benefit, or an aged member might receive less superannuation, or that a member might be denied funeral expenses as a result of these diabolical actions.

But I wonder how many rank and file trade union members knew at the time that their leaders were more interested in politics than in their duties and were reducing the provident benefits available to members. I wonder how many rank and file members knew in 1971 and 1972 of the calibre of the men who were supposed to be looking after their affairs. I wonder how many rank and file members knew at that time that their leaders were quite deliberately, under Section 338, acting in such a way as to reduce the benefits available to the sick, to the retired or the victims of accidents at work, and to people who had to incur funeral expenses because of the death of a relative.

Mr. Loughlin

The hon. and learned Gentleman will know, because I have declared my interest so often in the House, that I am an official of the Union of Shop, Distributive and Allied Workers. It is not a militant trade union by any standard. But at the annual conference which determines the policy on all issues there is a representation of its membership throughout the country of about 87 to 89 per cent. If the hon. and learned Gentleman tries to understand that, he will see that it is not a question of the members not knowing what happens. It is the members who are taking the decisions.

Mr. Waddington

I do not follow the hon. Gentleman's point. A trade union is not a unique organisation. Any body has its active members and its inactive members. For example, in the universities some people take an interest in National Union of Students' affairs and some do not. The hon. Gentleman will not persuade me by any argument that the vast majority of members of trade unions know the day-to-day activities of trade unions or take the slightest interest in them. The world would be a much better place if they did, which is my next point.

It is an extraordinary state of affairs that the unions are now demanding more and more privileges not afforded to ordinary citizens. The Secretary of State for Employment has been debating these matters for the past two or three weeks in the Standing Committee considering the Trade Union and Labour Relations Bill. Time and again new privileges have been demanded, and they look like being won.

Here we are considering acts of complete irresponsibility committed by trade union leaders, with complete disregard of the members they are supposed to serve. The Government are prepared to reward such people in a unique way, in the sense of making them appear to have been right all the time. A responsible Government would have pointed the moral and told rank and file union members, "If you don't turn up to meetings and if you let Scanlon get to the top, you cannot expect us to come to your rescue. You must pay the penalty for allowing these men to get to the top".

Mr. Joseph Dean (Leeds, West)rose—

Mr. Waddington

I will not give way now.

The present Government are irresponsible. They could not say that, they could not do the right thing and point the moral to the members, saying "These men have let you down, and it would not be right for us to try to twist the law now to help you. You must face the consequences of the bad management of your affairs by your leaders." The reason the Government could not do that is that they are under orders. They jibbed at paying the fines of the Amalgamated Union of Engineering Workers, but otherwise they have set about doing everything the TUC and the trade unions have asked them to do. Those who want chapter and verse for that should read the OFFICIAL REPORT of the proceedings in the Standing Committee on the Trade Union and Labour Relations Bill. More than once the only argument advanced in Committee for a change in the law has been that the trade unions want it.

Mr. Joseph Dean

The record should be put right. Mr. Scanlon was not allowed to get to the top by the inadequacies of the members of his union. Does the hon. and learned Gentleman realise that Mr. Scanlon was elected leader of the AUEW by a postal ballot in which every member received a ballot form?

Mr. Waddington

I am grateful to the hon. Gentleman for mentioning that, because it proves my point. Mr. Scanlon was apparently elected by 6 per cent. of the membership of the union.

Mr. Dean rose—

Mr. Waddington

I am not giving way again.

Mr. Dean

Let us get the facts right.

The Temporary Chairman (Sir Myer Galpern)

Order. The hon. Member for Leeds, West (Mr. Dean) must resume his seat if the hon. and learned Gentleman is not giving way.

Mr. Waddington

If an hon. Member is asked a question and gives way, he is entitled to answer. I do not see why I should give way again before I have even completed the answer I was giving.

The matter I have raised is one of great importance in the debate, because it gives the lie to what was said earlier by the hon. Member for Gloucestershire, West, who tried to pretend that rank and file members took an interest in trade union affairs and therefore knew perfectly well of the irresponsibility of the leaders of the trade unions who refused to register, disqualified themselves from tax relief, and therefore disadvantaged the provident funds. Now the hon. Gentleman—

Mr. Dean

The hon. and learned Gentleman is incorrect again.

Mr. Waddington

I shall give way when I have finished the sentence. The hon. Gentleman apparently objects strongly to my saying what I believe to be the truth, that 6 per cent. of the members voted. I think someone said just now that it was 7 per cent., but I do not mind, because that is near enough.

6.45 p.m.

Mr. Dean

I am grateful to the hon. and learned Gentleman for giving way again. His inference is that the leaders of the union concerned took a decision without any consideration of the members' wishes. That decision was taken by lay members who represent the rank and file and who give the union leaders their instructions on behalf of the rank and file. Therefore, when the hon. Gentleman says that it is a dictatorship he should come off it.

Mr. Waddington

That was an extraordinary observation. I thought that I was being accused of saying something that was inaccurate, but the hon. Gentleman apparently concedes that only 6 per cent. of the membership voted for Mr. Scanlon. Therefore, how can it be said that the average rank and file trade unionist has the faintest idea what his leaders are doing? He is far too busy working and looking after his family. He would be horrified if he knew of some of the irresponsible activities of the leadership, activities which are dedicated far more to political aims than to the true responsibilities of trade union leaders, which are to look after the pay and conditions of their members.

The pathetic thing is that all this grovelling by the Government is to no effect. As my hon. Friend the Member for Basingstoke (Mr. Mitchell) said, we should look around us. We should remember what was said at the Scottish miners' conference, the electricity workers' conference, the National Union of Teachers' conference and the draughtsmen's conference. The social compact or contract is as dead as the Dodo. The Government will certainly not get value for money. What do they think they will get by dishing out £10 million of the taxpayers' money for the purpose in the clause? They will not get value for the country. I believe that this action will stick in the gullet of every decent citizen.

Mr. Tomlinson

I hope that the right hon. Member for Carshalton (Mr. Carr) will not take exception to the way in which I summarise what I understood to be the main part of his argument on the £10 million. It had three main points. One was that no one had wanted in the first place to take the money. The right hon. Gentleman made that abundantly clear to the Committee. The right hon. Gentleman's second point was that the Government had provided means for the trade unions not to have to give the money. The third point was that because the trade unions would not come cap in hand to the Government under the procedures that the Government wanted to lay down, they should not have the money back.

It is an argument of extreme churlishness to say that the money that nobody wanted to take, and that the Government themselves tried to make provision not to have to take, should not now be given back to the trade union movement. That is an argument of extreme churlishness.

The right hon. Gentleman spent a great deal of time explaining the two methods by which he had proposed that the money could remain in the hands of the trade union movement. The first method was registration. He showed a complete misunderstanding of the view of ordinary trade unionists when he indicated that he thought that they could be brought to accept the Industrial Relations Act by offering a bribe to register. He also said that the previous Government made great efforts to lay down plans so that those trade unions that could not hive off their provident funds could go to the Government and explain their difficulties. Of course, he did not tell the Committee that in the earlier discussions that the trade union movement had with the Government its reception was nothing like as helpful as the right hon. Gentleman suggested it might have been.

The consultative document allowed approximately 14 days as the totality for consultation. When that consultation was taking place the right hon. Gentleman was forthcoming in receiving the views of the trade union movement to the extent that he said to its representatives that he was prepared to consult only on the detail and not on the principle. That was the kind of reception and the kind of consultation to which trade unionists became accustomed under the previous Government. It is not surprising that the trade union movement was not prepared to engage in that kind of nonsensical activity all over again.

The philosophy demonstrated by the right hon. Gentleman—and I am sorry that he is not here—is one of extreme churlishness. He accepts that the decision to take the money was one that was entered into almost unintentionally. He seemed to indicate that it was something that he did not want to do and that he tried to avoid.

I am sorry that the hon. Member for Blaby (Mr. Lawson) is not in his place. I challenged his reference to Sir Andrew Shonfield's Note of Reservation in the Donovan Report. The Committee will recall that the hon. Gentleman said that Sir Andrew described the trade union movement as a "licensed conspiracy". I have found a reference to "licensed conspiracy". I asked my hon. Friend to give me the reference—

Mr. Skinner

The hon. Member for Blaby is not my hon. Friend's hon. Friend.

Mr. Tomlinson

I must tell my hon. Friend the Member for Bolsover (Mr. Skinner) that I am friendly with all kinds of people. I found a reference to "licensed conspiracy" but I could not put the same construction on those words as the hon. Member for Blaby put on them. As that was reiterated by the hon. Gentleman after I asked him for the reference, the Committee should understand exactly what Sir Andrew said.

Mr. Skinner

This is why the hon. Member for Blaby has run away.

Mr. Tomlinson

In Paragraph 7 of the Note of Reservation—the Committee will recall that the hon. Member for Blaby vaguely referred to a left-hand page—in page 290 of the Donovan Report Sir Andrew said, I therefore regard the principle which is stated in paragraph 471 of the Report to be characteristic of the British system, that collective bargaining should remain 'outside the law', to be wrong. Then there is the important sentence, which says, The special grounds for treating trade unions in this way which seem to have influenced the 19th and early 20th century legislators, who laid down the framework of rules which govern British industrial relations today, were essentially that trade unionism was an unpleasant conspiracy… In paragraph 8 Sir Andrew says, Historically the doctrine of the 'licensed conspiracy' served a useful social purpose. Anyone reading those words correctly—and as the hon. Member for Blaby knew that they were on the left-hand page presumably he had read them—and trying to give the Committee a reasonable impression of what Sir Andrew said would have made it clear that "licensed conspiracy" was not a description of the modern trade union movement but an historical description of the conditions which early trade unionists had to suffer. I mentioned to the hon. Member for Blaby that I intended to raise this issue. He has not seen fit to justify the accusation that he made.

Mr. Prior

Far be it from me to wish to defend my hon. Friend the Member for Blaby (Mr. Lawson), who is not here, but would it not be for the benefit of the Committee if the hon. Member for Meriden (Mr. Tomlinson) read to the bottom of the paragraph?

Mr. Tomlinson

I am happy to read through the whole of the report, as I have done, unlike the right hon. Member for Lowestoft (Mr. Prior) who has just picked up the report and started to read it. I accept that he demonstrated fairly clearly this afternoon that he was new to the subject of industrial relations. The important words that I challenge are "licensed conspiracy". The hon. Member for Blaby suggested that Sir Andrew described the trade union movement as a licensed conspiracy. There is nothing in paragraph 8 that suggests that Sir Andrew even suggested anything remotely like that. I think that we can judge the rest of the hon. Gentleman's contribution when we remember that he, perhaps unintentionally, mislead the Committee by making the assertion to which I have referred. It was an assertion that he continued to make after he had been asked to give the reference for the words that he was quoting to the Committee.

I now turn to some of the comments of the hon. Member for Basingstoke (Mr. Mitchell). He made many points that were of interest to the Committee. First, he suggested that the Government were in some way prisoners of the trade union movement. Having made that sweeping assertion he said nothing further to seek to justify it.

Mr. Robert Adley (Christchurch and Lymington)

Will the hon. Member for Meriden (Mr. Tomlinson) remind the Committee of the proportion of the Labour Party's funds that come from the trade union movement?

Mr. Tomlinson

The Committee would be more inclined to have some degree of sympathy with any kind of statement made by the hon. Member for Christchurch and Lymington (Mr. Adley) if the hon. Gentleman had the courtesy to listen to the debate. The hon. Gentleman has walked in and has tried to divert the debate because of the embarrassment of the position in which the Opposition find themselves. That is something that my hon. Friends and I are not prepared to allow. I assumed when I gave way to the hon. Gentleman, he having only just come into the Chamber, that he had a genuine interest in the debate. My hon. Friends and I will not be diverted in this way.

The hon. Member for Basingstoke vagely told us something about U-turns—relating to statutory incomes policy. Surely that is one of the worst areas of policy which he could possibly have chosen. I have a document which is very hard to come by and which may have great significance one day. I presume that Central Office has been buying and burning copies of "A Better Tomorrow". I seem to remember that we were told in that document that statutory incomes policy had failed and that the Conservative Party would not repeat the mistake. When the hon. Member for Basingstoke lectures us about U-turns on incomes policy he should look a little nearer to the present and not only at Lord George-Brown's declaration of 1965.

Mr. David Mitchell rose—

Mr. Tomlinson

I shall extend the courtesy to the hon. Gentleman which was not extended to me.

Mr. Mitchell

I am grateful to the hon. Gentleman for giving way. I would have given way to him if I had referred to him in my speech. The point that he makes is not a direct parallel. I referred to the possibility of the social compact succeeding and to the attempts of previous Governments to secure such a success. If the hon. Gentleman would address himself to that point he would help the Committee considerably. Does he believe that there was success when previous attempts were made to introduce an incomes policy?

7.0 p.m.

Mr. Tomlinson

I have said that accusations of U-turns come ill from the mouth of a supporter of a Government who engaged in more U-turns than we have seen from all the Governments since the war put together. We judge the validity of the hon. Gentleman's statements against that background.

The hon. Gentleman demonstrated that he is not even au fait with some of the structure of the trade unions when he talked about APEX as being the clerical section of the AUEW. That was the specific point on which he refused to give way to me. I am sure that he now admits that that was a mistake. If he had had the grace to give way to me, he would have been able to correct himself by acknowledging that the white collar section of the AUEW is TASS.

The hon. Gentleman went on to talk about how the unions set out to defy the theme behind the Act—registration. We have been told many times by Conservative Party spokesmen that, under the Act, the unions could register or not register as they chose and that either course was legal. Yet the fact that unions, acting within the law, decided to exercise one of the options available to them leads the hon. Gentleman to chastise them. We have heard from the hon. Gentleman today a number of unsubstantiated assertions and allegations, none of them adding up to very much in practice.

We heard the same saga continued when the hon. and learned Member for Nelson and Colne (Mr. Waddington) decided to give us the benefit of his industrial understanding. The main pearl of wisdom gleaned from him was that he did not believe that the Conservative Government caused confrontation. I do not want to go too wide of the subject under discussion, but I feel bound to remind the hon. and learned Gentleman not only of the Industrial Relations Act but also of the Housing Finance Act, the cuts in school milk, the cuts in public building programmes, and so on. Indeed, confrontation was becoming almost endemic in our society because of the Conservative Government's activities.

The Conservative Party argued that the Industrial Relations Act was being set up to solve all our industrial relations problems. It was destined to bring us to a mecca of industrial relations. Yet, in the first two years of its operation the number of days lost through strikes grew steadily worse. Indeed, in each of those two years in succession the number of days lost through strikes was worse than in any year since 1926. The Labour Government left office in 1970, when the Conservatives were returned, and 1970, 1971 and 1972 in succession produced worse and worse figures until, in 1972, the non-confrontation to which the hon. and learned Member referred produced a loss through strikes of 23.9 million working days.

The 1965 position had led the then Labour Government to appoint the Donovan Commission. Yet if, by 1972, we had been able to get back to the 1965 figures, we would have acclaimed that as a great triumph for parliamentary democracy. One wonders just what were the problems of 1965 which led so many people to be so neurotic about our system of industrial relations.

Mr. Waddington

The hon. Gentleman has mentioned 1970, 1971 and 1972. Will he give us the figures for 1973?

Mr. Tomlinson

I do not have them.

Mr. Waddington

There was a big reduction, to 7 million.

Mr. Tomlinson

It is remarkable that the hon. and learned Gentleman should, seemingly, regard a mere 7 million days lost through strike action as something of a triumph. The fact that he can regard 7 million working days lost as a triumph is a reflection of how the situation had deteriorated. In the last full year before the Conservatives took over in 1970, the figure was less than 7 million. If the hon. and learned Gentleman will meet me outside, we can get the exact figures, but I think he will find that the precise figure was 6.8 million—and that was a pretty bad year in itself.

We have also heard generous explanations about the Conservatives not having wished to create any kind of conflict and that they did not govern by confrontation. Yet the result was confrontation in a way we had never seen before. The Opposition make great play of their bogyman, Hugh Scanlon, and talk in great detail about the precise figures by which he was elected as President of the AUEW. I, too, share the concern, inasmuch as I want to see a high degree of participation and a larger number of people taking part in the decision-making processes.

This was why I was amazed when, during their confrontation with the miners, which need never have taken place, the Conservative Government, having claimed so much for the Industrial Relations Act, were so reluctant to activate its emergency powers whereby they could have given the miners the chance to have a vote on their industrial action. But, of course, we heard very little about these emergency powers after they were tested on the railwaymen. They were never used at all during the miners' strike, but, when the miners used their own democratic processes to decide how they would react to the confrontation which the Government had forced on them, they voted 86 per cent. in favour of the action they were taking.

If we are concerned about the low degree of participation in some unions, let us give credit to the miners who, in their ballot, managed to get a very high degree of participation. The Conservative Government were obviously afraid that there would be such high participation, and therefore refused to invoke the emergency powers under the Act, which would have given the miners the opportunity to vote at an earlier stage.

Mr. Ian Lloyd

If the Conservative Government had activated the emergency powers, would they then have been accused of confrontation?

Mr. Tomlinson

That is a matter of conjecture, but I do not think that the hon. Gentleman has made a valid intervention. I can only assume that the Conservative Government, having used the emergency powers in the railway dispute, decided against using it in the miners' strike because they were afraid of the consequences. Because of the control and influence which the Conservative Government had over the Commission on Industrial Relations, having changed its rôle—this is one of the objections we have to the continuation of the CIR—they launched into a tortuous process in the railway dispute, virtually dividing the industry into four sections, three represented by ASLEF, the NUR and the TSSA, and the other for non-trade unionists. Unfortunately for the Conservative Government, they were beaten in all four ballots.

I am convinced that it was the result of the railwaymen being forced to have a compulsory cooling-off period and a compulsory strike ballot which had a significant influence on the Government's later refusal to activate the emergency powers in the miners' dispute, because they knew that the miners, too, like the railwaymen, had more confidence in their own leadership than in the leadership of a Government hell-bent on confrontation.

A large number of red herrings have been drawn across the debate. I end as I began by recalling the simple proposition that the right hon. Member for Carshalton put to the Committee. He put three points before us. First of all, the previous Government, he said, did not want to take money from the trade union movement. Secondly, when they found out that the legislation would have that effect, they tried to devise means by which they could avoid taking the money.

If those two points are made, then the third is self-evident. There must be a rectification of what was obviously a mistake in the first place. I hope we shall not have any more nonsense about this.

Mr. Peter Hordern (Horsham and Crawley)

This clause concerns retrospective legislation. The Committee has always regarded such legislation with great care and wariness. I remember that when I first came to this place there was retrospective legislation in respect of the Burmah Oil Company and its assets in Burma. I can recall the heated debates that took place then, when there were great issues of demarcation, war and peace and the definition of the assets. That was felt by many of my hon. Friends at the time to be a highly unsatisfactory piece of legislation.

It is unusual to have retrospective legislation in anything to do with the Finance Bill. It is not only most unusual but I think unprecedented that there should be retrospective legislation in respect of a body which is not a taxable body, which is invited to pursue a course of action of which the consequences of not following that action is taxation, and where that body has deliberately chosen to be taxed. That is the point about this debate. The unions had every opportunity to avoid the taxation which they were plainly warned would come upon them if they did not take the action required under the Industrial Relations Act either to register with the Registrar or to hive off their provident funds into separate funds.

It is interesting to recollect that the whole question of legislation was in any case not always so unpopular with the Labour Party. It was in "In Place of Strife" that the consequences of not registering were made plain. In paragraph 109 of that document it said, The Industrial Relations Bill will therefore propose that trade unions should register with a new Registrar of Trade Unions and Employers' Associations within a prescribed period. Refusal will lay a trade union open to a financial penalty by the Industrial Board. That was a plain example of what the consequences might be under the original proposals which were acceptable, apparently, to a Labour Government.

Nor was that the only example. The Donovan Commission recommended that the status of trade unions should be confined to those bodies which registered as trade unions. It made alternative recommendations for compelling such registration. One was the withdrawal of privileges under the 1906 Act or, as the minority suggested, the imposition of cash penalties. Thus in the Donovan Report and in the Labour Government's document there were to be financial penalties if trade unions did not register. It was a perfectly reasonable proposition contained within the original Industrial Relations Bill that the trade unions would lose the tax benefits which their provident funds and benevolent society monies were accorded if they did not register with the Registrar.

7.15 p.m.

However, during the long debates which occurred on the Industrial Relations Bill it was put forward very forcibly by the Opposition that these funds affected sickness and accident benefits, facilities to allow members all sorts of social benefits which were urgently needed. My right hon. Friend the Member for Carshalton (Mr. Carr) accepted that there was an extremely powerful case to be made for treating these funds separately so that they would not be liable to tax.

Mr. J. W. Rooker (Birmingham, Perry Barr)

Will the hon. Gentleman check his paragraph reference from "In Place of Strife"? Perhaps he would also reflect on the point that in "Fair Deal at Work" registration was to be made compulsory. Would he like to comment on the change made between the issue of "Fair Deal at Work", the consultative document and the 1971 Act?

Mr. Hordern

The quotation was from paragraph 109 in "In Place of Strife".

My right hon. Friend made every effort to meet the case put forward about these funds. There were discussions in another place between Lord Diamond and Lord Drumalbyn. It was clearly the case that the best legal advice obtainable by the Government was that if the funds were hived off and separately registered they would not be taxable. Two trade unions have done this, and their funds were exempt from taxation. It was Lord Diamond's case that it would be physically very difficult to hive off some of these funds to take advantage of tax concessions. It was therefore suggested by my right hon. Friend that if there were any insuperable difficulties the unions should approach him and the Government would see what accommodation they could make.

The unions were the custodians of benevolent funds for some of their members and their dependants. They were acting as trustees. One might have thought that they owed a duty above all to these people to see that their interests were properly protected. Yet, strangely, on no occasion did they ever approach my right hon. Friend to inform him that there were difficulties in hiving-off these benevolent funds. Such a difficulty never occurred and it was not apparently even suggested, when the TUC saw the then Chancellor of the Exchequer, that the legislation should be retrospective. It is clear that, for reasons at which we can only guess, the trade unions decided that they would not draw his attention to the, inconveniences of which they now complain—although they did not complain at all when the last Government was in power.

I must leave to the Committee the conclusions to be drawn from this lack of activity on their part to protect the funds of their members. No attempt was made before the election to inform the Government of any inconveniences. It was therefore clear that the unions deliberately chose to pay the tax. I do not recall during the election campaign that there was anything in the Labour Party manifesto saying that one of the first actions of a Labour Government would be to restore to trade union benevolent funds the sums which they had lost entirely through their own actions. Nor do I remember any mention of it in the Gracious Speech. It was never suggested that the unions had suffered a wrong which required to be put right by the Labour Government. The first mention which I recall was that made by the Secretary of State for Employment. But he did not announce it as a measure which needed to be taken to restore to trade union benevolent funds something which they had lost in taxation by some mishap or accident. What he said was that a benefit of £10 million was going to the trade unions, not to their benevolent funds or to those acting as trustees of the benevolent funds.

The Government must say exactly where the £10 million will go. Will it go to people who should benefit from the provident funds, or will it go to the trade union funds? The Government must answer that question plainly. If it goes to the trade union funds, people who should receive sickness and injury benefits will not receive them.

Mr. Waddington

The position is worse than that. If what my hon. Friend says is correct, right hon. and hon. Gentlemen opposite will give a present of taxpayers' money to themselves.

Mr. Hordern

That may well be so.

We need to know from the Secretary of State where the money will go. It is most extraordinary that of all the places to which the fl £10 million could be restored the Government should select to restore it to the trade unions' funds and not to any other section of society which may already have suffered considerably in the short time that the Government have been in office.

Mr. Gordon A. T. Bagier (Sunderland, South)

Whether or not the money was taken by accident, is the hon. Gentleman saying that it was the Conservative Government's considered intention that the taxation should be taken?

Mr. Hordern

That point has been dealt with many times. I hoped that I had made it clear that the intention of my right hon. Friends was to ensure that payment was not made by trade union benevolent funds, and that trade unions themselves, in order to accommodate them, should register them and hive them off as benevolent funds.

The unions, for reasons of their own, deliberately chose not to see the then Secretary of State, and they deliberately chose to pay the tax. The announcement by the present Secretary of State for Employment was plainly intended to act as a counter-weight in the social compact. It was never suggested by him that it would benefit the provident funds of the trade unions involved. It was a deliberate ploy to persuade them to take action which otherwise they may not have taken.

It was in every respect a form of Danegeld. But we've proved it again and again, That if once you have paid him the Dane gold, You never get rid of the Dane. The difference on this occasion is that the geld has been paid without the Dane even asking for it.

Mr. Cryer

The background to this matter needs emphasising time and again. Right hon. and hon. Members opposite are so embittered by their prejudices that they fail to understand that the Conservative Government did not want this taxation revenue. The new clause simply provides for repayment of revenue unwanted by the Conservative Government of which right hon. and hon. Members opposite were a composite part. The Conservative Government did not want the money, but they wanted the unions to go to them cap in hand and follow a number of rules which they suggested to them in a variety of ways in order to get the money back.

The background to the matter is one of bitter confrontation started by the Conservative Government with the passing of the Industrial Relations Act. That Act was put forward by the Conservative Party on a fraudulent basis. It was not, therefore, surprising that those in the trade union movement felt that a fraud had been inflicted on them, that the people had been cheated at the election when they were told that a framework of law was necessary, in such a manner that it gave the impression that there was no law affecting the trade union movement and that these wild men had to be curtailed by a framework of law.

The Conservative Government failed to point out that before the 1970 General Election there was probably more law attached to the trade union movement than was attached to almost any other organisation in the country. If hon. Members opposite wish me to spell it out, I shall be delighted to do so.

Mr. Peter Rees

If what the hon. Gentleman says is correct, why did his right hon. and hon. Friends introduce and subsequently withdraw proposals for a framework of law for the trade unions?

Mr. Cryer

I am interested that the Opposition should treat all the utterances of my right hon. Friends as though they had been brought down from Heaven on tablets of stone. They seem to think that some statement made several years ago should be treated with hallowed sanctity.

It has been admitted that what was done was not a prudent move. Governments are not perfect. I dare say that right hon. and hon. Members opposite would not argue that the 1970–73 Government were perfect. We are saying the same about the 1964–70 Government. They made an error, and the error has been admitted. But to suggest, as right hon. and hon. Members opposite do, that we must look to previous statements by members of the Labour Government, as though they are Holy Grail, is to try to score a cheap political point.

The basis of the Industrial Relations Act was fraudulent because the Conservative Party, at the 1970 election, put forward the idea that the trade union movement had no legal background. It said that a framework of law was necessary. That framework started to be formed as early as 1779, with the combination laws, and there has been a succession of other laws such as the Trade Union Act 1872, the Conspiracy and Protection of Property Act 1875, and the Trade Disputes Acts of 1906 and 1965, all of which put the trade union movement in a comprehensive framework of legislation. There was also legislation passed for political purposes in the Trade Union Act 1913.

The funds which trade unions use for political purposes are subject to strict scrutiny, which does not apply to the Conservative Party's friends in industry who every year pour out thousands of pounds—

Mr. Loughlin

Millions of pounds.

Mr. Cryer

—to the Conservative Party and top up its coffers prior to an election. They do not have the degree of scrutiny which trade union funds have. When hon. Gentlemen opposite advance the old argument that this clause will benefit the Labour Party in some mysterious way, it is a total fabrication. I served on a local authority which had shareholdings in a number of companies, and in its last year of existence it learned that those companies contributed some £30,000 to Conservative Party Funds——

Sir Harmar Nicholls

Shame!

7.30 p.m.

Mr. Cryer

It is a shame, because the local authority was not consulted in any way, and the ratepayers would have been interested to know that their local authority—which, incidentally, was Conservative-controlled—had made no protest and had not bothered to consult the firms which they knew to be contributing to the coffers of the party of which they were members. The hoary argument that somehow in this case the money will flow into the coffers of the Labour Party must be nailed as the deliberate lie that it is.

Mr. Douglas Hurd (Mid-Oxon)

Is the hon. Gentleman saying that, as a result of the payments which we are discussing, the unions receiving them will not possibly be in a stronger position to contribute to the party which he supports?

Mr. Cryer

Perhaps I might explain the position to the hon. Gentleman. Funds for a political purpose must be collected separately by any trade union, and members of trade unions have the right to opt out of payment. The funds are separate and are permitted to be spent only on certain purposes. I thought that I had emphasised that the political money came from separate sources and was subject to a very detailed legal scrutiny.

I ask the Opposition whether they are prepared to advocate legislation which gives the same degree of scrutiny to company funds which are paid into the coffers of their own party. Do they advocate legislation in which every shareholder has to give consent to ensure that political money is paid from company funds into the coffers of the Conservative Party? Let them advocate that before they start criticising the trade union movement.

Mr. Peter Rees

Is the hon. Gentleman aware of the provisions of the Companies Act 1967, introduced by the previous Labour administration, which makes it necessary for companies which make donations to political parties to disclose them? What is more, shareholders can comment on them in general meetings. There is no question of shareholders having to subscribe as in the case of trade unions, and, therefore, the hon. Gentleman's analogy breaks down. If he is aware of the provisions of that Act, a great deal of his indignation ought to be reserved for more worthwhile topics.

Mr. Cryer

Of course I am aware of that Act. I am also aware of the Conservative Party's opposition to the provisions which the hon. and learned Gentleman describes. However, the Companies Act 1967 does not require shareholders to be specifically consulted, as the comparable legislation relating to trade unions does. I thought that I had explained in stunning detail that the local authority of which I was a member was not consulted, although it was a shareholder—not simply a shareholder trying to obtain a dividend for its private benefit, but a shareholder representing the communal benefit of the town of Keighley.

Mr. Hordern

It is clear from what the hon. Gentleman says that the local authority of which he was a member was anxious to invest in private enterprise to the benefit of the ratepayers of Keighley. In selecting the companies concerned, the local authority was wise and astute enough to make a contribution to the Conservative Party. All that the hon. Gentleman is showing is that his authority believed in successful private enterprise. That is a matter for congratulation.

Mr. Cryer

That is an interesting change from the hon. Gentleman's speech. Apparently he is prepared to congratulate companies on contributing to the Conservative Party when he is reluctant to congratulate trade unions on contributing to the Labour Party.

Mr. Ronald Atkins (Preston, North)

Whereas a trade unionist can opt out of his union's political fund, a shareholder cannot opt out of a political contribution to the Conservative Party.

Mr. Cryer

I am grateful to my hon. Friend. That is the very point that I was making.

Sir Harmar Nicholls

But, apart from what the trade unions do with any money that they may get as a consequence of this legislation, will the hon. Gentleman say whether he thinks that this £10 million, if it is made available, will go into trade union funds?

Mr. Cryer

I shall be answering that question in the course of my speech, if the hon. Gentleman will be patient. If I am constantly interrupted, my speech will have to be fairly lengthy. Each time I am interrupted I shall have to take up the thread of my remarks at some length.

To get back to what I was saying, the Industrial Relations Act had a fraudulent basis for its introduction. There was already a huge amount of statute law controlling political funds, among other matters. The Industrial Relations Act was passed on the basis that there was no framework of legislation. However, in my view the Act was not passed because the Government of the day thought that it would improve industrial relations. It was designed to curb the right of trade unionists to combine and to withdraw their labour. In the view of Government supporters, that is an important right.

Trade unionists recognise the Industrial Relations Act as an attack on that basic right. I am sure that it is a right which the Opposition would not seek to erode, with the lessons of the disastrous failure of the Industrial Relations Act at their backs.

The right to withdraw labour is one which is not present in numerous countries of various "isms". It is a right which we ought to be prepared to cherish. It is a right in which free people can engage. It is an important right because it equates the power of the employee with that of the employer. The Opposition regard the world through rose-coloured spectacles and apparently believe that every employer is kindly and well disposed towards his employees.

The carrot in the Industrial Relations Act designed to lure the unions was that part of it relating to unfair dismissal procedures. That apart, employers have the right to dismiss any employee very easily and quickly. It may be argued that an employee may sue his employer for breach of contract—

Sir Harmar Nicholls

And thousands have done.

Mr. Cryer

At the same time, millions have not because of the enormous expense of going to law. The law is like the Ritz Hotel: it is open to everyone who has the necessary money.

Sir Harmar Nicholls

That is old-fashioned.

Mr. Cryer

It is not old-fashioned. Legal aid is not handed out like spoon fuls of treacle. It is controlled carefully. In any event it is an intimidating process. Legal aid is qualified by the fact that the legal aid committee must be convinced that an applicant has a case to win. A wealthy person may go to law without fear of the cost. An ordinary poor person who might have to contribute to the costs of a legal action has a great fear of going to law. The reality is that the ordinary person does not have the equality of freedom under the law that the employer has, and the employer can dismiss him at a moment's notice. He may well be in breach of contract in doing so, and happily the Trade Union and Labour Relations Bill will improve the protection which employees have. That improvement was referred to in the Labour Party manifesto. It is yet another promise that the Labour Government are meeting.

To combat the power of an employer, employees must combine. If an employer decides to get rid of one person, his process can carry on uninterrupted. But he cannot get rid of everyone. To do so would bring the process to a halt. If trade unions do not have this power and right to combine and to withdraw their labour, they become mere sick clubs. The £10 million is concerned with that section of the activity of trade unions. The clause affects a sick club function, not the basic right to combine.

I should like to disabuse hon. Members opposite of some notions which have come bubbling to the surface in the last hour or so. The controversial side of the trade union movement is the right to combine. Its main function is not the provision of funeral expenses and widows' benefits in cases where members have been injured or killed through industrial activity.

Yesterday I pointed out that every year 1,000 people died as a result of industrial injuries. Many more days are lost through industrial injury than through strike action.

I remind the Committee that the sick club function is being affected, not the right of combination which is the most controversial part of the trade union movement. One notion that has come bubbling to the surface is that somehow the unions are predatory and have groups of workers ready to go on strike at a moment's notice. That is not true. I believe that 99 out of every 100 members of trade unions do not wish to go on strike. That is very much the last resort for them. Certainly the withdrawal of labour takes place, but it is the last resort. The Press, aided by the Opposition, like the picture of a group of people who go out on strike at the proverbial drop of a hat. That is a most unkind and unfair picture, and I should like to refute it.

Some trade unions have separate provident funds for the benefit of the sick. But, taking the argument of some hon. Gentlemen that this money will not go directly to the sick, alternatively it will benefit the organisation and efficiency of the trade union movement. Donovan spent a good deal of time investigating the trade union movement. The Donovan Report clearly indicated that one deficiency in the trade union movement was the lack of full-time officials. One point that Donovan made emphatically and clearly was that in many situations the presence of a full-time trade union official could prevent a dispute spreading. I recall, for example, the number of members per employed official of the Transport and General Workers' Union. Those figures have since been improved. That is the kind of deficiency that the trade union movement wants to improve.

To argue against the payment of this money is to argue against improvements in the payments of benefits to the sick, the deprived and the elderly, or is to attack the efficiency of the trade union movement in industrial relations.

Donovan and most sensible contributors to parliamentary debates accept that we must improve the efficiency of the trade union movement to keep to the minimum the withdrawal of labour, not because people are, so to speak, hell-bent on strike action, but simply because an official often has information and the ability to communicate information not available to a group of people who are on the point of reaching the last resort.

The attitude of hon. Gentlemen opposite does not improve industrial relations. I have been a Member of the House of Commons for only a short time, but I have heard Hugh Scanlon's name shouted out as though he were some kind of bogyman of whom we should be afraid. If it is not Hugh Scanlon, it is Mick McGahey. The trade union movement is not some kind of peculiar machine with these terrible people emerging from it. It is a highly democratic organisation and movement. It is not as democratic as some would like, but it is more democratic than companies. It does not depend on the depth of one's pocket for its power. Each individual who pays his membership fee has the right to participate. It is democratic, but, of course, we should like it to be more democratic.

Hon. Gentlemen opposite may say that the trade union movement does not have the maximum number of people participating. But the movement's officials are chosen and its policies are decided and put into effect democratically.

I mention these points specifically because of a suggestion by one hon. Gentleman, who, of course, has gone, that somehow officials were running ahead and acting against the interests of the trade union movement without the consent of the members. No official would dream of doing that. He knows full well that he is employed within the terms of the rules of the trade union movement and is appointed through machinery which is democratically controlled.

The Government, through the clause, are attempting to repay tax which it is commonly admitted they do not want. The previous Government certainly did not want it. The money was taken from the trade unions in a confrontation situation. Now we are attempting some degree of reconciliation. The trade union movement is a fact. I wish that hon. Gentlemen would accept that the Government are trying to imbue into industry a new spirit of reconciliation. They should cease their abuse and attack on the trade union movement, which is a basic fountain of the democratic brotherhood of this country.

7.45 p.m.

Mr. Nick Budgen (Wolverhampton, South-West)

I am sure that when the Secretary of State for Employment winds up the debate he will enchant the Committee with one of his historic analogies. I expect that three quarters of his speech will be an enchanting story about Cromwell or perhaps Plymouth. [An hon. Member: "There is nothing wrong with that."]. I agree. Indeed, I am about to follow his example, albeit without his eloquence.

I remind the Committee that to a large extent landed interests controlled the fortunes of the Tory Party in the nineteenth century and the early part of the twentieth century. Legislation of the time bears ample witness to the proposition that that interest group had perhaps too great a hold on the Tory Party. But what finally slaughtered the landed interests in this country?

Mr. Rooker

Giving the working man the vote.

Mr. Budgen

A Liberal administration, no doubt supported by the father of the present Secretary of State for Employment, introduced death duties. Until recently death duties were an entirely voluntary tax. Many families, who were later slaughtered by that tax, refused to avoid taxation for political reasons. Rather than avoid death duties, they preferred to come to the House of Commons to complain about their level.

Some families unhappily received bad advice from lawyers, and for that reason lost their lands. Other families were plain stupid, and for that reason lost their lands. But in that way, by the imposition of a voluntary tax, a great interest group in this country was almost slaughtered. It was a most moving performance. They lost their provident, pension and funeral funds and their sickness benefit. All this was forgotten by the Tory Party. It was forgotten because the Tory Party recognised that the principle of retrospective legislation was one of the principles that we and every party have to adhere to.

The Tory Party then recognised two things which the present Government do not recognise. The first was that any responsible Government cannot be the tool of any interest group. I say that in relation to the CBI and my party just as much as I say it in relation to the TUC and the Labour Party. Secondly, the Tory Party in those days, notwithstanding the drama enacted before its eyes and the slaughter of its principal interest group, recognised that retrospective legislation erodes both the rule of law and a primary principle of public administration. Further, it prevents the citizen having any certainty in his relations with the State.

Surely in this case the principle is as clear as clear can be. This tax was a voluntary tax. The unions could have chosen to register or, on the other hand, to use their funds in a different way and so have avoided the tax. They are in no different a position to the landed interest slaughtered by death duties, except in only one respect, that they must be appeased in order that this Government may go before the country in the near future and parade the sham of the social contract in order that they may pretend that they have some defence against the ravages of inflation.

I do not pretend that I believe that the party of which I am proud to be a member has a particularly consistent record in defending the citizen against inflation. But one thing is clear—if great interest groups do not obey the law and lean on the party they support, get preferential treatment and encourage people to bend the mose important principles of public administration no Government, of any political complexion, can rule and we shall then be naked before the forces of hyper-inflation.

Mr. Bagier

I listened to the hon. Member for Wolverhampton, South-West (Mr. Budgen) with some interest. It seems to me that towards the end of his speech he was trying to present the theme that no political party should have to lean, as he puts it, on any sort of paymaster. May I remind him that for a long time—well before 1967—the Labour Party has always published details of where its funds come from, but it required an Act by a Labour Government to insist that the paymasters of the Tory Party should expose where their funds come from. Let us all be clear about that—

Mr. Budgen

On a point of order, Mr. Murton. I was not saying that. I was saying—

The Deputy Chairman (Mr. Oscar Murton)

Order. It seems that procedure is going a little astray. That is not a point of order. It is an interjection, which the hon. Member for Sunderland, South (Mr. Bagier) has allowed the hon. Member for Wolverhampton, South-West (Mr. Budgen) to introduce.

Mr. Budgen

On a point of interjection, I was saying that I believe that no political party should be ruled by the interest group that pays it.

Mr. Bagier

That is exactly the point which the hon. Gentleman was making. I was saying that it had long been known that the Labour Party receives funds from the trade union movement. But it was not until a Labour Government changed the situation that we were able to know from where the Conservative Party gets its funds.

The debate is taking the form of consideration of the credibility and honesty of the Opposition Front Bench. When the right hon. Member for Carshalton (Mr. Carr) was in Government he said that it was not the intention of his Government to take taxes from the trade unions as such. The right hon. Gentleman nods assent to that. If there was no such intention the money should not have been taken in the first place. The new clause has been introduced to put right what the right hon. Gentleman and some of his more honest members of his Front Bench are prepared to concede were the intentions of the Government of the day.

The debate has nothing to do with what is happening in the trade union movement, but rather it has to do with what has been taking place over the weekend. We hear that the Leader of the Opposition wants to flex his muscles and have a fight. He wants the Opposition to become a real Opposition again. Had he been involved in the 1964 situation, when there was a majority of three, he would have been manning the barricades and bringing every hon. Member who was sick to the House so that they could all go through the Lobby, apparently trying to defeat us.

The difficulty today is that if the Opposition and the other opposition parties want to get together they can defeat the Government any time they wish, but they have to ask themselves whether this is the issue on which to do it. That is their dilemma. One of the traditions of the Tory Party is that it always believes in union bashing. However conciliatory the speeches from the Opposition Front Bench they have not been echoed from the back benches. They have said "Let us have a real go at Hugh Scanlon and Dan McGarvey, as the villains of the piece." If they believe that that is the best way to get industrial peace they ought to talk to people outside the Committee. It would help them occasionally to give credit to the great majority of members of the trade union movement and leadership who have worked hard, honestly and sincerely to get industrial relations operating and to get the nation working properly. It would also help the Opposition if we did not have the union-bashing approach from them. That approach is harmful to the nation; it does not help the Opposition and it does not help us——

Sir Harmar Nicholls

It is not a matter of righting wrong or of doing what my right hon. Friend said he would like to do. It is a matter of how it is being done—of its being done in such a way as to appear to give the impression of having contempt for both the laws of the land and a High Court judge's decision.

Mr. Bagier

The hon. Gentleman says that a wrong has been done but he objects to its being put right by the only possible means; namely, by altering the law. That is the wish of some Members of the Conservative Party. But many of them want to go into the Lobby tonight.

I suggest, Mr. Murton, that when the Division bell goes tonight you make sure you give the Opposition the full six minutes, for we do not know how many of them will be locked out when making charades of how they will defeat us.

The Leader of the Opposition was not present when I made my earlier remarks. He has been saying that it is time there was some purposeful opposition and that tonight is the opportunity for that. I hope that when hon. Gentlemen opposite consider some of the remarks that have been made today they will realise that what they are doing is wrong.

8.0 p.m.

If Opposition Members think back over their time in Government, they will realise that by bringing the law into industrial relations they created more industrial strife than there was even in the early 1930s. One hon. Gentleman opposite referred to my right hon. Friend the Member for Blackburn (Mrs. Castle) and "In Place of Strife". The penal clauses in that document were a mistake. Trade unionists and Members on this side of the Committee managed to convince my right hon. Friend that she was wrong, and those proposals were withdrawn. The Tory Government introduced similar proposals and brought the law into industrial relations, and their record over the last three years shows the folly of doing that.

One cannot bring the law in to arrive at decisive decisions in industry. Such decisions can be made only by people of good will on both sides getting together round the table and thrashing out matters. Difficulties cannot be resolved by a judge or a court of law. A judge cannot give and take. He cannot do a deal. He can only interpret the law, and we saw the folly of that.

Mr. Robert Carr

How does the hon. Gentleman explain the introduction of such a system—not by the law but with a lot of help from the law—in Socialist Sweden, Western Germany, Holland and several other countries, but not here?

Mr. Bagier

In Socialist Sweden a social contract was drawn up between a Socialist Government, the trade union movement and industry.

Mr. Robert Carr

The law helped.

Mr. Bagier

The system was introduced with the full agreement of all parties, and not by the guillotine procedure against the will of the then Opposition and the organised trade union movement.

Mr. Robert Carr

The law was introduced in Sweden in face of far more violent opposition than there was from the trade unions here. Trade unionists picketed Parliament and tried to prevent Swedish Members from getting in to pass the law.

Mr. Bagier

When the contract was finally made, it was arrived at in a manner which ensured that there was a fair division of power between the three sides to the bargain. The trouble in this country has been that because of the Opposition's general attitude towards trade unions and their policy of union bashing there has been no feeling of trust on the part of trade unionists. The Opposition asked for this lack of trust, and they received the response which they got.

It is difficult for those of us who try to take a reasonable line to encourage trade union leaders and our membership at shop floor level to act in what is sometimes called a more responsible manner, or not to react too sharply to calls for strikes. It is not easy to ask them to change their attitudes when they hear the individual and personality bashing, that is indulged in by hon. Gentlemen opposite.

The nub of the matter today is whether, as the hon. Member for Peterborough (Sir H. Nicholls) said, it is right that this money should have been taken in the first place, and, if it is wrong, whether the Government are right in introducing a new clause to restore the position to what it was, but instead of trying to right a wrong the Opposition are taking advantage of the situation to divide the Committee and make it look as though there is real opposition to this proposal instead of a mere charade.

Mr. Hurd

I wonder how we can persuade the hon. Member for Sunderland, South (Mr. Bagier) that he is wrong in his analysis of what we are trying to do. He ranged widely in his speech, and in doing that he followed his right hon. Friend the Chancellor of the Exchequer. The right hon. Gentleman did not say a great deal about the clause, but he did say a great deal about the political situation as a whole. Some of my hon. Friends became a little impatient with him for that, but the right hon. Gentleman was justified in what he did because the clause goes to the root of the Government's whole attitude to the trade unions. The fact that the Secretary of State for Employment has been here for most of the afternoon and evening and has been smiling rather anxiously is proof that that is so.

I have no doubt that, second to inflation, the question of trade union rights and trade union power is the most important subject in the minds of the people whom I represent. That may be partly because so many of my constituents work at or live near the Cowley car works at Oxford, and my hon. Friend the Member for Oxford (Mr. Woodhouse) made a telling intervention on this situation in a recent debate.

In the short time that I have been a Member—and this happened during the election campaign too—large numbers of trade unionists of different political opinions have been to see me, have written to me and have rung me up to make all kinds of representations. It is puzzling, after listening to the speeches of hon. Gentlemen opposite, to realise what the representations are about. People come to see me not to ask for the immediate repeal of the Industrial Relations Act, and certainly not to ask for the provisions in the clause that we are debating today but, with their wives and children, to complain about the industrial disruption which they suffer at their place of work.

In a wide-ranging speech the hon. Member for Keighley (Mr. Cryer) dealt eloquently with the right to withdraw labour. I accept that part of his speech, and if it had been delivered 50 or 60 years ago it might have been relevant. The relevant issue today at Cowley is not the right to withdraw labour but the right to work. People there find that their livelihood is disrupted over and over again by disputes in which they do not feel themselves involved and which for them have no meaning.

The best thing that has happened in my part of the world since the General Election is that at last, after many months, the great majority of trade unionists—whom hon. Gentlemen opposite have rightly praised—their wives and the management have come together and administered a sharp rebuff to the kind of trade union leadership which the Labour Party when in opposition did so much to encourage and invoke, and with which it is now landed. This has been an encouraging development in my part of the world, and it shows in what an unreal world some of those who have spoken today live.

The clause opens up alarming possibilities for the future. At Question Time last week I had a brush with the Chief Secretary on the question of the wealth tax as it affects farmers. At the other end of my constituency there are many small farmers who are worried about the effect of a wealth tax on their farms—whether their farms will be broken up as a result of a wealth tax, or whether they will be able to carry on. This is a legitimate and deeply-felt complaint.

Using the principles which we have heard advocated about putting right a wrong, and using the quotations from the benches opposite, if, by a mishap, the tax were to come in we should be entitled to come back in four or five years' time—and perhaps £10 million would not be enough, and we should need £20 million or £30 million—and ask the House to pay back the money that had been taken by way of wealth tax because we thought a wrong had been done to this section of the community, their livelihood had been disrupted and they were entitled to a retrospective refund of taxes.

That is the principle opened up by the clause. It may affect the farmers one day, but one can imagine various categories of people who from now on can expect, with some degree of justification, that we would go forward and make sure that they got their money back. The implications of this are alarming. None of us wants an approach by this or that group of aggrieved constituents about rates or taxes to lead to our not only putting the matter right for the future but restoring the rates and taxes that they have paid.

Having listened to the speeches of Labour Members on this subject over the last few months, I would acquit them of any hypocrisy. They have been quick to accuse us of hypocrisy today, but I do not return that accusation because it would be unfair. However, judging from my admittedly short experience in the House and the representations and complaints that I have had from constituents who are trade unionists, I believe that many Labour Members are living in a dream world.

They really think that they won a majority at the last election for this kind of measure, that most people are unionists and that most unionists are pressing for this. They really think that it was in the national interest for them to stimulate the opposition to the 1971 Act which has done so much harm. They really think that they serve the honourable tradition of their party as the party of the underdog by heaping these privileges on already powerful organisations.

Of course, as has been said, the trade union movement is a fact that we must not just live with but work with. Any Government must accept that. The sooner we move towards some nationally acceptable policy on the unions the better. But if the Government think that this clause is a step in that direction, they misunderstand the nature of the problem and the nature of democracy in this country.

Mr. Ronald Atkins

I was prompted to intervene by the extraordinary remarks of the hon. Member for Wolverhampton, South-West (Mr. Budgen). He said that the Conservatives never went in for retrospective legislation. He must be unaware of the Immigration Act, for instance. He also said that the Conservatives did not represent a section of the community, implying that they represented the whole community.

In fact, the history of the Conservative Party, and indeed of the Liberal Party, is that they have represented a small section of the community—namely, the employer class. Because the working classes were not represented by either of the main parties, the Labour Party came into being. That is its raison d'être. The combination laws have been mentioned, and the nineteenth century is full of examples of both the main parties trying to destroy the unions. There is one exception. Disraeli found it necessary to repeal a part of Gladstone's Act which had made peaceful picketing impossible.

The Conservative Party has suffered from that split mind ever since. It has an inner ego full of hatred for the working classes. The Labour Party, because it represents the unions and they represent the majority of the community, in fact represents the community at large.

Mr. Robert Redmond (Bolton, West)

First, am I not right in thinking that there are 25 million people employed in this country but that only 10 million are members of affiliated unions? Second, how can someone like me represent a constituency like mine without a large number of solid working-class votes behind me?

Mr. Atkins

The answer to the second question is that that was Disraeli's tactic. After the workers had been given the vote, especially in the towns and later in the countryside, he knew that the Conservatives could never get power unless they fooled the workers. These conflicting attitudes in the Tory Party have been present ever since.

8.15 p.m.

On the first point, it is true, to the delight of some Conservative Members, that not all workers are in unions. There are various reasons for that and it does not mean that they are against unions. So many employments do not give an opportunity for union membership. But unionists, their families and their friends represent the great mass of the community. That is why ours is a truly democratic party.

Mr. Michael Marshall (Arundel)

Will the hon. Gentleman also accept that all our estimates show that a third of the 9 million to 10 million trade unionists have to vote Conservative for us to get the kind of vote we get? He cannot say that no unionists support us.

Mr. Atkins

I have the greatest admiration for the ability of Disraeli and for the Conservatives ever since to deceive that section of the electorate.

Mr. Carol Mather (Esher)

Is the hon. Gentleman not saying that many of the people on whom he depends for support, the working classes, are foolish?

Mr. Atkins

I am not saying that they are foolish; I am saying that the Tories are very cunning. They have had the advantage of education, public schools and the rest. I am anxious for my own people to get similar advantages. That is one reason that I am in the Labour Party—[Interruption.] I was one of those boys who was able to take advantage of State education. Some of my colleagues have not had the same opportunities.

The Conservative Party has not changed. When they brought in the Industrial Relations Act, they cloaked their intentions in all sorts of pretence about working for the community. They were supposed to be going to improve industrial relations—and we know what happened. One way in which they intended to do it was through tax remissions if unions registered. It was an effort to make the unions commit suicide. It would have weakened them back to their pre-1875 position—[HON. MEMBERS: "Nonsense".] There is fury on the other side of the Committee, like the fury of blackmailers who have lost their means to blackmail.

The Labour Government will get rid of this pernicious imposition which should never have been placed on the unions. Typical of the true Tory attitude to the unions is what happened when the employers, in their wisdom, decided to pay the fine imposed on a union by the National Industrial Relations Court. They took that decision for the sake of the country and of their own profits. The Tory Party in Parliament does not even [...]present the employers sensibly and wisely. By creating an atmosphere of bad industrial relations, they are hurting not only the country but the men they represent.

This is another example. For a mere £10 million they are trying once again to poison industrial relations at enormous cost to the country. They themselves speak about the importance of industrial relations. But one thing they always forget is that industrial relations are human relations. Until one starts treating working people like human beings, one will never have a good relationship with them.

Mr. Adley

I should like, first, to congratulate my hon. Friend the Member for Mid-Oxon (Mr. Hurd) on a very constructive contribution to the debate. I echo something that he said, that is, that when I am visited by trade unionists, as I frequently am at my surgeries, they do not come complaining about the Industrial Relations Act. As the Secretary of State for Employment knows very well, many of my constituents work on building Concorde and are very concerned about that. Some of them visited the right hon. Gentleman recently, and I accompanied them. Therefore, it is totally false for anyone to suggest that the rather sterile arguments that we have so often back and forth across the Chamber represent the views of millions of trade unionists in this country. A very small number of them are actively interested in the political arguments that we spend so much time discussing.

In opening the debate, the Chancellor of the Exchequer made what for him was a very poor speech. He has an extremely high intellect. One can only assume that his failure to spend any time discussing the merits of new Clause 4, and the time that he spent in political banter, was an indication that a man with a mind as sharp as his could find so little to say about the clause, that he had to indulge in party-political bluster.

My right hon. Friend the Member for Carshalton (Mr. Carr) won the argument absolutely hands down. Certainly if I needed any persuading as to how to vote at the end of a debate, it has been provided and I shall vote with my right hon. Friend.

It is perhaps prophetic that we are discussing new Clause 4. After listening to the Chancellor, I rushed to the Library and perused Keesings Contemporary Archives. I am glad that the Secretary of State for Employment is on the Government Front Bench at present, because I want to take him back to Clause IV and the Labour Party Conference of 1959. From that conference stem so many of the wrangles within the Labour Party which have resulted in the present situation, the wrangles which have resulted in that faction of the Labour Party which the right hon. Gentleman has represented gaining ascendancy at present.

If I may briefly quote from the report on the debate at the Blackpool conference and the speech made by Mr. Gaitskell on the nationalisation controversy, Keesing says Strongly contrasting views on this subject were expressed, ranging from demands that the party should not compromise on the question of public ownership (voiced inter alias by Mrs. Castle, Mr. Michael Foot, Mr. Frank Cousins…) to assertions by MPs (among them Mr. Pannell, secretary of the trade union group of Labour MPs) that nationalisation had lost the party large numbers of votes, especially in the new housing estates. Nothing much has changed about that. Mr. Gaitskell went on to say that nationalisation "was not the be-all and end-all" of Labour policy.

Mr. Ted Leadbitter (Hartlepool)

I am trying to follow, with considerable interest although not too much energy, what the hon. Gentleman is saying. What has it to do with new Clause 4? Unless the hon. Gentleman tries to explain it to me, I shall get him wrong.

Mr. Adley

It has as much to do with new Clause 4 as the speech of the Chancellor of the Exchequer. The point I wish to make is simply that we are faced with a new clause on the Finance Bill at the behest of a Labour Government who are represented now by that faction of the Labour Party which lost the argument on Clause Four in 1959. There has been a turn-around. The point is that we are faced with this new Clause 4 on this occasion because although Mr. Gaitskell won then, he and his followers, the social-democratic section of the Labour Party, have lost at present. That answers the point made by the hon. Member for Hartlepool (Mr. Leadbitter).

Mr. Bernard Conlan (Gateshead, East)

Is not the hon. Gentleman getting confused between two separate and distinct Clause 4s? Tonight we are discussing new Clause 4 of the Finance Bill, but the speech that he is making now he should be making tomorrow.

Mr. Adley

I am grateful to the hon. Gentleman. I am glad to be able to assure the Committee that I shall not seek to make the same speech or any speech tomorrow. I am deliberately confusing the two Clause 4s. But it is prophetic that this clause was introduced by the Chancellor as new Clause 4.

Mr. Terence Higgins (Worthing)

There are three Clause 4s. Clause 4 of the present Finance Bill is related to VAT and television rentals, on which the Government were defeated the other night in Standing Committee.

The Temporary Chairman (Mr. Harold Gurden)

It would help the Committee if we discussed new Clause 4.

Mr. Adley

I am grateful to my hon. Friend the Member for Worthing (Mr. Higgins). I hope that tonight will be third-time lucky for the country.

The whole political atmosphere at present is dominated, as it has been for some time, by the defeat—and the fear—of the social-democratic section of the Labour Party by the Left-wing of the Labour Party. The way in which the present Secretary of State for Education and Science was reviled by many of his colleagues in the previous Parliament was something which many of us who were Members during that Parliament will not forget very quickly.

Returning to the speech made by the Chancellor this afternoon, there was a sedentary intervention from the hon. Member for Bolsover (Mr. Skinner)—who is in his place, as assiduous as ever. I think that I am not misquoting him when I say that he called out to his right hon. Friend, "Ah, yes, but there have been two elections since then." The hon. Gentleman nods assent, for which I am grateful. He was referring to the change that had taken place in the view of the Labour Party since "In Place of Strife" in 1969 and the situation which pertains today.

My right hon. Friend the Member for Carshalton pointed out that the Conservative Party had accepted that part of Donovan in 1969 and that part of "In Place of Strife", and that we would have agreed had the then Labour Government had the courage to go ahead with that piece of legislation. That is still the position of the Conservative Party. As the hon. Member for Bolsover pointed out, it is the Labour Party which has changed since then because of the takeover by the Left.

What I find infinitely depressing is that almost everywhere one looks there are manifestations of this take-over. The phrase "worker participation" has become the phrase "worker control". In Germany they have the two-tier board system which allows the election from the shop floor of workers to a place on the board. That is not the proposal which the Labour Party seems to be putting forward now. The Labour Party is proposing nominations from union headquarters or from Transport House, and it seems likely that those nominations will include people who do not even work for the company concerned. That is, perhaps a detail—but it is a significant detail.

I fear that what we may be going through at present is the last chance for responsible trade unionists in this country to have a fair say in the way in which their unions operate. The words of a leading trade unionist in the West Country will live with me for ever. I do not think I misquote his meaning when I say that what he said to me privately was "Any Government who remove the Industrial Relations Act totally from the statute book are kissing goodbye to responsible trade unionism". That same chap 48 hours later got up on a platform to denounce the Industrial Relations Act.

8.30 p.m.

Mr. Clemitson

I am interested in this phrase "responsible trade union" or "responsible trade unionist". Would the hon. Member care to define what he means by it? It seems to me he is using it in terms of a unionist who agrees with the 1971 Act.

Mr. Adley

By "responsible trade union" I mean a trade union which takes into consideration the views of all its members and takes into consideration the national interest.

Today a number of hon. Members have accused the previous Conservative Government of deliberately seeking confrontation. I submit that the confrontation to which they refer was the same confrontation which Winston Churchill felt that the British people could offer to another overweening power in September 1939. There comes a time in the affairs of men when, however unpleasant confrontation may appear to be, confrontation is better than subjugation. This afternoon the Chancellor of the Exchequer sought to paint the Conservative Party as anti-unionist. That is absolute nonsense. We are, however, opposed to those who seek deliberately to disrupt our society, and the point was made so eloquently by my hon. Friend the Member for Mid-Oxon from his own experience.

I object very strongly to the methods and the motives which lie behind this new clause, a clause retrospectively paying back money to people who are in a position to pull the purse strings of the Labour Party.

I want now briefly to deal with another point which has been made by a number of hon. Members today—the continuing saga of the unions versus big business. I am not going to indulge in a blind defence of big business. The one point I want to make is this: I cannot think of one hon. Member on either side of the House—certainly not among my hon. Friends—against whom a finger could be pointed and of whom a company could say, "We sponsored that man to be a Member of Parliament and if that Member of Parliament does not do what we want then at the next general election when that Member of Parliament is again a parliamentary candidate we shall see he does not get selected for the constituency."

Mr. Conlan

I feel that on reflection the hon. Member may regret what he has just said because many of us are Members sponsored by trade unions and not one of us—and there are 130—would accept a diktat of a trade union. Each and every single one of us, trade union- sponsored or otherwise, represents his constituents and nobody else.

Mr. Adley

I am delighted to hear that, but I was not aware that I had said anything about sponsored trade union Members. I had not gone on to make any remarks about that. What I said was that I am not aware of any Conservative Member or any Member sponsored by big business, and who could have his seat withdrawn. I have nothing whatsoever to add to what the hon. Member has just said because I am more than happy to accept what he said as a fact. He seemed to assume that I was about to make some sort of accusation. So be it. He has made his point, and I am sure that it will stand, and that all those 130 Members will continue to sleep as easily in the future as they do now.

I think that this is a rotten new clause because, as my hon. Friend the Member for Wolverhampton, South-West said, it is likely to undermine the sovereignty of Parliament, if people outside the House can put pressure on the Government to get them to introduce retrospective legislation. The principle is crystal clear, and anybody who takes an interest in this subject and who will read tomorrow the speeches of the Chancellor of the Exchequer and of my right hon. Friend the Member for Carshalton will be able to judge for himself who is putting forward the national interest.

It is against the national interest for the clause to be carried and if it is carried the effect upon Parliament, the will of Parliament and the rule of law in Britain will be far more insidious than any bombs the IRA may care to place in this building.

Mr. Leadbitter

The hon. Member for Christchurch and Lymington (Mr. Adley) attempted to speak, like other hon. Members, sincerely on a matter on which he feels genuine concern. It is slightly irrelevant, however, with 21 out of a possible 635 Members present to begin to talk about the will of Parliament and loss of sovereignty in this current situation. I am sure that the more reasonable Conservative Members would agree with that if they were asked privately. I understand that the Opposition Front Bench feel that it was regrettable that this money should have been taken from the trade union movement. They did not envisage the technical and legal situation which has developed and which has involved the loss of the provident funds by the unions. I would be the last person to suggest that the Opposition saw this situation coming and deliberately set out to cause it to happen.

Hon. Members generally have a high regard for the institutions of this country, and the trade union movement, whether the Conservatives like it or not, is an important institution. It is only right, therefore, to have, in the vernacular of my part of the world, "fair do's". The money was taken from the trade unions unintentionally, and it is now time to consider in a reasonable manner and with no strings attached how to achieve the previous Government's original intention. The clause is the only way by which the money can be returned to the trade union movement. We are not here dealing with political funds. We are not concerned with whether the trade union movement has been wise or unwise. We are dealing with a matter in which it is generally agreed that if we could go back to square one and start again we would ensure that the provident funds of the unions were not endangered.

Some Conservative Members, particularly back benchers who take a different line from their Front Bench, have made the mistake of trying to inject a belligerent element into the situation. Some have been unreasonably aggressive, which is not what we require in a respectable Finance Bill Committee in the Chamber. But I do not want to react by saying "You have all been mistaken, and you should not do it." What I am saying is that in a free Parliament we should be free to say what we want, and say it as vehemently as we can, whilst acknowledging that when another hon. Member seeks to calm the waters, which can be stirred to violence so easily here, we should respond by saying "Perhaps this is the best approach." When we want to redress a wrong, it is not right to indulge in peripherical arguments about whether the trade union movement is disruptive.

Not long ago some Conservative Members mistakenly sought to put to the country the argument about who runs Britain—the Government or the trade union movement. Those of us who are wiser said "We have heard that story before, and the fair-mindedness of the British people as a whole will take it for what it is worth." I remind those who raised that argument that there is a corollary. A few days ago the President of the CBI was telling an elected British Government exactly what to do. I am pleased to say that none of us on this side of the Committee has made the mistaken observation that one could cry "Who rules the country—the CBI or the elected Government?"

There is little to be gained from introducing areas of animosity into a serious debate. I respect the hon. Member for Christchurch and Lymington for talking about the will of Parliament and the sovereignty of the House. There is no point in taking that away from an hon. Member. But it must be understood that the House is not itself democracy. It is the end product of a democratic process in which the trade union movement, the CBI and everything else that makes up this great nation play a part. It behoves us to speak with a degree of humility rather than arrogance about the true situation.

The Conservative Members, who have led the country to believe that tonight there is a great issue, that they will show as an Opposition that at last there are teeth in their fight against the elected Government, have a duty to tell the nation that the fight will be sincerely and genuinely fought, when it comes, on issues that really matter to the nation. This is not such an issue. I can forecast what will happen when the vote takes place. Already the right hon. Gentleman the Leader of the Opposition has been in the Chamber frowning. It seems that he is wondering what will happen. A lot has been said about this clause, and the national newspapers have carried headlines relating to it, but there are not enough hon. Members present to make up two football teams.

Mr. Prior

Hon. Members are watching it.

8.45 p.m.

Mr. Leadbitter

Perhaps most hon. Members were watching it last night. This may be one of the rare occasions when the right hon. Gentleman is correct.

Having decided this issue it is important that credibility be restored in Parliament. None the less, I forecast that the Whips are working hard to see that certain hon. Members do not vote and that the Labour minority Government are upheld. That is the true position.

I do not want to anger Conservative hon. Members, because they are all honourable men. I do not want to worry them too much, and I do not want to put too much energy into this matter. I merely wish to put to them a simple businesslike proposition. They claim a greater knowledge of such matters than most of my right hon. and hon. Friends. I am talking in terms of a fair deal. If, on the basis of a fair deal, we take something from a person or from an organisation when it is not our intention to do so, is it morally wrong when we realise the error of our ways, to correct the error?

Conservative hon. Members do not want to get themselves into an awful tizzy about retrospective legislation. They do not want to call upon principles. We have all read our Machiavelli. Principles are often brought into play when there is little left in an argument. Principles are only passengers in the night. However, Conservative hon. Members want to bear in mind that some of my right hon. and hon. Friends can recall occasions when they have found retrospective legislation much to their liking. I remember on one occasion in the 1960s sitting in another place, which perhaps for the first time this century was full, and watching their lordships support retrospective legislation to give compensation to the Burmah Oil Company.

Mr. Rooker

They are all shareholders.

Mr. Leadbitter

Conservative hon. Members might be advised—and I say this gently—to knock it off.

Mr. Ivan Lawrence (Burton)

I hope that I shall not be accused of being unreasonably aggressive when I remind the Committee that the hon. Member for Sunderland, South (Mr. Bagier) referred to credibility and said that this debate was all about credibility. I have heard some incredible things this evening by Labour Members. I remember my hon. and learned Friend the Member for Nelson and Colne (Mr. Waddington) talking about the democracy of the trade union movement, about which Labour Members are proud. He said that Mr. Scanlon had been elected by only 6 per cent. of the entire electorate. Knowledgeable hon. Members were first in some discord, but with a united cry they called out "Liar".

Mr. Tomlinson

No.

Mr. Lawrence

The incredible thing is that they do not appear to have been aware that that was just the position. I went to the Library and secured a cutting from The Times stating that Mr. Scanlon had been re-elected president by 76,063 votes—a vastly increased majority. The report pointed out that this retained for Mr. Scanlon the leadership of the union's 1,168,000 members. I do not seek to take away from Mr. Scanlon his right to represent and speak on behalf of the AUEW, even on a 6.3 per cent. poll, but it is difficult to support wholeheartedly the claim by hon. Members opposite that the wielding of his union's enormous power by Mr. Scanlon is the result of a democratic process.

Mr. James Tinn (Redcar)

Can the hon. Gentleman assure us that there are larger turn-outs of shareholders for the election of company directors? Are shareholders more assiduous than trade unionists in attending meetings?

Mr. Lawrence

The Conservative Party does not represent shareholders, and I do not know one single company which can bring this country to a standstill. The same cannot be said of some of the powerful unions. The hon. Gentleman's intervention was another of the odd and incredible things which have been said by hon. Members opposite in the debate. There have been others.

The hon. Member for Sunderland, South, echoing other hon. Members, said that it was wrong of the Conservative Party to think that the way to peace was by having a "go", to dare to criticise Mr. Scanlon, to dare to criticise the unions, to launch an attack upon the sanctity of the trade union movement or any of its constituent parts.

But the attitude that we should not dare to criticise or attack was the very attitude of appeasement found to be so wrong at the outbeak of the Second World War. People were saying in the 1930s "We must not rock the boat or criticise." The attitude was that we must not fight, and the result was war. Looking back to those years, we are rather ashamed of the attitude of appeasement.

Mr. Tomlinson

The hon. Gentleman is directing his approach against the wrong target. His attack should be concentrated on the confession of the right hon. Member for Carshalton (Mr. Carr). who said that the £10 million arose from a decision whose result he had not expected.

Mr. Lawrence

I cannot speak for my right hon. Friend the Member for Carshalton (Mr. Carr), but criticism of his statement by hon. Members opposite conies a little strange to my ears. It is about the third oddest thing I have heard in the debate.

If one is going to discipline one's child—I am not using a very good analogy because it is just off the cuff—one does not intend to hit him with a slipper. One's intention is that he should do the right thing, and it is with the greatest regret that later on, if he has not done the right thing, one chastises him with the slipper. It surely cannot be claimed that one chastises him with the slipper. It surely should apologise for the reason for chastisement.

The Conservative Government went into office in 1970 with the clear mandate of the people to introduce an industrial relations Bill which would include registration. To make sure that as far as was reasonably possible registration was what happened—and some sort of stick had to be used apart from the carrot—certain consequences followed if the unions did not register. One consequence was that they were not immune from taxation. It cannot lie in the mouths of Labour Members, or even the unions, to say that these bodies, with their eyes open, having deliberately taken a step which was lawful, which had been laid down by Parliament, should now be able to turn round and say "What a shame. We want our money back."

That is why we say that this issue is so important. It is yet another example of the Government turning back on the traditional respect which this country has always had for the rule of democracy and of law. We play by the rules and we do not change them when we come into office.

Another thing I found strange was the eloquent speech of the hon. Member for Gloucestershire, West (Mr. Loughlin), who spoke at great length, in eulogistic terms, saying what a wonderful measure this was, how it safeguarded provident funds now being denied to the unions by wicked Tory legislation. He said that the measure would advance co-operation in industry, that it was a great measure, one that had been pondered long. It was important to him and his hon. Friends. I pause to ask: why, if that was so, was this measure not part of the Labour Party's programme in 1973? Why was it not part of the General Election manifesto of 1974? Why was it not part of the Gracious Speech and why was it not part of the original Bill?

There is only one answer. It is obvious to the country, if not to Labour Members. We know it and the country knows it. This £10 million is part payment of the social contract, if such a thing exists. What we are concerned about is that there is no guarantee that the £10 million will not go down the drain. We have only to read our newspapers to see that the social contract is by no means the sort of instrument upon which any great reliance can be placed. I will not go into detail and explain why we have reasons for thinking that it will not last long. We have all seen the declarations of certain trade union leaders. I certainly hope that this contract will last.

I find it incredible that Labour Members should believe that the public will think that it is a mere coincidence that 130 of them who are sponsored representatives, sent here partly by a process of choice in which the unions play a large part, should be taking the view that they do. It is not a matter of coincidence that people who come here on that basis should be unduly sympathetic towards the trade union cause. The public will not be able to understand how hon. Gentlemen can honestly believe that they can put across to the people that it is a matter of coincidence that 80 per cent. of the funds of the Labour Party are contributed by the unions, irrespective of whether this £10 million will be so used. This sum is a satisfaction, a payment, an earnest to the trade union movement, and in due course the movement will, it is hoped, pay out to support the Labour Party.

Mr. Joseph Dean (Leeds, West)

Will the hon. Gentleman explain what happens to the massive donations made to the Conservative Party by private industry, sometimes without the acquiescence of shareholders?

Mr. Lawrence

The hon. Gentleman will understand that I can talk only from my own experience. I have a mass of business enterprises in my constituency. I can assure him that there was only one substantial business enterprise there which dared to give any money to the Conservative Party.

The Temporary Chairman

Order. That part of the hon. Gentleman's speech does not come within the new clause.

9.0 p.m.

Mr. Lawrence

I am obliged, Mr. Gurden, and I apologise.

Right hon. and hon. Members opposite know full well that it was the reaction of the unions which broke the last Conservative Government, and it is the action of the unions which can break the present Government, too. The behaviour implicit in the clause will be partly construed as a justification for placating the unions, whether as a down payment or not. We have heard a hollow pretence from hon Members opposite to justify their support for the clause.

I do not necessarily accept that all hon. Members opposite are in contempt of the law. I do not accept that every hon. Member opposite wants to undermine parliamentary democracy and the traditions of our legal system. Nevertheless, if there is a significant proportion of hon. Members opposite who do not believe that infringement of the rule of law is reflected by the action of the Clay Cross councillors, by the Secretary of State for Employment's attack on the judges and by the retrospective payment contained in the clause. I conclude that the pressure on them to pass this measure must be very great indeed. The stronger the pressure on hon. Members opposite, the more we on this side must be fearful.

Mr. Tinn

Will the hon. Gentleman allow me?

Mr. Lawrence

I have given way four times. I am not duty bound to give way any more.

The mightier the pressure, the more appalling is the predicament in which this great democracy of our finds itself.

The hon. Member for Gloucestershire, West said that we on this side of the Committee were using the clause as a vehicle to attack the trade union movement. Nothing could be further from the truth. We are using it as a vehicle to attack the Labour Government for being weak, helpless, and the lackeys of the over-mighty unions. Right hon. and hon. Members opposite have said that, in government and now, we have been following a policy of confrontation. In my view, confrontation in defence of law and democracy is to be preferred to abject cringeing before brute force and political blackmail.

I hope that the clause will be thoroughly defeated.

Mr. Prior

I hope that the Committee will permit me to make a few short general comments about industrial relations and the attitude of my party and of the last Conservative Government to the trade unions and the part which they have to play in our economic and social affairs. The debate has ranged fairly wide, and I wish to deal with one or two of the points raised.

It is self-evident that no party or group of individuals in a party can claim in recent years to have found the right balance between Government and unions, or unions and employers, or even unions and unions, or the people and unions. We should therefore approach this subject with a good deal of humility and open-mindedness. I intend to listen with care to the views of all who make suggestions, from wherever they may come. A solution to the problems of our industrial society is vital if Britain is to remain a prosperous and contented nation.

However, I do not believe that there is anything to be gained by soft words, any more than there is by soft words in debate in this Committee. A degree of plain speaking will not be misinterpreted. The cut and thrust of debate is just as much part of the life of trade union leaders as it is part of the life of this Committee, and I do not think that we are more likely to reach a consensus or a solution to the problem of mealy-mouthed words than we are by plain speaking.

There are a number of facts which we all have to face. It is not self-evident that the unions are an underprivileged, downtrodden lot, unable to look after themselves and incapable of standing up for their rights against wicked employers. I do not think that any hon. Member who, for one reason or another, exaggerates the case for or against a given point of view improves it by wild exaggeration, some of which we have heard today from Government supporters.

In truth, the trade unions have enormous power and strength. I want to quote some words written by a man who I do not suppose has ever voted Conservative in his life. He had this to say on the subject of trade unions a little while ago: It is not easy for people of liberal-left sympathies to face up to the extent of the threat to a stable, democratic and just society posed by the power enjoyed by the unions. After all, we were all brought up on the history of the unions, from the Combination Acts onwards, seeing them as the struggling representatives of the oppressed underdog; it is not easy, then, to accept that this picture is now only a limited part of the whole truth. The unpalatable—and uneasy—prospect is that if we are to maintain and improve the kind of society which most people in this country appear to want, the power of the unions needs to be further curbed. The right to strike must, of course, be maintained. So must the right of workers' representatives to negotiate with management about working conditions, and, one might hope, to participate increasingly in management. But the present strength of ill-co-ordinated mass trade unions, which are far more concerned with maintaining the privileges of differentials than with the interests of the real underdogs, amounts to a threat which we all—and especially those of us of the Liberal-left—must face squarely. That was what Professor Alan Day wrote in a recent article.

I am bound to say that I agree with him. I am prepared to accept that not everything can be improved by legislation any more than it can be put right without it. Somewhere and at some time soon we have to reach a middle way. In seeking for it, we must go for the maximum of co-operation and consultation, and on that we shall embark.

It is against the background of one attempt to solve our industrial relations problems that we come to this debate.

There have been two main strands running through the debate. The first one was retrospection, to which I shall return later. The second was whether the tax could have been avoided—and the answer to that is plainly, "Yes". It could have been avoided either by registration or by means of a special register under the Industrial and Provident Societies Act 1965 or the Friendly Societies Act 1896.

Let me take the Committee back to the debates about registration under the Industrial Relations Act. The Committee will recall that the Donovan Commission recommended that all trade unions should receive corporate status and be registered, and a majority of the commission recommended that the immunity for inducing breaches of contract should be restricted to registered trade unions and to those acting on their behalf.

The Commission also recommended that certain requirements should attach to registration—in particular, that the rule books of trade unions should conform to certain conditions designed to ensure better safeguards for individual members before those unions could be registered.

This concept of the use of a power to refuse registration to a trade union whose rules failed to meet certain standards was taken up by the former Labour Government. In "In Place of Strife" the principle is accepted that it is essential that unions should be able, and be seen to be able, to conduct their business according to clear and comprehensive rules, and to deal fairly with any dispute between the union or its officers and the individual member. The Labour Government of that time accepted that unions should register, and that a condition of registration should be that Unions will be required to have rules governing certain matters and that Refusal will lay a trade union open to a financial penalty by the Industrial Board. It was also accepted that it is necessary that the administration of their rules should be subject to independent review. We built on that foundation. "In Place of Strife" remarked: it is right and healthy in a democracy that any powerful body should be subject to outside scrutiny where abuse of its power can most harm the individual. It is not an ignoble concept to ensure better safeguards for individual members of unions, as Donovan called it. It is not unreasonable that there should be registration. It was not unreasonable at the time the Bill was introduced that a concept recommended by Donovan, incorporated by the previous Labour Government, should be put into statutory form by the incoming Government which had made it a main plank of their election campaign.

As time went on, and only as time went on, it became clear that a large number of unions would not register. We do not want to go into all the reasons why they decided not to register. Perhaps if we had had more assistance from hon. Members who only a few months before that were saying how essential it was that unions should register, we might as a nation have got over some of our problems.

It was a decision that the unions were perfectly entitled to take—albeit, a great disappointment to hon. Members who now sit in Opposition and, I fancy, to a large number of hon. Members who sit on the Government side, and it was certainly a grave disappointment to the country as a whole.

Had the unions registered, their funds would have been protected. By their not registering, provident funds became liable to tax.

We have today been through the various periods when this matter was debated in the House of Commons and in the House of Lords. It was debated first on 10th February 1971 when my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), the then Solicitor-General, stated that an organisation which was not registered under the Industrial Relations Act could not qualify as a friendly society in respect of its provident funds. The implication was that it could no longer secure tax relief on those funds.

Following that, the then Opposition put down an amendment which sought to give effect to the concept of a special register. That my right hon. Friend the Member for Carshalton (Mr. Carr), then Secretary of State, resisted, saying: I resist these amendments only because they are not necessary My right hon. Friend went on to argue that registration was a necessary condition for the provision of tax reliefs for provident funds, and that a union could secure this relief either by registration under the Industrial Relations Bill or by hiving off its provident funds…into separate organisations, registering them as friendly societies and thereby achieving the present degree of registration."—[OFFICIAL REPORT, 23rd March 1971; Vol. 814, c. 3267.] The matter then went to the House of Lords where a debate was introduced by Lord Diamond who moved a similar amendment to that which had previously been moved in the House of Commons. His arguments are set out in columns 40 to 46 of Vol. 322. The upshot was that Lords Diamond and Drumalbyn and the Lord Chancellor undertook to consult about the question and the technical difficulties already identified by Opposition counsel.

The final round of the debate occurred on 20th July when Lord Diamond introduced a new amendment to secure a special register and reiterated his arguments about the technical difficulty of securing the transfer of union provident funds to friendly society status, and the Lord Chancellor replied to him. He rejected the opinion submitted by Opposition counsel, which he had examined, and he charged that the difficulties alleged by Lord Diamond were essentially "administrative" and not legal or constitutional.

When Lord Diamond came to sum in reply to the Lord Chancellor, he said: There must be…some cases where the difficulties would be insuperable, and therefore it is right, in those cases where they cannot get over these difficulties, that they should be entitled to the same tax treatment as promised to them, if they can establish to any reasonable independent person…that they have taken all reasonable steps to try and get this tax treatment and have not succeeded in doing so."—[OFFICIAL REPORT, House of Lords, 20th July 1971; Vol. 322, c. 922.] I ask the Committee to pay attention to the words "all reasonable steps" and establish to any reasonable independent person''. What would one expect to happen next on these occasions? Great unions had funds at risk. Funds which we heard the Chancellor of the Exchequer describe today as being for widows, orphans and under-privileged sections of our society were at risk. Would one not have been reasonable in expecting that a great union with all the legal power at its command, would take the most strenuous steps to make certain that no stone was left unturned to render those funds not liable to tax? Is that not a reasonable supposition for any unbiased person to make on this occasion?

All the legal brains in the country were at the disposal of the unions. They could have made constant attendance on my right hon Friend if they had wished to do so. It seems inconceivable to me that, given all the circumstances of the case, not once in the whole period from that time onwards until we left office did anyone approach my right hon. Friends and put this case to them. In all the talks which the Prime Minister of the day had with the unions, not once was this ever made the subject of a strong challenge. One is therefore bound to be led to believe that the unions were not serious in what they were saying.

Again, what could the unions have done? If they were unhappy about the difficulties of applying to register as a friendly society—and they had the assurance from my right hon. Friend that if there were insurmountable difficulties he would put the matter right—they could have taken the case to the Registrar of Friendly Societies, and if the Registrar had refused to register—which he might have done—they had the option of going to the High Court or of returning to my right hon. Friend.

They did not do so. I do not know whether they ever made inquiries of the Registrar of Friendly Societies. I hope they did, but I rather suspect that they did not, and so, as the right hon. Member for Devon, North (Mr. Thorpe) said, there is no single example of a union which had tried to register its provident funds separately so that they would not be caught by the provisions of non-registration generally. There was not one union which tried that and proved that it had failed.

The Chancellor said today that the legal advice was against that course. He based his case on insuperability. But how can the Chancellor know that on legal grounds it cannot be done if it has never been tested? That must leave any reasonable person to the suspicion that the unions were not trying and that it suited them better to build up a case against the dreaded Act. Like good negotiators, they worked it out and got their sums right, and it is paying a handsome dividend in getting the Act repealed.

I do not suppose that they ever dreamed that they would get the Act repealed and that some suckers would come along and offer them £10 million into the bargain. Like all trade unionists, they try for more, but they do not always get it, except from the right hon. Gentleman.

I turn now to the question of retrospection. The Prime Minister said at the USDAW conference at Margate in April that no one likes retrospective legislation but it is justifiable when it is introduced to right a wrong which it was never intended should be inflicted. The only justification we have had until today was that given by the Prime Minister. This afternoon the Secretary of State made remarks about where there is a will there is a way and he asked, "We all want to do it, so why not get on with it?" I do not know that that is a constitutional practice which we ought to adopt. Whatever the merits of that principle as a justification of retrospective legislation, it is obvious that Parliament must be satisfied that the principle applies satisfactorily to the case in question.

We do not think that it applies in this case as justification for retrospective action. It was not the intention of the previous Government that unregistered unions should continue to enjoy tax reliefs come what may. It was our intention that they should be able to secure those reliefs by taking action, either to register under the Industrial Relations Act, or to transform their provident funds into friendly societies. If a union failed to take either course it would inevitably forfeit its reliefs, but that would not be a wrong inflicted upon it by the Government. Rather, it would be a loss which it had chosen for its own reasons to incur.

If there were any evidence that unregistered trade unions had tried to hive off provident funds as suggested and that they had met with insuperable legal and constitutional difficulties, there would be a case for the view that an intended wrong had been inflicted.

Our amendment to the 1971 Finance Act regarding the provisional register concerned the principle of retrospection in such a case. But no evidence of such difficulties has been presented and the Government have therefore failed to make out their case for retrospective legislation.

I do not wish to lead the Committee into a great debate about the rule of law and how that principle is or may be affected by recent developments, but there is a danger that those who feel that the talk of a present danger to the rule of law is exaggerated may, because of that feeling, be led to deprecate the importance of that principle and the duty of the Committee to safeguard it.

Both sides of the Committee are rightly suspicious of retrospective legislation. There are two types of restrospective legislation. There is that which retrospectively destroys claims which were lawful when made and that which retrospectively allows claims which were not previously lawful. It is clearly objectionable that Parliament should intervene retrospectively to create or destroy retrospectively the claims of one subject on another and it is hard to justify any retrospective action to destroy lawful claims of a subject upon the Government. My hon. Friend the Member for Horsham (Mr. Hordern) mentioned the Burmah Oil case. In that case, retrospective action by Parliament destroyed the lawful claims of a subject upon the Government. In this case, the Government are making a backdated grant, they say, to certain deserving organisations.

I do not wish to press the objection that £10 million of public money can be given to one class of subjects only if it is taken from another class. My hon. Friend the Member for Basingstoke (Mr. Mitchell) drew attention to the other ways in which it could be spent. But I am entitled to remind hon. Members that the Donovan Commission and "In Place of Strife" adopted the concept of the refusal of registration to a union whose rules failed to meet certain standards. That was the concept underlying the registra tion provisions of the Industrial Relations Act and it has imposed new responsibilities upon unions. All we did was accept what was thought desirable by a Royal Commission, a Labour Government and a Conservative Government.

In the course of its legislative activities, Parliament imposes many novel responsibilities and obligations upon individuals and groups—especially when it is Labour legislation. However, it is our tradition that, when those obligations and responsibilities have been imposed by lawful process, we accept them and their consequences even when we hope that in due course they will be removed. By the conventions of our constitution, we are entitled to hope that legislation that we oppose will be repealed in future, but we are not entitled to hope that such appeal will be retrospective, securing us from the past consequences of democratic legislation.

Nowadays, when new taxation is imposed, particularly by a Labour Government, how can we hope to proceed if we once accept the principle that taxes lawfully imposed by one Government may be paid back retrospectively by a future Government? How can we proceed if powerful sectional groups simply refuse to consent to legislation in the confident expectation that a future Government will retrospectively relieve them of the consequences of their actions?

I have sought to show that it was not necessary for the funds to be taxed and it would be a breach of an important principle if retrospection were allowed. So why did the Government take this step? There can be only one proper explanation for the Government seeking to justify this repayment of tax. It has nothing to do with the justifications that the Chancellor put forward. He was not very certain of his ground. He seemed to be getting ready for the hustings rather than concerning himself with the argument.

The real reason is simply that the unions have an arm-lock on this Government. In a political debate, the Government have given way to the unions—[Interruption.] Hon. Members should not get excited; that is what most of them wanted anyway. The price on this occasion is £10 million—not high in terms of cash, although one or two of us could think of better uses for it. It is in a much more fundamental way that this price should not be paid.

9.30 p.m.

This rebate undermines the law. It is clear that the unions made no real attempt to insulate their provident funds. It is equally clear that they were reconciled to these funds being taxed so that they could build up resentment against an Act which they did not like.

They are perfectly entitled to take that point of view, however unreasonable it may seem. What no Government are entitled to do is to say that because the unions decided to boycott the Act and not to register, they should now be compensated retrospectively for the consequences of such a defiance. This is to bring our law into further disrepute. It undermines the authority of Parliament and it gives comfort to those who seek to destroy our way of life.

There is a growing belief in society that the law can be defied with impugnity. In Opposition, the Labour Party was not always forthcoming in its defence of the law, but the country had a right to expect that the Labour Party would be more forthcoming once Labour Members became the Government. No excuse made by the right hon. Gentleman the Chancellor this afternoon, no great feats of oratory, which mean precious little, by the right hon. Gentleman the Secretary of State for Employment when he winds up the debate, can excuse what they have done. The social compact, the economic situation or the Industrial Relations Act do not justify this action that the clause would permit. I invite all those who believe in upholding the law and who are against retrospective legislation to join me tonight in rejecting it.

Mr. Foot

The right hon. Member for Lowestoft (Mr. Prior) started his speech with some general comments on industrial relations, and he concluded with some comments on what he considers to be the constitutional issues involved in the matter that we have been debating. Clearly I have no complaint on those scores. I may follow him in some of those matters, although I wish to direct most of my remarks, if I can, to the precise question that we are debating. But I say to the right hon. Gentleman that he made one obvious error, at any rate—the others I hope to reveal later. If he thinks that Professor Alan Day is a Left-wing publicist, I must be the newly-appointed Archbishop of Canterbury. Despite the curious elevations I have had in recent times, I do not think that that has actually occurred.

However, I turn back to the speech of the right hon. Member for Carshalton (Mr. Carr). I shall come, I trust, to the remarks of the right hon. Member for Lowestoft in a few minutes' time. I come now to the right hon. Member for Carshalton and the note of sweet reason which he used to present the whole of his case. That naturally suits my temperament much better than the controversial tone of the right hon. Member for Lowestoft. It is on that basis that I should prefer to discuss the matter.

Despite differences on this subject, those who have listened to this debate—I have listened to practically every sentence that has been uttered in it—those who have been here all the time, will know that, despite controversial matters, there has been one question and one central point on which we have been entirely agreed. It was underlined by my hon. Friend the Member for Meriden (Mr. Tomlinson) extremely effectively in his speech. There is one matter that is central to the whole argument and on which there is not the slightest difference between myself and the right hon. Member for Carshalton and, as we understand it, if they agree with him, all his followers. That is that the money that we are discussing, the £10 million or whatever the precise figure may be, is money which on their reckoning, on their calculations and on their desires and policies should never have been withdrawn from the trade unions. One way or another, whosoever's fault it may have been, we will discuss in a moment.

The right hon. Gentleman the Member for Carshalton has not disputed this proposition. I am trying to establish what he said, and I think that there is no doubt what he said. He underlined that according to his view this money should never have been been withdrawn. [HON. MEMBERS: "Need not"] Need never have been withdrawn. Right. Therefore, their policy was, their intention was, that the money should have stayed with the trade unions. [HON. MEMBERS: "No."] That was the meaning, the whole meaning, of what the right hon. Gentleman said.

Mr. Robert Carr

Could I just state to the right hon. Gentleman our position? Our position is that if there was the will there was the way for the trade unions not to pay.

Mr. Foot

I am coming to that. I promise the right hon. Gentleman that, if I am permitted, I will come to his argument. I am not seeking to trap him in any way. I am seeking, for the benefit of hon. Members not all of whom have been here throughout the day, to establish the proposition on which we are all agreed, and that is that their intention and their desire was that the money should have stayed with the trade unions.

Hon. Members

No.

Mr. Robert Carr

The point was that there was no need for the trade unions to pay if they did not wish to do so.

Mr. Foot

I understand. I am sure the right hon. Gentleman appreciates that it is not possible for me to present all my arguments in one sentence.

I have tried to establish the common premises, and any one who has listened to this debate, any one who has studied the debate which took place on these matters in 1971, would concur in the view I have stated—[HON. MEMBERS: "No."]—that the central part of the right hon. Gentleman's argument has been that he never wanted this £10 million taken away from the unions. He said it in the debate. If that was not the case the right hon. Gentleman would have been guilty of gross deception, and we are not accusing him of that.

The right hon. Gentleman goes on to say that in certain circumstances he would have been prepared to agree to retrospection to deal with this matter, and indeed, there was an element of retrospection, as the right hon. Gentleman acknowledges, in the fact that the money was not collected in the first year. [Interruption.] The right hon. Gentleman is nodding. Hon. Gentlemen way back of him cannot see. The right hon. Gentleman also admitted and acknowledged very fairly this afternoon that there were occasions—this might have been one of them—in which retrospection to which he had already agreed, in this matter might have been extended if the case had been satisfactory. He agrees to that.

I am coming to the point of both right hon. Gentlemen who have argued—it has been the central part of their argument, to which I am seeking to reply, and it touches on the main argument put by the right hon. Gentleman the Leader of the Liberal Party—that their charge is that the trade unions did not deal properly with the issue, that they had alternatives which they should have taken. [HON. MEMBERS: "Could have taken."] This is the argument I am now trying to rebut.

We need not spend a great deal of time arguing about registration, as the right hon. Member for Carshalton acknowledges. He must not claim that the form of registration proposed in the Donovan Report or in "In Place of Strife" was in any sense the same form of registration as that in the 1971 Act. [HON. MEMBERS: "That is not the point."] It may not be the point but it touches upon the point because one of the reasons why the trade unions exercised the right they had under the 1971 Act, to refuse to register, was that the form of registration was far fiercer and more severe and rigid than anything contemplated by Donovan.

Let us come to the second alternative since we do not have to deal further with the first. [HON. MEMBERS: "Why not?") Let us come to this second—[Interruption.] I am trying to answer the argument—[Interruption.] Let us come to the second argument which the right hon. Gentleman put forward, that the unions should have adopted the method—[HON. MEMBERS: "Could have."]—could and should have adopted the method of seeking to hive off their friendly society operation from their trade union operation. This has been the central argument.

The right hon. Member for Lowestoft says that the unions never took proper precautions, that they were most negligent in dealing with this matter, and that their approach to it was insufficient and unsatisfactory. Perhaps I may describe what they did so that people may judge whether that is the case. The right hon. Gentleman accuses them of being careless in the use of their funds.

Mr. Barney Hayhoe (Brentford and Isleworth)

Deliberately so.

Mr. Foot

The right hon. Gentleman knows better than almost anyone what happened during the passage of the 1971 Bill. The unions had very serious discussions on these matters. They had talks, and they consulted, among others, the two unions which had previously adopted the method the right hon. Gentleman was advocating. NALGO and the NUT were the unions in question, and the other unions consulted them to see whether they, too, could adopt the same method. They also took legal advice on the subject. I have the legal information here.

The right hon. Member for Devon, North (Mr. Thorpe) said he wanted some indication of the legal position and the view of the trade unions about the advice they received from the Government at that time. The conclusion was that the friendly society solution would secure fairly comprehensive tax protection but would create severe administrative difficulties, in particular:

1. "1. The friendly society would have to be formed by the members and not by the union as such and be completely separate from the union and controlled separately.
2. 2. Contributions would have to be separately collected and accounted for. They might be collected at the same time as union subscriptions.
3. 3. Unless every existing member and beneficiary agreed to the transfer of their accrued rights to the new society the union would still have a commitment to provide benefits to them as their accrued rights would have to be assured.
4. 4. Any payment of union funds into the friendly society for the purpose of providing or supplementing benefits (as can now happen between union funds where the provident fund is not actuarily based) would be irrevocable."

Their conclusion, which the unions sent to their members, seems to be unavoidable. It was that neither of these solutions, the other one being that suggested by the right hon. Gentleman, would provide a satisfactory means of securing tax exemption. They added: It is, however possible that one or two unions might find the friendly society solution practicable in their own circumstances. That was the advice which the General Council gave to its members in July 1971.

9.45 p.m.

Sir Derek Walker-Smith (Hertfordshire, East)

Turning for a moment from the abstract to the specific, can the right hon. Gentleman say how many unions actually tried to put that solution into practice?

Mr. Foot

I am saying that two unions made an approach following the circular. The General Council said in the circular that it thought a few unions might do so. Two unions made an approach to the Registrar of Friendly Societies, and the answer they received was very much along the lines of the answer the trade unions collectively had had. That was the situation then, but the right hon. Gentleman said that there was no attempt by anyone to put these matters right or to present the case to the Government of the day, that there was no strong challenge to the Government of the day on the subject.

Mr. Prior

Does not the right hon. Gentleman exactly make the point I was making? Does he not realise that this is the first time we have ever heard that there were two unions out of all the unions which actually took the trouble to go to the Registrar, and even after that none of them returned to my right hon. Friend?

Mr. Foot

The right hon. Gentleman says further that there was never any strong challenge, that nobody made representations about it. That is absolutely untrue. Some of my hon. Friends moved a clause as an amendment to last year's Finance Bill. The Minister who replied to that debate, the hon. Member for St. Ives (Mr. Nott) said: I realise that there are practicable difficulties in some cases in that for these purposes provident funds have to be alienated from the main union funds". That is quite different from what the right hon. Gentleman said. I believe that my hon. Friend the Member for Birmingham, Ladywood (Mr. Walden), then the Member for Birmingham, All Saints, who moved the amendment, said that his union had run into this difficulty, as indeed it had. The hon. Member for St. Ives continued: I am, therefore, aware that what I am now suggesting cannot apply or appears not to apply in every case."—[OFFICIAL REPORT, 10th July 1973; Vol. 859, c. 1425.] We have just been told by the right hon. Gentleman that the Conservative Government had no idea of the difficulties, that no representations were made to them. Nothing of the sort—the representations were made here on the Floor of the House, the proper place to make them.

The right hon. Gentleman also says that the TUC never made the representations. That is exactly what it did in the confabulations it had with the previous Government at Downing Street and elsewhere. As my hon. Friend the Chancellor of the Exchequer revealed in the debate earlier today, at the end of last year or the beginning of this year it went again to Downing Street. When Conservative Members say that it did not make any representations for retrospective action at these times, that is not the case as we understand it. In the Economic Review published by the TUC only a few months ago it reported that it had made representations to the previous Government. It referred in that document to the fact that it had had retrospective legislation to deal with the matter for one year and was asking that it should be applied to other years.

Therefore, the whole of the fabric of the right hon. Gentleman's argument about the unions having been negligent or backward in raising the issue collapses to the ground. Why should it be said that there is anything improper in introducing the new clause?

Mr. Waddington

Much of the right hon. Gentleman's argument has been directed to the proposition that the unions were anxious to protect their provident funds. Will he answer the important question that has been posed today—namely, how are we to know if the clause is carried, that the £10 million will be used for provident purposes?

Mr. Foot

The money will go back to the places from which it should never have been taken. The Opposition were in favour of leaving this money in the coffers of the trade unions a few years ago—at least, that is the only reputable defence that they can put forward. If the policy of Conservative hon. Members is to be represented by the spleen of Conservative back benchers, they are then faced with a different proposition. However, the claim from the Opposition Front Bench is that the previous Government were dealing fairly with this matter and trying to deal with it in the most mild and moderate manner.

I now turn to retrospection in a different form—

Mr. Thorpe

Is the right hon. Gentleman, in putting to the Committee that two trade unions sought to hive off their provident funds and were told that it would be administratively difficult, basing his case on those two exclusive applications?

Mr. Foot

It seems that the right hon. Gentleman has not attempted to follow the argument. My case is based not only on those two claims but on the whole argument that has surrounded this matter ever since it was mooted by Conservative hon. Members that they were going to take action which implied that the money might be taken away.

The right hon. Member for Lowestoft referred to the debate in another place. I acknowledge that that debate was probably the most extensive discussion of the whole matter that has taken place. The right hon. Gentleman knows very well that my noble Friend Lord Diamond took one view and the previous Lord Chancel-lord took another. He may say that he wants to side with the Lord Chancellor but on financial matters and tax matters I would think that Lord Diamond is probably a better guide. These matters involve not only legal but financial considerations and, as the right hon. Gentleman has said, there are also involved some political matters—[HON. MEMBERS: "Oh".] Yes, fair treatment for people who subscribe to their trade unions. That is a political matter. We now have a Government who are prepared to stand up for those people.

If the previous Government were so eager to be fair in 1971 as they now pretend, and if there was the balance between the two different legal opinions that is now suggested, why did the previous Government not take the course which we have taken to ensure that the funds stayed where they have said they should always have stayed? That is action which could have been taken and that is the action which we are taking in the clause. As we are carrying out the good intentions of the previous Government as the right hon. Gentleman declared them, we should have had a vote of thanks and not dissention.

I suppose that we must look for other excuses. I have said that political matters were involved. We must remember that the decision to have a debate on this matter was taken a few weeks ago in the middle, according to the right hon. Gentleman the Leader of the Opposition, of the phoney war. Hence this phoney attack by the Opposition.

Mr. Robert Carr

Can the right hon. Gentleman tell us why not one single union came to me or my two successors to ask us to honour the pledge that we had made?

Mr. Foot

I will tell the right hon. Gentleman why. It was lack of confidence in him and his Government. Why should the unions go to the right hon. Gentleman for fair play? They did not get fair play from him in 1971. They did not get it in the debates in Parliament. He has not given them fair play today. If the right hon. Gentleman had any courage, he would have repudiated the spleen of his back benchers in this debate.

If the right hon. Gentleman will not learn from me about retrospection and fair play for all the people of this country, perhape he will take it from that leading article in The Times which has already been quoted. It is on the tender point of retrospection, about which the Opposition claim to be so sensitive. It says: There remains the element of retrospection. Parliament is right always to be wary of retrospective legislation;— I agree— and it would have sufficed in this case to change the law with effect from this financial year. But if it is conceded that the income

from funds which deserve to have charitable status were made liable to tax either by inadvertence or upon false principles, then it cannot be very wrong to correct the error with effect from the time at which the error was committed."

The question is: was it inadvertence which led to this problem? Or was it on the basis of false principles and a false prospectus? The members of the Conservative Government responsible are either fools or crooks, and I leave it to the Committee to decide which. I had thought that it was the folly of the right hon. Member for Carshalton which led him into this course. But I had hoped that he and his right hon. Friends had learnt from their experience of the 1971 Act and were ready to say that changes would be made. Indeed, that was what they were saying to the unions in the last few months of negotiation, but now, in this debate, we have learnt how false that claim was.

The Labour Party is very eager to have the General Election that the right hon. Member for Lowestoft so nervously calls for. But we know that he will not lead the Conservative Party into battle with much spirit because he has had his tail between his legs ever since he came back from the marginal constituencies a few weeks ago. We are ready for the battle, and when we have it the people will say that we played fair towards the trade union movement.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 299, Noes 308.

Division No. 45.]	AYES	[9.59 p.m.
Abse, Leo	Bradley, Tom	Cox, Thomas
Allaun, Frank	Broughton, Sir Alfred	Craigen. J. M. (G'gow, Ma[...]yhill)
Atcher, Peter (Warley, West)	Brown, Bob (NewcastleuponTyne, W.)	Cronin, John
Armstrong, Ernest	Brown, Hugh D. (Glasgow, Provan)	Crosland, Rt. Hn. Anthony
Ashley, Jack	Brown, Ronald (H'kney, S. & Sh[...]itch)	Cryer, G. R.
Ashton, Joe	Buchan, Norman	Cunningham, G. (Isl'ngt'n,S&F'sb'ry)
Atkins, Ronald (Preston, N.)	Buchanan, Richard (G'gow,Springb[...]n)	Cunningham, Dr. John A. (Whiteh'v'n)
Atkinson, Norman	Butler, Mrs. Joyce (H'gey, WoodGreen)	Dalyell, Tam
Bagier, Gordon, A. T.	Callaghan, Jim (M'dd'ton & Pr'wich)	Davidson, Arthur
Darnett, Guy (Greenwich)	Campbell, Ian	Davies, Bryan (Enfield, N.)
Barnett, Joel (Heywood & Royton)	Cant, R. B.	Davies, Denzil (Llanelli)
Bates, Alf	Carmichael, Neil	Davies, Ifor (Gower)
Baxter, William	Carson, John	Davis, Clinton (Hackney, C.)
Benn, Rt. Hn. Anthony Wedgwood	Carter, Ray	Deakins, Eric
Bennett, Andrew F. (Stockport, N.)	Carter-Jones, Lewis	Dean, Joseph (Leeds, W.)
Bidwell, Sydney	Castie, Rt. Hn. Barbara	de Freitas, Rt. Hn. Sir Geoffrey
Bishop, E. S.	Clemitson, Ivor	Deiargy, Hugh
Blenkinsop, Arthur	Cocks, Michael	Dell, Rt. Hn. Edmund
Boardman, H. (Leigh)	Cohen, Stanley	Dempsey, James
Booth, Albert	Coleman, Donald	Doig, Peter
Boothroyd, Miss Betty	Colquhoun, Mrs. M. N.	Dormand, J. D.
Bottomley, Rt. Hn. Arthur	Concannon, J. D.	Douglas-Mann, Bruce
Boyden, James (Bishop Auckland)	Conlan, Bernard	Duffy, A. E. P.
Bradford, Rev. R.	Cook, R. F. (Edinburgh, C.)	Dunn, James A.
Dunnett, Jack	Kinnock, Neil	Roberts, Albert (Normanton)
Dunwoody, Mrs. Gwyneth	Lambie, David	Roberts, Gwllym (Cannock)
Eadie, Alex	Lamborn, Harry	Robertson, John (Paisley)
Edelman, Maurice	Lamond, James	Roderick, Caerwyn E.
Edge, Geoff	Latham, Arthur(CityofW'minsterP'ton)	Rodgers, George (Chorley)
Edwards, Robert (W'hampton, S.E.)	Lawson, George (Motherwell&Wishaw)	Rodgers, William (Teesside, St'ckton)
Ellis, John (Brigg & Scunthorpe)	Leadbitter, Ted	Rooker, J. W.
Ellis, Tom (Wrexham)	Lee, John	Roper, John
English, Michael	Lestor, Miss Joan (Eton & S[...]ough)	Rose, Paul B.
Ennals, David	Lever, Rt. Hn. Harold	Ross, Rt. Hn. William (Kilmarnock)
Evans, Fred (Caerphilly)	Lewis, Arthur (Newham, N.)	Rowlands, Edward
Evans, loan (Aberdare)	Lewis, Ron (Carlisle)	Sandelson, Neville
Evans, John (Newton)	Lipton, Marcus	Sedgemore, Bryan
Ewing, Harry (St'ling,F'kirk&G'm'th)	Lomas, Kenneth	Selby, Harry
Faulds, Andrew	Loughlin, Charles	Shaw, Arnold (Redbridge, Ilford, S.)
Fernyhough, Rt. Hn. E.	Loyden, Eddie	Sheldon, Robert (Ashton-under-Lyne)
Fitch, Alan (Wigan)	Lyon, Alexander W. (York)	Shore, Rt. Hn. Peter (S'pney&P'plar)
Fitt, Gerard (Belfast, W.)	Lyons, Edward (Bradford, W.)	Short, Rt. Hn. E. (N'ctle-u-Tyne)
Flannery, Martin	Mabon, Dr. J. Dickson	Short, Mrs. Renee (W'hamp'n, N.E.)
Fletcher, Raymond (Ilkeston)	McCartney, Hugh	Silkin, Rt. Hn. John (L'sham,D'ford)
Fletcher, Ted (Darlington)	McCusker, H.	Silkin, Rt.Hn.S.C. (S'hwark,Dulwich)
Foot, Rt. Hn. Michael	McElhone, Frank	Sillars, James
Ford, Ben	MacFarquhar, Roderick	Silverman, Julius
Forrester, John	McGuire, Michael	Skinner, Dennis
Fowler Gerry (The Wrekin)	Maclennan, Robert	Small, William
Fraser, John (Lambeth, Norwood)	McMillan, Tom (Glasgow, C.)	Smith, John (Lanarkshire, N.)
Freeson, Reginald	McNamara. Kevin	Snaps, Peter
Garrett, John (Norwich, S.)	Madden, M. O. F.	Spearing, Nigel
Garrett, W. E. (Wallsend)	Magee, Bryan	Spriggs, Leslie
George, Bruce	Mahon, Simon	Stallard, A. W.
Gilbert, Dr. John	Mallalieu, J. P. W.	Stewart, Rt. Hn. M. (H'sth, Fulh'm)
Ginsburg, David	Marks, Kenneth	Stoddart, David (Swindon)
Gourlay, Harry	Marquand, David	Storehouse, Rt. Hn. John
Graham, Ted	Marshall, Dr. Edmund (Goole)	Stott, Roger
Grant, George (Morpeth)	Mason, Rt. Hn. Roy	Strang, Gavin
Grant, John (Islington, C.)	Mayhew, Patrick (RoyalT'bridgeWells)	Strauss, Rt. Hn. G. R.
Griffiths, Eddie (Sheffield, Brightside)	Meacher, Michael	Summerskill, Hn. Dr. Shirley
Hamilton, James (Bothwell)	Mellish, Rt. Hn. Robert	Swain, Thomas
Hamilton, William (Fife. C.)	Mendelson, John	Thomas, D. E. (Merioneth)
Hamling, William	Mikardo, Ian	Thomas. Jeffrey (Abertillery)
Hardy, Peter	Millan, Bruce	Thorne, Stan (Preston, S.)
Harper. Joseph	Miller, Dr. M. S. (E. Kilbride)	Tierney, Sydney
Harrison, Walter (Wakefield)	Milne, Edward	Tinn, James
Hattersley, Roy	Mitchell, R. C. (S'hampton, Itchen)	Tomlinson, John
Hatton, Frank	Molloy, William	Tomney, Frank
Healey, Rt. Hn. Denis	Moonman, Eric	Torney, Tom
Heffer, Eric S.	Morris, Alfred (Wythenshawe)	Tuck, Raphael
Hooley, Frank	Morris, Charles R. (Openshaw)	Urwin, T. W.
Horam, John	Morris, Rt. Hn. John (Aberavon)	Varley, Rt. Hn. Eric G.
Howell Denis (B'ham, Small Heath)	Moyle, Roland	Wainwright, Edwin (Dearne Valley)
Huckfield, Leslie	Murray, Ronald King	Walden, Brian (B'm'hom, Ladywood)
Hughes, Rt. Hn. Cledwyn (Anglesey)	Newens, Stanley (Harlow)	Walker, Harold (Doncaster)
Hughes, Mark (Durham)	Oakes, Gordon	Walker, Terry (Kingswood)
Hughes, Robert (Aberdeen, North)	Ogden, Eric	Watkins, David
Hughes, Roy (Newport)	O'Halloran, Michael	Weitzman, David
Hunter, Adam	O'Malley, Brian	Wellbeloved, James
Irvine, Rt. Hn. Sir A. (L'p'I.EdgeHill)	Orbach, Maurice	White, James
Irving, Rt. Hn. Sydney (Dartford)	Orme, Rt. Hn. Stanley	Whitehead, Phillip
Jackson Colin	Ovenden, John	Whitlock, William
Janner, Greville	Owen, Dr. David	Wigley, Dafydd (Caernarvon)
Jay, Rt. Hn. Douglas	Padley, Walter	Willey, Rt. Hn. Frederick
Jeger, Mrs. Lena	Palmer, Arthur	Williams, Alan (Swansea, W.)
Jenkins, Hugh (W'worth, Putney)	Park, George (Coventry, N.E.)	Williams, Alan Lee (Hvrng, Hchurch)
Jenkins, Rt. Hn. Roy (B'ham.St'fd)	Parker, John (Dagenham)	Williams, Rt.Hn. Shirley(H'f'd&St'ge)
John, Brynmor	Parry, Robert	Williams, W, T. (Warrington)
Johnson, James(K'ston upon Hull, W)	Peart, Rt. Hn. Fred	Wilson, Alexander (Hamilton)
Johnson, Walter (Derby, S.)	Pendry, Tom	Wilson, Rt. Hn. Harold (Huyton)
Jones, Barry (Flint, E.)	Perry, Ernest G.	Wilson, William (Coventry, S.E.)
Jones, Dan (Burnley)	Phipps, Dr. Colin	Wise, Mrs. Audrey
Jones, Gwynoro (Carmarthen)	Prentice, Rt. Hn. Reg	Woodall, Alec
Jones, Alec (Rhondda)	Prescott, John	Woof, Robert
Judd, Frank	Price, Christopher (Lewisham, W.)	Wrigglesworth, Ian
Kaufman, Gerald	Price, William (Rugby)	Young, David (Bolton, E.)
Kelley, Richard	Radice, Giles	TELLERS FOR THE AYES:
Kerr, Russell	Rees, Rt. Hn. Merlyn (Leeds, S.)	Mr. John Golding and
Kilfedder. James A.	Rhodes, Geoffrey	Mr. Laurie Pavitt.
Kilroy-Silk, Robert	Richardson, Miss Jo
NOES
Adley, Robert	Finsberg, Geoffrey	Lloyd, Ian (Havant & Waterloo)
Aitken, Jonathan	Fisher, Sir Nigel	Loveridge, John
Alison, Michael (Barkston Ash)	Fletcher, Alexander (Edinburgh, N.)	Luce, Richard
Allason, James (Hemel Hempstead)	Fletcher-Cooke, Charles	MacArthur, Ian
Amery, Rt. Hn. Julian	Fookes, Miss Janet	MacCormack, Iain
Ancram, M.	Fowler, Norman (Sutton Coldfield)	McCrindle, R. A.
Archer, Jeffrey (Louth)	Fox, Marcus	Macfarlane, Neil
Atkins, Rt. Hn. Humphrey (Spelthorne)	Fraser, Rt. Hn. Hugh (St'fford&Stone)	MacGregor, John
Awdry, Daniel	Freud, Clement	McLaren, Martin
Baker, Kenneth	Fry, Peter	Macmillan, Rt. Hn. M. (Farnham)
Balniel, Rt. Hn. Lord	Galbraith, Hn. T. G. D.	McNair-Wilson, Michael (Newbury)
Banks, Robert	Gardiner, George (Reigate&Banstead)	McNair-Wilson, Patrick (New Forest)
Barber, Rt. Hn. Anthony	Gardner, Edward (S. Fylde)	Madel, David
Beith, A. J.	Gibson-Watt, Rt. Hn. David	Marshall, Michael (Arundel)
Bell, Ronald	Gilmour, Rt. Hn. Ian (Ch'sh'&Amsh'm)	Marten, Neil
Bennett, Sir Frederic (Torbay)	Gilmour, Sir John (Fife, E.)	Mather, Carol
Bennett, Dr. Reginald (Fareham)	Glyn, Dr. Alan	Maude, Angus
Benyon, W.	Godber, Rt. Hn. Joseph	Maudling, Rt. Hn. Reginald
Berry, Hon Anthony	Goodhart, Philip	Mawby, Ray
Bitten, John	Goodhew, Victor	Maxwell-Hyslop, R. J.
Biggs-Davison, John	Goodlad, A.	Mayhew, P. (Royal T'bridge Wells)
Blaker, Peter	Gorst, John	Meyer, Sir Anthony
Boardman, Tom (Leicester, S.)	Gow, Ian (Eastbourne)	Miller, Hal (B'grove & R'ditch)
Body, Richard	Gower, Sir Raymond (Barry)	Mills, Peter
Boscawen, Hon. Robert	Grant, Anthony (Harrow, C.)	Mitchell, David (Basingstoke)
Bowden, Andrew (Brighton, Kemptown)	Gray, Hamish	Moate, Roger
Boyson, Dr. Rhodes (Brent, N.)	Grieve, Percy	Money, Ernie
Braine, Sir Bernard	Griffiths, Eldon (Bury St. Edmund3)	Monro, Hector
Bray, Ronald	Grimond, Rt. Hn. J.	Moore, J. E. M. (Croydon, c.)
Brewis, John	Grist, Ian	More, Jasper (Ludlow)
Brittan, Leon	Grylls, Michael	Morgan, Geraint
Brocklebank-Fowler, Christopher	Hall, Sir John	Morgan-Giles, Rear-Adm.
Brown, Sir Edward (Bath)	Hall-Davis, A. G. F.	Morris, Michael (Northampton, S.)
Bruce-Gardyne, J.	Hamilton, Michael (Salisbury)	Morrison, Charles (Devizes)
Bryan, Sir Paul	Hampson, Dr. Keith	Morrison, Peter (City of Chester)
Buchanan Smith, Alick	Hannam, John	Mudd, David
Buck, Antony	Harrison, Col. Sir Harwood (Eye)	Neave, Airey
Budgen, Nick	Hastings, Stephen	Neubert, Michael
Bulmer, Esmond	Havers, Sir Michael	Newton, Tony (Braintree)
Burden, F. A.	Hayhoe, Barney	Nicholls, Sir Harmar
Butler, Adam (Bosworth)	Heath, Rt. Hn. Edward	Normanton, Tom
Carlisle, Mark	Henderson, Barry (Dunbartonshire, E.)	Nott, John
Carr, Rt. Hn. Robert	Henderson, Douglas (Ab'rd'nsh're, E)	Onslow, Cranley
Chalker, Mrs. Lynda	Heseltine, Michael	Oppenheim, Mrs. Sally
Channon, Paul	Higgins, Terence	Orr, Capt. L. P. S.
Chataway, Rt Hn. Christopher	Hill, James A.	Osborn, John
Churchill, W. S.	Holland, Philip	Page, Rt. Hn. Graham (Crosby)
Clark, A. K. M. (Plymouth, Sutton)	Hooson, Emlyn	Page, John (Harrow, W.)
Clark, William (Croydon, S.)	Hordern, Peter	Pardoe, John
Clarke, Kenneth (Rushcliffe)	Howe, Rt.Hn. Sir Geoffrey (Surrey, E.)	Parkinson, Cecil (Hertfordshire, S.)
Cockcrofl, John	Howell, David (Guildford)	Pattie, Geoffrey
Cooke, Robert (Bristol, W.)	Howell, Ralph (Norfolk, North)	Percival, Ian
Cope, John	Howells, Geraint (Cardigan)	Peyton, Rt. Hn. John
Cordle, John	Hunt, John	Pink, R. Bonner
Cormack, Patrick	Hurd, Douglas	Price, David (Eastleigh)
Corrie, John	Hutchison, Michael Clark	Prior, Rt. Hn. James
Costain, A. P.	Iremonger, T. L.	Pym, Rt. Hn. Francis
Critchley, Julian	Irvine, Bivant Godman (Rye)	Quennell, Miss J. M.
Crouch, David	James, David	Raison, Timothy
Crowder, F. P.	Jessel, Toby	Rathbone, Tim
Davies, Rt. Hn. John (Knutstord)	Johnson Smith, G. (E. Grinstead)	Rawlinson, Rt. Hn. Sir Peter
d'Avigdor-Goldsmid, Maj.-Gen. James	Johnston, Russell (Inverness)	Redmond, Robert
Dean, Paul (Somerset, N.)	Jones, Arthur (Daventry)	Rees, Peter (Dover & Deal)
Deedes, Rt. Hn. W. F.	Jopling, Michael	Rees-Davies, W. R.
Dixon, Piers	Joseph, Rt. Hn. Sir Keith	Renton.Rt. Hn. SirDavid (H't'gd'ns're)
Dodds-Parker, Sir Douglas	Kaberry, Sir Donald	Renton, R. T. (Mid-Sussex)
Dodsworth, Geoffrey	Kellett-Bowman, Mrs. Elaine	Rhys Williams, Sir Brandon
Douglas-Home, Rt. Hn. Sir Alec	Kershaw, Anthony	Ridley, Hn, Nicholas
Drayson, Burnaby	Kimball, Marcus	Ridsdaie, Julian
du Cann, Rt. Hn. Edward	King, Evelyn (Dorset, S.)	Rifkind, Malcolm
Durant, Tony	King, Tom (Bridgwater)	Rippon, Rt. Hn. Geoffrey
Dykes, Hugh	Kirk, Peter	Roberts. Michael (Cardiff, N.-W.)
Eden, Rt. Hn. Sir John	Knight, Mrs. Jill	Roberts, Wyn (Conway)
Edwards, Nicholas (Pembroke)	Knox, David	Rodgers, Sir John (Sevenoaks)
Elliott, Sir William	Lamont, Norman	Ross, Stephen (Isle of Wight)
Emery, Peter	Lane, David	Ross, Wm. (Londonderry)
Ewing, Mrs. Winifred (Moray&Nairn)	Langford-Holt, Sir John	Rossi, Hugh (Hornsey)
Eyre, Reginald	Latham, Michael (Melton)	Rost, Peter (Derbyshire, S.-E.)
Fairgrieve, Russell	Lawrence, Ivan	Royle, Sir Anthony
Farr, John	Lawson, Nigel (Blaby)	Sainsbury, Tim
Fell, Anthony	Le Marchant, Spencer	St. John-Stevas, Norman
Fenner, Mrs. Peggy	Lester, Jim (Beeston)	Scott-Hopkins, James
Fidler, Michael	Lewis. Kenneth (Rtland & Simford)	Shaw, Giles (Pudsey)
Shaw, Michael (Scarborough)	Stradling Thomas, J.	Walker, Rt. Hn. Peter (Worcester)
Shelton, William (L'mb'th.Streath'm)	Tapsell, Peter	Walker-Smith, Rt. Hn. Sir Derek
Shersby. Michael	Taverne, Dick	Wall, Patrick
Silvester, Fred	Taylor, Edward M. (Gl'gow, C'cart)	Walters, Dennis
Sims, Roger	Taylor, Robert (Croydon, N.W.)	Warren, Kenneth
Sinclair, Sir George	Tebbit, Norman	Watt, Hamish
Skeet T. H. H.	Temple-Morris, Peter	Weatherill, Bernard
Smith, Dudley (W'wick&L'm'ngton)	Thatcher, Rt. Hn. Margaret	Wells, John
Spe[...]e, John	Thomas, Rt. Hn. P. (B'net, H'dn S.)	Whitelaw, Rt. Hn. William
Spicer, Jim (Dorset, W.)	Thorpe, Rt. Hn. Jeremy	Wiggin, Jerry
Spicer, Michael (Worcestershire, S.)	Townsend, C. D.	Wilson, Gordon (Dundee, E.)
Sproat, Iain	Trotter, Neville	Winstanley, Dr. Michael
Stainton, Keith	Tugendhat, Christopher	Winterton, Nicholas
Stanbrook, Ivor	Tyler, Paul	Wood, Rt. Hn. Richard
Stanley, John	van Straubenzee, W. R.	Worsley, Sir Marcus
Steel, David	Vaughan, Dr. Gerard	Young, Sir George (Ealing, Acton)
Steen, Anthony (L'pool, Wavertree)	Viggers, Peter	Younger, Hn. George
Stewart, Donald (Western Isles)	Waddington, David
Stewart, Ian (Hitchin)	Wainwright, Richard (Colne Valley)	TELLERS FOR THE NOES:
Stodart, Rt. Hn. A. (Edinburgh, W.)	Wakeham, John	Mr. Walter Clegg and
Stokes, John	Walder, David (Clitheroe)	Mr. Paul Hawkins.

Question accordingly negatived.

Mr. Robert Carr

On a point of order, Mr. Thomas. May I ask—[Interruption.]

The Chairman

Order. I think it is to the advantage of the Committee to hear the point of order.

Mr. Carr

May I ask the Chancellor of the Exchequer to confirm that, in view of the will of the Committee expressed in this Division, he will undertake not to reintroduce the clause on Report?

Mr. Healey

On a point of order, Mr. Thomas. The answer is "No, Sir".

No one on this side of the Committee will regret that the phoney war is now ended. When the General Election comes—it may be sooner rather than later—after tonight's events millions of working people will cast their vote in the knowledge that the Conservative and Liberal Parties have voted to rob them of funds subscribed exclusively to protect themselves and their families against illness, injury and death, in flat violation of the most solemn undertaking given by the previous Conservative Government.

Mr. Edward Heath (Sidcup)

Are the Chancellor of the Exchequer and all his colleagues aware of the fact that millions of people in Britain tonight will know that as a member of a minority Government he has declared that that Government will defy the will of the House of Commons and that in defying the will of the House of Commons they will be supporting those who throughout the past four years have continuously defied the will of Parliament, and that all the millions of people in this country who believe in the maintenance of parliamentary democracy will make absolutely sure that if the right hon. Gentleman and his colleagues call a General Election they will be thrown out?

The Chairman

I think that on an occasion such as this both sides of the Committee have exchanges, but this point of order is rapidly coming to a close.

Mr. Healey

The Leader of the Opposition was asking a question to which, with your permission, Mr. Thomas, I propose to reply. We all understand the Leader of the Opposition's chagrin that his party has chosen to reject the advice he offered it only two days ago, that it should win the argument and not the vote, but a more important vote will shortly be taken by the people of this country as a whole. When that vote is taken the people of this country will bear in mind fully the fact that the Conservative and Liberal Parties tonight have betrayed the promise which they had made over the past four years.

The Chairman

I hope that the Committee will understand that I shall not always be as generous on points of order.

Bill (Clauses 5, 6, 7, 9, 10, 11, 13, 14 and 19) reported, with amendments; to lie upon the Table.